Mangaroon site visit
Paul Howard | Analyst | Canaccord Genuity (Australia) Ltd.
Last week we visited Dreadnought Resources’ (DRE-ASX) Mangaroon Project in the Gascoyne Region of WA. Recall that DRE’s primary focus at Mangaroon is the 100%-owned Yin ironstone and adjacent carbonatite targets, where the company is amidst drilling to grow the 14.4Mt @ 1.13% TREO (30% NdPr:TREO) resource. In addition, Mangaroon is also prospective for Ni-Cu-PGEs and gold, with First Quantum Minerals (FM-TSX) earning up to a 70% interest in a subset of tenements in the west of the project area.
On the ground: DRE charters two weekly flights from Perth to Gifford Creek Station, 30 minutes from its field camp. The area is well serviced by Gascoyne Junction and Carnarvon, and tourists frequent the district en route to the large monocline, Mt Augustus. DRE has two RC rigs and one diamond drill rig active in the field, along with a team of smart, eager and extremely motivated geologists in our view. In fact, we see DRE as a poster child for demonstrating team culture and values among ASX peers.
One RC rig is currently drilling at Yin South, testing the 43km of mapped and interpreted ironstones. DRE has set its next target at 30-50Mt of ironstone resource, noting that the current resource at Yin covers only 7% of the known ironstone strike extent within the project. The diamond drill rig is also at Yin, undertaking resource and metallurgical drilling. The second RC rig is undertaking follow-up drilling at the C3 carbonatite target before moving along to C5. DRE has completed ~30% of the wide spaced, first pass drilling at C1-C5. The company is trying to ascertain if C3 contains high-grade zones or will it be a low-grade system. Recent results from C3 include:
- 195m @ 0.57% TREO from 6m (incl. 24m @ 1.26% TREO (22% NdPr:TREO), 4.4% P2O5, 0.24% Nb2O5, 4.4% TiO2 and 100ppm Sc) at C3
- 128m @ 0.74% TREO from 8m, (incl. 34m @ 1.31% TREO (21% NdPr:TREO), 4.4% P2O5, 0.16% Nb2O5, 4.4% TiO2 and 80ppm Sc) and 12m @ 1.09% TREO (20% NdPr:TREO), 2.5% P2O5, 1.1% TiO2 and 58ppm Sc) at C3
Upcoming potential news flow: 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 test the compelling 900m x 600m magnetic feature that defines the outcropping portion of 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.
DRE is targeting a Yin resource upgrade in late-June’23 and an ironstone resource expansion in the September’23.
Recap on ironstones and carbonatites: There are two aspects to DRE’s Mangaroon Project: (1) ironstones and (2) carbonatites. The classic carbonatite model 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 has confined widespread ironstone mineralisation and is now honing in on primary carbonatite mineralisation as well.
Valuation and recommendation: Our valuation remains underpinned by an EV/Resource multiple centring on a 60Mt @ 1% TREO ironstone resource defined at Mangaroon. We justify this given DRE has already defined 14Mt of resource and has a further 50-100Mt defined in a JORC exploration target on ironstone targets alone. Further upside remains if carbonatite targets such as C3 can convert to mineable resources. We also model a takeover scenario given the strategic nature of the project. We maintain our SPECULATIVE BUY recommendation and price target of $0.24.