Yin maiden Mineral Resource Estimate delivered on time
Maiden Resource – 14.36Mt at 1.13% TREO, 30% NdPr
DRE released their maiden Mineral Resource Estimate (MRE) for the Yin discovery, being 14.36Mt at 1.13% total rare earth oxides (TREO) and 30% Neodymium + Praseodymium (NdPr) (BPe 15-21Mt at1.1% TREO and 30% NdPr). The MRE came in just below the lower end of our estimation range, with slight increases in the TREO grade offsetting some of the variance. The variance at the low end of our estimate on a contained metal basis was 2%. Despite this, Yin remains relatively un-tested, with the MRE covering ~10% of the total 30km in interpreted strike length.
2023 work plan
DRE intend to build upon the success of 2022, with all approvals in place to begin drilling along strike at Yin and Sabre (commencing February/ March 2023) and C1-C7 (commencing March 2023) with a focus on providing an updated resource in 2023. In parallel to this, DRE will conduct metallurgical test work on Yin with results anticipated in March/ April 2023 which, if positive, may support an initial mining study.
Investment thesis: Buy (Speculative), Valuation $0.19/sh
We have updated the capital structure and our comparable data set, which has resulted in a 4% reduction in our SOTP valuation to $0.19/sh, we maintain our Speculative Buy recommendation in accordance with our rating structure. Our investment thesis for DRE is supported by: 1) a strong demand profile for light magnet rare earths; 2) expansion on the maiden MRE of 14.36Mt at 1.13% TREO and 30% NdPr, 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.
