OD6 Metals [ASX:OD6]
Metals & Mining
Australia’s Standout Rare Earths & Copper Opportunity
We initiate coverage on OD6 Metals (ASX: OD6) with a 12-month fair value estimate of A$0.317 per share, representing a 296% upside to the current share price of A$0.080. OD6’s valuation is driven by its flagship Splinter Rock Rare Earths Project in Western Australia, one of Australia’s most promising clay-hosted rare-earth element (REE) systems, with a JORC 2012 Mineral Resource Estimate of 682Mt at 1,338 ppm TREO. The project stands out not just for its scale potential, with only 10% of the identified clay basin drilled so far, but for the exceptionally high quality of its products: OD6 has already produced a high-purity MREC with very low impurities and strong NdPr enrichment, placing it ahead of most clay REE peers. Splinter Rock also benefits from outstanding infrastructure; located away from farming activity near Esperance with sealed-road access, an established workforce, nearby renewable energy generation and direct proximity to the deepwater Esperance Bulk Port with essential cape-size vessel capacity. Additionally, OD6’s Gulf Creek Copper-Zinc Project in New South Wales offers discovery potential. Gulf Creek, which benefits from nearby energy infrastructure and an established transport network, has already delivered high-grade results (intercepts of up to 4.6% Cu) from its maiden drilling programme, with Phase 2 drilling now underway.
Metallurgical Edge Sets OD6 Metals Apart
OD6’s metallurgy distinguishes the company as a leader in the clay-hosted REE sector. Its ambient-acidic heap-leach process supports strong project economics through low capital intensity and operating costs. The company has also further enhanced processing efficiency through technologies such as nanofiltration, strengthening recoveries and reducing reagent consumption. More than 90% of Splinter Rock’s product value is derived from the high-value magnet elements contained in Rare Earths (Nd, Pr, Dy and Tb), supported by excellent overall Nd+Pr recoveries of ~75% and a remarkably low impurity profile. OD6 has already produced a high-purity saleable MREC and MREH of ~56-59% TREO, with uranium and thorium levels below 0.01%, placing it among the cleanest clayhosted REE products in Australia and worldwide. With OD6 already in active offtake engagement, and likely to secure favourable terms given the quality of its product, the company is well positioned to benefit from a tightening REE market and increasing Western demand for secure, high-purity magnet feedstock.
Valuation: A$0.285 – A$0.349
Our valuation of OD6 Metals confirms the company’s substantial re-rating potential, driven by the quality of their Splinter Rock REE Project. In our Base Case, we derive a total equity value of A$65.8m, equating to A$0.285 per share, while the Upside Case increases to A$77.4m, or A$0.349 per share. This represents an implied upside of 256.4%–335.9% relative to the current share, with a midpoint fair valuation of A$0.317 per share. OD6 trades at a material discount to its intrinsic value, providing an attractive entry point for investors.