De Grey Mining

Initiation of Coverage
De Grey Mining Limited

1 September 2020 Precious Metals - Developer/Explorer
Tim McCormack | Analyst | Canaccord Genuity (Australia) Ltd. | tmccormack@cgf.com | +61.8.9268.4810

Rating Price Target Tyson Kestel | Associate Analyst | Canaccord Genuity (Australia) Ltd. | TKestel@cgf.com | 08 9263 1156
SPECULATIVE BUY A$1.40
Price
Rapidly defining a new gold province
DEG-ASX A$1.06
DEG is an Australian-based gold exploration and development company, focused on its
Mallina Gold Project (MGP) located 60km south of Port Hedland in Western Australia.
Market Data Hemi could grow Mallina Resource to +5Moz by mid-2021. Since its discovery in
52-Week Range (A$) : 0.04 - 1.22
late 2019, Hemi has emerged as one of the most meaningful recent discoveries in the
Avg Daily Vol (M) : 10.8
Market Cap (A$M) : 1,267.7
Australian gold space and changed the scale of DEG's 2.2Moz MGP markedly. DEG has
Shares Out. (M) : 1,195.9 increased its exploration efforts as the scale of Hemi continues to grow, and currently
Enterprise Value (A$M) : 1,275 has six drill rigs on site (2x Diamond, 2x RC, 2x Aircore). Hemi is now defined across
Cash (A$M) : 28.6 three main zones (Brolga, Aquila and Crow) and has a footprint of ~2.5km (N/S) by
Long-Term Debt (A$) : 0.0 ~2km (E/W). Current drilling efforts are largely focused on expanding the scope of the
NAV /Shr (A$) : 1.38
project, with strike extensions open in most directions and few holes drilled beyond
NAV /Shr (5%) (A$) : 2.03
Major Shareholders: DGO Gold 16%
~300m depth. We expect DEG to release a maiden Resource for Hemi in mid-2021,
which will be the culmination of +18 months of drilling. Based on our calculations, we
see potential for Hemi's initial Resource to be 3-4Moz at ~1.4-1.6g/t, and importantly,
1.4
expect >50% to be in the Indicated category. Naturally, we have made some broad
1.2 assumptions in deriving the estimate, but in most cases have erred on the side of
conservatism and point to DEG's publicly stated goal of the greater Hemi project being
1
a +5Moz Resource as offering comfort that our assumptions will be met or exceeded
0.8 over time. Further upside exists via step-out drilling plus results from the greater Hemi
targets (Scooby, Shaggy, Antwerp), which should be drill tested in the 2H 2020.
0.6
Existing Resource to potentially fold into larger production scenario. Not to be
0.4 overlooked, DEG has an existing Resource base for Mallina of 2.2Moz (1.8g/t), which
has been the subject of Mining Studies and, in our view, could potentially support an
0.2
80-100kozpa production scenario irrespective of Hemi. With the inclusion of Hemi,
0 however, we see DEG being afforded the luxury of cherry-picking the best parts of the
existing Resource, thereby bolstering the potential mine life and production profile. By
May-20
Nov-19
Aug-20
Sep-20
Dec-19
Mar-20
Feb-20
Apr-20
Jun-20
Oct-19
Jan-20
Jul-20
way of example, the Withnell (85% M&I) and Wingina (76% M&I) deposits both have
DEG +250koz open pit Resources and are <25km from Hemi, and Toweranna (58% M&I) has
Source: FactSet a +450koz (+2g/t) open pit Resource that is ~60km from Hemi. Naturally, the ultimate
economics on Hemi will dictate whether ore is displaced to make way for potentially
Priced intraday 1 September 2020 higher grade satellite deposits, but we see this as a nice problem to have, and one that
In April 2020, Canaccord Genuity (Australia) Limited
as a minimum is supportive of a longer life project.
received a fee for Capital Market services provided to De Potential production profile of up to 300kozpa. While forecasting production based
Grey Mining Limited. on assumed Resources will likely see iterations of model inputs as the project evolves,
we feel comfortable the MGP can support a significant production profile. To develop
the project we assume a ~7Mtpa processing facility, capex of A$700m (includes $50m
pre-strip) and first production by FY25. Our initial assumed mine life is 12 years, with a
production profile averaging 290kozpa and an AISC of <A$1100/oz. Initial metallurgical
test work has shown that ore (partly refractory) responds well to flotation (92-93%
gold reports to float concentrate in <10% the initial mass), with pressure oxidation
(POX) and CIL averaging recoveries of +96% in fresh rock. Metallurgical test work
will be ongoing and refined over time (only completed on Brolga currently), and we
also expect DEG to run trade-off studies investigating alternative oxidation routes
like BIOX and Albion. In our view, metallurgy will be an aspect of the story that is
watched closely, and at this stage we assume 90% recovery in our modelling. While
POX increases the theoretical capex, it should be noted that the MGP's location <100km
from Port Headland (WA) offers strong development advantages. Proximity to major
sealed highways, gas pipelines, high voltage power lines, ample water supply and flat
topography all represent savings versus remote projects.
Valuation and recommendation. Our A$1.40/share price target is based on an
NPV10% for the Mallina gold project, net of corporate adjustments, and diluted for
future equity requirements to fund ongoing exploration through FY21-24. We initiate
with a SPECULATIVE BUY recommendation.
Canaccord Genuity is the global capital markets group of Canaccord Genuity Group Inc. (CF : TSX)
The recommendations and opinions expressed in this research report accurately reflect the research analyst's personal, independent and objective
views about any and all the companies and securities that are the subject of this report discussed herein.
For important information, please see the Important Disclosures beginning on page 26 of this document.
Figure 1: Financial summary

FINANCIAL SUMMARY
De Grey Mining ASX:DEG
Analyst : Tim McCormack Rating: SPEC BUY
Date: 1/09/2020 Target Price: A$1.40
Year End: June
Market Information Company Description

