Our New Portfolio Addition: Locksley Resources (ASX: LKY)

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 4,945,000 LKY Shares at the time of publishing this article. The Company has been engaged by LKY to share our commentary on the progress of our Investment in LKY 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.

The most talked about mine in the USA right now is MP Materials’ Mountain Pass mine.

It is the USA’s only operating rare earths mine.

Rare earths are essential for permanent magnets right now... and critical to power future AI-driven robots and drones - key technologies for industry and defense.

(yep, turns out AI-robot wars are coming...)

Which is why the Pentagon (US Department of Defence) is acting on securing domestic rare earths supply as a top national priority amid supply chain risks from China.

The Pentagon just invested US$400M into MP Materials and is now its largest shareholder.

Recently there has been a lot of attention and capital starting to flow toward MP Materials from the US government AND from US investors.

MP Materials is up nearly 80% in the last few weeks, now capped at A$16BN.

And our latest investment Locksley Resources (ASX:LKY) is right next door to MP Materials:

The past performance of MP Materials is not an indicator of the future performance of LKY.

LKY even has some ground INSIDE MP Materials’ ground, on strike from their mine.

LKY is permitted and is going to be drilling this quarter (more on this in a second).

And we think the current amount of US attention and money flowing into its direct neighbor MP Materials could bring more attention to the much smaller and much earlier stage LKY...

🚨 BREAKING NEWS: Overnight (literally a few hours ago) the US government said that it would be adopting a pandemic-era style urgency approach to boost US critical minerals:

(Source)

The article says:

“The officials detailed Trump's desire to quickly boost U.S. rare earths output - through mining, processing, recycling and magnet production -

in a manner that would evoke the speed of 2020's Operation Warp Speed, which developed the COVID-19 vaccine in less than a year.”

Here are the other takeaways from the article:

• Trump held meetings with 10 rare earth companies as well as Apple and Microsoft.
• Trump would like to see more tech companies invest in the rare earths sector, either through seed investing or by making buyouts
• US price floor for rare earths “not a one off” and “similar deals are in the works”.
• There are “billions of dollars worth of incentives” for companies along the rare earths supply chain.
• The administration aims to “move in ‘Trump Time,’ which is to say as fast as possible while maintaining efficiency”.

In our opinion, “USA critical metals” is going to be the big macro investment theme over the next couple of years.

(we already held this opinion before the above news broke, that’s just lucky timing)

Seems like a few other investors share our view too...

LKY just raised $5.3M at 9.5c per share led by institutional investors.

Our bid into the LKY placement was scaled back by 57%, and more than a dozen new institutional investors are coming onto the LKY register, according to LKY.

Including Tribeca Investment Partners ($1.7BN funds under management) who cornerstoned the placement.

(You don't normally see billion dollar plus funds coming into early stage small cap exploration stocks like LKY, so it's pretty impressive the company has been able to secure this support.)

Meanwhile US investors have only just started to think about this investment theme.

First after Trump started talking about it, then more after the Pentagon invested into MP Materials...

And now likely even more after the breaking news overnight of the urgent financial injection needed to speed up critical metals development to “vaccine development during the pandemic” levels of urgency.

For the past 30 years, the US outsourced mining and production of its critical metals to its (now) #1 trade rival - China.

After China withheld critical metals supply to the US in recent trade negotiations, the US has suddenly realised critical metals supply is a matter of national security.

And the US has urgently started trying to rebuild domestic mines and minerals processing supply chains.

The US is not a traditional natural resources investment destination like the ASX (they have a much bigger focus on their globally dominant tech industry).

So most of the best, early stage US critical minerals based projects will likely have found their way to the ASX over the years, where there was interest and capital available.

We think that US capital markets are just about to start paying attention to US based critical metals, and US money is about to start flowing into ASX metals and mining companies with US critical metals projects.

Especially those with US OTC listings and NASDAQ dual listings.

LKY listed on the OTC five weeks ago under the code OTC: LKYRF - now they just need to get the story out there in the US.

Remember what happened to 88E and its US based oil exploration project when it listed on the OTC and it was discovered and became popular with US investors and on reddit?

Reminder: It traded up to a $1.3 billion market cap off the back of a drilling program at its Alaskan oil and gas project.

We think it’s the first and early movers (like LKY) with US critical metals projects on the ASX that will benefit when the broader US investing community catches onto the US critical metals theme.

