DRE continues its high strike rate
Serial explorer Dreadnought Resources (DRE-ASX) has interested 14m of visible Ni-Cu sulphide mineralisation (incl. 2m of massive sulphides) from 37m in the first holes targeting a geophysical anomaly (EM conductor) at the Bookathanna North prospect along the 45km long Money Intrusion, which is part of the Mangaroon Project (Gascoyne Region, WA). This is located on the western side of the Mangaroon leases, some 30km northwest of where DRE is uncovering rare earths at Yin and C3. While we’re not calling it a discovery just yet, we believe this intersection demonstrates the quality of DRE as an explorer, given discoveries to date of substantial rare earths further to the east within the project area as well as emerging VMS discoveries on its project in the Kimberley. Suffice to say, we view DRE as one of the best explorers in the market, with a growing track record of discovery.
FQM earn-in: The Ni-Cu aspect of the Mangaroon Project is subject to earn-in by First Quantum Minerals (FQM) where FQM is earning up to 70% of five tenements (option agreement dating back to April 2021). The first stage of the earn-in is currently underway with $12m being spent by 1 March 2026 for a 51% interest and a further 19% by sole funding to a Decision to Mine.
What has DRE hit? DRE has reported the intersection of 14m of shallow (from 37m) Ni-Cu sulphide mineralisation in RC drilling. This was in the first of two holes to be drilled at Bookathanna North, where two highly conductive plates have been modelled over a ~100m strike. The drill hole was collared into the gabbroic core of the Money Intrusion before passing into the footwall olivine dolerite at 25m depth and finishing in gneissic country rock from 65m to 153m (EOH). Drilling intersected disseminated Ni-Cu sulphides within the footwall olivine dolerite increasing in intensity to a 2m thick massive sulphide lens underlain by net-textured to brecciated sulphides. The sulphides are reported to be high in tenor comprising 40-50% pentlandite (nickel mineral) and chalcopyrite (copper mineral) in equal proportions. Reading between the lines, this could infer a grade of ~4-5% Cu and ~3-4% Ni over the 2m massive sulphide interval. DRE has confirmed the presence of Ni and Cu with handheld XRF. Based on these results, DRE has said that additional holes will be drilled and DHEM crews are mobilising to site. After Bookathanna North, the rig will move to High Range to test three further conductors. Assays are expected in October 2023.
Valuation and recommendation: Our price target for DRE remains $0.20 and we retain our SPECULATIVE BUY rating.
Our valuation is underpinned by an EV/Resource multiple centring on a 60Mt @ 1% TREO resource defined at Mangaroon. We have ascribed $130m in our valuation for exploration and other projects within DRE’s portfolio and note that today’s announcement has added ~$60m to DRE’s market capitalisation.
The Money Intrusion: As mentioned above, today’s announcement refers to drilling at the Bookathanna North prospect located along the Money Intrusion. The Money Intrusion is a ~45km long, outcropping mafic/ultramafic intrusion with high tenor blebby Cu-Ni-PGE bearing sulphides. In 2021, a 1km long outcropping gossanous Ni-Cu-PGE was mapped and sampled, and was presumably enough to get the C$25bn FQM interested. Drilling ensued in 2022, returning disseminated to net-textured/brecciated magmatic Ni-Cu sulphide (pyrrhotite-chalcopyrite-pentlandite) mineralisation including 13m @ 0.19% Ni & 0.17% Cu from 70m. DRE outlines that the confirmation of a fertile magmatic Ni-Cu-PGE system within the 45km long Money Intrusion highlights the potential for multiple deposits and/or deposit styles. The Money Intrusion has been dated to ~0.8 Ga, similar in age and tectonic setting to the Jinchuan Ni-Cu-PGE deposit in China (>500 Mt @ 1.2% Ni, 0.7% Cu, ~0.4 g/t PGE). Jinchuan contains three main mineralised bodies over ~6.5km of strike, each situated within a sub-chamber of the overall intrusion. Mineralisation is dominated by net-textured and disseminated sulphides with minor massive sulphide accumulations.
Plan view of the Money Intrusion