AW1: Drilling in the USA for critical metals... that China controls

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 14,722,222 AW1 Shares and 7,361,111 AW1 Options at the time of publishing this article. The Company has been engaged by AW1 to share our commentary on the progress of our Investment in AW1 over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

The critical metal “indium” is essential for infrared detectors, night vision systems, missile guidance systems, radar systems and F-35 fighter jets.

The US has zero domestic production of indium.

China produces 70% of the world’s supply.

Gallium is essential for defence systems and high-performance semiconductors required for AI.

The US has zero domestic production of gallium.

China produces 98% of the world’s supply.

Our Investment American West Metals (ASX:AW1) owns 100% of the largest undeveloped JORC-compliant indium resource in the United States.

The same project also has confirmed gallium mineralisation.

Last Friday AW1 started a 5,000m drilling campaign - that for the first time will properly test a pipeline of high grade indium, gallium and copper targets.

(All from outside the existing JORC resource)

AW1 is targeting a “Goldilocks Zone” - an area where it expects to be critical minerals rich and where there has been very limited drilling to date...

As well as indium, AW1’s JORC resource also has large defined resources of zinc, copper, and silver.

Oh and it’s already fully permitted for open pit mine and exploration shaft construction - potentially saving the company years of permitting purgatory and development delays.

We are hoping assay results over the next few months deliver AW1 a few new unexpected discoveries, allowing AW1 to define a multi-mineral resource to go with AW1’s giant indium resource.

We think AW1’s asset is of strategic importance to the USA’s national security.

AW1’s MD Dave O'Neil has said publicly: "We have been approached by the Department of War, Department of Energy and local government to move this forward." (listen to that part of a podcast here)

On 14th January this year, President Trump issued a Presidential Proclamation, invoking Section 232 national security powers to address the US’ reliance on foreign sources of processed critical minerals.

Indium was one of the 13 critical minerals President Trump explicitly mentioned that the US would push to develop domestic supply. (source)

Two other minerals Trump mentioned were gallium and germanium.

(source)

With its current round of drilling, AW1 will be assaying its project for both gallium and germanium (as well as a full suite of other critical metals).

We think Artificial Intelligence (AI), AI humanoid robots and all of the tangential industries that are born from it will dominate global markets over the next 5-10 years.

Two days ago we said in an email to subscribers: “the more we look at it, the more obvious it is that the real chokepoints are physical, not digital”.

And that we think “the biggest winners will be critical components of AI infrastructure”.

(source: an email we sent to subscribers after market on Monday - subscribe here for future emails)

Naturally, that means the developers of the critical mineral mines that go into building that infrastructure will also win.

Like indium, gallium and germanium developers.

• Gallium is used in high-efficiency electronics and thermal management for AI chips - gallium oxide chips can be ~5x more conductive than silicon.
• Germanium is the critical dopant in fibre optic cores - AI server racks need 36x more fibre than traditional server racks, and China controls ~60% of global supply.
• Indium powers the laser diodes and transceivers, enabling high-speed optical data transfer inside AI data centres.

(source)(source)(source)

Note - In December 2024, China banned gallium exports to the US, then the ban was temporarily suspended (until November 2026) - so the full impacts haven’t really been felt in the market YET. (source)

As we said above, AW1 owns 100% of the single biggest indium resource inside US borders.

(It's the only project with an indium JORC resource estimate on US soil).

So far, only ~35% of the project’s prior drilling has been assayed for indium.

Only ~10% of historical drill cores have been assayed for gallium and germanium.

BUT we do know that some resampling on an old drillcore delivered a monster 518m continuous gallium intersection with a peak grade of ~77.3g/t:

(source)

There are more historical core resampling results pending in the coming weeks - so we could see more gallium results fairly quickly here.

AW1’s exploration theory is that its project shares geological similarities to the old Apex

mine in Utah, ~300km south of AW1’s project.

That Apex Mine was the highest-grade gallium-germanium mine ever operated in the US and was producing in the 1980s and 1990s. (source)

(source)

With the current round of drilling, we should get a fairly good idea of whether or not that analogue is true.

AND IF proven - AW1 could be sitting on both the biggest indium resource AND potentially a significant gallium resource inside the US.

Interesting side note - someone just purchased that Apex mine in a deal worth ~US$32M.

(Maybe front-running the end of those temporary suspensions from China ending in November?)

(source)

(more on that deal in a second).

We Invested in AW1 because we think the project could become strategically important to the US as a domestic source of indium first and foremost.

Now, after this current round of drilling, the deposit’s strategic importance could also come from any gallium/germanium resource the project might host.

