LSR: Appoints ex-MP Materials and ex-Lynas technical leaders to its USA Heavy Rare Earths Project

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 38,596,178 LSR Shares and 25,393,930 LSR Options at the time of publishing this article. The Company has been engaged by LSR to share our commentary on the progress of our Investment in LSR 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.

Our USA based heavy rare earths explorer Lodestar Resources (ASX:LSR) just appointed ex-MP Materials and ex-Lynas technical leaders to its team.

A$15BN MP Materials and A$13.5BN Lynas are the two major rare earths mining and processing companies outside of China supplying global technology markets.

LSR has a heavy rare earths exploration project in Arizona, USA.

(Source)

Heavy rare earths are critical inputs into the key AI and military technologies that will likely determine the next global superpower/s:

• Artificial Intelligence (AI)
• AI-driven defence
• Autonomous war robots and drones
• Quantum computing, and
• Advanced energy technologies.

China dominates ~60% of rare earths mining and ~90% of rare earths processing, and has recently withheld rare earths supply as leverage in trade disputes with the USA. (source)

The US has now realised that being exposed to rare earths supply disruptions puts them at a big disadvantage on the world stage.

Rare earths supply risk has created a sense of urgency in the USA not seen since the “Manhattan Project” during WW2 (to build the first nuclear bomb)...

We think the long term trajectory has been set and it's for a building out of the domestic rare earths supply chain inside the US...

.. putting aside the last couple of weeks where the small end of the market experienced a broad sell off and nearly all share prices have come off from recent highs for the moment, coupled with the recent Trump-Xi “12 month truce” where a temporary “cease fire” of sorts was agreed on various export controls, including rare earths.

For us, we don’t think the 12 month truce will slow the USA down at all in urgently rebuilding its domestic critical minerals supply.

Our USA critical minerals Investments are a 2026 and 2027 play - while the recent sell off isn’t pleasant, we don’t think the macro theme has changed.

LSR owns an option on a heavy rare earths project in Arizona, USA.

And today, LSR appointed ex-MP Materials and ex- Lynas technical leaders to its team.

Andy Martinez who was Director of Product Development at MP Materials and led the design and building of a pilot line and multiple analytical laboratories for the prototyping and testing of rare earth magnets, and

Dayo Odunade who was Business Development Manager at Lynas Rare Earths where he led Strategy Development and Execution and Mergers & Acquisitions.

(Source)

Basically, LSR is executing one of the steps of what we have identified as the general “US critical minerals playbook” for small ASX companies.

Given the urgency in the USA to solve this domestic supply problem, we think it’s the small companies that are first and fastest to deliver the following that will perform well in the next 1 to 2 years:

✅ own or acquire a US based critical minerals project

⬜ appoint Washington lobbyist

⬜ spend time in USA or appoint US based operations person

✅ appoint experienced, big name advisors or board members (Today’s news for LSR)

⬜ list on the US OTC market

⬜ commence NASDAQ or NYSE listing process

⬜ acquire, license or partner with downstream processing technology

⬜ deliver early metwork and processing of bulk samples, ahead of drilling

⬜ prove samples can be processed - deliver down stream product

⬜ secure US govt funding

⬜ attract interest from private US investors

⬜ outline plan for small, cheap and fast mine

⬜ deliver drilling success on project (doesn’t need to be huge), just commercial for a small mine

⬜ use larger market cap to bolt on later stage/advanced projects in the USA

⬜ list on major US exchange

⬜ US investor roadshows

⬜ deliver domestic US critical minerals supply.

We think the broader US markets are yet to fully catch on to the US critical minerals investment thematic.

And the US Govt urgency and US capital markets will drive domestic critical minerals supply into existence.

So why are ASX companies doing this and not US companies?

Because Australian’s have decades of exploration and mine building experience, where the US shifted focus away from mining decades ago and their speed and skills eroded over time.

Today’s LSR appointments are part of this playbook, and they look to have the experience to help LSR execute on other parts of the playbook.

Interestingly - both have experience downstream - Andy Martinez with”magnets, separation, technologies & downstream process”.

(“downstream” means all stages AFTER mineral extraction: processing, refining, manufacturing, and delivering value-added products to end users or industry, a critical area where China currently dominates)

Dayo Odunade in “downstream business development”.

The exact set of expertise for a company that would potentially bring in some sort of downstream venture into the business.

Which looks exactly like the type of thing they will be focused on doing:

(Source)

We have seen US critical minerals stocks with downstream angles do relatively well in the current market - especially in Our Portfolio.