Share Price A$ 1.06 DEG is primary focus is the 100% owned Mallina Gold Project (MGP) in the Pilbara region of WA.
Market Capitalisation A$m 1,267.7 The recent Hemi discovery is an intrusion-hosted form of gold mineralisation which has not been
12 Month Hi A$ 1.22 previously encountered in the Pilbara and with an aggressive exploration effort underway, the
12 Month Lo A$ 0.04 compnay should grow its existing 2.2Moz Resource considerably over the next 12 months.
Average daily turnover (3 month) m 10.812
Issued Capital m 1195.9 Profit & Loss (A$m) 2019a 2020e 2021e 2022e
Options m 16.1 Revenue 0.0 0.0 0.0 0.0
Fully Diluted m 1212.0 Other Income 1.3 0.0 0.0 0.0
Operating Costs including royalties 0.0 0.0 0.0 0.0
Valuation A$m A$/share Corporate, O'heads -3.1 -4.1 -2.0 -2.0
Mallina NPV @ 10% 1,521.7 1.17 Exploration (Expensed/WO) 0.0 -0.3 0.0 0.0
Exploration & Projects 150.0 0.12 EBITDA -1.8 -4.5 -2.0 -2.0
Corporate (16.4) (0.01) Dep'n -0.2 0.1 0.0 0.0
Hedging (flat forward - - Net Interest 0.0 0.3 0.3 0.5
Cash & Bullion 28.6 0.02 Tax 0.0 0.0 0.0 0.0
Future Equity Raised 100.0 0.08 NPAT (reported) -2.0 -4.0 -1.7 -1.5
Debt - - Abnormals 0.0 0.0 0.0 0.0
Unpaid Capital (ITM options) 4.6 0.00 NPAT -2.0 -4.0 -1.7 -1.5
TOTAL NAV 1,788.5 1.38
Price:NAV 0.77x EBITDA Margin nm nm nm nm
NAV at Spot US$1,969/oz, AUDUSD $0.74 1.29 EV/EBITDA -678.2x -276.9x -619.6x -619.6x
Target Price (1.00 x NAV) 1.40 EPS nm nm nm nm
EPS Growth nm nm nm nm
PER nm nm nm nm
Dividend Per Share $0.00 $0.00 $0.00 $0.00
Assumptions 2019a 2020e 2021e 2022e Dividend Yield NA NA NA NA
Gold Price (US$/oz) 1,257 1,563 1,842 1,877
AUD:USD 0.71 0.67 0.70 0.70 Cash Flow (A$m) 2019a 2020e 2021e 2022e
Gold Price (A$/oz) 1,767 2,328 2,637 2,698 Cash Receipts 0.9 0.0 0.0 0.0
Cash paid to suppliers & employees -10.3 -10.4 -2.0 -2.0
Sensitivity Tax Paid 0.0 0.0 0.0 0.0
Net Interest 0.0 0.1 0.3 0.5
$1.90 Other (Expl.& Eval) 0.0 0.3 0.0 0.0
Operating Cash Flow -9.4 -10.0 -1.7 -1.5
$1.80
Exploration and Evaluation -0.9 -6.6 -30.0 -32.0
$1.70 Capex 0.0 0.0 0.0 0.0
$1.60 Other 0.0 -7.9 0.0 0.0
Investing Cash Flow -0.9 -14.5 -30.0 -32.0
$1.50 Debt Drawdown (repayment) 0.0 0.0 0.0 0.0
$1.40 Share capital 10.8 53.5 55.3 50.0
Dividends 0.0 0.0 0.0 0.0
$1.30
Financing Expenses -0.3 -2.2 1.5 0.0
$1.20 Others 0.0 0.0 0.0 0.0
$1.10 Financing Cash Flow 10.5 51.3 56.8 50.0
Opening Cash 1.1 1.3 28.2 53.3
$1.00 Increase / (Decrease) in cash 0.2 26.8 25.1 16.5
-15% -10% -5% 0% 5% 10% 15%
FX Impact 0.0 0.0 0.0 0.0
Closing Cash 1.3 28.2 53.3 69.9
Gold Price US$ Exchange Rate
Op. Cashflow/Share -$0.01 -$0.01 $0.00 $0.00
P/CF -105.5x -126.4x -798.6x -936.1x
Production Metrics 2019a 2020e 2021e 2022e EV/FCF -120.1x -50.6x -39.1x -37.0x
FCF Yield -1% -2% -2% -3%
Gold production (koz) 0 0 0 0
AISC (A$/oz) 0 0 0 0 Balance Sheet (A$m) 2019a 2020e 2021e 2022e
Cash + S/Term Deposits 1.3 28.2 53.3 69.9
Other current assets 0.8 6.1 0.1 0.2
Reserves & Resources Mt Grade Moz Current Assets 2.1 34.3 53.4 70.0
Resources Mine Properties, Plant & Equip. 0.7 0.6 0.6 0.6
Measured 4.7 1.7 0.27 Exploration & Develop. 30.7 37.5 67.5 99.5
Indicated 11.2 1.7 0.79 Other Non-current Assets 0.1 0.1 1.1 1.1
Inferred 18.5 1.9 1.11 Payables -1.3 0.0 0.0 0.0
Total 37.4 1.8 2.20 Short Term Debt 0.0 0.0 0.0 100.0
Long Term Debt 0.0 0.0 0.0 -100.0
Reserves Other Liabilities 0.4 3.6 0.1 0.2
Proved 0.0 0.00 0.0 Net Assets 19.6 68.8 122.5 171.0
Probable 0.0 0.00 0.00 Shareholders Funds 70.8 124.3 179.6 229.6
Reserves 0.0 0.0 0.0 Reserves 1.4 1.4 1.4 1.4
Retained Earnings -52.6 -56.9 -58.5 -60.0
Major shareholders Total Equity 19.6 68.8 122.5 171.0
DGO Gold Limited 16%
Northwest Nonferrous 5% Deb t/Equity 0% 0% 0% -58%
Directors and Management 3% Net Deb t/EBITDA 0.1x 2.8x 32.2x 47.6x
Net Interest Cover nm nm nm nm
ROE -10% -6% -1% -1%
ROIC -6% -9% -2% -1%
Book Value/share $0.02 $0.06 $0.10 $0.13
Source: Factset, Company reports & Canaccord Genuity estimates
Source: Company reports, Canaccord Genuity estimates
2
Speculative Buy Target Price A$1.40 | 1 September 2020 Precious Metals - Developer/Explorer 2
Contents
Overview ................................................................................................4
Corporate and Finance ..............................................................................5
Valuation Summary ..................................................................................6
Peer Comparisons .................................................................................. 10
Company Background ............................................................................. 11
Asset Overview: Mallina Gold Project......................................................... 12
Appendix 1 – Board of Directors ............................................................... 24
Appendix 2 – Investment risks ................................................................. 25
3
Overview
DEG is an Australian-based gold exploration and development company focused
on its Mallina Gold Project (MGP) located 60km south of Port Hedland in Western
Australia. The MGP has significant nearby infrastructure including railways, nearby
gas pipelines, a major electricity transmission line, and the Great Northern
highway located ~15km to the east of its recent Hemi discovery.
The tenement package covers a total area of 1,500km2 with exploration efforts
currently focused on the new Hemi discovery, one of seven targets identified for
testing last year and interpreted to be an intrusive related gold system (IRGS), a
system that is unique in the Pilbara region. Three main zones have been identified
within Hemi, namely Brolga, Aquila and Crow, which collectively are
demonstrating the potential for deposits of considerably larger scale than those
generally defined the Pilbara region.
DEG is accelerating its exploration efforts with six rigs now on site drilling
extensional targets as well as testing targets proximal to Hemi like Antwerp,
Scooby and Shaggy.
Excluding Hemi, DEG has an existing resource base of 2.2Moz at 1.8g/t across
two mining centres, Withnell and Wingina, and we note that ~49% in the
Measured and Indicated category.
With a consolidated land position covering 150km of strike, a large-scale intrusion
hosted discovery at Hemi (which remains open), and at least four large intrusions
at Hemi still to be tested, we believe there is significant district scale potential still
to be unlocked.
Figure 2: Project location map
4
Corporate and Finance

Balance sheet and liquidity
We expect DEG to finish the SepQ’20 with a cash position of ~A$28.5m, flat QoQ,
with an additional ~A$5.3m received in July from the second tranche of its recent
placement and ~A$0.45m from options exercised during the quarter. Recent
capital raisings have comprised:
 April 2020: A$31.2m raised at A$0.28/share
 November 2019: A$5.0m raised at A$0.045/share
 July 2019: A$22m raised at A$0.05/share
 May 2018: A$5m raised at A$0.20/share
Capital structure
DEG’s capital structure is detailed in Figure 3 below. The outstanding options have
a weighted average exercise price of A$0.24 resulting in a fully diluted issued
capital (including performance rights) of 1,213m shares.
Figure 3: DEG capital structure

Issued Shares m 1195.90 Strike Price Value Expiry
Options 1 m 3.25 0.10 0.33 31/10/20
Options 2 m 4.08 0.30 1.22 30/05/21
Options 3 m 1.50 0.30 0.45 30/09/21
Options 4 m 2.00 0.10 0.20 13/12/21
Options 5 m 4.86 0.35 1.70 12/03/22
Options 6 m 0.45 0.00 0.00 29/07/22
Perf. rights m 1.45
Total Options m 17.59 0.24 3.9
Fully Diluted m 1213.50
Substantial shareholders
DEG has one substantial shareholder; DGO Gold Limited (DGO-ASX: A$3.44 | Not
Rated) which owns 16.2%. Other significant shareholders include:
 Northwest Nonferrous Australia Mining Pty Ltd 4.9%
 Kirkland Lake Gold (KL-TSX: C$69.50 | BUY | PT C$83.0 | Analyst: Carey
MacRury) 2.8%
 Directors and Management ~3%
Directors and management

