Our New Investment: Lodestar Minerals ASX: LSR

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 38,596,178 LSR Shares and 25,393,930 LSR Options. 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.

Access to and control over HEAVY rare earths 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
• Advanced energy technologies.

Whoever wins the race in these emerging domains determines geopolitical and military supremacy.

Which is why the USA has recently commenced urgent efforts to try and break China’s stranglehold on rare earths supply and processing...

An urgency not seen since the “Manhattan Project” during WW2 to build the first nuclear bomb - which obviously shaped what the world looks like today.

The USA generally has a technology lead in most of these areas...

But the USA’s “Achilles heel” is China’s control of rare earths supply and processing.

This is the USA’s critical handicap in this new race for global supremacy.

Right now we have only seen China threaten to withhold rare earths supply as leverage in trade negotiations...

But what happens if things escalate beyond trade...?

Two weeks ago China added controls to HEAVY rare earths too - critical inputs into the “global supremacy deciding” domains of AI, autonomous warfare and quantum computing.

So US domestic supply of heavy rare earths is suddenly a national security problem for the US to solve, and quickly... trade truce or not.

So we wanted to add some exposure to an early stage, “swing for the fences” exploration shot at a new heavy rare earths discovery, inside US borders.

Our latest Investment is Lodestar Minerals (ASX:LSR).

We Invested in the LSR capital raise at 2.5c per share - which is a $25M undiluted market cap. Fully diluted market cap of ~$37M (when the in-the-money options are considered).

LSR just announced the acquisition of an option on a heavy rare earths project in Arizona, USA...

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

(USA in the 90’s: “let’s just import all our rare earths from China instead, what could go wrong? right?”)

The 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.

Of the 12 rare earths that China has put restrictions on...

Channel sampling on LSR’s project demonstrated mineralisations of all 12 of them. (source: LSR announcement table 1)

Including high concentrations of the HEAVY rare earths on which China most recently announced controls.

High concentrations of heavy rare earth elements from channel sampling is a great start - LSR is early stage exploration - so drilling the project will determine if they can find commercial quantities of heavy rare earth inside US borders.

We also like that LSR is a first and fast mover in heavy rare earths exploration inside US borders.

LSR says in its announcement it is moving quickly into “Metwork” (proving they can extract heavy rare earths from a bulk sample) which we think could help their case to attracting US government funding to progress the project.

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)

(Source)

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)

LSR is an early mover on a USA based heavy rare earths exploration project...

And in the current climate of US urgency to secure rare earths, first and fast wins (in our opinion)

The mineralisation is there...

LSR just needs a few drill holes put into it, make a discovery (this is where the main risk is, exploration is risky and drilling may fail to find commercial quantities of rare earths) and in parallel quickly process a bulk sample to demonstrate 100% USA sourced and processed heavy rare earths.

Whatever happens with China rare earths export controls in the near term, the USA looks like it isn’t taking any chances and is looking to secure their own supply as quickly as possible (treating supply risk as a national security risk).

When it comes to exploration we wanted exposure to a company that is having a crack at making a new heavy rare earths discovery inside USA borders...

... 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)

(that’s the facility being built with funding from the Department Of War, and an offtake deal from Apple).

(Source)

LSR’s chairman summarised it pretty well with this comment:

(source)

How did the USA get here?

China has been building up their rare earths mining and processing capacity quietly for decades, and USA’s focus on globalisation made them lose sight of handing strategic industries to potential adversaries.

And now the race is on for the USA to fix it.

Western governments, particularly the U.S., Japan, and Australia, now classify heavy rare earths as critical defense materials.

• The U.S. The Department of Defense is funding a “mine-to-magnet” initiative to build full domestic heavy rare earths processing and magnet-fabrication capacity, linking Lynas (Australia) and MP Materials (U.S.) into secured supply chains. (source)
• The European Union and Japan are pursuing rare earth stockpiles and bilateral agreements with Greenland, Canada, and Africa to mitigate Chinese dominance.

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

(Source)

The first wave of broader market interest has been in rare earths in general.