Here is a brief overview of the 9 reasons why we are Invested in LKY.

(with a bonus reason #10 after the overnight breaking news on US critical metals urgency).

9... No...10 Reasons why we are Invested in LKY

1. “US Critical Minerals” is an emerging thematic right now - ASX listed companies with US projects are being re-rated on market and are finally getting access to capital to drill test their projects. We think US investors haven’t fully caught on yet.
   
2. LKY’s project is directly next to Mountain Pass, owned by $16BN capped MP Materials - MP’s project is the only producing rare earths mine in the USA and just did large deals with the Pentagon and tech giant Apple.
   
3. LKY could deliver early stage nearology re-rates like RML - Our last US critical metals investment before LKY was RML. RML sits next to a project that is set to become the USA’s only domestic source of antimony. RML is up over 480% from our Initial Entry Price. LKY sits next to the only rare earths mine in the USA.
   
4. LKY acquired the ground BEFORE US Critical Minerals theme was hot - LKY picked up its project in 2023, way before broad based market interest in US based critical minerals projects OR MP Materials. We like first and early movers in an emerging theme.
   
5. Drilling permits in place, drilling this quarter - LKY has permits in place for drilling on two of its projects. Drilling is expected to start this quarter.
   
6. One of LKY’s projects has produced antimony in the past - LKY’s largest blocks to the north-east of MP Materials is home to an old antimony mine and a small antimony smelter. We think that is a good sign there could be more antimony mineralisation on these blocks.
   
7. Institutional investors are backing LKY, cornerstoned by Tribeca - Tribeca Investment Partners have $1.7BN in funds under management, and have had a history of success in the mining sector. Tribeca cornerstoned LKY’s 9.5c placement (source).
   
8. LKY is listed in the USA via the OTC - LKY has been OTC listed for the last 6 weeks. When the US critical metals theme starts gaining more traction in the US, its possible more US investors invest in LKY via OTC (OTC: LKYRF)
9. LKY is looking to go downstream (mineral processing) right now - LKY has explicitly said in past investor presentations that it is looking at a “downstream” and processing strategy. Finding and mining the critical minerals is one thing, but processing them is another big national security issue.
   
10. 🚨BREAKING: US Government to adopt “vaccine development during the pandemic” levels of urgency to boost US critical minerals (source)

There’s another company near LKY... which has come across President Trump’s desk

Aside from being directly next to (and inside) MP Materials, LKY’s other neighbour to the north is ASX listed Dateline Resources.

Dateline’s share price moved up 50x when President Trump slipped in one solitary bullet point about the project in a weekly policy achievements update on Truth Social.

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.

LKY will be drilling both projects this quarter for:

• Rare earths, essential for advanced robotics, AI chips, etc..
  
• AND Antimony, used in various military applications including ammunition, armor-piercing bullets, flame retardants.

Our LKY Big Bet:

“LKY to re-rate to a $200M+ market cap on the back of strong drill results, a maiden resource, or progress on downstream processing, plus continued interest and capital flows into the USA critical metals thematic”

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 LKY Investment Memo

LKY is drilling for rare earths and antimony this quarter

LKY is drilling this quarter and with all the attention on its neighbor MP Materials, we think that any whiff of exploration success could re-rate the stock (there is obviously no guarantee of drilling success).

Here is where LKY’s initial drilling program is scheduled:

(Source)

With the rare earths drill program, LKY plans to test areas where a number of high grade rock chip samples were found, grading 1.20% to 6.87% TREO (rare earths).

With the antimony drill program, LKY plans to test for the extent of mineralisation near the historical antimony mine.

Over 24 surface samples 8 had over 17% antimony and 18 had over 1.4% antimony - these are very high grades for antimony projects.

Here are pictures of the old mining shaft and the antimony smelter from where the old timers were mining antimony on LKY’s ground.

(Source, Source)

We are hoping with this upcoming drill program that LKY makes a new mineral discovery.

Here is a video of Julian Woodcock, Technical Director of LKY talking through LKY’s upcoming drilling plans:

(watch the video)

Obviously, there is no guarantee LKY finds anything, mineral exploration is risky and there is a high likelihood that LKY finds nothing.

We have identified and accepted the risks of our Investment in LKY (risks listed below in ourLKY INvestment Memo) - our LKY position is only a small % of our overall Portfolio.