See Appendix 2 for full Director bios
 Simon Lill – Executive Chairman
 Andy Beckwith – Executive Technical Director
 Glenn Jardine – Managing Director (Appointed 20/03/2020)
 Peter Hood – Non-Executive Director
 Eduard Eshuys – Non-Executive Director
 Jeffrey (Bruce) Parncutt – Non-Executive Director
5
Valuation Summary
Valuation
We have based our valuation for DEG on a DCF analysis (forward curve NPV10%)
for the MGP, assuming a standalone development scenario. We see good potential
for DEG to delineate a 3-4Moz Resource at Hemi within 12 months, building on
the existing 2.2Moz Resource, which in our view should provide a base for
development and production assumptions once Feasibility work kicks off in 2H
2021. Our valuation conservatively assumes first gold production in FY25,
allowing 18 months from the Hemi maiden Resource (mid 2021) to complete infill
drilling and Feasibility Studies, followed by 18 months for project construction and
commissioning. We model the project to produce ~300kozpa at an AISC
<A$1,100/oz over an initial 12-year LOM to recover ~3.4Moz.
Our modelling assumes total capex of A$700m (inclusive of A$50m pre-strip) for
a 7Mtpa plant construction and associated infrastructure (benchmarked against
recent peers). We also assume A$128m (A$32m pa) will be spent on exploration
from FY21 to FY24, which is funded out of existing cash (CG est. ~A$28.5m
currently) and A$100m in future equity being raised which is included in our
diluted valuation.
Figure 4 details our sum-of-the-parts valuation, which comprises our initial
A$1.40/share target price. On a per share basis, we have diluted for two assumed
future equity raisings totalling A$100m (at A$1.00/share); A$50m in FY21 to
maintain the aggressive exploration push, and A$50m in FY22 to fund exploration
and Feasibility Studies. Given the long-dated nature of the project’s financing, at
this stage we assume the project being 100% debt funded. With 1.196bn shares
currently on issue, 16.1m in-the-money options, 1.45m Performance Rights and
the future equity (100m shares), this implies a fully diluted share count in our
valuation of 1.313bn shares.
Figure 4: DEG sum-of-the-parts valuation

Valuation A$m A$/share
Mallina NPV @ 10% 1,521.7 1.17
Exploration & Projects 150.0 0.12
Corporate (16.4) (0.01)
Hedging (flat forward - -
Cash & Bullion 28.6 0.02
Future Equity Raised 100.0 0.08
Debt - -
Unpaid Capital (ITM options) 4.6 0.00
TOTAL NAV 1,788.5 1.38
Price:NAV 0.77x
NAV at Spot US$1,970/oz, AUDUSD $0.74 1.29
Target Price (1.00 x NAV) 1.40
Source: Canaccord Genuity estimates
In deriving our valuation, we utilise forward curve pricing assumptions for gold
and FX, key inputs and assumptions are shown in Figures 5 and 6.
Figure 5: Gold price and FX assumptions
2019a 2020e 2021e 2022e LT

Gold (US$/oz) 1,257 1,563 1,842 1,877 1,926
US/AUS Exchange 0.71 0.67 0.70 0.70 0.69
Gold (A$/oz) 1,767 2,328 2,637 2,698 2,776
6
Figure 6: CG key assumptions

Metric Measure Value
Thoughput Mtpa 7
Avg. Head Grade g/t ~1.5
Avg. Recoveries % 90%
Avg. Annual Gold Prod. koz ~290
First Production year FY24
Ore Source OP/UG Open Pit
Mine Life years 11
Capex A$m 700
Sust. Capex A$m 10
Long-term Gold Price US$/oz 1,926
Avg. AISC U$/oz 1,100
FX AUD/USD 0.69
NPV(10%) A$m 1,520
Figures 7-12 demonstrate our forecast production and AISC profile, key physicals,
earnings and cash flow forecasts for the MGP. We have assumed ore will be
processed at a newly constructed processing facility at a rate of 7Mtpa, with ore
primarily sourced from Hemi. We highlight that the Withnell (85% M&I) and
Wingina (76% M&I) deposits both have +250koz open pit Resources and are
<25km from Hemi, as well as the Toweranna (58% M&I) that has a +450koz
(+2g/t) open pit Resource and ~60km from Hemi, as likely additional higher
grade satellite ore sources that could enter the production profile during the LOM.
Figure 7: CG modelled production and AISC Figure 8: CG modelled C1, AISC vs gold price
Source: Canaccord Genuity estimates Source: Canaccord Genuity estimates
7
Figure 9: CG modelled material movement and grade Figure 10: CG modelled plant throughput and recovery
Figure 11: EBITDA sensitivity (CG deck, spot and forward Figure 12: FCF sensitivity, annual and cumulative (CG
curve) deck, spot and forward curve)
Sensitivity to key input assumptions

Considering the largely assumption-based inputs in our valuation, we have
completed a comprehensive sensitivity analysis to stress test a number of
scenarios. The impact on our valuation is discussed below.
 Gold Price and FX: Our assumption for gold price and FX are based on the
forward curve and are consistent with our valuations across the coverage
universe. Sensitivity was conducted across several scenarios out to +/- 15%
on our price deck with the outcomes shown in Figure 13.
8
Figure 13: CG valuation sensitivity
 Mining head grade: We have assumed an average 1.5g/t mining head grade
in our model (slightly higher in the initial years and lower in the latter years),
which we see as reasonable and should account for mining dilution. A +/-
10% change in head grade is meaningful to our valuation, with a +10%
increase resulting in an increased valuation to A$1.70/share, and a 10%
decrease reducing our valuation by 18% to A$1.15/share.
 Resource/Reserve conversion: We have assumed a 12-year mine life
recovering a total ~3.4Moz of gold. In a situation where additional Resources
and Reserves are defined beyond our estimates, we note that an additional
five years of mine life (~1.5Moz recovered gold), would increase the valuation
to ~A$1.75/share.
 Processing rates: We have assumed a mining/processing rate of ~7Mpta.
While a simplistic manipulation (capex not adjusted), we estimate a 6Mtpa
processing/mining rate would reduce the valuation to A$1.15/share
(production to ~250kozpa) and an 8Mtpa processing/mining rate would
increase the valuation to A$1.60/share (production to ~345kozpa).
 Costs: Capex is the least sensitive valuation driver – we note that a A$100m
increase in total capex (to A$800m) only drops our valuation to A$1.30/share.
Opex similarly remains relatively insensitive, with a 10% increase in unit input
costs only dropping our valuation to A$1.25/share.
9
Peer Comparisons
Figure 14: Resources vs gold grades Figure 15: Resources vs gold grades vs EV
8
Resource Grade
5.0 7.5 Namdini (CDV.AU)
7
4.5
CG assumed total 6.5
resource mid-CY20 6
4.0 Mallina (DEG.AU)
5.5
Resources (Moz Au)

3.5 5
Grade g/t
4.5
Moz
3.0
4
Nyanzaga (ORR.AU)
6.99
2.5 3.5 Karlawinda (CMM.AU)
Misima (KSN.AU)
2.0 3
2.5 Abudja (TIE.AU)
1.5 2 Warrawoona (CAI.AU)

