Sunday Edition: 4th October

Disclosure: S3 Consortium Pty Ltd and its associated entities may hold direct or indirect interests in securities referred to in this publication and may receive fees or other forms of consideration from entities mentioned. These interests and arrangements may create a potential conflict of interest in the preparation of this material.

The information contained in this communication is provided for general information purposes only and may relate to speculative investments. It does not constitute financial product advice, and has been prepared without taking into account your personal objectives, financial situation or needs. You should consider obtaining independent financial advice before making any investment decision.

Any forward-looking statements are uncertain and not a guaranteed outcome.

Yesterday’s Saturday note: When a project you really like comes with baggage: cap structures, copium (and of course, critical minerals)

Quick Takes: OD6, NS1, PNN (x2), EMD, WCE, VKA, AUZ, ILA, PAT

Deep Dives: PNN

Other content: ILA, IVR, AW1, BPM, MTH, PNN, WCE, AUZ, CND

OD6 was accepted into the US Defense Industrial Base Consortium.

The DIBC is an industry and government consortium of 2,091 organisations set up to “strengthen the US defence industrial base”.

(Sort of like the Avengers? ... of organisations and companies).

Membership SHOULD give OD6 more access to US government funding programs, partnering opportunities and an easier line of engagement to other organisations in the DIBC.

Hopefully, this strengthens any shot OD6 has at US government funding (similar to the US$250M deal another US based fluorspar project received earlier this year - no guarantees of course).

(source)

Later in the week OD6 went into a trading halt for a capital raise (expected to resume trading tomorrow, so we expect to get the details then), we saw this coverage:

Read more: AFR - Julie Bishop-backed OD6 Metals seeks $5 million for US critical minerals project

NS1 pushed its $8.3M convertible notes out to late 2027.

NS1 has negotiated an extension of ~12 months on $8.32M of the debt it owes, which is in the form of various convertible notes.

$8.325M is the principal amount (excluding accrued and capitalised interest) so the total amount NS1 will need to pay will be larger than this.

The cost of the extension was up to 189.2M options with exercise price of 1.5c, well above NS1’s current share price of 0.3c.

NS1 now has until October and November 2027 to execute on its US expansion strategy and start bringing in revenue.

Contracts in NS1's space can take time to land so NS1 has an improved runway now.

Some pressure should be taken off NS1’s share price given the company doesn’t have to address its big debt issue in the near term.

It’s a make or break 12 months coming up for NS1 now.

(source)

PNN started metallurgical test work on its Brazil rare earths asset.

Over 100kg of samples are now in the labs - PNN’s target is a flowsheet that is capable of recovering high value magnet rare earths (while rejecting low value materials) by the end of the year.

Always nice to see a junior getting on top of metwork early - it means it can be refined over time and it de-risks the project from a technical perspective.

Now when PNN delivers its maiden JORC resource estimate, there will be a solid understanding for the corporates to get their heads around the geology and flowsheet too.

(source)

The next day PNN announced high grade rare earths drill results at depth.

PNN’s latest drill result was from ~57m to the northwest of the first four holes, extending mineralisation into a new area rather than more of the same along the same line.

The entire hit sits below 80m (the first 80m haven’t been reported yet).

The first four holes carried their best grades near surface, so IF the shallow assays come in strong, this hole could get even better.

PNN is drilling towards a maiden JORC resource estimate expected this quarter or next - this is the big one for us.

(source)

More on PNN in our Deep Dive: PNN’s neighbour gets ~$1BN takeover offer... What now?

EMD opened its first Sydney clinic - now operating in Australia's four most populated states.

EMD’s first NSW clinic opened on schedule, with first patients already being treated - good to see EMD hitting another target on time.

This is EMD's fifth clinic, taking total treatment beds from 14 to 18 and allowing up to 90 dosing sessions per week.

The revenue numbers in the coming quarterly is now something we are looking forward to seeing.

(source)

WCE is set to start drilling next week at its WA silver project.

WCE already has a maiden JORC resource estimate of 2.8M ounces of silver at 617g/t, making it the highest grade silver project on the ASX.

With this next round of drilling (18 diamond holes) WCE will be aiming to increase the status of its resource estimate AND chase extensions to the west of the current resource.

The part we are looking forward to is seeing the “Elizabeth Hill Deeps” target drilled - following up that 3m at 524g/t silver hit from the last drill program.

Ultimately though, this round is about getting the project to a scoping study, due for delivery next quarter.

(source)

VKA produced 69.3% tungsten concentrate at its US project.

