A peer-based study comparing several leading clay-based rare earths hunters has rated OD6 Metals and its Splinter Rock project near the Western Australian town of Esperance as a potential sleeper among giants.
Breakaway Research, a Sydney-based equities research specialist which has been profiling ASX-listed junior to mid-size companies for the past decade, revealed in a recent paper that it believes OD6 has the potential to build Splinter Rock’s resource to a size bigger than all of its peers other than potentially Meteoric Resources’ bulging deposit at its Caldeira project in the Brazilian State of Minas Gerais and Ionic Rare Earths’ massive Makutu play in Uganda.
While Meteoric and Ionic have leapt ahead, OD6 is still preparing the proof for its pudding.
Intriguingly, in a quick back-of-the-envelope estimation, Breakaway muses that if all defined clay areas in OD6’s tenure are economically mineralised (and that is not yet certain), its resource could even exceed 7 billion tonnes – with no grade calculated.
Breakaway bases its assessment of OD6’s potential scale using the company’s considerable current estimated mineral resource estimate of 344 million tonnes at a grade of 1308 parts per million total rare earth oxides (TREO), which is higher than most, if not all of those used by its selected peer explorers.
The study focused on nine other reasonably-comparable ASX-listed companies exploring for clay-hosted rare earths globally. While it is not exactly comparing apples with apples because of the vastly different stages and locations of the profiled projects, it does provide for some interesting comparisons.
Most of OD6’s drilling to date has been undertaken along roads, tracks and fence-lines, guided by geophysical interpretation of relatively linear, shallow basin topography. The approach is common in first-pass drilling campaigns because it is relatively speedy, access is already available, it does not usually require detailed environmental approval processes and it avoids unnecessary damage to flora and fauna habitats. It does, however, mean that some drill transects may not be optimally located.
It is relevant to point out that the flat and oft-regarded “featureless” WA surface terrain hides a turbulent weathering, erosion and tectonic past not too far below its surface cover of windblown sands, sheetwash drainage sediments, eluvial and colluvial deposits and multiple phases of lateritisation that not only mask fresh rock, but often alter the ancient surface beyond recognition.
Deep paleo-channels abound, often feeding into saline lake systems, and feature deep scours that often exceed 50m in depth, eroding the underlying rocks.
OD6’s current resource comes from a mere 5 per cent of the company’s 250 square kilometres of interpreted “clays in basins” from geophysical surveying. It is calculated from just a handful of rectangular outlines, each around a single fence and usually comprising a relatively small number of drillholes.
The resource comes from Splinter Rock’s four key target zones – Centre, Prop, Scrum and Flanker. The individual resources for each target area are Centre with 149 million tonnes at 1423ppm TREO, Scrum with 120 million tonnes at 1222ppm, Flanker with 42 million tonnes at 1246ppm and Prop with 33 million tonnes at 1180ppm TREO.
It is worth noting that the Centre estimate is based on just 37 holes, meaning that each hole yields 4 million tonnes – and that is a lot. That would lead to a logical suggestion that additional drilling could provide a dramatic increase in OD6’s resource to a level that might exceed most or all of its current peers, according to Breakaway.
It speculates on the potential range of resource tonnages if the current extent of Splinter Rock was extended in three dimensions to cover all of its interpreted lateral boundaries and minimum and maximum ranges of clay thickness. It concludes that based on an assumed area of mineralised clays of 253sq km, a minimum zone-dependent thickness ranging from 10m to 20m and depth ranging from 3m to 15m and an assumed 1.8 tonnes per cubic metre bulk density for clays, a minimum potential resource size might amount to 7.1 billion tonnes, but with no grade estimation.
While OD6 still has a lot of work to do to get anywhere near that number and even then, it is still not certain, Breakaway’s assessment gives cause for pause.
Breakaway notes that the Splinter Rock metallurgy appears to vary from drillhole to drillhole and from horizon to horizon. It suggests that having a big resource base would allow OD6 to chase the best metallurgy option, rather than being forced to chase tonnage.
OD6’s Splinter Rock project comprises 2579sq km of granted exploration licences about 150km north-east of Esperance and its mineralisation is thought to be a mobilised weathering product of the rare earths-enriched Booanya granite suite. Its current market cap sits at about $17 million.
The other companies and projects considered in the Breakaway report include:
*Ionic, which has a resource of 532 million tonnes at 640ppm TREO at its 60 per cent-owned Makutu deposit. It is one of only a handful of western ionic-adsorption clay (IAC) rare earths projects – a major source of low cost critical and heavy rare earths – and the company has a market cap of $91 million. The project has an indicated resource of 404 million tonnes at 670 ppm TREO.
*Meteoric, which has a resource of 409 million tonnes at 2626ppm TREO at Caldeira. sports a a market cap of $437 million.
*Victory Metals’ resource is 250 million tonnes at 520ppm TREO at its North Stanmore project in Cue. Its resource modelling was based on 1161m of drill assays averaging 828ppm of TREO. It contains a high percentage of critical magnet metals dysprosium and terbium. The company’s market cap is $14.97 million.
*West Cobar Metals has a resource of 190 million tonnes at 1172ppm TREO at its Salazar project, 120km north-west of Esperance. Its market cap is $8.26 million.
*Australian Rare Earths has a reported resource of 101 million tonnes at 818ppm TREO at its Koppamurra project in South Australia. Its market cap is $33.92 million.
*Krakatoa Resources has a resource of 101 million tonnes at 840ppm TREO at its Mt Clere project on the northwestern margins of the Yilgarn Craton. Its market cap is $9.57 million.
*Godolphin Resources, which has a resource of 94.9 million tonnes at 739ppm TREO at its Narraburra project in the central west of NSW, boasts a market cap is $6.26 million.
*Heavy Rare Earths has a resource of 28 million tonnes at 625ppm TREO at its Cowalinya project, 70km south-east of Norseman in WA. Its market cap is $6.21 million.
*ABx Group, which has 21 million tonnes of inferred and indicated resource with a grade of 770ppm TREO at its Deep Leads deposit in Tasmania, has a market cap is $19.14 million.
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