Ann: Shallow, High-Grades at Star of Mangaroon & Popeye, page-13

Here's a detailed breakdown and interpretation of the key points:

1. High-Grade Assays at Star of Mangaroon and Popeye

• Star of Mangaroon: This historical gold mine, discovered in 1956, was the largest gold producer in the Gascoyne region. It has been minimally explored since its initial discovery. Recent reverse circulation (RC) drilling returned significant high-grade gold intercepts, including:
  • 3m @ 23.7 g/t Au from 58m (SOMRC020)
  • 4m @ 27.4 g/t Au from 80m (SOMRC030)
  • 4m @ 5.1 g/t Au from 106m (SOMRC028)
  • 3m @ 4.9 g/t Au from surface (SOMRC024)
• Popeye Prospect: Located near Star of Mangaroon, Popeye has also returned promising gold intercepts. This prospect had no previous drilling records and was discovered while sinking a shaft for water supply. Significant assays include:
  • 3m @ 22.8 g/t Au from 13m (POPRC001)
  • 1m @ 1.6 g/t Au and 15.5 g/t Ag from 11m (POPRC002)

Interpretation: These high-grade assays indicate that the area around the Star of Mangaroon holds substantial gold mineralization potential, with Popeye emerging as an equally promising prospect. The assays suggest the potential for shallow, high-grade open-pit operations at both locations.

2. Strategic Importance and Future Plans

• Dreadnought’s strategy is to focus on becoming a self-funded explorer, with plans to develop high-grade open pits at Star of Mangaroon and Popeye. They aim to outsource the funding, development, haulage, and processing to third parties. This reduces reliance on market funding and allows them to focus on exploration and growth.
• An initial Mineral Resource Estimate (MRE) for Star of Mangaroon is expected in November 2024, with diamond drilling assays to be released around October/November 2024.

Interpretation: This strategy of outsourcing the more capital-intensive aspects of mining (development, haulage, processing) while focusing on exploration and discovery is a smart move in a capital-constrained market. The MRE will provide a clearer picture of the project's potential economic viability.

3. Geological Context

• Star of Mangaroon lies within the Mangaroon Shear Zone, which has seen limited modern exploration due to fractured, small-scale ownership. The mineralization is characterized by finely disseminated free gold within siliceous units, sometimes associated with pyrrhotite, chalcopyrite, and arsenopyrite.
• The Popeye prospect, discovered near the historic workings, presents a new opportunity for a high-grade open pit, similar to Star of Mangaroon.

Interpretation: The geological context suggests that both Star of Mangaroon and Popeye could host significant gold deposits. The mineralization styles and the presence of visible gold in diamond drill cores further enhance the prospects for a successful resource definition and future mining.

4. Upcoming Catalysts

• The report outlines several key upcoming milestones, including further assay results from diamond drilling, geophysical surveys, and metallurgical testing, expected in the next two months. These will feed into the initial MRE for Star of Mangaroon in November 2024.
• Additional exploration at other targets like Two Peaks and Lead prospects is also planned.

Interpretation: The upcoming news flow presents significant near-term catalysts for the company. Positive results could lead to an upward revision of the resource estimates and possibly increase investor confidence and share price.

5. Self-Funded Exploration Model

• Dreadnought plans to use a model in which cash-flow generating activities (mining and processing) are outsourced to third parties. This model allows them to generate their own cash flow to fund further exploration without diluting shareholders through continuous capital raises.

Interpretation: This approach aligns with current market conditions, where raising capital can be difficult. By generating cash flow internally and focusing on exploration, Dreadnought can maintain a steady pipeline of exploration projects without over-reliance on external funding.

6. Risk Factors

• The announcement includes a cautionary statement about risks, such as economic conditions, stock market fluctuations, commodity prices, and operational risks, which could affect future performance.

Interpretation: While the results are promising, the typical risks of mineral exploration and project development remain. Market conditions, particularly gold prices and access to third-party services for processing and haulage, will play a critical role in the project’s success.

