OD6 to hit ASX boards with Esperance rare earths targets

A dogged commitment to rare earths research, combined with some left-field data analysis, could prove a potential $20m masterstroke for junior explorer OD6 Metals as the company makes its debut on the ASX.

OD6 will hit the market today with an indicative market capitalisation of about $20m. The move follows on from a well-supported capital-raise that saw the company achieve its maximum stated $8m goal.

The rare earths hopeful has locked in two significant tenement packages in the highly prospective rare earths region near Esperance, in Western Australia’s south, with its Splinter Rock and Grass Patch projects.

The two projects cover a vast area of almost 5000 square kilometres.

Splinter Rock, the company’s flagship project, is about 150km north-east of Esperance and comprises six exploration licenses spanning more than 2700 square kilometres.

The project includes three key exploration targets in the Splinters, Central Road and Buraminya prospects. Drilling is expected to begin within weeks.

In the lead up to the IPO, company founders spent months interrogating the WA Mines Department online database that records all significant mineral anomolies discovered throughout the state over decades.

By any measure, the move, that resulted in an indicative $20m market cap for OD6, was a success.

The company’s thorough online research revealed historic drill intercepts across the three key targets showing strong results for rare earth oxides, including significant neodymium and praseodymium, both of which are instrumental in the manufacture of industrial magnets used in electric vehicle engines and other “green energy” industrial applications such as windmills.

The results show the clay intersections at Splinter Rock are up to 37m in thickness with the mineralisation taking in a significant 30km by 40km strike extent.

OD6 says the historical drilling at the site suggests total rare earth oxide grades about two to three times higher than known Chinese rare earths clay deposits.

The previously drilled air core holes are between 2km and 4km apart and consistently intercept an enriched rare earths saprolitic clay between 5m and 37m thick.

Whilst Splinter Rock shows significant potential for rare earths and will be a major focus for the company, Grass Patch is where OD6 again used its initiative following some clever analysis of historical CSIRO compiled water sampling results.

The Grass Patch project is up to 100km north-west of Esperance and covers a tenement area of more than 2200 square kilometres in size. The site includes four granted exploration licences and two licences that are under application which the company expects to be granted very soon.

Whilst the area has been a focus of historical drilling in the past, previous explorers were primarily interested in gold, with no previous testing for rare earths.

Curiously, OD6 discovered water samples compiled by CSIRO from bores in the region that showed anomalous neodymium and praseodymium traces.

The company has highlighted the Belgian Road prospect at Grass Patch as a principal area of interest in addition to a second high-grade neodymium-praseodymium single soil anomaly to the north-east of Belgian Road that includes a 12km untested magnetic feature.

OD6 says the Belgian Road prospect is also a key target, with a 5km neodymium-praseodymium soil anomaly identified in addition to some of the highest rare-earth elements detected in water bore sampling in WA.

Our immediate focus is drilling out our clay REE systems, with a view to rapidly delineate a globally significant JORC-compliant maiden mineral resource estimate.

The company expects to begin an air core drilling program in the coming weeks.

Geophysical clay mapping to expand the target base is estimated to begin in the fourth quarter, in addition to metallurgical test work.

Prices for industrial magnet rare earths such as neodymium and praseodymium are on the march, reflecting a market that has become insatiable for electric vehicles.

The focus on renewable energy has impacted locally too, resulting in Horizon Power partnering with Pacific Energy to deliver a new integrated power system comprising a 4 megawatt solar farm, two 4.5MW wind turbines, a 4MW battery energy storage system and a 22MW high-efficiency gas power station.

The clean energy system, owned and operated by Pacific Energy, will feed into Horizon Power’s network and provide cleaner, greener power to Esperance.

According to the WA Government, almost 50 per cent of Esperance’s total electricity demand will now be met by renewable sources.

The Esperance region has significant key infrastructure already in place. Both OD6 projects are within 150km of the Port of Esperance that boasts existing exports including nickel, iron ore and grain.

The picturesque town of Esperance can provide the company with existing accommodation and infrastructure, whilst a new local LNG plant can provide local power with an existing gas pipeline running through Grass Patch.

Just up the road, there is significant existing mining activity in the greater Goldfields region with the Ravensthorpe nickel mine and access to acid production in Kalgoorlie.

The evidence of clay-based rare earths in the region provides a possible point of difference for OD6 as they are generally considered to be a cheaper bulk mining proposition with a relatively simple process flow sheet.

At OD6’s helm is founder and Chairman Darren Holden, who has more than 25 years’ international experience in mineral discovery and mineral exploration technologies.

Managing Director Brett Hazelden is a metallurgist with more than 25 years’ experience in the resources industry and is also the founder and former director of Kalium Lakes.

OD6’s holdings lie to the east of Meeka Gold’s Cascade rare earths project.

Recent air core drilling at Cascade encountered grades of up to 5791 parts per million total rare earth oxides over a 1143 square kilometre region at the site.

Assays reveal shallow and high-grade mineralisation at cascade up to 24m thick, with a standout strike of 4m at 5791ppm TREO unearthed within a 16m zone running 2223ppm. Another high-grade intersection of 12m at 1215ppm TREO from 36m was returned.

In addition to Cascade, Meeka also holds its Circle Valley rare earths operation only 50km to the north.

About 35km north-east of Esperance, Mount Ridley Mines namesake project is also showing potential to host a serious array of rare earths.

The project was originally drilled for nickel as early as 2015, however the company recently re-analysed 1108 samples from previous air core work and found over half the samples contained significantly elevated levels of rare earths.

The first partial leach test results from 489 samples returned an average grade of about 800 parts per million total rare earth oxides, whilst the mineralised strike of the Mount Ridley project spans more than 25km.

OD6’s work at the keyboard in the lead up to the IPO identifying potential rare earths hot spots from historical data cannot be over-stated.

By any measure it was a success with punters lining up to plough $8m into the IPO. More remarkable is the fact the ground at both Grass Patch and Splinter Rock was actually available to be pegged - which is perhaps a reflection on the fact that Esperance has not traditionally been recognised as a mineral hotspot like its northern cousin Kalgoorlie.

Coupled with the fact that rare earths have not really even been a thing up until now, OD6 was able to simply walk onto the ground with the benefit of its online research and peg it – something that is unlikely to happen again anytime soon.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au