OD6 Metals (ASX: OD6) has hailed its massive Splinter Rock rare earths play near Esperance in Western Australia as one of the world’s “largest and highest-grade projects” of its kind after doubling its mineral resource estimate to an indicated and inferred 682 million tonnes at 1338 parts per million total rare earths oxides (TREO).
The higher-grade indicated component, derived from the company’s Inside Centre resource area, amounts to an eye-catching 119 million tonnes at 1632ppm TREO. The total clay-hosted resource contains an estimated 910,000 tonnes of TREO and 205,000 tonnes of magnet rare earths oxides (MREO), meaning the magnet component makes up about 23 per cent of the metal resource.
And the company believes there is still plenty of upside to the estimate given the vast area of clay-hosted mineralisation already indicated by its mapping, CSIRO (Commonwealth Scientific and Industrial Research Organisation)-assisted clay basin modelling using electromagnetic geophysics and scout drilling beyond existing resource areas that have been defined to date.
About 17.5 per cent of the current resource tonnage falls in the indicated category, with the remaining 82.5 per cent assigned to the inferred category.
The market reacted immediately to today’s news, sending the company’s share price to an intraday high of 9.5c from a close yesterday of 6.3c – a jump of more than 50 per cent on its biggest trading volumes for more than a year.
This Mineral Resource Estimate sets OD6 apart from any other clay-hosted rare earth project in Australia and highlights Splinter Rock as one of the largest and highest-grade projects globally. The estimate has significant further upside based on the identified clay basins that remain open in multiple directions or have yet to be drilled.
OD6 Metals managing director Brett Hazelden
Hazelden said that if the company used a lower cut-off grade of 600ppm, a massive mineralised tonnage of 1.6 billion tonnes at 1014ppm TREO would put WA and Australia “on the worldwide rare earths map”. The current estimate is reported at a 1000ppm TREO cut-off grade.
The Splinter Rock project comprises 2579 square kilometres of granted exploration licences centred about 150km north-east of Esperance in WA’s deep south. It has several significant advantages compared with many international clay-hosted rare earths ventures.
The operation is in a politically stable country, on unallocated crown land and OD6 has a strong working relationship and agreements in place with the traditional landowners via the Ngadju and the Esperance Tjaltjraak Native Title Aboriginal Corporations. In addition, OD6 says its metallurgical recoveries of about 60 per cent in conjunction with an expected low stripping ratio, low acid consumptions, no private royalties, access to green-energy generation potential, proximity to port and being in a strategic location away from farmland are key advantages.
The Splinter Rock mineralisation is believed to be a mobilised weathering product of the rare earths-enriched Booanya granite suite that underlies the project area. Historic work and examination of target geology indicates that the potential host lithology at Splinter Rock extends for more than 400sq km.
From its combined mapping, geophysics and drilling, OD6 has identified four key prospect areas that contribute to the present resource estimate. They include Centre – along with its sub-prospects Inside Centre and Centre Northwest – Scrum, Prop and Flanker.
Except for Inside Centre, all of the individual prospect mineral resources for Splinter Rock are classified as inferred and grades have been interpolated to a maximum of about 400m beyond the central drill traverse.
Management says its updated 119 million-tonne indicated resource at Inside Centre, coupled with ongoing metallurgical studies and testwork at ANSTO (Australian Nuclear Science and Technology Organisation), will be the company’s main focus for its upcoming planned scoping study that has been slated for completion at the end of calendar year.
Subject to a favourable outcome of the scoping studies, follow-on work would then likely involve further infill drilling to home in on high-grade zones, lift indicated resources to reserves categories and establish mining paths and a mining schedule.
Given OD6’s total project tenure extends more than 60km north-south and about 70km east-west, and existing defined prospects lie in the centre north of the area, haul distances to a central processing area could be substantial, potentially within a radius of up to 30km.
It will be now fascinating to watch just how much the project can grow as it progresses towards what the company envisages as a long-term operation.
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