1.5 Awak Mas (NUS.AU)
1.0 Okvau (EMR.AU)
0.5 1
0.5 Bombora (BRB.AU)
Woodlark Is. (GPR.AU) Cape Ray (MZZ.AU)
0.0 -0.5 0
BRB MZZ EMR CAI TTM GPR TIE NUS DEG KSN ORR CDV 0.5 1 1.5 2 2.5 3 3.5 4 4.5
Grade (g/t Au)
Source: Company reports, Canaccord Genuity estimates Source: Company reports, FactSet, Canaccord Genuity estimates
Note: Bubble size represents company EV in A$m
Figure 16: EV/Resource oz rankings Figure 17: Estimated annual production vs AISC/oz
400 1600 400

Avg. annual prod'n AISC
350 350
1400
EV/Resource oz (A$/oz)
300 300
1200
AISC (A$/oz)
250 250
Koz
200 1000 200
150 150
800
100 100
600
50 50
0 400 -
Source: Company reports, FactSet, Canaccord Genuity estimates Source: Company reports, Canaccord Genuity estimates
^ CG assumed total resource mid-CY20 * Estimate based on CG production scenario
Figure 18: Capex and capital intensity Figure 19: Mine life and average annual production
3000 800 17 400
Capex Cap Intensity
Mine Life Avg. annual prod'n
Cap Intensity (A$/Avg. annual
700 350
2500 15
Annual prod'n (koz)
600 300
13
Mine life (yrs)
2000
Capex (A$m)
500 250
11
prod'n)
1500 400 200

9
300 150
1000 7
100
200
500 5 50
100
3 0
0 0
Source: Company reports, Canaccord Genuity estimates Source: Company reports, Canaccord Genuity estimates
^ Estimate based on CG production scenario ^ Estimate based on CG production scenario
10
Company Background
DEG was originally listed on the ASX in 2002 to explore the Turner River Project
(TRP) in the Pilbara for platinum group elements. From 2002 through to 2007,
DEG explored the TRP tenure, discovering the Wingina and Mt Berghaus gold
deposits as well as the Orchard and Discovery base metals deposits (Zn, Ag, Pb).
From 2008 to 2014, DEG focused on Argentina and New Zealand gold exploration
projects, later selling its New Zealand tenure to Evolution Mining. During this
period the Company also entered into several farm-out agreements on the TRP
which ultimately culminated in the project being 100% retained by DEG due to
the counterparties withdrawing or failing to meet the conditions of the
agreements.
From 2015 to 2017, DEG refocused its attention on the TRP, drilling the Wingina
and Mt Berghaus deposits and releasing an updated Mineral Resource for the
project of 464koz at 1.5g/t in January 2017. February 2017 DEG secured an
option to evaluate and explore the Indee Gold Project (IGP), consisting of the
Mallina, Toweranna and Withnell deposits, with the right to acquire 100% of the
project. August 2017 a Scoping Study was completed for a 1Mtpa plant, based on
a mineable resource of 325koz at 2.1g/t from seven deposits across both the TRP
and IGP (together the Mallina Gold Project).
From 2017 through to 2019, drilling by DEG expanded the existing IGP resource
from 538koz at 1.8g/t to 1.1Moz at 2g/t. In early 2019, after a significant review
of the company’s geological database, DEG announced seven new “walk-up”
Toweranna lookalike intrusion related gold targets, one of which was Hemi, which
had no previous drilling completed on it at that time.
In August 2019, DEG completed its acquisition of the IGP for a total of $15m,
consisting of $12m in cash and ~59m shares in DEG (representing a 6.3% equity
holding at the time). In December 2019, DEG made a significant new gold
discovery at Hemi, with aircore drilling returning 43m at 3.7g/t Au from 36m and
25m at 2.7g/t from 32m.
In April 2020, DEG released an updated Mineral Resource estimate for the MGP
(excluding Hemi) of 2.2Moz at 1.8g/t. In June 2020, further drilling identified
three major gold zones at Hemi with broad high-grade extensions with the current
focus being on the Brolga zone.
Figure 20: De Grey’s MGP tenure
11
Asset Overview: Mallina Gold Project

Location, Access and Infrastructure
DEG’s MGP landholding is approximately 1,500km2 in size, covering 200km of
mineralised shears. The Project consists of the Turner River tenure (TRP) and
newly acquired Indee tenure (IGP), now collectively called the Mallina Gold Project
(MGP). The MGP is located 60km to the south of Port Headland giving it significant
infrastructure advantages that cannot be overstated.
The Project is accessible by sealed roads, with two major highways within 10km
of Hemi and two railways crossing the MGP tenure. Gas pipelines are located 5km
and 20km from Hemi and a major 220kV electricity transmission line is within
~20km. Replenishable fresh groundwater has also been seen in drilling.
The coastal Pilbara, with the cities of Karratha and Port Headland, is a globally
significant infrastructure hub concentrating oil and gas production facilities, large
scale ports, multi-commodity export facilities, mining services and a qualified
workforce. The tenure is primarily flat sand plain topography ideal for mining and
DEG has flagged that there should be ample ground water supply for processing.
Geology
The Mallina Basin formations constitute an Archean greenstone belt, characterised
by successions of volcanics, volcaniclastics and sediments, with ultramafic and
mafic intrusions and underplating crustal units. Archean greenstone belts of the
Pilbara are generally of the same age and nature as the better known Yilgarn
greenstones.
The long association between the Pilbara region and iron ore mining has seen
limited gold exploration of the Archean Basement of the Pilbara Craton. The gold
deposits of the region are also known to present metallurgical challenges, with
many fresh rock deposits defined as partly refractory to refractory.
At Hemi, mineralisation is hosted within a mafic intrusive (sanukitoid), equivalent
to the Lamprophyres described in many instances in the goldfields. If the direct
relationship between those intrusions and gold mineralisation is still unclear, latest
studies show that the magmatic events associated with the emplacement of
Sanukitoids or Lamprophyres are associated with very high level of volatile
elements meaning that they carry or mobilise large volumes of mineralising fluids.
This style of mineralisation is unique in the region. The conceptual exploration
model was defined in-house by DEG’s geology team which, in our view, gives
more credit to the discovery of this entirely new system from grassroots
exploration to early drilling success. At this stage, mineralisation at Hemi displays
attributes of an intrusive related gold system (IRGS) where mineralisation is
broadly disseminated throughout a strongly altered intrusive body. Figures 21 and
22 show the intensity of the alteration and the evenly disseminated aspect of
sulphide mineralisation.
12
Figure 21: Hemi drill core Figure 22: Hemi RC chips
Source: Company reports Source: Company reports
Hemi – Continues to grow, 3-4Moz potential?