VKA has a strategy to quickly restart a previously producing Nevada tungsten project using a simple, gravity led processing plant (simple usually means cheap when it comes to processing).

This week VKA reported on four samples from parts of its project that hadn’t been tested before, and all four samples produced gravity concentrates above the 50% tungsten grade saleable threshold.

For us the major takeaway is that VKA has demonstrated it can produce a saleable product with very little processing.

Gravity alone is as simple as processing gets - literally just relying on gravity to separate the tungsten from the host rock.

(source)

AUZ - Mining billionaire Robert Friedland talked scandium and AI metals.

Robert Friedland was the founder of the $17BN Ivanhoe Mines, and is famous for discovering and developing massive, tier-one copper, nickel, and gold deposits across the globe.

So why does what Friedland say matter for our Investment AUZ?

Because AUZ owns one of the highest grade scandium resources in the western world - that happens to be directly next door to Friedland’s $3.7BN capped Sunrise Energy Metals.

Friedland is a major shareholder of Sunrise and its chairman.

Friedland is a master showman and presenter - so AUZ gets Friedland presenting to and educating investors all over the world about scandium.

This was one of the reasons why we Invested in AUZ, because every time Friedland (or a US government official) talks about scandium, it makes it easier for investors to learn about and understand a company like AUZ. (source - Our Initiation note)

Right now, AUZ is capped at ~$66M, Sunrise is capped at ~$3.7BN.

While Sunrise is more advanced in terms of studies and permitting, we think AUZ could close that gap by progressing its project (and hopefully, the market takes that progress and helps close the valuation gap).

No guarantees of course.

You can read more of our take and watch the full Friedland presentation at the Mining Forum Americas in yesterday’s Saturday note:

When a project you really like comes with baggage: cap structures, copium (and of course, critical minerals)

ILA began GMP drug manufacturing, the first batch for the Uganda Ebola response.

Manufacturing of ILA's antiviral drug Galidesivir started on 1 October, with the first 5kg batch targeted for completion by the end of October.

That batch is earmarked for ILA's approved emergency use program in Uganda, treating patients in the current Bundibugyo Ebola outbreak.

ILA will be able to collect real world clinical, safety and virological data from any patients treated, with first patients due to be dosed during CY2026.

Unfortunately, this current Ebola outbreak just keeps getting worse - it has now reached 8,137 confirmed cases and 3,926 confirmed deaths - and there is still no approved treatment for this specific strain.

A second batch due by late November supports ILA's planned Marburg pivotal study, which remains the drug's primary FDA approval pathway.

(source)

PAT completed maiden sampling at its Peru silver project - drill permit in progress.

PAT's project already has a 31.4Moz silver equivalent JORC resource estimate, sitting inside a 559 to 774Moz silver equivalent exploration target (note this is conceptual in nature, with limited drilling).

The big catalyst we are looking forward to is PAT getting a drill rig on site and drilling this monster target.

PAT says that the drilling application process is currently with Peru's Ministry of Energy and Mines - so hopefully we shouldn’t be too far away now.

In this week’s announcement PAT confirmed a surface sampling program had been completed across the northern part of its project with assays expected early next quarter.

(source)

Power Minerals (ASX:PNN)

After threatening a move into Brazil for years...

This week the biggest rare earths stock in the Western world, the $13BN capped Lynas Rare Earths, lobbed a $968M takeover offer for Brazilian rare earths developer Meteoric Resources (valuation based on Lynas’ share price at the time of the offer).

(source)

Lynas only has one operating rare earths mine, in Western Australia, and now it is going to Brazil.

Right next door to our Investment, the $57M capped PNN.

PNN and Meteoric sit next door to each other in the same “Poços de Caldas” Complex, in the state of Minas Gerais.

(source)

Two rare earths companies right next door to each other, one subject to an almost billion dollar takeover offer, the other less than 1/10th the size.

Meteoric has taken a few years to reach this position.

PNN only in the last few months acquired its asset next door.

Can PNN’s valuation grow closer to Meteoric’s over time as PNN de-risks the asset?

That’s what we are Invested in PNN for.

The main technical difference between the two companies so far is the type of mineralisation on each project.

Meteoric’s is the biggest ionic clay rare earths deposit outside of China.

PNN is progressing with the exploration of the hard rock carbonatite on its ground - the same type of geology as the only two producing rare earth mines in the west.

One being $12BN MP Materials’ project in California.

And... the other - you guessed it - $13BN Lynas Rare Earths producing mine in WA.