LKY is in an emerging macro theme with near term exploration share price catalysts that could move the share price significantly up OR down depending on the drill results, so we are adding LKY to our Catalyst Hunter Portfolio for shorter term exploration Investments.

Significant attention on LKY’s neighbor - will it bring US more investors?

The talk of Washington and the mining industry over the last two weeks has been MP Materials, and the major deals that it secured with the US government and tech giant Apple:

... and LKY is right next door.

So much US attention on MP Materials can only be good for direct neighbor LKY as it goes into its first drilling campaign this quarter.

The MP Materials deal basically put mining on the map as the macro thematic for US investors to follow next... particularly those that are leveraged to AI.

(which is basically everyone in Silicon Valley).

Here is the All In podcast crew featuring the MP Material CEO on the deal (we don’t think anyone in that room would have thought about investing in a mining company a few years ago... but here we are today):

This 12 minute video interview with the CEO of MP Materials talking about the project, the US critical metals thematic and importance of rare earths for future AI robots wars on the All In Podcast (an investing, funds management and politics podcast):

(Remember LKY has prospective ground next door and inside MP Materials ground)

(Watch the video here)

It’s been viewed over 220,000 times - given the All In Podcast is a US based investor and fund manager podcast (mainly in tech), we think its the initial stages of the broader US investment community waking up to the US critical metals theme...

In an interview, the CEO of MP Materials said:

• Rare Earth magnets are the feedstock to physical Artificial Intelligence - Robots, drones, and the other future biggest industries in the world.
• The Pentagon is extremely interested in rare earths because it is the backbone of the future of warfare - physical AI robots and drones.
• Supply chain bottle necks of rare earths caused by trade rival China is a national security threat.

Since the Pentagon investment and offtake deal with Apple, MP Materials has gone from ~US$3BN market cap to US$10BN.

MP Materials neighbour to the north, Dateline Resources has also been on a glorious run, moving up more than 50 times after Donald Trump posted about its rare earths mine on social media.

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

While these larger companies in the region have been gaining significant attention from both investors and the highest office of the US government... LKY has been quietly working up its drill targets.

After months of hard work, LKY has finally secured the permits and is ready to drill test its projects (more on the drill targets above).

LKY has first mover advantage and next door to the “first and only” critical mineral project in USA

The US government is now making “national champions” of its critical metals projects.

Basically, creating and supporting a “national champion” company in a particular industry is a form of protectionism that guards against other countries gaining too much power and leverage by dominating that particular industry.

Right now, there are two obvious “champions” in US critical minerals:

• $16BN MP Materials (rare earths)
• $2.5BN Perpetua Resources (gold and antimony) and

Another Portfolio company of ours RML is next door to the “other” US critical minerals champion - $2.5B Perpetua Resources and its giant gold and antimony project.

RML has gone to a market cap of over of over $100M.

We initiated on RML at 1.3 cents only 51 days ago - RML hit a peak of 9.3c, and is up ~430% from our Initial Entry Price.

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.

LKY is just ~1km away from MP Materials and its Mountain Pass mine is the only rare earths mine in the USA.

LKY secured this ground in 2023, BEFORE the interest in US Critical Minerals and before any of the DoD deals with MP Materials.

(Source)

We have seen how an emerging macro theme can ignite a big land grab around an interesting story or new discovery.

Strong performers are typically the ones who convert investor interest and a first mover advantage into meaningful project progress...

Like we are seeing with LKY and its $5.3M raise cornerstoned by Tribeca and with “over a dozen new institutions” participating according to LKY (source)

LKY in the right place (USA), at the right time (now), in the right sector (critical minerals)

Ever since Trump has come into office, the US Critical Minerals theme has started emerging...

It all started on his first day in office when he signed the “Unleashing American Energy” Executive Order:

Then, what followed was:

• Trump announced the Executive Order “Immediate Measures to Increase American Mineral Production” setting the agenda of US mineral production.
• Universal tariffs on other countries including a massive tariff on China.
• A Big Beautiful Bill set aside $7.5B for critical minerals and stockpiling
• Fastracked permitting for the first 10 critical minerals projects in the US
• Perpetua Resources raised $400M for its gold-antimony with a total of $80M coming from the US DoD over a 2-year period.
• Trump posted on Truth Social about the Colosseum rare earths mine owned by ASX-listed Dateline Resources, company share price is up 50 times.
• MP Materials raised $400M from US DoD including price floor for rare earths
• Apple signed a $500M offtake agreement with MP Materials for rare earth magnets
• 🚨Breaking news: Trump to adopt “pandemic-era” urgency to boost US critical minerals

We think that this macro thematic will be extremely strong as US investors start to pay attention to metals and mining.