The Hemi discovery represents a new style of gold mineralisation for the Pilbara.
Drill testing of Hemi began in DecQ’19 with shallow wide-spaced aircore drilling.
Initial results of 43m at 3.7g/t Au from 36m, and 25m at 2.7g/t Au from 32m
spaced 640m apart confirmed the potential for large structurally controlled gold
deposits within the basin. Further drilling was undertaken in early 2020, defining
three major gold zones – Brolga and Aquila and Crow. All three zones present the
same type of intrusion related mineralisation. The overall footprint of Hemi
continues to grow, now approximately 2.5km north-south and 2km east-west.
Brolga – Extensive extensions
RC and diamond hole drilling at the Brolga Zone through 1H’20 has continued to
return thick intercepts confirming the shallow gold mineralisation extends along
strike and at depth. The Brolga footprint has expanded from ~240m x 200m in
mid-March to >640m x 300m and extends to a depth of >300m. The deposit
remains open along strike and at depth and is yet to be fully defined. It has a
favourable orientation with widespread mineralisation gently dipping to the south
east. Selected intercepts include:
 43m at 1.9g/t Au from 34m (HERC002)
 36m at 3.2g/t Au from 156m in HEDD002)
 54m at 2.2g/t from 42m (HERC013)
 55.3m at 1.9g/t Au from 184.7m (HERC034D)
 16m at 1.4g/t Au from 177m (HERC052D)
 18.2m at 1.5g/t Au from 254.8m (HERC034D)
More recently, drilling undertaken to test for further extensions at Brolga has
yielded positive results. RC drilling to the north of Brolga, heading towards Aquila,
has succeeded in identifying significant extensions of mineralisation (Figures 24-
26). Intercepts include:
13
Aircore and RC drilling ~320m north east of Brolga has identified further new
mineralisation extending along the structural corridor towards the Scooby Zone,
a further 1km to the north east (Figure 24). Intercepts include:
 17m at 1.4g/t Au from 64m (BWAC847)
Three RC holes have also identified further extensions to the south west of Brolga
(Figure 25). Intercepts include:
 3m at 0g/t Au from 152m (HERC153)
Aircore drilling to the south of Brolga has defined a new zone. The extension
covers an area of 1,200m x 200m with the intrusion open along strike to the
south. Initial aircore drilling has intersected shallow gold mineralisation with a
scale and style similar to the Brolga zone. Drill results include:
RC drilling on an 80m x 80m basis is underway with initial results including:
 15m at 1.g/t Au from 223m (HERC102)
Figure 23: Hemi - Brolga Section 30640E Figure 24: Brolga– Sections 30560E and 30640E
Section 30560E
Section 30640E
14
Figure 25: Brolga Zone – Section 30640E Figure 26: Brolga Zone – Section 30560E
Source: Company reports, Canaccord Genuity estimates Source: Company reports, Canaccord Genuity estimates
Aquila
Grades at Aquila have tended to be higher than Brolga, however the mineralised
zone is narrower with a steeper dip (Figures 27 and 30). The Aquila footprint was
~800m strike x ~50m wide and a depth of 180m in mid-March, with RC drilling
confirming significant gold mineralisation:
Aircore, RC and diamond drilling through JunQ’20 and into August successfully
extended the mineralisation at Aquila to depth >400 vertical meters and
lengthened the strike to at least 1.6km whilst remaining open in all directions.
Drilling showed the extensive continuity of mineralisation with high grade thick
intercepts consistent at depth:
 28m at 10.2g/t from 117m (HERC099)
 10.2m at 2.5g/t Au from 254m (HERC111D)
 5m at 3.3g/t Au from 407.7m (HERC105D)
Further drill results are expecting in the coming weeks.
15
Figure 27: Aquila and Crow Plan View – Section 30480E Figure 28: Aquila and Crow - Section 30480E
Section 30480E
Figure 29: Aquila and Crow Plan View – Section 30400E Figure 30: Aquila and Crow - Section 30400E
Section 30400E
Aquila – Westerly extensions adding to open pit potential

Shallow aircore and RC drilling at the western end of Aquila has intersected new
intrusion-hosted shallow gold mineralisation with over 400m of strike confirmed
(Figure 32). A drill program of 16 RC holes on 80m x 80m spacing has commenced
aiming to test to a depth of 200m below surface whilst also targeting near surface
mineralisation to the west of Aquila.
Recent aircore and initial RC results have returned promising results, including:
 16m at 3.7g/t Au from 43m, including 10m at 5.4g/t Au (HERC141)
Four holes were completed as of 5 August. DEG expects the drill program expected
to be completed by early September with assays to follow thereafter. Further
aircore drilling is also being undertaken to the south, aiming to extend the zone.
16
Figure 31: Aquila Zone - Longsection
Source: Company reports
Figure 32: Aquila west plan view Figure 33: Aquila west cross sections from Figure 34
17
Crow – recent drill hole the best yet drilled at Hemi

Initial aircore drilling in April identified Crow, the third large gold zone at Hemi,
and indicated the potential for gold mineralisation similar to Aquila and Brolga.
The zone has a favourable orientation; shallow, dipping to the south and believed
to intersect the Aquila Zone at depth. Initial RC drilling results showed that gold
mineralisation extended the entire length of drilling from Aquila across the Crow
intrusion. The mineralised footprint at Crow is currently 1000m x 400m and
remains open. Reported intercepts included:
Further RC and diamond drilling commenced in July to define and extend the
mineralisation at Crow. A new mineralised lode was identified in mid-August,
~100m north of Aquila (Figure 30). The lode extends over 400m down dip and
remains open, with strong potential to extend along strike. Intercepts included:
 6m at 2g/t Au from 41m (HERC202)
 3.4m at 4.1g/t Au from 420m (HERC111D)
Further drill results released in late August returned the best intersections to date
at the MGP:
 19m at 42tg/t Au from 170m, including 8m at 84.7g/t Au (HERC238)
Crow was originally looking to be the lowest grade deposit of the three identified
at Hemi (Brolga, Aquila, Crow). In our view these significant high grade results,
along with the discovery of multiple stacked subvertical lodes which remain open
at depth and along strike, should significantly improve the potential economics of
the deposit.
Metallurgy – What’s in the POX?
DEG has completed preliminary metallurgical test work for the Brolga Zone
utilising a pressure oxidisation (POX) flowsheet. Oxide gold recoveries were 93%
based on carbon in leach (CIL). Fresh (sulphide) recoveries were 96.3% based on
sulphide flotation, pressure oxidation (POX) and CIL.
Results were positive, indicating that a flotation circuit yielded high recoveries
(>92%) for fresh (sulphide) mineralisation into a gold-rich concentrate
representing ~10% of the original mass (10% mass pull). Metallurgy is key when
it comes to refractory ore bodies. No two are the same and each process must be
tailored to achieve the desired results.
The need to have sufficient, high quality testing and studies completed in areas
such as mineralogy, geometallurgy, floatability, gravity recovery, grindability,
rheology and cyanide extraction cannot be overstated.
The company has three composite drill core samples currently in the lab, with
outcomes expected late in SepQ’20. We also expect DEG to test alternative
processes such as AlbionTM and bio-oxidation (BIOX), in trade-off studies as the
project advances.
POX is a well-established process having been around for more than 30 years and
is the process route most often employed for refractory ores, due its high recovery
rates and low environmental impact.
18
The process typically uses an autoclave at a temperature range of 190-230oC with

an oxygen pressure of 350-700kPa(g), retention times range from 60 to 90
minutes. The oxidised concentrate is then subjected to CIL processing to achieve
high recoveries. DEG’s flow sheet based on the first round of metallurgical test
work is shown below.
Figure 34: Simplified flowsheet for fresh ore from Hemi (Brolga)
Whilst the POX process can be costly both from a capex and opex perspective
(Figure 35) DEG’s project has a number of advantages that, in our view, could
help mitigate both capital and operating costs:
1. The POX plant will be processing 10% of the ore throughput as a result of
the significant recoveries of gold via the flotation circuit.
2. The high gold-to-sulphur ratio in the concentrate means there is less
sulphur requiring oxidation which should result in lower retention times.
3. POX is an energy intensive process and Hemi has excellent potential access
to power with a major 220kV transmission line within ~20km as well as gas
pipelines located 5km and 20km from Hemi. This should help keep power
costs moderately low.
4. Hemi is in no way remote. Located just 60km south of Port Headland, the
Project will benefit significantly from the extensive infrastructure nearby. In
our view, this will assist in keeping initial construction costs down (i.e. lower
upfront capex) as well as operating costs given the ease of access to gas,
power, railways and major highways.
19
Figure 35: Comparison of processes for refractory ore Figure 36: Selected POX operations
Ultra Fine
BIOX
Aspect POX Grinding into Roasting
(Bacterial Oxidation)
Albion™
Technical Risk High Low High Low
Environmental Risk Lowest Low Low High, depending on gas clean up
C apital C ost High Low High Prohibitive
Operating C ost High Low High Low
Acid neutralisation High Low High Low
C yanide Use High Modest High Medium
Power C onsumption High Medium Very High Low
Process C hemistry Well understood Simple C omplex Simple
Operating pressure &
Major Driver Power cost Power cost / Au:S ratio Sulphur level
temperature
Well proven over the last
History Good, growing Poor, failures Tried and true
decade
Fine, getting better all the Good, wear issues Difficult, learning curve
Operability Simple
time Power cost impt. applies
Recovery Excellent Grind sensitive Subject to "bug health" Very good
Upside: Four Hemi ‘lookalikes’ within 10km

