DGO Gold will make a strategic investment in Pilbara gold counterpart, De Grey Mining, helping it to advance assets in the region.
De Grey plans to use the funds to expand an exploration program and pre-feasibility study (PFS) at its Pilbara gold project in Western Australia.
Under the agreement, DGO will invest $5 million in De Grey by subscribing for 25 million shares at 20 cents each.
In addition, DGO will receive 12.5 million options at 25 cents a share on or before November 30 2019, and a further 12.5 million unlisted options exercisable at 30 cents a share before May 31 2021.
DGO will hold 7 per cent of De Grey’s ordinary shares and 10 per cent on a fully diluted basis.
De Grey chairman Simon Lill was pleased with the endorsement from one of its Pilbara neighbours.
“DGO is backed by significant gold investors and led by the well credentialed geologist, Ed Eshuys,” Lill said.
“Recent excitement in the region has been about conglomerate gold. However, DGO have been attracted to our significant and underexplored mineralised shear zones.”
DGO considers De Grey to be one of the best positioned gold explorers in Western Australia due to its 1.2Moz of gold resources in the Pilbara.
Eduard Eshuys, DGO chairman, believes De Grey’s structural gold mineralisation and associated large exploration upside has the potential to host aggregate gold resources sufficient to support a medium to large-scale production operation.
“DGO strongly supports the planned acceleration in exploration activities and anticipates significant resources growth at an attractive discovery cost per ounce through both new discoveries and strike and depth extension of existing discoveries,” Eshuys said.
De Grey will raise $6 million in total, with Top Drill to be issued $1 million of equity in the company.