Ann: Final Results- Phase One Drilling at Lynas Find Project-DKO.AX, page-161

Friday, 13 May 2016

Stock

DKO:ASX

Recommendation

SPEC BUY

Current Price

$0.17

Event & Impact: Positive

High grade lithium: Dakota Minerals (DKO) released the final assays from the first pass drilling program of its 100% owned Lynas Find project in the Pilbara region of Western Australia. While only a modest portion of the prospective spodumene bearing pegmatite area has been tested, drilling has shown thick, shallow mineralisation with average intercept grades of 1.7% Li2O. This is higher than the average Resource grades in the adjacent project areas of Pilbara Minerals (PLS) and Altura Mining (AJM), at 80Mt @ 1.3% Li2O and 35Mt @ 1.1% Li2O respectively. Better intercepts from recent drill results included:

·20m at 2.61% Li2O from 5m depth and

·12m at 1.90% Li2O from surface


Mineralised envelope modest, but DKO have only scratched the surface: Argonaut estimates ~5Mt of mineralisation has been defined from the 26 hole, 1,670m program completed to date. 21 holes were drilled into the main Lynas Find pegmatite and all returned significant grade and width intercepts. Mineralisation is open both along strike and down dip. The five reconnaissance holes (holes 16LC022-16LC026, see Figure 2 below) had limited success with only two mineralised intercepts. Importantly, the interpreted continuation of PLS’ Monster Zone, which contains some of the highest grades in the Pilgangoora Lithium District, was not tested. Argonaut considers the Lynas Find mineralisation to be far from constrained given; the large tenement area yet to be mapped and sampled, the number of outcropping pegmatites yet to be drilled and the known tendency for pegmatites to pinch and swell (noting an example whereby mineralised pegmatites intercepted by PLS expanded from 5m near surface to 50m at depth).


Figure 1: Cross section through the Lynas Find pegmatite







Source: DKO

Second drill campaign commencing late May: DKO is planning its second campaign in late May, which will comprise ~5,000m of RC and ~1,000m of diamond drilling. It is expected that drilling will step out along the Lynas Find pegmatite and test additional pegmatites mapped in the region, including the Monster Zone extension. A Maiden Resource is expected later in H2 CY16.


Figure 2: Map showing completed drill holes, rock chip samples and mapped pegmatite outcrops







Source: DKO

Recommendation

DKO is well funded after recently undertaking a share placement raising $12.3m at $0.20. Argonaut maintains a SPEC BUY recommendation.