Greater Hemi and beyond
After a systematic review of its databases completed in 2019, DEG identified
seven targets analogous to its existing Toweranna deposit (524koz, 2.2g/t Au):
Hemi, Scooby, Antwerp, Shaggy, Alectroenus, Charity Well and Geemas.
Four of these targets are located within 10km of Hemi, in a region referred to as
Greater Hemi, a highly prospective 15km long corridor.
During JunQ’20 drilling commenced at two of the Hemi ‘lookalike’ targets, Scooby
and Antwerp, with results returning shallow, high grade, and thick intercepts:
 Antwerp (aircore drilling)
 6m at 10.7g/t Au from 4m (BWAC185)
 4m at 21.7g/t Au from 32m (BWAC211)
 Scooby (RC drilling)
 14m at 3.5g/t Au from 37m (SCRC007)
 8m at 1.3g/t Ay from 40m (T1AC097)
A recently completed aeromagnetic survey has identified at least four new clusters
with at least 16 individual new intrusion targets, all within the Greater Hemi
corridor.
Figure 37: Greater Hemi Region
20
The company is putting together an exploration team focused on generating and

testing new regional intrusion and shear-hosted targets along the 150km Mallina
Gold Project. In our view, the results seen to date suggest the potential for
significant exploration upside to our current resource estimates.
Figure 38: Pilbara Gold Project area
Withnell and Wingina - 2.2Moz of potential satellite feed

Excluding the new Hemi discovery DEG has defined Resources of 2.2Moz at 1.8g/t
across two mining centres, Withnell and Wingina.
Figure 39: The Pilbara Project tenure
The Withnell orebodies were discovered and drilled by Resolute in the late 1990s.
Extensive drilling leading to the definition of Ore Reserves and the development
of a mining and heap leach processing operation carried out by Range River
between 2003 and 2008. The mine never delivered the 1Mtpa planned in the FS
mostly due to mining issues. Metallurgy in the oxide material mined was as
expected with +70% recoveries.
21
At Mallina, gold mineralisation occurs as linear multiple stacked lodes hosted

within metasediments and surrounded by pervasive alteration haloes. Gold is
intimately associated with quartz veining, carbonate and sulphide alteration, in
places along the margins of 2-30m wide porphyry intrusions within the east-west
trending, 200m-wide structural corridor.
At Toweranna, gold mineralisation occurs in numerous variously oriented pyrite-
rich quartz veins which occur within, and marginal to, a granite stock. Lodes
typically strike north-south, with a moderate easterly dip. The mineralisation and
host rocks are weathered to a depth of up to 50m. Importantly, metallurgical test
work on the Toweranna mineralisation showed the free milling nature of the
deposit both in the oxide and in the fresh rock domains with recoveries through
cyanidation in the 94-96% range.
The Mt Berghaus Central, North Lode and Berghaus West deposits are controlled
by the Mallina Shear Zone and occurs within deformed metasediments of Archean
age. Mineralisation is developed within a NE-SW striking, sub-vertical zone with
Resource grade mineralisation defined to date in three separate areas. The Mt
Berghaus zone has a strike extent of 1.4km, while the North Lode and West
Berghaus zones have strike extents of 160m and 350m respectively. All zones
have been reported above a depth of 120m. Gold mineralisation is associated with
zones of quartz veining developed as multiple steep lodes within metasediments.
The deposit has a typical depth of oxidation of 40m to 60m and over 50,000oz of
the Mineral Resource lies within oxidised and transitional material.
Resources and Reserves
Mineral Resources
DEG has an existing Resource base for Mallina of 2.2Moz (1.8g/t), which has been
the subject of Mining Studies and, in our view, could potentially support an 80-
100kozpa production scenario irrespective of Hemi.
With the inclusion of Hemi, however, we see DEG being afforded the option of
cherry-picking the best parts of the existing Resource, thereby bolstering the
potential mine life and production profile.
In our view, components of the current Resource that screen as attractive satellite
ore supply opportunities are the Withnell (85% M&I) and Wingina (76% M&I)
deposits, which both have +250koz open pit Resources and are <25km from
Hemi. Also, Toweranna (58% M&I) has a +450koz (+2g/t) open pit Resource that
is ~60km from Hemi and is free-milling.
A full breakdown of the existing Resource is shown in Figure 40 and split into
underground and open pit Resources.
22
Figure 40: Mineral resource estimate April 2020

Measured Indicated Inferred Total
Deposit Type
Mt Au g/t Au oz Mt Au g/t Au oz Mt Au g/t Au oz Mt Au g/t Au oz
Oxide 0.63 1.4 28,500 0.36 1.2 14,400 0.15 1.1 5,300 1.14 1.3 48,200
Withnell O/P Fresh 0.63 1.6 33,200 2.68 1.9 163,500 0.53 2.2 38,000 3.85 1.9 234,700
Total 1.25 1.5 61,700 3.05 1.8 177,800 0.68 2 43,300 4.9 1.8 282,900
Oxide 0.0015 2.5 300 0.0015 2.5 300
Withnell U/G Fresh 0.11 4.3 15,600 1.38 3.9 301,100 2.5 3.9 316,700
Total 0.11 4.3 15,600 2.39 3.9 301,400 2.5 3.9 317,100
Oxide 0.71 1.3 30,200 1.68 1.3 72,300 2.39 1.3 102,500
Mallina Fresh 0.9 1.2 33,900 3.47 1.5 171,100 4.36 1.5 204,900
Total 1.61 1.2 64,100 5.15 1.5 243,300 6.76 1.4 307,400
Oxide 0.62 2.4 47,700 0.24 1.6 12,600 0.86 2.2 60,300
Toweranna O/P Fresh 3.71 2.1 245,500 2.21 2.1 152,500 5.92 2.1 398,000
Total 4.33 2.1 293,200 2.46 2.1 166,400 6.79 2.1 459,600
Oxide
Toweranna U/G Fresh 0.56 3.6 64,500 0.56 3.6 64,500
Total 0.56 3.6 64,500 0.56 3.6 64,500
Oxide 0.18 2.8 16,400 0.32 2.6 26,800 0.04 1.1 1,500 0.54 2.6 44,700
Camel Fresh 0.01 2.1 600 0.14 1.4 6,500 0.14 1.8 8,600 0.29 1.7 15,700
Total 0.19 2.8 1,700 0.46 2.2 33,300 0.19 1.7 10,100 0.84 2.2 60,400
Oxide 0.43 1.3 17,900 0.05 0.8 1,400 0.48 1.3 19,300
Calvert Fresh 0.56 1.3 23,800 0.23 1.2 9,300 0.79 1.3 33,100
Total 0.99 1.3 41,700 0.28 1.2 10,700 1.27 1.3 52,400
Oxide 0.06 2.7 5,500 0.13 1.5 6,000 0.11 1.6 5,700 0.3 1.8 17,200
Roe Fresh 0.01 2.5 1,000 0.07 2.3 5,300 0.21 2.2 14,800 0.3 2.2 21,100
Total 0.08 2.7 6,500 0.2 1.8 11,300 0.33 2 20,500 0.6 2 38,300
Oxide 0.10 2.2 7,200 0.03 1.6 1,400 0.04 1.6 2,200 0.17 1.9 10,800
Dromedary Fresh 0.03 1.6 1,700 0.08 1.8 4,700 0.12 1.7 6,400
Total 0.10 2.2 7,200 0.06 1.6 3,200 0.12 1.7 6,900 0.29 1.9 17,200
Oxide 0.86 0.7 19,300 0.86 0.7 19,300
Leach Pad Fresh
Total 0.86 0.7 19,300 0.86 0.7 19,300
Oxide 0.04 2.1 3,000 0.03 1.3 1,100 0.07 1.8 4,100
Hester Fresh 0.01 2.1 900 0.05 1.4 2,100 0.06 1.6 3,100
Total 0.06 2.1 3,900 0.07 1.4 3,300 0.13 1.7 7,200
Oxide 0.98 1.8 57,500 3.49 1.5 166,800 2.35 1.4 102,300 6.82 1.5 326,600
Withnell Mining
Fresh 0.66 1.7 34,800 8.23 1.9 496,700 9.87 2.4 766,600 18.75 2.2 1,298,200
Centre Total
Total 1.63 1.8 92,300 11.72 1.8 663,500 12.24 2.2 870,200 25.58 2 1,626,100
Oxide 2.68 1.8 15,210 0.65 1.3 27,000 0.34 1.3 14,400 3.67 1.6 193,500
Wingina Fresh 0.40 1.6 20,500 0.34 1.5 16,300 1.08 1.7 57,400 1.82 1.6 94,200
Total 3.08 1.7 172,700 0.99 1.4 43,300 1.42 1.6 71,100 5.49 1.6 287,700
Oxide 0.68 1.8 38,900 0.99 1.1 35,800 1.67 1.4 74,700
Mt Berghaus Fresh 0.27 1.7 14,400 2.4 1.2 91,800 2.67 1.2 106,300
Total 0.95 1.7 53,300 3.39 1.2 127,600 4.34 1.3 181,000
Oxide 0.51 1.3 21,700 0.89 0.9 24,700 1.4 1 46,300
Amanda Fresh 0.07 1.8 4,200 0.56 1.1 19,200 0.63 1.2 23,300
Total 0.58 1.4 25,800 1.44 0.9 43,900 2.03 1.1 69,700
Oxide 2.68 1.8 152,100 1.84 1.5 87,600 2.21 1.1 74,900 6.74 1.5 314,500
Wingina Mining
Fresh 0.40 1.6 20,500 0.68 1.6 34,900 4.04 1.3 168,400 5.12 1.4 223,800
Centre Total
Total 3.08 1.7 172,700 2.52 1.5 122,500 6.25 1.2 243,200 11.86 1.4 538,400
23
Appendix 1 – Board of Directors