We think the next run will be in heavy rare earth stocks - once the market catches onto how scarce they are (and just how critical they are for really important industries).

Which is why we are adding LSR to the Portfolio today.

The USA currently has only one producing rare earths mine - $19BN MP Materials, Mountain Pass mine in California.

That mine produces mostly light rare earths.

Earlier in the year, MP received US$400M from the US Department of War and signed a US$500M deal with Apple to 10x its magnet production facility.

Immediately after that, the Wall Street Journal reported that “as MP scales up magnet production it will need to acquire more heavy rare earths than are available” at its own mine:

(Source)

The only company in the US producing heavy rare earth oxides in the US is Energy Fuels which is doing so from its processing plant using feedstock from different projects around the world...

Energy Fuels share price is up OVER 500% over the last 9 months and is now capped at US$4.9BN.

(source)

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.

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.

Interestingly, in that video we referenced yesterday - the US Energy Secretary Chris Wright specifically mentions Arizona as one of the states where he thinks domestic rare earth supply could come from.

In the interview he is asked “Mr Secretary, which states are the most promising for the rare earth development?”...

He responds:

“Believe it or not California is our one rare earth producer today... But theres resources in Nevada, in Utah, in Arizona, in Idaho. Across those mountain mining west districts, we have lots of opportunities there”.

(Source)

LSR is in the right macro theme - currently attracting capital

Today we are adding LSR to our Catalyst Hunter Portfolio, where we Invest in earlier stage exploration investments.

With LSR’s new US rare earths project, we want to see them roll out the “US critical metals play book”, which essentially runs like this:

• Bring on US government lobbyists to go for US critical minerals funding,
• OTC listing for exposure to US investors
• Get on the radar of US investors
• and maybe even some high profile appointments to strengthen the in-country team.

We want to see LSR take advantage of the market’s willingness to fund us critical minerals stocks and hopefully make a discovery that is material for its market cap...

OR the US critical metals theme capital flows push LSR’s market cap to a point where it's able to use its balance sheet to pick up more advanced assets, also in the US...

We think the US critical minerals macro thematic still has a long way to run (check out our weekender on this here).

We have had success in US critical minerals so far

Our two early picks in the US critical minerals space have performed well for us so far:

• Locksley Resources Ltd is currently up 400% from our Initial Entry Price
• Resolution Minerals Ltd is currently up 515% from our Initial Entry Price.

(Past performance is not an indicator of future performance)

We do note that at the 2.5c placement price, LSR is capped at $25M undiluted, so is starting from a higher valuation than LSR and RML.

When the in the money options are considered the fully diluted market cap is closer to ~$37M.

We are Investing in LSR alongside Tribeca Investment Partners.

We have had some success lately in stocks which Tribeca has also recently invested in:

• Locksley Resources - which is one of our most recent big wins, which at its peak was up ~626% from our Initial Entry Price.
• Advance Metals, which is up over 90% from our Initial Entry Price.
• Rapid Critical Metals, which is up over 40% from our Initial Entry Price.
• Power Minerals, which is up over 80% from our Initial Entry Price.

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.

Later in today’s note we will share our updated LSR Investment Memo which will cover:

• What LSR does
• 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

But before that, here is a summary of the 8 reasons why we Invested in LSR.

8 reasons why we Invested in 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.

Investment Memo 1: Lodestar Minerals (ASX:LSR)

Memo Opened: 27-10-2025

Shares Held: 38,596,178

Options Held: 25,393,930

What does LSR do?

Lodestar Minerals (ASX:LSR) owns an option to acquire a rare earths project in Arizona, USA.

LSR’s project is prospective for heavy rare earths - the more scarce, more valuable suite of rare earth materials.

What is the macro theme behind Lodestar Minerals?

Critical minerals and US based projects are attracting attention and capital.

Trump is now looking to adopt pandemic-era level urgency to boost critical minerals production in the US.

With Trump signing Executive Orders to encourage US domestic critical metals production, fast track permitting and providing funding for mining projects private interest and capital has followed into the sector.

LSR has exposure to rare earths - a set of niche minerals used in the production of magnets for various military applications and AI.

