Mangaroon potential expands further

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

Mineralised ironstones now mapped over 43km strike: Dreadnought Resources (DRE-ASX) has added a further 13km and two new ironstone trends to the broader Yin Ironstone Complex within the 100%-owned Mangaroon Project in the Gascoyne, WA.

Recent surface sampling has uncovered the Y9 and Y42 prospects where recent rock chips have returned up to:

  • 5.65% TREO, 2.54% Nd2O3+Pr6O11 (45% NdPr:TREO) at Y42
  • 4.05% TREO, 1.01% Nd2O3+Pr6O11 (25% NdPr:TREO) at Y9

Y42 has produced some of the highest NdPr:TREO ratios to date, while Y9 significantly expands the scale of the Yin Ironstone Complex and is located ~12kms northwest of Yin (figure 1 overleaf).

C7 shaping up, too: In addition to the ironstones, sampling over the C7 carbonatite has confirmed REE mineralisation similar to that seen at C3 and C4. As reported last week, initial drilling at C3 returned ~100m intervals of REE mineralisation. DRE is still working through its first pass drilling program over the C1-C7 carbonatite targets.

Not a single drill hole has been put into C6 and C7, which both present as compelling targets: C6 because of the 900m x 600m ‘classic carbonatite’ magnetic feature defining the target area, and now C7 because of the mineralisation seen in sampling from the limited outcrop at the target site. Drilling at C1-C7 will continue in February/March 2023.

Resource intensity points to large scale: Once again, we reiterate our previously mentioned remark on resource intensity for the project. DRE’s maiden 14.36Mt resource over 3km at Yin implies a resource intensity per strike kilometre of 4.8Mt/km.

Similarly, Hastings Technology Metals’ (HAS-ASX: $3.59 | SPEC BUY, TP $6.90 | Reg Spencer) exploration target for the nearby Yangibana Project (29.93Mt @ 0.93% TREO & 0.32% Nd2O3+Pr6O11) implies a resource intensity of 1.2Mt/km. DRE’s 4.8Mt/km resource intensity would imply over 200Mt of resource potential at Mangaroon (given it is now mapped/interpreted over 43km) and 77Mt at Yin alone.

Applying the HAS’ resource intensity still demonstrates that DRE could achieve over 50Mt in resources across the project. We also note DRE’s long-term incentive plans to deliver 30Mt @ >1% TREO by end of CY24; this was set in August 2022 when DRE had only mapped and/or interpreted 16km of strike at Yin.

Recap on ironstones and carbonatites: There are two aspects to DRE’s Mangaroon Project: (1) ironstones; and (2) carbonatites. The classic carbonatite model (figure 2 overleaf) envisions multiple pulses of carbonatites intrusions associated with radial or ring like REE-bearing ironstone dykes and sills, and niobium-bearing veins all associated with widespread fenite alteration of the host rocks. Economic mineralisation is often concentrated within the carbonatite plug with additional minor mineralisation associated with the radial and ring ironstone (ferrocarbonatite) dykes. DRE and HAS have confined widespread ironstone mineralisation with DRE now honing in on primary carbonatite mineralisation as well.

Valuation and recommendation: We maintain our SPECULATIVE BUY recommendation and price target of $0.24. Our valuation is underpinned by an EV/ Resource multiple centering around a 40Mt resource defined at Mangaroon, as well as a takeover scenario given the strategic nature of the project. In our initiation of coverage, we believed that 40Mt was achievable from the ironstone targets defined at the time. We still hold this view but are coming to the belief that the potential scale from additional ironstones, as highlighted today, plus the carbonatites potential such as that seen at C3 last week, means the Mangaroon could offer much greater tonnes to take the project inventory well beyond our initial 40Mt estimate. We await drilling to confirm the extent of further mineralisation (both ironstone and carbonatite hosted) across the project area before increasing our resource expectation beyond 40Mt.

Read the full report here.