Given there is, rightly, ongoing discussion about DRE's...

Given there is, rightly, ongoing discussion about DRE's exploration program, focus, cash flow and strategy, I appreciate the detailed response below to a new question on the Dreadnought investor hub.that appeared this morning.

Question:

A quick question re your work program this year. Is it fair to say that undertaking soil sampling at Star of Mangaroon rather than going straight into a drill program is partly to save precious $$ until the junior end of the resource stockmarket starts to attract some interest again? Preserving capital is important and trying to raise at these levels wouldn't benefit anyone, so I just wanted to get a handle on the thinking and also, will this impact what drilling you may or may not do this year at TY and Central Yilgarn?

DRE's response:

"Over half of our shareholders got on board on the back of the rare earth run we were having, so regardless of the market movements and things that are out of our control (NdPr pricing, rising interest rates dropping retail investment across the board, a general exit of instos from smaller market cap companies etc), it doesn't change the fact that we have a lot of investors who's investment is worth less than it was a year ago. And as much as misery loves company, it's not comforting even if our peers are down as well.

Whilst I share our shareholders frustration, I also appreciate where we are in the cycle, and what we have from a project and target perspective. I therefore remain optimistic that when things do start to change, and we start drilling that we will be well positioned.Which also leads well into your question (quick question, long answer!).

Why are we soil sampling now instead of going straight into a drill program? Firstly, I will answer from the technical standpoint which is that we picked up the Mangaroon project with an eye to discover a new high grade gold camp. We believed that the high-grade gold camp might exist because of the existence and history of the Star of Mangaroon mine (which is a single lode) and lack of systematic exploration in the region.So, what is systematic exploration? Mapping, soil sampling, stream sediment sampling, geophysical surveys etc focusing on what matters, what can be mapped spatially, and doing the right work at the right scale to effectively and efficiently reduce the search space towards a mineralised body. We can't make a discovery without defining new untested drill targets, we cannot define new untested drill targets without soil sampling and mapping (as part of systematic exploration).Soil sampling is one of the most important tools in defining targets within a new gold camp around the Star of Mangaroon. High grade gold lodes are like needles in a haystack, you aren’t going to find one by blindly drilling without going broke very quickly. This is systematic exploration at work and has always been part of our exploration process across all our projects for gold and base metals.Last week the team and I were on site walking over some of our gold targets like Tiger, Rory, Albatross, and others. Those targets only exist because of the soil sampling we did last year. And we still have more soil sampling to do, along with mapping and rock chipping before they are drill ready. We are doing this work to have them drill ready for later this year (following the Central Yilgarn program, due to kick off once the Yilgarn stops flooding).

So, what are the steps or stages, in particular surface sampling geochemical surveys, that lead towards a defined drill target that might become a discovery? (simplified for this example, excluding other techniques and geophysics)1. Stream Sediment Sampling (Identifying broad large-scale mineralisation footprints - camp scale targeting)+/- infill Stream Sediment Sampling2. Wide spaced soil sampling (generally 400-800m line spacing, 50-100m sample spacing along the lines) to generate targets3. Infill soil sampling (100-200m line spacing, 50m sample spacing along the lines) to refine / define drill targets4. If outcrop / subcrop then mapping, structural measurements, and rock chipping or if under cover or deep weathering, air core drilling to define drill targets5. Target Testing Drilling - may lead to discovery+/- follow up program, change orientation of drilling etcTargets like Tiger are at stage 4, Rory is still at stage 3, Albatross at Stage 2. So, we still have a fair bit of soil sampling to do, which we are trying to do that work now so that results are in place for drilling following the Central Yilgarn program.

This staged approach leads into the financial part of your question.Exploration is a process of area reduction. And we aim to do that work as effectively and efficiently as possible. We are trying to define high grade gold lodes which may be 100-400m in strike, 5-20m wide and extend significantly at depth. That is a very small footprint! 0.008sq kms! And we pegged >5,000.000 sq kms at Mangaroon.So, we are trying to reduce our search area as effectively and efficiently as possible.

Firstly, we can try and make that detectable footprint a bit bigger than 0.008sq kms, and that is the importance of "camp scale" targets. Because clusters of deposits (like Hemi, Bellevue, Jundee etc) tend to have geological and geochemical footprints that are ~1-10 sq kms (they vary, but using this as an example)- that is what a camp scale target is (a 1-10sqkm target as opposed to a 0.008sqkm target). Camp scale targets are areas with broad alteration and structural deformation, geochemical pathfinders that indicate fluid flow and alteration and of course, gold anomalism.That is the importance of Stage 1, stream sediment sampling where 1 sample is taken for every 1-5sqkm drainage basin - to define the gold camp to focus the other stages of exploration. Once the camps are defined, we start the target generation and definition phases (2-4).

Why? Capital allocation. let us look at the surface geochemical stages from a financial standpoint. How much does each stage cost to effectively explore a unit of ground? (we will use 1sq km ground, this is very rough and for illustrative purposes only)1. Stream Seds: ~$80-150/sqkm2. Wide Spaced Soils: ~$1,000-3,000/sqkm3. Infill Soils: ~$6,000-12,000/sqkm4. If outcrop and mapping: ~$10,000-15,000/sqkm4. If undercover/laterite and aircore drilling: ~$500,000 (not including approvals surveys)5. RC fence drilling ~$1,500,000/sqkm (not including approvals surveys)Drilling is an extremely expensive way to explore a unit of ground, so the staged approach uses the appropriate tools and techniques to focus on the most prospective bits of ground within our projects. By combining surface geochemistry, with geophysics, mapping and structural interpretations we are aiming to define compelling targets (one or more coincident anomalies / evidence of mineralisation) to drill test and make a discovery.This is why we are soil sampling around the Star of Mangaroon camp which has only recently been fully defined by the stream sediment sampling.

Finally, preservation of capital and the ability to deliver high impact drill programs.If we wanted to just focus on surviving, we would fire everyone, put our resources into retention licenses and wait things out. But that doesn’t do anyone any good. As I tell the team regarding the cyclical nature of our industry, there are periods of abundant money and no time, and periods of no money and abundant time. So, our focus in these tighter times is to ensure that we are prioritising, and drill testing our most compelling and highest confidence targets. This requires more time and effort in reviewing and planning drill programs to ensure our capital is allocated to the most impactful exploration drilling.What are the targets that will give us the best bang for our buck? They need to be commodities of interest (Au, Cu at the moment) and they need to be compelling (as defined before). So, expect to see more soil sampling, rock chipping and geophysics as we continue to define and prioritise the most compelling targets at Central Yilgarn, Mangaroon and the Kimberley for drilling this year.And that drilling will commence as soon as the Yilgarn dries out from the recent floods."