Our LSR Big Bet

“LSR makes an economic discovery on its US 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.

The 8 Reasons We Invested in Lodestar Minerals

1. LSR has a US critical minerals project prospective for heavy rare earths
2. Heavy rare earths are more scarce and critical for “global dominance”
3. We think the US will need domestic heavy rare earths supply in 2-3 years
4. Capital is flowing into US critical metals macro thematic
5. IF LSR attracts capital and re-rates to a valuation high enough it could acquire more advanced assets
6. We are Investing alongside Tribeca Investment Partners
7. We think it's the right time in the bull market cycle to get some exposure to exploration stocks
8. Free kick on a WA gold and Chilean gold-copper project

What do we want to see LSR do next?

Objective 1: 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.

Milestones:

🔄 Acquisition completed

🔲 Mapping and sampling (soil and rock chips)

🔲 Geophysics

🔲 Metalurgical testwork

🔲 Drill targets confirmed

Objective 2: Drilling on US rare earths project

After LSR has identified priority drill targets, we want to see the company drill the project.

Milestones:

🔲 Drill permitting

🔲 Drilling

🔲 Drilling results

Objective 3: Macro objectives

We want to see LSR go after fast tracked permitting and non-dilutive funding opportunities that are available for US critical minerals projects.

Milestones:

🔲 Fast-tracking permitting

🔲 Non-dilutive US critical minerals funding opportunity applications

Objective 4 (Bonus): LSR uses its market cap to acquire more advanced assets

This one would be an unexpected surprise to the upside (depending on what assets LSR can acquire).

What are the risks?

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.

Permitting Risk

LSR will need to get permitting in order for its rare earths project in the US. If this permit is delayed or rejected it may be a drag on the LSR share price.

Funding risk/dilution risk

As a pre-revenue small cap company, LSR is reliant on capital markets to advance its projects. If something negative happens at a macro or company level, LSR could struggle to access capital on favourable terms.

These capital raises may take place at a discount, and result in the issuance of new shares which incur dilution to existing shareholders.

Market risk

Broader market sentiment could deteriorate, and shares as an investment class trade lower, taking Lodestar Minerals’s share price with it. Alternatively, there could be further sector specific pain ahead where junior explorers suffer a lot more than the broader market.

Other risks

Like any early-stage exploration company, LSR carries a high degree of risk, here we try to identify a few of those risks.

The company’s new rare earths project in Arizona is still in its early stages, and there is no guarantee that exploration will result in an economic discovery. Even with promising surface samples, subsurface geology may differ, and drill results may not meet expectations.

As a pre-revenue explorer, LSR depends on capital markets to fund exploration and development. Any new equity raises may dilute existing shareholders, and access to funding could tighten if market or sector sentiment weakens.

The company’s valuation is also closely tied to sentiment in the rare earths sector. A sustained downturn in rare earth prices or reduced investor interest in the US critical minerals thematic could impact LSR’s share price and its ability to progress exploration.

Operating in the US brings advantages but also regulatory and permitting challenges. Delays or changes to environmental or mining approvals could impact timelines and capital requirements.

Competition for US critical minerals funding and partnerships is increasing. There is no certainty LSR will secure government support or attract major industry partners.

Additionally, early-stage M&A activity in the US critical minerals space could influence valuations - both positively, if appetite for acquisitions grows, or negatively, if consolidation bypasses smaller players like LSR.

Finally, broader market movements, shifts in macroeconomic conditions, or geopolitical changes may impact LSR’s share price regardless of company performance.

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

What is our Investment Strategy?

We are adding LSR to our Catalyst Hunter Portfolio.

Our plan is to hold LSR in line with our Trading Blackout and hold conditions for the Catalyst Hunter Portfolio.

LSR is an early stage, small cap, high risk, high reward Investment.

There is no guarantee LSR finds anything of value, but if they do then we would hope to see its share price re-rate to a level multiples of our Initial Entry Price.

If none of the three scenarios happen, then we fully acknowledge that we may be down on our Investment.

Check out the detailed hold conditions for our Catalyst Hunter Portfolio here.