Yin shaping up to be high grade, scalable resource
Regan Burrows | Bell Potter Analyst
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We initiate on DRE with a speculative Buy rating and a $0.20/sh valuation. DRE is rapidly progressing the Yin Rare Earths discovery at its 100% owned Mangaroon project in WA. We estimate the maiden Mineral Resource for Yin could be between 15Mt – 21Mt @1.1% TREO and 30% NdPr enrichment. Furthermore, we estimate upside from Yin, the Sabre deposit, C1-C5 carbonatite targets and the 100 other anomalies could see resource growth of a further 20Mt. Should our views be confirmed, we see shareholder value coming from: 1) the development of a concentrate style operation like Yangibana; or 2) a strategic sale / takeover from a global or domestic major such as MP Materials (MP:US, not covered) or Iluka (ILU, not covered).
Near term catalysts
DRE has a stream of near-term catalysts which we believe will support our investment thesis, specifically: 1) release of a maiden MRE on Yin by the end of CY22; 2) assay results from the C1-C5 targets in Nov-22; 3) assay results from Sabre RC drill program in Nov-22; and 4) an update on the Y8 drill campaign towards the end of the year.
Investment thesis: Buy (Speculative), Valuation $0.20/sh
We initiate on DRE with a Speculative Buy rating and a $0.20/sh valuation. DRE recently announced the discovery of the Yin rare earth prospect, adjacent to Hasting Technology Metals (HAS, not covered) Yangibana deposit, a 27 Mt Mineral Resource at 0.97% total rare earth oxide (TREO) grade. Our investment thesis for DRE is supported by: 1) strong demand profile for light magnet rare earths; 2) the potential for a maiden Mineral Resource Estimate of between 15Mt – 21Mt @ 1.1% TREO and 30% NdPr enrichment, 3) further upside in C1-C5 carbonatite targets which bare similarities to Mt Weld and Mountain Pass; and 4) a pipeline of promising exploration projects in the Kimberley and Central Yilgarn.