(then the last two week of broader small cap selling kicked in and most small cap stocks took a haircut)

Two of our other US critical minerals Investments LKY and RML have already been progressing their downstream plans.

LKY has partnerships with Rice University and Hazen Research on downstream tech.

And RML recently appointed Tribeca Investment Partners as an advisor to develop its downstream business as well as a processing partnership with US based Kingston Process Metallurgy.

(Source)

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The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Both LKY and RML have been fast executors of the “US critical minerals playbook” since we invested.

LSR’s project was previously explored for uranium and rare earths in the 1940s and hasn’t really been touched since 1991.

LSR’s main target area is ~300m in length and could potentially extend ~300m to the west (the prospect hasn’t been properly explored so it could be even bigger).

(Source)

The mineralisation is there...

LSR just needs a few drill holes put into it, make a discovery...

(no guarantees - exploration is risky and drilling may fail to find commercial quantities of rare earths).

LSR’s project contains light rare earths AND high concentrations of heavy rare earth elements, including dysprosium, terbium, and lutetium, as well as yttrium, ytterbium, gadolinium, holmium, erbium, and thulium.

LSR’s project is on the border of Arizona and Nevada - 200km away (trucking distance) from the USA’s current rare earths champion MP Materials.

MP Materials is aspiring to mine rare earths and produce advanced rare earth magnets 100% inside US borders , but is currently mostly producing light rare earths.

Advanced rare earth magnets need both light and heavy rare earths.

LSR has rare earth mineralisation from trenching and rock chips with over 50% of the rare earths being heavy rare earth elements...

(again, heavy rare earths are the critical inputs into AI, quantum computing and autonomous warfare... where China currently controls supply)

(Source)

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AND China has a far stronger grip on heavy rare earths than it does light rare earths...

(Source)

We think heavy rare earths is the right place to be in terms of exploration exposure inside US borders.

1. Because of the proximity to MP Materials - 200km from MP materials, which is more light rare earths, but needs heavy rare earths to feed its “10X magnet facility” (yes, its called the 10X facility) that it expects to have commissioned by 2028. (source)
2. Because the US has virtually no domestic heavy rare earth supply (outside of MP’s mine which is primarily light rare earths)

Here is a Wall Street Journal article which said“as MP scales up magnet production it will need to acquire more heavy rare earths than are available” at its own mine:

(Source)

So where will all that heavy rare earths feedstock come from?

(we are hoping from projects like LSR’s - but yes we recognise its still very early days for LSR and they still need to make a discovery.).

Our thinking with LSR is:

1. As the US pours capital into its champions like MP Materials and develops processing capacity inside the USA it will need more feedstock.
2. There is plenty of light rare earth feedstock available in the western world (if governments are willing to put capital behind developing those projects).
3. Once that MP processing facility is built (MP expects to have it operational by 2028), it will be the most short in heavy rare earths supply. (source)

Which will mean any heavy rare earth discovery made INSIDE US borders could become extremely valuable.

That gives LSR time to work on its project and (we hope) make an economic discovery.

8 reasons why we Invested in LSR

We Invested in LSR last week (27th of October), here is the 8 reasons we published on that date:

Read our full initiation note here: Our New Investment: Lodestar Minerals ASX: LSR

1. LSR has a US critical minerals project prospective for heavy rare earths

LSR’s new project is prospective for heavy rare earths (the less common and more valuable type of the rare earth materials).

2. Heavy rare earths are more scarce and critical for “global dominance”

Access to and control over HEAVY rare earths supply helps determine which nations can build, sustain, and upgrade next-generation:

• Artificial Intelligence (AI)
• AI-driven defence
• Autonomous war robots and drones
• Quantum computing, and

Heavy rare earths production is dominated by China (>80%), and the USA’s only rare earth mine owned by $19BN MP Materials, produces predominantly light rare earths.

3. We think the US will need domestic heavy rare earths supply in 2-3 years

With the recent funding MP Materials received for an expanded magnet production facility we think the plant will be short heavy rare earth feedstock when it comes online.

MP Materials expects to have that plant fully commissioned by 2028 - which gives time for LSR to explore and define a heavy rare earths deposit (with some exploration luck).

IF LSR can make a discovery and define a resource by the time the plant comes online it could be extremely valuable as a source of domestic heavy rare earths for someone like an MP...

4. Capital is flowing into US critical metals macro thematic

We think LSR’s US rare earths project could attract increased capital flows into LSR.

We have seen this play out in other stocks where they list on the OTC, attract US attention and eventually capital.

One of the biggest US investment banks, JP Morgan, has also committed US$1.5 trillion for industries that are critical to the US national interest - including critical minerals.