Simon Lill - Executive Chairman (BSc MBA)
Mr Lill is a financial services professional with over 25 years’ experience in
stockbroking, capital raising, management, business development and analysis
for a range of small and start-up companies, both in the manufacturing and
resources industries, and has specialised in company restructuring activities. Mr
Lill was instrumental in reorganising DEG, refocusing activities on the Pilbara Gold
Project and finalising the acquisition of the Indee Project.
Andy Beckwith - Executive Technical Director (BSc Geology, Aus
IMM)
Mr Beckwith is a geologist whose experience spans all projects’ stages from
grassroots to mine development and has extensive experience working with
corporate transactions, project acquisitions, resources development and project
generation. Mr Beckwith joined DEG originally as a consultant, before taking up
the role of Technical Director and Operations Manager in November 2017. Mr
Beckwith has played a significant role in the rebirth and growth of the company.
Glenn Jardine – Managing Director (BE, FAusIMM)

Mr Jardine is a mining engineer with over 35 years’ experience. His experience
includes Project Manager and General Manager of the Henty Gold Mine in
Tasmania for Goldfields Ltd; Project Manager of the Emily Ann and Maggie Hays
nickel mines; General Manager New Business, Chief Operating Officer and
Managing Director for Lion Ore Australia. He has more recently been Chief
Operating Officer of Azure Minerals Limited.
Peter Hood - Non-Executive Director (BE (Chem), MAusIMM,
FIChemE, FAICD)
Mr Hood is a Chemical Engineer, whose career in the Australian mining and
chemical industries has covered over 40 years. Mr Hood held the position of Senior
Production Engineer at the Kwinana Nickel Refinery from 1971 to 1981, then Mill
Superintendent of the WMC Kambalda Nickel and Gold Operations between 1982
and 1985. In 1985, he joined Coogee Chemicals Pty Ltd in the position of General
Manager and then as their CEO between 1998 and 2005. He then held the position
of CEO of Coogee Resources Ltd.
Eduard Eshuys – Non-Executive Director (BSc, FAUSIMM, FAICD)
Mr Eshuys is a geologist with several decades of gold exploration experience in
Australia. Mr Eshuys is a successful explorer leading the teams that discovered
the Plutonic, Bronzewing, Jundee gold deposits and was directly involved in the
Cawse, Maggie Hays and Mariners nickel discoveries. More recently he was the
Managing Director and CEO of St Barbara Limited from July 2004 to March 2009
and oversaw its substantial growth as a gold producer. He is currently a Director
of ASX-listed companies DGO Gold Limited and NTM Gold Limited.
Bruce Parncutt AO – Non-Executive Director (BSc, MBA)
Mr Parncutt is a finance professional whose career spans over 40 years of
involvement in investment management, investment banking and stockbroking,
including roles as Managing Director of McIntosh Securities, Senior VP of Merrill
Lynch and Director of ASX Ltd. In 2016, he was awarded the Order of Australia
for distinguished service to the community as a philanthropist, particularly in the
arts and education sectors, as an advocate and supporter of charitable causes,
and to business and commerce. He is currently Chairman of investment banking
group Lion Capital and a Director of ASX-listed DGO Gold Limited.
24
Appendix 2 – Investment risks

Financing risks
As a pre-production company with no material income, DEG is reliant on equity
and debt markets to fund development of its assets and progress its regional
exploration pipeline. Total development and working capital requirements are
subject to completion of feasibility studies. There are no guarantees that studies
will result in a positive investment decision for the MGP. Further, we can make no
assurances that accessing these markets will be done without further dilution to
shareholders.
Exploration risks
Exploration is subject to a number of risks and can require a high rate of capital
expenditure. Risks can also be associated with conversion of inferred Resources
and lack of accuracy in the interpretation of geochemical, geophysical, drilling and
other data. No assurances can be given that exploration will delineate further
mineral Resources nor that the company will be able to convert the current
mineral Resource into minable Reserves.
Operating risks
If/when in production, the company will be subject to risks such as
plant/equipment breakdowns, metallurgical (meeting design recoveries within a
complex flowsheet), materials handling and other technical issues. An increase in
operating costs could reduce the profitability and free cash generation from the
operating assets considerably and negatively impact valuation. Further, the actual
characteristics of an ore deposit may differ significantly from initial interpretations
which can also materially impact forecast production from original expectations.
Commodity price and currency fluctuations
As with any mining company, DEG is directly exposed to commodity price and
currency fluctuations. Commodity price fluctuations are driven by many
macroeconomic forces including inflationary pressures, interest rates and supply
and demand factors. These factors could reduce the profitability, costing and
prospective outlook for the business.
25
Appendix: Important Disclosures