Conclusion

Dreadnought Resources has reported highly encouraging high-grade gold assays at Star of Mangaroon and Popeye, with potential for shallow, high-grade open-pit mining. Their self-funding exploration model and upcoming MRE in November 2024 set the stage for substantial growth. However, as with any exploration company, they face risks related to market conditions and operational execution. The next few months, with the release of further assays and the MRE, will be crucial for understanding the full potential of the Mangaroon Gold Project.

The viability of mineral intercepts, particularly the width (thickness) of gold-bearing zones, is a key consideration in determining the economic potential of a deposit. In the case of the intercepts mentioned in the Dreadnought Resources announcement, here's an analysis of their viability:

1. Width of Intercepts

• At Star of Mangaroon, some of the significant intercepts include:
  • 3m @ 23.7 g/t Au from 58m (SOMRC020)
  • 4m @ 27.4 g/t Au from 80m (SOMRC030)
  • 4m @ 5.1 g/t Au from 106m (SOMRC028)
  • 3m @ 4.9 g/t Au from surface (SOMRC024)
• At Popeye, the key intercepts are:
  • 3m @ 22.8 g/t Au from 13m (POPRC001)
  • 1m @ 1.6 g/t Au and 15.5 g/t Ag from 11m (POPRC002)

2. Are the Intercepts Too Skinny?

When evaluating whether these intercepts are "too skinny" to be viable, several factors must be considered:

• Grade vs. Width Trade-off: Higher-grade mineralization can compensate for narrower intercepts. The grades in the reported intercepts are quite high, with several above 20 g/t Au, which is well above the average cut-off grades used in many gold mining projects (typically 1-3 g/t Au for open-pit operations). In this context, even narrower intercepts can be viable, especially with high-grade deposits.

• Shallow Depth: Many of the intercepts occur at relatively shallow depths, particularly at Popeye, where one intercept starts just 13 meters from the surface. Shallow, high-grade deposits are more economical to mine as open-pit operations, and lower costs can offset the thinner widths.

• Mining Method:

  • For narrow, high-grade deposits, selective mining methods (e.g., narrow-vein mining for underground or shallow open-pit mining) can be employed to extract the ore economically.
  • The widths mentioned (3-4 meters) are not uncommon for narrow-vein gold deposits. However, if the ore body is consistent and extends laterally, it can still be profitable even with these thicknesses.

• Mineralization Continuity: Another critical aspect is the continuity of these high-grade zones. The announcement mentions that drilling confirms the continuity of the mineralization. Consistent high-grade zones, even if narrow, can be very attractive, especially if the resource extends over a significant area.

• Processing and Recovery: High grades can reduce processing costs and improve overall recovery rates. Gold grades of over 20 g/t are particularly attractive because they allow for more efficient extraction, even in smaller tonnages.

3. Comparison with Industry Norms

• Many profitable gold deposits around the world, particularly narrow-vein underground mines, operate with intercepts of similar or even smaller thicknesses if they offer high grades.
• In certain high-grade gold districts (e.g., Fosterville in Australia), narrow, high-grade intercepts are common, and such deposits are highly profitable due to selective mining and low-cost processing.

4. Potential Upside

• Additional drilling, including the results from diamond drilling, is expected in October/November 2024. These results could further delineate the thickness and extent of the mineralized zones.
• The steep northerly plunge of the mineralization mentioned in the announcement suggests that future deeper drilling might reveal thicker intercepts or additional high-grade zones at depth.

Conclusion

The intercepts reported, while relatively narrow (3-4 meters), are high-grade and shallow, which can make them economically viable, especially if the resource continues to show continuity. These kinds of grades are often profitable even with smaller tonnage operations. However, further drilling and resource estimates will provide a clearer picture of the full extent and thickness of the mineralization. The upcoming Mineral Resource Estimate will be crucial in determining the overall economic feasibility.