Carbonatite discovery

Research January 25, 2023

Paul Howard | Analyst | Canaccord Genuity (Australia) Ltd.

Four REE discoveries in seven months: Dreadnought Resources has received assays from wide-spaced, first pass drilling over the C3 carbonatite target and in doing so, has confirmed yet another discovery within the Mangaroon Project (Gascoyne Region, WA).

The assays come after DRE announced visuals back in November 2022 and combined with the Yin, Sabre and Y8 REE ironstone discoveries, takes the discovery tally to four in just seven months on drilling at Mangaroon. Perhaps more important is that this latest discovery is of mineralised carbonatites, which could be the source of the regional ironstone mineralisation, according to DRE. Assays from C3 include:

  • 96m @ 0.70% TREO from 3m to EOH (incl. 31m @ 1.26% TREO (22% NdPr:TREO), 4.4% P2O5, 0.09% Nb2O5 and 73ppm Sc))
  • 99m @ 0.64% TREO from 6m to EOH (incl. 44m @ 1.00% TREO (24% NdPr:TREO), 5.7% P2O5, 0.13% Nb2O5 and 103ppm Sc))
  • 72m @ 0.69% TREO from 3m to EOH (incl. 31m @ 1.12% TREO (22% NdPr:TREO), 3.2% P2O5, 0.14% Nb2O5, 4.5% TiO2 and 73ppm Sc)).

Finding a needle in a haystack: The first batch of assays (23 holes) of the 82-hole program completed last year, which focussed on the C1-C5 carbonatite targets, has been returned. Considering that the drilling was broad spaced, aimed at blind targets beneath shallow cover, the fact that DRE has defined a ~600m x 550m zone of REE-P2O5-Nb2O5-TiO2-Sc mineralisation is an excellent outcome in our view.

We note that carbonatite intrusions are known globally to host several commodities including rare earths, niobium, titanium, phosphate and scandium often as different mineralised bodies within the same intrusion, so DRE will now follow up this initial drilling in an attempt to uncover a high grade core as seen at Mt Weld and Mountain Pass. We highlight that Mountain Pass also has a relatively small footprint of 700m x 150m versus the 600m x 550m zone now uncovered by DRE at C3.

Excitement mounting for the C6 target: As well as infill drilling at C3, completion of first pass drill at C2, C4, C5 & C7 and further work on the regional ironstone prospects, DRE will also test the compelling 900m x 600m magnetic feature that defines the C6 target, which DRE interprets to be a potential conduit for carbonatite intrusions. Like most of the carbonatite targets at Mangaroon, C6 is also under shallow cover, so it may take a number of attempts to snag mineralisation. All this planned work is set to commence with RC and diamond rigs next month.

Valuation and recommendation: We maintain our SPECULATIVE BUY recommendation and price target of $0.24. Our valuation is underpinned by an EV/Resource multiple centring around a 40Mt resource defined a Mangaroon. In our initiation of coverage, we believed that this was achievable from the ironstone targets alone. We still share this view but now think that the potential scale from C3 (600m x 550m zone defined already) could offer tonnes to take the project inventory well beyond our initial 40Mt estimate. We are also excited by the potential to uncover high-grade zones within C3 and the other carbonatite targets further afield. We await further detail before attempting to model the size potential of C3.