Australia’s next big gold mine comes with new $1.3b price tag
De Grey Mining says it is now in a stronger position to secure funding despite a near 30 per cent jump in the cost of building Australia’s next big gold mine.
The company said the cost increase was in line with the inflationary pressures at play across the resources industry in Australia.
De Grey Mining says its Hemi project is on track to become one of Australia’s biggest gold mines.
De Grey said banks and equity investors should view its production plans as less risky because they were now focused solely on the increased gold reserves at the Hemi project and no longer included regional deposits.
The latest capital cost estimate for Hemi is almost $1.3 billion, up from $985 million a year ago.
The updated figure includes $162 million for design growth and contingencies in building what is on track to become one of the top five gold mines in Australia.
The revised estimate was within analyst expectations and coincided with De Grey going into a trading halt as it rattled the tin for $300 million.
Gold Road Resources, De Grey’s largest shareholder, immediately committed to tipping enough into the equity raising to maintain its 19.9 per cent stake.
Gold Road, which gained a strategic stake in De Grey last year through its aquisition of DGO Gold, is seen as a player or at least kingmaker in any bid for control of the Hemi project about 80 kilometres from Port Hedland in Western Australia.
Advisory firm BDO is among those predicting a lot more M&A in the gold sector after a string of deals in the past year headlined by Newmont Mining’s $26.2 billion takeover of Newcrest, which is expected to be ticked off by shareholders next month.
BDO head of global resources Sherif Andrawes said the Genesis Minerals acquisition of the
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