Analyst Certification
Each authoring analyst of Canaccord Genuity whose name appears on the front page of this research hereby certifies that (i) the
recommendations and opinions expressed in this research accurately reflect the authoring analyst’s personal, independent and
objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring
analyst’s coverage universe and (ii) no part of the authoring analyst’s compensation was, is, or will be, directly or indirectly, related
to the specific recommendations or views expressed by the authoring analyst in the research, and (iii) to the best of the authoring
analyst’s knowledge, she/he is not in receipt of material non-public information about the issuer.
Analysts employed outside the US are not registered as research analysts with FINRA. These analysts may not be associated
persons of Canaccord Genuity LLC and therefore may not be subject to the FINRA Rule 2241 and NYSE Rule 472 restrictions on
communications with a subject company, public appearances and trading securities held by a research analyst account.
Sector Coverage
Individuals identified as “Sector Coverage” cover a subject company’s industry in the identified jurisdiction, but are not authoring
analysts of the report.
Investment Recommendation
Date and time of first dissemination: September 01, 2020, 16:40 ET
Date and time of production: September 01, 2020, 16:40 ET
Target Price / Valuation Methodology:
De Grey Mining Limited - DEG
We have based our valuation for DEG on a DCF analysis (forward curve NPV10%) for the MGP, assuming a standalone development
scenario. We see good potential for DEG to delineate a 3-4Moz Resource at Hemi within 12 months, building on the existing 2.2Moz
Resource which, in our view, should underpin our production assumptions once Feasibility work kicks off in 2H 2021. Our valuation
conservatively assumes first gold production in FY25, allowing 18 months from the Hemi maiden Resource (mid 2021) to complete
infill drilling and Feasibility Studies followed by 18 months for project construction and commissioning.
Risks to achieving Target Price / Valuation:
De Grey Mining Limited - DEG
Financing risks
As a pre-production company with no material income, DEG is reliant on equity and debt markets to fund development of its assets
and progress its regional exploration pipeline. Total development and working capital requirements are subject to completion of
feasibility studies. There are no guarantees that studies will result in a positive investment decision for the MGP. Further, we can make
no assurances that accessing these markets will be done without further dilution to shareholders.
Exploration risks
Exploration is subject to a number of risks and can require a high rate of capital expenditure. Risks can also be associated with
conversion of inferred Resources and lack of accuracy in the interpretation of geochemical, geophysical, drilling and other data. No
assurances can be given that exploration will delineate further mineral Resources nor that the company will be able to convert the
current mineral Resource into minable Reserves.
Operating risks
If/when in production, the company will be subject to risks such as plant/equipment breakdowns, metallurgical (meeting design
recoveries within a complex flowsheet), materials handling and other technical issues. An increase in operating costs could reduce
the profitability and free cash generation from the operating assets considerably and negatively impact valuation. Further, the
actual characteristics of an ore deposit may differ significantly from initial interpretations which can also materially impact forecast
production from original expectations.
Commodity price and currency fluctuations
As with any mining company, DEG is directly exposed to commodity price and currency fluctuations. Commodity price fluctuations are
driven by many macroeconomic forces including inflationary pressures, interest rates and supply and demand factors. These factors
could reduce the profitability, costing and prospective outlook for the business.
Distribution of Ratings:
Global Stock Ratings (as of 09/01/20)
Rating Coverage Universe IB Clients
# % %
Buy 521 63.00% 55.09%
Hold 177 21.40% 42.37%
Sell 14 1.69% 35.71%
Speculative Buy 115 13.91% 76.52%
827* 100.0%
*Total includes stocks that are Under Review
Canaccord Genuity Ratings System

BUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.
HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.
SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months.
NOT RATED: Canaccord Genuity does not provide research coverage of the relevant issuer.
“Risk-adjusted return” refers to the expected return in relation to the amount of risk associated with the designated investment or
the relevant issuer.
Risk Qualiﬁer
SPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamental criteria. Investments in
the stock may result in material loss.
12-Month Recommendation History (as of date same as the Global Stock Ratings table)
A list of all the recommendations on any issuer under coverage that was disseminated during the preceding 12-month period
may be obtained at the following website (provided as a hyperlink if this report is being read electronically) http://disclosures-
mar.canaccordgenuity.com/EN/Pages/default.aspx
Required Company-Specific Disclosures (as of date of this publication)

De Grey Mining Limited currently is, or in the past 12 months was, a client of Canaccord Genuity or its affiliated companies. During
this period, Canaccord Genuity or its affiliated companies provided investment banking services to De Grey Mining Limited.
In the past 12 months, Canaccord Genuity or its affiliated companies have received compensation for Investment Banking services
from De Grey Mining Limited .
Canaccord Genuity or one or more of its affiliated companies intend to seek or expect to receive compensation for Investment
Banking services from De Grey Mining Limited in the next three months.
De Grey Mining Limited Rating History as of 08/31/2020

AUD1.20
AUD1.00
AUD0.80
AUD0.60
AUD0.40
AUD0.20
AUD0.00
Oct 15Jan 16Apr 16Jul 16Oct 16Jan 17Apr 17Jul 17Oct 17Jan 18Apr 18Jul 18Oct 18Jan 19Apr 19Jul 19Oct 19Jan 20Apr 20Jul 20
Closing Price Price Target
Buy (B); Speculative Buy (SB); Sell (S); Hold (H); Suspended (SU); Under Review (UR); Restricted (RE); Not Rated (NR)
Past performance
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whole period for which the financial instrument has been offered or investment service provided where less than five years. Please
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Initiation of Coverage

De Grey Mining Limited

Tim McCormack | Analyst | Canaccord Genuity (Australia) Ltd. | tmccormack@cgf.com | +61.8.9268.4810

Figure 1: Financial summary

Market Information Company Description

Figure 2: Project location map

Source: Company reports, Canaccord Genuity estimates

Corporate and Finance

Figure 3: DEG capital structure

Directors and management

Figure 4: DEG sum-of-the-parts valuation

Figure 5: Gold price and FX assumptions

2019a 2020e 2021e 2022e LT

Figure 6: CG key assumptions

Source: Canaccord Genuity estimates Source: Canaccord Genuity estimates

Source: Canaccord Genuity estimates Source: Canaccord Genuity estimates

Source: Canaccord Genuity estimates Source: Canaccord Genuity estimates

Sensitivity to key input assumptions

Figure 13: CG valuation sensitivity

Source: Canaccord Genuity estimates

Resources (Moz Au)

1.5 2 Warrawoona (CAI.AU)

400 1600 400

1500 400 200

Figure 20: De Grey’s MGP tenure

Source: Company reports, Canaccord Genuity estimates

Asset Overview: Mallina Gold Project

Figure 21: Hemi drill core Figure 22: Hemi RC chips

Source: Company reports Source: Company reports

Hemi – Continues to grow, 3-4Moz potential?

Source: Company reports Source: Company reports

Source: Company reports Source: Company reports

Source: Company reports Source: Company reports

Source: Company reports Source: Company reports

Aquila – Westerly extensions adding to open pit potential

Figure 31: Aquila Zone - Longsection

Source: Company reports

Source: Company reports

Source: Company reports

Crow – recent drill hole the best yet drilled at Hemi

The process typically uses an autoclave at a temperature range of 190-230oC with

Source: Company reports

Source: Company reports Source: Company reports

Upside: Four Hemi ‘lookalikes’ within 10km

Figure 37: Greater Hemi Region

Source: Company reports

The company is putting together an exploration team focused on generating and

Figure 38: Pilbara Gold Project area

Source: Company reports

Withnell and Wingina - 2.2Moz of potential satellite feed

Figure 39: The Pilbara Project tenure

Source: Company reports, Canaccord Genuity estimates

At Mallina, gold mineralisation occurs as linear multiple stacked lodes hosted

Figure 40: Mineral resource estimate April 2020

Appendix 1 – Board of Directors

Glenn Jardine – Managing Director (BE, FAusIMM)

Appendix 2 – Investment risks

Appendix: Important Disclosures

Canaccord Genuity Ratings System

Required Company-Specific Disclosures (as of date of this publication)

De Grey Mining Limited Rating History as of 08/31/2020

Closing Price Price Target

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