One of our highest conviction macro views going into 2025 was that US capital would flow into the ASX metals and mining companies.

Now that the US is supporting “national champions” in the mining industry like MP Materials and Perpetua Resources, we think that investors will start to look for more speculative plays... like LKY.

Investment Memo 1: Locksley Resources (ASX:LKY)

Memo Opened: 1 August 2025

Shares Held: 4,945,000

What does LKY do?

LKY is a junior mining exploration company with ground directly next door to the largest and only rare earths mine in the USA owned by MP Materials.

It has ground prospective for both antimony and rare earths.

What is the macro theme behind LKY?

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.

LKY has exposure to two key US critical minerals: rare earths and antimony.

Antimony is a critical military metal used for various defence applications like missiles, tanks and ammunition.

Rare earths are a set of niche minerals used in the production of magnets for various military applications and AI.

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.

Our LKY Big Bet

“LKY to re-rate to $200M market cap on the back of strong drill results and maiden resource, plus continued interest and capital flows into the USA critical metals thematic”

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 exploration risk, funding risk, permitting risk - just some of which we list in our LKY Investment Memo.

The 10 Reasons We Invested in LKY

1. “US Critical Minerals” is an emerging thematic right now
2. LKY’s project is directly next to Mountain Pass owned by $16BN capped MP Materials
3. LKY could deliver early stage nearology re-rates like RML
4. LKY acquired the ground BEFORE US Critical Minerals theme was hot
5. Drilling permits in place, drilling this quarter
6. One of LKY’s projects has produced antimony in the past
7. Institutional investor are backing LKY, cornerstoned by Tribeca
8. LKY is listed in the USA via the OTC
9. LKY is looking to go downstream (mineral processing) right now
10. 🚨BREAKING: US Government to adopt “vaccine development during the pandemic” levels of urgency to boost US critical minerals”.

What do we want to see LKY do next?

Objective 1: Exploration drilling at its two projects

LKY is fully permitted for an 8-hole drilling campaign across two prospects.

Milestones:

🔲 Drill rig mobilisation

🔲 Drilling (El Campo)
🔲 Drilling (Northern Block)

🔲 Assay results

Objective 2: Upsize drilling permits

LKY is looking to increase the size/scale of the drill program. We want to see permits granted and drilling of additional holes started.

Milestones:

🔲 Soil Sampling
🔲 Modelling of existing 3D data
🔲 Identify drill targets
🔲 Permit for further drilling

Objective 3: More target generation work for the next round of drilling.

LKY’s projects, largely untouched, want to see LKY do more target generation work for a follow-up drilling program.

Milestones:

🔲 Geophys/Geochemistry work

🔲 New targets generated

Objective 4 (Bonus): US government funding OR downstream partnerships

This would be an added bonus for us. We would like to see LKY land some US government funding for its project OR add a downstream element to the business.

Milestones:

🔲 US funding deal

🔲 Downstream partnership/deal

What are the risks?

Exploration risk

There is no guarantee that LKY’s upcoming drill programs are successful. LKY may fail to find economic deposits of rare earths or antimony in which case we would expect the share price to re-rate lower.

Funding risk/dilution risk

As a pre-revenue small cap company, LKY is reliant on capital markets to advance its projects. If something negative happens at a macro or company level, LKY 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.

Commodity price risk

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

Tenure risk

LKY’s El Campo project sits inside MP Materials Mountain Pass tenement. In the past MP Materials has contested LKY’s drilling (however the claim was rejected by regulatory bodies).

Market risk

Broader market sentiment could deteriorate, and shares as an investment class trade lower, taking LKY’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.

What is our Investment Strategy?

We are Invested in LKY to make a discovery and define a REE or antimony resource.

Our plan is to hold the majority of our position in LKY for 1 year as part of our Catalyst Hunter exploration portfolio, which we hope is enough time to see LKY drill out its project, make a discovery and release a maiden JORC resource.

We may look to sell up to 20% of our holding if the company delivers on one or more of our Investment Memo objectives and/or the share price materially re-rates in line with our minimum hold conditions.