So in bidding for Meteoric, Lynas has elected to go after an ionic clay asset, a departure from the hard rock carbonatites it knows so well in WA.

We must admit, we thought Lynas would stick to what it knows and go for an asset with similar geology to its own.

But here we are... $13BN Lynas, right next door to our Investment PNN.

And even though it is not a deal directly with PNN, we think there are three reasons why the deal (if it closes) could be big for PNN:

1. PNN has previously mentioned the potential for ionic clay mineralisation on its project and that it would be something it looks at after drilling out the high grade hard rock mineralisation.

(source)

1. PNN’s asset could now become an obvious hard rock carbonatite acquisition target for Lynas (post swallowing Meteoric) - Lynas has now made a commitment to the region (and might want to bolt on to whatever its plans are for the area’s geology it knows and understands).
2. And finally, because we think PNN’s already working toward what looks like it could be an interesting very high grade (albeit relatively small... for now) hard rock rare earths JORC resource estimate.

We think that when PNN defines a JORC resource estimate of its own, it could start to attract interest from investors looking to recycle some of their wins from Meteoric into another company in this part of Brazil.

(Nothing like a winner in your portfolio to think you are a genius at investing in that sector and region)

Read more: PNN’s neighbour gets ~$1BN takeover offer... What now?

Reuters - Entrenched premium leaves gold primed to climb despite surge in US bond yields

AFR - Lynas to buy Meteoric for $968m to secure Brazilian rare earths

Mining.com - US warms to building Brazil critical minerals chain

Bloomberg - Europe’s LNG Shift Is Breaking the Economics of Gas Storage

WSJ - Five Takeaways From Pete Hegseth's Speech to Troops

CNBC - Elon Musk, Palmer Luckey and Newt Gingrich to help Pentagon with warfare initiative, Hegseth says

AFR - ASX defence stocks soar as world becomes more dangerous

AFR - Julie Bishop-backed OD6 Metals seeks $5 million for US critical minerals project

ECDC - Ebola disease outbreak in the Democratic Republic of the Congo (relevant to ILA, see in the Quick Take section)

Reuters - $5 billion Firmus IPO divides investors after valuation triples in two months

AFR - Buy, hold, short? Firmus shapes up to be the most divisive IPO yet

Bloomberg - Anthropic Targets Mega-IPO Before Thanksgiving Holiday

FT - China, America and the new Great Game

IVR - Paris in Spring (Update Report) - MST Financial

AW1 - West Desert Continues to Deliver (Update Report) - MST Financial

BPM - A major gold system, a major gold discovery in the making - Forelands Gold Project + Bonnie & Clyde Unlocked

MTH - Mithril Silver & Gold Looks to Double Its Resource at Copalquin (CEO interview)

PNN - Priority Status Puts Morro do Ferro on the Fast Track (CEO interview)

WCE - Investability Interview | West Coast Silver CEO on Elizabeth Hill Silver Drilling Targets (CEO drilling-program interview)

Critical minerals - The AI Supply Chain Is a Copper Story (Robert Friedland)

This is an engaging presentation on critical minerals themes, most of which we have been talking about for a while now and the mining investment required to allow it to come to fruition.

This covers much more than copper, Friedland is the Chairman of Sunrise Energy Metals (for scandium) that had an incredible share price performance over ~18 months, the next door neighbour to our Investment AUZ.

You can read more of our take at the Mining Forum Americas in yesterday’s Saturday note:

When a project you really like comes with baggage: cap structures, copium (and of course, critical minerals)

Critical minerals - Secretary Burgum & Robert Friedland Discuss How to Build America's Golden Age - 09/29/26 (Interior Secretary interview)

Precious metals - Gold and Silver Are Setting Up for a “Meteoric” Move, Michael Oliver Warns | Sprott Money (Sprott Money)

CND met with Peru's Energy and Mines Minister to discuss its offshore block and progress on the licence agreement application:

A word of caution...

While we aim to highlight developments in the small cap space, investing in early-stage and small cap companies - like those we cover - is inherently risky.

These companies often face funding challenges, regulatory hurdles, and market volatility. Announcements may reflect aspirations more than guaranteed outcomes.

Things can, and often do, change.

Just because a company has signed a deal, released drill results, or appointed a new director doesn’t mean success is assured.

Always assume delays, cost overruns, or results that don’t pan out.

We’re here to share insights, not offer personal financial advice - so please do your own research and speak with a licensed adviser before acting on anything mentioned.

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Bye for now.