Lodestar Minerals Ltd (ASX:LSR)

Investment Memo:

Lodestar Minerals Ltd (ASX:LSR)

- LIVE

Opened: 27-Oct-2025

Shares Held at Open: 38,596,178

Options Held at Open: 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?

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 Big Bet for LSR

“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.

Why did we invest in LSR?

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).

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.

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...

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.

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.

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.

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).

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.

What do we expect LSR to deliver?

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

in-progress Acquisition completed

not done Mapping and sampling (soil and rock chips)

not done Geophysics

not done Metalurgical testwork

not done 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

not done Drill permitting

not done Drilling

not done 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

not done Fast-tracking permitting

not done 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 could go wrong?

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.

LSR: Appoints ex-MP Materials and ex-Lynas technical leaders to its USA Heavy Rare Earths Project [06-Nov-2025]

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 plan?

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.

Disclosure: 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 Investment Memo. 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.