AW1 will also be drill testing for copper-silver-gold mineralisation on the project.

We didn’t Invest in AW1 for exposure to a discovery of those minerals BUT it would be a handy bonus if some were found.

In relation to the multi-commodity potential of AW1’s asset, the below Reuters article, quoting a co-CEO of JP Morgan lives rent free in our heads.

Every time AW1 talks about the multi-commodity potential of its asset we remember the below part of the article where it mentions multiple revenue streams keeping projects financially afloat regardless of pricing volatility in critical minerals.

And how financing critical minerals projects is much easier when there are more predictable revenue streams like copper and gold to go with the strategic metals.

(source)

We think any big copper/gold/silver drill hits could change the way the market looks at AW1’s indium resource.

It might even help with getting the project funded - either by a group like JP Morgan, institutional funds or maybe some US government funding.

AW1 is working with US advisors, Ervin Graves Strategy Group, on potential funding pathways including the Defence Production Act Title III program (more on this below).

So, AW1 started drilling on Friday and has a total of ~5,000m of drilling planned over the coming 3-4 months.

We should start to find out more about what AW1’s project hosts over the coming months.

Given its diamond drilling we may even get visuals in the lead up to assay results...

American West Metals

More on AW1’s current drill campaign and what to watch out for

AW1's project currently has a defined JORC resource of 33.7Mt at 20g/t indium (for a total of 23.8 million ounces of indium), plus includes zinc, copper, gold and silver.

The current drill campaign is testing three separate ideas, all outside the existing resource estimate:

1. Following up high-grade indium with copper, silver, and gold

IF AW1 can expand this zone then the project becomes a polymetallic story, not just indium but with copper, silver, and gold credits that could improve the potential economics.

(source)

2. First-ever gallium-focused drilling on the project

As mentioned earlier, this will be the first time AW1 drills specifically targeting Apex style mineralisation (gallium/germanium).

(source)

3. Drilling for "look-alike" geophysical targets

The existing resource sits on just one part of a 5.6km magnetic trend that runs through the project area. AW1 will test more of that trend outside of the current resource.

(source)

AW1’s exploration model - similarities to the nearby Apex mine

One of AW1’s exploration theories is that its project shares geological similarities to the Apex Mine, ~300km away.

The Apex is the only primary gallium mine that has EVER operated in the United States.

At its peak, the Apex was producing germanium at grades of up to 7,000 g/t and gallium at up to 20,000 g/t.

Since that mine was shut down, the US has produced no gallium domestically.

Interestingly, the mine wasn’t just producing gallium-germanium but also copper in the 1980s and 1990s.

(AW1’s asset also has some copper - an estimated 49,000 tonnes (JORC indicated and inferred - source)

We already know AW1’s got gallium in an old core that's been resampled (up to 77.3g/t).

Now, with the current drill program, we get to see those Apex-style targets tested properly for the first time.

Fingers crossed they come in - especially now, only a few weeks after that old Apex mine was purchased by NASDAQ-listed ~US$500M Blue Moon Metals in a deal worth ~US$32M.

(source)

Why this deal matters for AW1

Because the groups behind Blue Moon could take an interest in AW1 if that drilling comes in.

Blue Moon has Hartree Partners (a key partner with the US government on the recently announced US$12BN critical metals stockpile "Project Vault"), Wheaton Precious Metals, and Oaktree Capital on its register.

(source)(source)

IF a partner to the US critical minerals stockpiles is backing the Apex mine - then some solid drill hits from AW1 could put its project on their radar too.

(only this time, they will get indium to go with the gallium/germanium too - the Apex Mine isn’t an indium resource and indium is another mineral the US Pentagon is interested in)

(Source)

Here is where AW1’s project sits relative to that Apex Mine:

(source)

IF AW1 can start to build a gallium and germanium story (on top of its project having the biggest indium resource in the US) then we think its project could be of interest to the US government.

We already know AW1 is working with US advisors, Ervin Graves Strategy Group, on potential funding pathways including the Defence Production Act Title III program.

AW1’s Managing Director Dave O'Neil has said publicly: "We have been approached by the Department of War, Department of Energy and local government to move this forward." (listen to that part here)

At this stage, we would take any corporate interest too (similar to Blue Moon’s interest in Apex) - a few of Blue Moon’s big holders coming into AW1 would be big too (Oaktree, Hartree, Wheaton).

Especially considering AW1 is capped at just $44M right now.

