20c target price. 6x

Canaccord note-
Mangaroon resource now exceeds 40MtIronstone resource growthDreadnought Resources (DRE-ASX) has published an updated resource over the Yin ironstones within the Mangaroon Project (Gascoyne Region, WA). The company has increased Yin by 52% in terms of contained TREO. The ironstone resource now stands at 30Mt @ 1.04% with am NdPr:TREO ratio of 29%. Notably, the Yin resource covers just 10% of the known 43km Yin trend. Importantly, 87% of tonnes and 91% of contained TREO are in the Measured and Indicated category of resource classification with 64% of the total 40.8Mt project tonnes in M&I. This de-risks the resource considerably and puts DRE in a strong position as it contemplates moving the project through development studies in 2024, in our view. We previously wrote of our expectation for 35-40Mt across Mangaroon with +50% Indicated, so DRE has delivered this and more. Despite this pleasing outcome, DRE continues to trade at a significant discount, in our view, under the weight of depressed commodity prices and delayed development timelines from other rare earth peers impacting equities.Global resource of 40MtThis update for Yin is in addition to the existing ~10Mt of carbonatite at C3 and boosts the total project Mineral Resource to g40.8Mt @ 1.03% TREO (27% NdPr:TREO). In addition, C3 also contains a range of other critical minerals including niobium, phosphate, titanium and scandium. Of note is the 23.7kt of niobium grading 0.22% Nb2O5. The company is still to undertake testwork to see if any by-products are recoverable.Active on all frontsA true explorer, DRE is actively exploring for further ironstone and carbonatite mineralisation at Mangaroon. It is also undertaking Ni-Cu-PGE exploration along the Money Intrusion in JV (earn-in) with First Quantum and sole funding gold activitiesin the western portion of Mangaroon. Elsewhere, HREE, gold and uranium works are underway at Bresnahan while further lithium groundwork is planned for Central Yilgarn and Mangaroon while its Kimberly Project awaits the passing of the wet season.
Valuation and recommendationOur 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. Given DRE has now defined 40Mt of resource, and has a JORC Exploration Target of 50-100Mt over additional ironstones, we believe a total resource offering of 60Mt is achievable from DRE over time.