EM targets identified - rare earths drilling event next quarter

Just a few days ago we announced our latest investment in the Catalyst Hunter portfolio - rare earths explorer Frontier Resources (ASX:FNT).

FNT has rare earths exploration ground in the Gascoyne region, WA, and is directly next door to the ~$500M capped Hasting Technology Metals Yangibana Rare Earths project.

FNT’s neighbour Hastings’ is set to be the next rare earths producer outside of China, and is aiming to do this by next year.

Hastings’ world class rare earths project is one of the highest value REE projects for ore value per kg.

In order to accelerate Hastings’ into production, the Australian Federal government recently provided the company with a $140M loan - a clear signal from the government that a local supply of rare earth elements is of critical importance.

We invested in FNT because its grounds have similar geological fundamentals to Hastings project and to see FNT make a REE discovery ~20km away.

It’s a high risk investment here and FNT is only at the early stages of exploration.

In our initiation note released on Thursday we mentioned that we wanted to see FNT complete its EM surveys and generate some interesting drill targets.

Only 24 hours after announcing our first investment, FNT did just that.

Last Friday FNT announced that the EM surveys had generated 12 high priority drill targets that are ready to be followed up with drilling.

FNT expects to drill test these targets next quarter.

With a total of twelve “priority 1” targets generated, FNT also announced that the team was on site conducting some “ground-truthing” - which to us means they are on-site collecting rock chip samples in and around the target areas, looking at outcroppings, and pinpointing exactly where they intend to drill.

This is common for a junior explorer to try and triangulate and narrow down the 12 targets from the EM survey and pick the best ones that need to be drilled in the near term.

The sampling program isn't the be all and end all, but if any high-grade outcroppings are found in and around these target areas then all of a sudden they move higher up the rankings on which target to drill first or spend the most cash on.

As well as the field works, heritage surveys are ongoing and a programme of works has already been submitted to the regulator, in the lead up to drilling next quarter.

So here in our investment memo you can see FNT is definitely on track - nailing Objective #1, and building up to deliver Objective #2:

ASX:FNT

Before we dive into the EM targets FNT has found, it's worth looking at land positions right now in the neighbourhood.

The map below shows:

• Shaded dark blue where the $486M Hasting’s globally significant rare earths project sits
• Aqua green is the $113M capped explorer Dreadnought
• In red is our FNT’s ground. Of particular interest is that chunk of land called ‘Lyons’ - that is where we think the most interesting EM anomalies and likely drill targets are located.

ASX:FNT

Before we dive into the EM targets FNT has found, it's worth looking at land positions right now in the neighbourhood.

The map below shows:

• Shaded dark blue where the $486M Hasting’s globally significant rare earths project sits
• Aqua green is the $113M capped explorer Dreadnought
• In red is our FNT’s ground. Of particular interest is that chunk of land called ‘Lyons’ - that is where we think the most interesting EM anomalies and likely drill targets are located.

More on the EM targets:

FNT’s EM surveys were completed by well respected geophysics consultants “Southern Geoscience Consultants” and were done with 50m spacing from heights of ~30m off the ground.

Keeping in mind these are the same guys who did all of this style of work for FNT’s big neighbour Hastings.

The 50m spacing used by FNT is a big improvement from the 1990s surveys run on the same ground, which had spacing of ~ 500m.

To try and visualise the difference, 500m is almost 3x the size of an AFL field. Leaving this much space between the EM lines means you are more likely to miss anomalies.

FNT have run the surveys in 50m spaced lines which makes it much less likely they missed any anomalies of interest.

FNT managed to put together a total of 30 targets after which a ranking system was used to try and rank them from highest to lowest priority.

The ranking system is mostly based on the following:

• Thorium radiometric anomalism - This one we had to speak to a geologist about - it is similar to magnetic anomalies, just looking for thorium anomalies.
• Association with a lineament/fault - Does the target sit on a fault line?
• Magnetic anomalism - Checking for magnetic signatures.
• Potential ironstone outcrop - Checking if there is ironstone outcrop in that area.

The more of these boxes that an anomaly ticked, the higher priority drill target it ranked.

After doing all of this, FNT managed to rank twelve priority 1 (High priority) drill targets.

Below is an image of those targets. The little blue dots showing up as all of the areas where FNT think they should be drilling.

What stands out in the image below is that the bulk of the targets are trending towards Hastings monster deposit.

Another thing that jumped out to us is that FNT claimed that success in this part of WA with respect to REE exploration was based on a similar style ranking system - EM surveys looking for the same 4 characteristics to produce the highest priority targets.

Reading this we thought it would be good to go back and check what Hastings did way back in the day before the project became what it is today.

Back in 2016 Hastings used the same consultants to run the same surveys and used a similar ranking system to produce their drill targets.

Getting the same consultants doing similar EM surveys, in an area they know well, is always a positive.

Below is an announcement by Hastings from when Southern Geoscience Consultants did the same EM survey at the Yangibana project:

FNT are now trying to replicate this by doing all of the same work on their ground.

Of course doing the same type of work doesn't mean you will make the same style discovery, but having touched on the nearology aspect of FNT’s project to Hastings, the more similarities the better.

You can check out our coverage of that nearology from our launch note here.

What’s next for FNT?

We mentioned at the start of today’s note that the next stage of triangulating the highest priority targets was to do some “ground truthing”.

FNT have already flagged that they are on-site and are doing some sampling in and around these EM anomalies.

The purpose of this is to try and see if there are any high-grade rock chips or outcrops. Think of this as another ranking exercise, if nothing is found then the EM anomalies are still enough to warrant drill testing.

If high-grade rock chips are found then these automatically become the highest priority EM anomalies to target in the drilling program.

Whilst all of this gets done, FNT will be trying to get all of the permitting and land access agreements sorted.

FNT has given Q2 2022 as the expected maiden drilling date which puts the big drilling event inside the next 3-4 month timeframe.

FNT 2022 Investment Memo:

We’ve been rolling out Investment Memos across our portfolio to better track our portfolio companies.

An “Investment Memo” is a short, high-level summary of why we continue to hold FNT and what we expect the company to deliver in 2022.

We’ll be using these Investment Memos as a way to assess the company’s progress over 2022 and also examine how our investment thesis plays out throughout the year.

In our FNT Investment Memo you’ll find:

• Key objectives for FNT in 2022
• Why do we continue to hold FNT
• The key risks our investment thesis
• Our investment plan.

Click the button below to read the FNT Investment Memo: