Sabre and Y8 assays confirm more widespread REE mineralisation
Paul Howard | Analyst | Canaccord Genuity (Australia) Ltd.
Dreadnought Resources has confirmed further rare earth element (REE) mineralisation at two new prospects within the Mangaroon Project in the Gascoyne region of WA. First assays have been returned from initial, wide spaced RC drilling at the 3km long Sabre (formerly Y3) and 12km long Y8 ironstone prospects. These are located ~8km east of Yin, where a maiden resource was declared last month. When combined, these three separate ironstones have been mapped over 30km strike and support our 40Mt resource target for the project.
Assay results: In June 2022, DRE commenced drilling the ironstone targets at Yin before moving onto initial testing of the ironstones at Y3 (Sabre) and Y8. Given outcrop is less clear than at Yin, these initial holes were primarily designed to pin down the location of the sub-cropping ironstones and could explain why these results show skinnier intercepts than those seen at Yin. DRE highlights that Sabre and Y8 show evidence of stacked ironstone horizons with more expected to be discovered through further drilling.
Results at Sabre include:
- 12m @ 1.21% TREO from 51m;
- 9m @ 1.02% TREO from 7m; and
- 23m @ 0.93% TREO from 141m (incl. 9m @ 1.54% TREO).
Y8 results include:
- 7m @ 1.15% TREO from 9m.
Resource intensity points to large scale: We reiterate our previously mentioned remark on resource intensity for the project. DRE’s maiden 14.36Mt resource over 3km implies a resource intensity per strike kilometre of 4.8Mt/km. Similarly, Hastings Technology Metals’ (HAS-ASX: $3.72 | SPEC BUY, TP $6.90 | Reg Spencer) exploration target for the nearby Yangibana Project implies a resource intensity of 1.2Mt/km. DRE’s 4.8Mt/km resource intensity would imply up to 144Mt of resource potential at Mangaroon and 77Mt at Yin alone. Applying the HAS resource intensity still demonstrates that DRE could achieve 36Mt in resources across the project.
Upcoming news flow: Upcoming news flow includes assays from first pass C1-C5 drilling and regional sampling, which are expected in late January 2023. RC and diamond drilling will recommence in February/March 2023 at Yin.
Valuation and recommendation: We maintain our SPECULATIVE BUY recommendation and price target of $0.24. In addition to Yin, where DRE recently declared a maiden resource over 3km of strike (and mapped over 16km), the company has now confirmed through drilling that the 3km long Sabre and 12km long Y8 prospects are also highly mineralised. Cumulatively, there is over 30km of strike potential emerging at Mangaroon, consolidating our view that a 40Mt resource is a likely target over time, which forms the basis of our valuation. Given the early stage nature of Mangaroon (Yin), we continue to use a blend of a Resource multiple and takeover scenario to value DRE. We value the early stage DRE on an unfunded NAV basis. Our NAV comprises our Yin REE Project valuation weighted 50:50 for a Resource Multiple and 75% takeover premium.