With our bullish view on gold, we continue to actively research the entire ASX gold sector. De Grey is one of the most exciting gold ‘discovery-delineation’ stocks globally. As illustrated below, it has rapidly grown from a $60m micro-cap to a $1b+ mid-cap. De Grey was initially an unloved gold micro-cap with ~2moz of gold across its Mallina gold project in the Pilbara WA, which we viewed as lacking scale and economics to underwrite development capex. Then in early February 2020, following a focus on intrusion-related gold targets (known for scale), De Grey made an outstanding discovery at its Hemi prospect, at which point we bought in.

Gold mineralisation has since been delineated across two adjacent zones (Brolga and Aquila), adding another 2moz+ of mineable gold resources (based on our estimates) and open in every direction. Further adjacent zones discovered (Crow and Brolga South) are equally exciting. Group resources are already >4moz of gold and within a 25km radius and a likely central processing hub at Hemi. Whilst De Grey is still in resource 'discovery-delineation phase’ - testing its scale potential - we can already see a large-scale project (300koz+ p.a. high-margin production) eventuating in the medium term. Metallurgic test work is underway, and any refractory gold can be dealt with as part of the process design given the benefits of scale. We have seen this within other globally significant orebodies across the Carlin trend in the USA, Alacer’s Copler in Turkey and at Northern Star and Saracen’s Super Pit in WA. Using comparable gold projects to derive capex and opex estimates, and based on delineated resources to date, our valuation shows solid risk-reward for De Grey. And this is giving nothing for the huge exploration upside potential and upside risk to the gold price.

Paragon has a strong track record of picking thematic-led stocks early that prove to be super-performers and sector-specific leaders. To name a few over the years: 

  1. LNG (greenfield LNG) - US LNG energy boom 
  2. Orocobre (Greenfield Lithium, turn first brine project built in 20yrs - JV with Toyota) - Electric Vehicle/Lithium boom
  3.  Kidman (discovery-delineation - takeover by Wesfarmers) – Electric Vehicle/Lithium boom
  4. Adriatic Metals (polymetallic discovery-delineation - Sandfire creeps to 16% shareholding)
  5. Alacer Gold (turnaround, takeover by SSR) – gold bull market

Our differentiation is finding companies making economic discoveries with world-class projects, that not only present considerable value, but are so compelling that the rest of the market and ultimately majors will have to own. The Fund is currently invested in several stocks expected to drive strong returns in the medium to long-term.



Paul Bourke

Hi John, thanks for the great article. Do you follow junior Gold explorers like MCT, GMN, RTR ? Also does anyone follow AIS Copper / Gold ? All the best, Paul