5. IF LSR attracts capital and re-rates to a valuation high enough it could acquire more advanced assets

IF LSR can attract enough capital with its current portfolio of assets, it can use its re-rated valuation to acquire more advanced assets.

6. We are Investing alongside Tribeca Investment Partners

Tribeca has come into four of our recent Investments - LKY (up 626% at its peak), AVM (up 260% at its peak), RCM (up 151% at its peak) and most recently PNN which has peaked at ~263% above our Initial Entry Price.

We like their approach to resources investing and they bring institutional interest to a micro cap explorer like LSR.

The past performance is not an indicator of future performance.

7. We think it's the right time in the bull market cycle to get some exposure to exploration stocks

We think it's the right time to Invest in junior explorers with new assets.

We are seeing institutional capital finally coming back into the exploration sector after years of a capital drought.

We expect those capital inflows to increase the valuation of explorers with projects in the right commodities and the right parts of the world (like rare earths in the US).

8. Free kick on a WA gold and Chilean gold-copper project

LSR has put out some interesting results from its WA gold project of late.

It also has a few interesting exploration targets on its Chilean exploration project.

Both of those projects are not the primary reason for us Investing in LSR.

But if the results are strong enough to one day make that the primary asset, we would get this as a “free option” to our US rare earths exposure.

Ultimately, we want to see LSR achieve our Big Bet which is as follows:

Our LSR Big Bet:

“LSR makes an economic discovery on its US heavy rare earths projects and re-rates 1,000% from 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 LSR Investment Memo.

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

What’s next for LSR?

🔄 Target Generation on US rare earths project

We want to see LSR sample, map and run geophysics on its US asset to identify priority drill targets.

We also want to see LSR run metallurgical testwork on the geology to start thinking about how to separate the heavy rare earths.

First though, LSR will need to complete the acquisition of its project in Arizona.

Here are the milestones we are tracking:

🔄 Acquisition completed

🔲 Mapping and sampling (soil and rock chips)

🔲 Geophysics

🔲 Metalurgical testwork

🔲 Drill targets confirmed

What are the risks?

In the short term, given LSR isn’t doing any drilling the two key risks we see are “deal risk” and “commodity price risk”.

LSR still needs to complete the acquisition of its rare earths asset and there is always a chance the deal falls through.

If the deal were to fall through we would expect LSR’s share price to re-rate lower.

Deal risk

LSR has picked up the project under a 120 day option, which means there are still a few hurdles to clear before it formally owns the asset. There’s also always a chance that LSR walks away after the 120 days if the drilling doesn’t deliver, which would mean time, cash and transaction shares spent on a project that LSR may choose not to advance.

Source: “What could go wrong” - LSR Investment Memo 27 October 2025

There is also a chance rare earth prices and market sentiment toward rare earth stocks gets worse after the recent China-US news.

There is a risk of over-supply in the rare earths market which would deter future exploration and negatively impact LSR’s share price.

Commodity price risk

The performance of commodity stocks is often closely linked to the value of the underlying commodities they are seeking to extract. Should rare earths prices fall, this could hurt the LSR share price.

Source: “What could go wrong” - LSR Investment Memo 27 October 2025

For the full set of risks we have identified and accepted in making our Investment in LSR, see our LSR Investment Memo below.

Other risks?

Like any small cap exploration company, investing in LSR carries a high degree of risk.

LSR is an early-stage explorer with projects that are not yet producing. There is no guarantee that exploration on its US heavy rare earths project or other assets will lead to an economic discovery, or that any discovery will ever reach commercial production.

Funding remains a key risk. As a pre-revenue company, LSR depends on capital markets to finance exploration and development. Any delays in exploration progress or weaker market conditions could make raising capital more difficult or force the company to issue shares at lower prices, diluting existing shareholders.

Regulatory and permitting risks are also present. While operating in the US is generally considered stable, changes to state or federal policy, or delays in obtaining necessary permits, could impact timelines and increase costs.

LSR’s strategy also includes potential downstream partnerships or acquisitions. This introduces execution and integration risk if these deals do not materialise or fail to deliver value, the company’s focus and resources could be stretched.

In addition, the company has smaller exploration assets in Australia and Chile. Maintaining multiple projects across jurisdictions increases administrative and operational complexity and could divert attention from its primary US rare earths focus.

Finally, broader equity market conditions, particularly for junior explorers remain volatile. A downturn in global markets or risk sentiment could affect LSR’s valuation regardless of exploration results.

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

Our LSR Investment Memo:

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

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

Our LSR Investment Memo covers:

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