Latest drilling extends Yin and uncovers yet another ironstone trend
Yin extended by 1km to the south: Dreadnought Resources (DRE-ASX) continues to be very active with the drill bit. Assays are now starting to flow through ahead of a series of resource updates expected over the coming months. Drilling to the south of the current 14.4Mt Yin resource (which covers 3km), has extended mineralisation up 1km and demonstrates that what was previously referred to as the Yin South prospect is a continuation of the main Yin trend, and remains open further to the south where assays are pending for broad-spaced scout drilling. Latest results include:
- 22m @ 2.15% TREO, 4.9kg/t Nd2O3+Pr6O11 (23% NdPr:TREO) from 67m (incl. 8m @ 24% NdPr:TREO)
- 9m @ 2.15% TREO, 5.7kg/t Nd2O3+Pr6O11 (26% NdPr:TREO) from 36m (incl. 3m @ 27% NdPr:TREO)
While TREO is a common descriptor for REE grade, NdPr oxide and NdPr:TREO ratios are perhaps more appropriate given these are the main value drivers and payable in a monazite concentrate. DRE has presented NdPr oxide grades in kg/t, which should make it relatively simple for readers to gain an appreciation of the value per tonne, given NdPr oxide typically fetches US$65-70/kg. Recoveries of ~85% and payabilities of ~60% should also be factored in.
More ironstones to the north and west: Drilling has also uncovered the continuation of Yin to the north of the resource area, across the creek. A new branch of the Yin trend has also returned high-grade, thick intercepts at the newly named Y2 prospect to the west, which looks very encouraging in our view. Results include:
- 22m @ 2.01 TREO, 7.7kg/t Nd2O3+Pr6O11 (38% NdPr:TREO) from surface (incl. 12m @ 39% NdPr:TREO)
- 15m @ 1.31% TREO, 4.5kg/t Nd2O3+Pr6O11 (34% NdPr:TREO) from 61m (incl. 7m @ 35% NdPr:TREO)
Upcoming potential news flow: We expect Yin South to be brought into a resource and further infill at Yin derisking the deposit in the coming weeks (June/July 2023). Our target would be up to 20Mt in resource across the project (currently 14.3Mt). During the DecQ’23, we expect an updated ironstone resource lifting the total project inventory to somewhere in the region of 25-30Mt with +50% Indicated. This will form the basis off an initial mining study. We could also see a maiden carbonatite resource from C3 at some point in 2H23.
50-100Mt @ 0.9-1.3% TREO Exploration Target in the medium to long term: Recall that in February 2023, DRE published an exploration target range for the ironstone potential within the 100%-owned Mangaroon REE Project. The company cited a substantial amount of geological knowledge derived from work undertaken by DRE itself and neighbour HAS-ASX in advancing the Yin and Yangibana ironstone province.
DRE defined a JORC 2012 Exploration Target of 50-100Mt @ 0.9-1.3% TREO for the 40km of mapped and sparsely drilled ironstones within its Mangaroon Project. This is in addition to its current resource over a 3km strike at Yin (14.36Mt @ 1.13% TREO). In total, DRE has defined 43km of strike potential within its tenure. The exploration target excludes ironstone mineralisation at depths greater than 150m below surface, and all carbonatite mineralisation across the project.
Valuation and recommendation: Our valuation is underpinned by an EV/Resource multiple centring on a 60Mt @ 1% TREO resource defined at Mangaroon. Given DRE has already defined 14.4Mt of resource and has a further 50-100Mt defined in a JORC Exploration Target, we believe a total resource offering of 60Mt is achievable from DRE over time. We maintain our SPECULATIVE BUY rating and price target of $0.24.