On track for a carbonatite resource next month
Further thick, high-grade zones within the C3 carbonatite: Dreadnought Resources (DRE-ASX) has released additional 80m x 80m infill results received over the C3 carbonatite target and remains on track for a C3 resource next month. This is within the Mangaroon Project (Gascoyne Region, WA). With 18 of 24 holes now reported, C3 is defined by a 400m x 400m coherent zone of rare earth mineralisation that could point to an additional 10Mt coming into resource next month. As per the C3 cross-section below, mineralisation is flat and at/near surface making it very amenable to open pit mining, in our view.
Given significant niobium mineralisation can be traced over ~150m of strike, we do not write off the inclusion of a niobium zone in the resource too.
Latest results include:
• 102m @ 1.14% TREO from 3m (incl. 9m @ 3.88% TREO (22% NdPr:TREO), 8.6kg/t Nb2O3 + P6O11 at C3
• 62m @ 1.68% TREO from 7m (incl. 15m @ 3.26% TREO (21% NdPr:TREO), 6.5kg/t Nb2O3 + P6O11 at C3
• 114m @ 0.68% TREO from 1m (incl. 25m @ 1.03% TREO (20% NdPr:TREO), 8.6kg/t Nb2O3 + P6O11 at C3
Significant niobium mineralisation: We highlight the 36m @ 1.03% Nb2O5 and18m @ 1.09% Nb2O5 niobium intercepts received in addition to the previous 15m @ 1.16% Nb2O5 and 30m@ 0.97% Nb2O5, as being highly significant niobium intercepts and of great interest.
Carbonatite upside is in addition to the 50-100Mt @ 0.9-1.3% TREO exploration target: Recall that in February 2023, DRE published an exploration target range for the ironstone potential within the 100%-owned Mangaroon REE Project. The ironstone resource has recently grown to 20Mt from 4km of ironstones (out of 43km defined for targeting), so we see great potential for this resource to grow significantly. On top of this is the carbonatite potential and as highlighted above, there could be an additional 10 Mt of carbonatite resource pending next month.
Upcoming potential news flow
DRE expects to publish an initial resource for the C3 carbonatite in August, following receipt of final assays this month. During the DecQ’23, we expect another updated ironstone resource lifting the total project ironstone inventory (excluding carbonatites) to somewhere in the region of 25-30Mt with +50% Indicated. This will include a further 12km of drilled ironstone (remember, 16km of 43km drilled to date) and will include the higher grade Y2 and Yin North prospects. This resource will form the basis off an initial mining study in 2024.
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 defined 20Mt of resource, has a carbonatite resource pending and a JORC Exploration Target of 50-100Mt over additional ironstones, 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.