FYI AW1 already has attracted corporate interest before - Ocean Partners own 8% of AW1 - a global metal trading and financing company, that investment into AW1 was mainly for its Canadian copper project - you can read more about that asset in our recent note here.

Of course, there is no guarantee that AW1's drilling will return economic grades. That's the risk with exploration - what AW1 has shown so far is encouraging, but there are no guarantees with exploration drilling.

Ultimately we are hoping AW1’s US asset helps AW1 achieve our Big Bet which is as follows:

Our AW1 Big Bet:

“AW1 receives capital from either the US government, a strategic partner or the capital markets to progress its Indium project in the USA, re-rating AW1 to a valuation that is multiples of our Initial Entry Price”

NOTE: our “Big Bet” is what we HOPE the ultimate success scenario looks like for this particular Investment over the long term (3+ years). There is no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and commodity price risk - just some of which we list in our AW1 Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What's next for AW1?

🔄 5,000m drill program on US critical minerals asset (now underway)

AW1 has flagged the potential to upsize this drill program, so if this happens it could be an early sign that management are liking what they see from the drilling. (source)

Here are the milestones we are tracking for the US indium project

• source) 🔄 Drilling underway - running 24/7 (
• 🔲 Resampling assays - expected in 3-5 weeks
• Drill results - expected over the coming months 🔲
• 🔲 Updated resource estimate (post drilling)

🔄 Pre-Feasibility Study for Canadian copper project

AW1 also has its Storm Copper Project in Canada where a PFS is in progress, which in the quarterly was expected to deliver in Q1, so might not be far away.

With copper prices having run the past year or so, we want to see this delivered, along with the environmental studies and key permits needed to advance the project. (source)

🔄 Strategic and government engagement

AW1 appointed Ervin Graves (Washington DC firm) earlier this year to lead government engagement. (source)

With drilling now underway, and the Section 232 Proclamation referring to just the critical metals AW1 is exploring for, this is something we could see some movement and momentum on.

Especially for potential US government funding that would position AW1 as a domestic critical minerals supplier.

What could go wrong?

The key risk for AW1 in the short term is “exploration risk”.

There is always a risk that AW1 fails to deliver any interesting drill results.

Especially now that AW1 is drilling for gallium and germanium alongside its indium resource.

IF grades come back weak - or IF the gallium/germanium mineralisation doesn't extend as hoped - the critical minerals angle loses momentum.

Especially considering the market will expect good results from the indium targeted drilling, given the project's existing resource.

Exploration risk

There is no guarantee that AW1’s current drill and resampling programs will be successful and as a result AW1 may not be able to prove up an economical resource.

Source: “What could go wrong” - AW1 Investment Memo 16 October 2025

Other Risks

Like any small-cap exploration and development company, AW1 carries significant risk, here we aim to identify a few more risks.

While AW1 has a massive defined resource of indium alongside zinc, copper, and silver, polymetallic deposits are notoriously complex to process. Extracting and commercially separating trace critical minerals like gallium, germanium, and indium requires highly specialised and capital-intensive metallurgical flowsheets.

There is a risk that the commercial recovery of these specific metals proves uneconomic at scale, regardless of the high in-ground grades.

AW1’s theory that its project shares geological similarities to the historic high-grade Apex Mine is currently just an exploration model. There is a high statistical probability that the current 5,000m drill campaign fails to discover economic quantities of gallium or germanium, which would diminish the "multi-critical mineral" premium the market might be pricing in.

Operating across two major jurisdictions - running a 5,000m drill program in the USA and advancing a Pre-Feasibility Study for the Storm Copper project in Canada, requires immense capital and stretches management bandwidth.

As a pre-revenue explorer capped at just $44M, AW1 has a high cash burn. If the company fails to secure non-dilutive US government funding (such as through the Defence Production Act Title III), it will highly likely need to tap equity markets to fund its ongoing development, resulting in dilution for existing shareholders.

AW1’s valuation is heavily leveraged to US-China geopolitical tensions, Chinese export bans, and US government policy initiatives like the Section 232 Proclamation.

If global trade relations normalize, Chinese export bans on gallium and germanium are permanently lifted, or US political priorities shift away from domestic critical mineral stockpiling, the strategic market premium currently attached to AW1's US asset could quickly evaporate.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our AW1 Investment Memo

You can read our AW1 Investment Memo in the link below.

We use this memo to track the progress of all our Investments over time.

Our AW1 Investment Memo covers:

• What does AW1 do?
• The macro theme for AW1
• Our AW1 Big Bet
• What we want to see AW1 achieve
• Why we are Invested in AW1
• The key risks to our Investment Thesis
• Our Investment Plan