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Pantera Minerals Ltd

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- Pantera Minerals Ltd
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Investment Memo:

Pantera Minerals Ltd (ASX:PFE)


Opened: 04-Mar-2024

Shares Held at Open: 9,916,667

What does PFE do?

Pantera Minerals (ASX: PFE) is a micro cap lithium brine exploration and development company which is operating in the Smackover Formation in South West Arkansas, USA.

The Smackover Formation is home to large lithium companies such as Standard Lithium, Albemarle as well as oil giant, Exxon Mobil - which are all investing large amounts of money, seeking to produce lithium from this area.

At the time of writing, PFE controls over 10,000 leased acres directly next door to Exxon’s Arkansas lithium brine project, and is aiming to expand this land holding quickly.

What is the macro theme?

Lithium is a critical material used in Electric Vehicle (EV) battery cathodes.

We believe battery metals are the most compelling investment theme of this decade. A lithium supply deficit is anticipated between 2024-2030.

Lithium rich brines and the complementary technology, Direct Lithium Extraction, are an emerging option for addressing this anticipated supply deficit.

In addition, we think that domestically sourced lithium will be a top priority for the US, in the wake of the US$370BN Inflation Reduction Act which creates strong incentives for critical minerals production.

Our Big Bet for PFE Big Bet Tooltip

PFE to return 10x by making a discovery and defining a deposit significant enough to move into development studies.

Why did we invest in PFE?

PFE right next door to $643BN Exxon

Exxon reportedly spent >US$100M acquiring its project and just started drilling its first well 6 weeks ago with a view of getting to first production by 2027.

Surrounded by (much) bigger players

PFE is also in the same neighborhood as $25BN Albermarle, $383M Standard Lithium, $790M Tetra Technologies.

Cheap re-entry into historical oil wells

PFE doesn't have to drill new wells, instead, it can just re-enter old oil and gas wells and extract lithium brines. This is cheaper to do than drilling whole new wells.

Direct Lithium Extraction (DLE) tech advancing

All over the world, DLE tech is progressing extremely quickly. PFE is in a unique position where it gets to benefit from the work and investment Exxon is doing next door - Exxon is working on DLE technology.

Supportive local government and regulations

We attended the inaugural Lithium Innovation Summit in Little Rock, Arkansas and saw firsthand how much the state wants to make lithium a key pillar of its economic agenda.

Federal government incentives

The US government is looking to incentivise critical minerals production inside the US. The $370BN IRA includes incentives that reward producers inside the US/friendly countries.

Arkansas already has a brine processing industry

Arkansas is a globally significant brine processing hub. Arkansas produces ~40% of the world’s bromines by extracting it from brines.

Small market cap of ~$11M

PFE’s market cap is well below its regional peers & has a lot of room for growth as it delivers catalysts at its project.

Fast mover into the Smackover

PFE’s ground was picked up BEFORE Exxon Mobil entered the Smackover Formation & put the region on the map as a US lithium hot spot.

Large JORC exploration target released

PFE’s exploration target is between 436,000 and 2,966,000 tonnes of Lithium Carbonate Equivalent (LCE) - big enough to host a resource the size of its neighbour Standard Lithium’s project.

We have had previous success with a DLE stock

We built our position in Vulcan Energy Resources in a down lithium market and then at its peak during the lithium bull market had a return from our Initial Entry Price of 5,420%.

PFE Strategic Advisor previously sold a project to Rio Tinto for US$825M

PFE recently appointed Tim Goldsmith as its strategic advisor. Tim sold the Rincon lithium brine assets to Rio Tinto for US$825M in March 2022.

What do we expect PFE to deliver?

Objective #1: Rapidly increase acreage in Smackover Formation

PFE, is aiming to rapidly grow its footprint in the Smackover Formation. This could make the company attractive to majors in the area or another company looking to gain exposure to the region. To do this PFE will need to continue leasing acreage quickly.


complete 10,000 acres leased

complete 15,000 acres leased

not done 20,000 acres leased

not done +25,000 acres leased

Objective #2: Convert exploration target into a maiden JORC resource

PFE has already defined a 436,000 to 2,966,000 tonnes of Lithium Carbonate Equivalent (LCE) exploration target. We want to see PFE convert that into a maiden JORC resource estimate.


complete Release an exploration target

not done Acquire existing 2D seismic/geophysical data

not done Re-enter old oil and gas wells

not done Sample the wells for lithium brines

not done Maiden JORC resource estimate

Objective #3: Secure brine samples for further analysis and pilot plant DLE testing

We want to see PFE secure a brine sample to test in a DLE pilot plant to see if the brines on the company’s acreage are amenable to producing lithium (i.e they have a high concentration of lithium and/or low levels of contaminants).


not done Secure brine sample

not done Analyse sample

not done DLE pilot plant testing

What could go wrong?

Leasing risk

There is a chance that PFE is not able to lease acreage quick enough or securing further mineral rights in the Smackover Formation proves to be more difficult than expected. This could be due to increased competition from other companies fighting to get a hold of acreage.

Alternatively, the exclusive agreement with the abstract provider expires before enough acreage is leased.

Exploration risk

PFE has said it intends to secure a lithium brine sample on the company’s acreage - there is no guarantee that lithium bearing brines are found or the brines are of economic concentrations.

Alternatively, if brines are found, they could contain contaminants that reduce or eliminate the value of PFE’s brines.

Funding risk

PFE held $1.8M in cash at the end of 2023. PFE is a micro cap stock and will need to raise more capital to continue expanding its foothold in the Smackover Formation. Capital raises can lead to dilution and may take place at a discount to market prices, reducing the value of PFE shares.

Technology risk

PFE is relying on Direct Lithium Extraction (DLE) technology to be proven viable and then being capable of producing lithium from PFE’s brines. There is no guarantee that a DLE tech will be advanced enough to effectively extract lithium from PFE’s brines.

Commodity price risk

Lithium prices have pulled back relatively strongly recently and that is impacting investor interest in small cap lithium companies. There is a chance the lithium price stays low for an extended period of time which would impact PFE’s share price negatively.

Market risk

There is always the possibility that broader market sentiment gets worse and shares as a whole trade lower, taking PFE’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 plan?

We will apply our standard plan for early stage exploration Investments.

We invest early, hold on to our position in anticipation of a major catalyst and Top Slice/Free Carry ~20% of our position.

For PFE, the major catalyst is likely to be more land acquired or the results of the brine sampling for DLE.

Disclosure: Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 9,916,667 PFE shares, 2,994,167 PFE options. The Company has been engaged by PFE to share our commentary on the progress of our Investment in PFE over time.

Investment Memo:

Pantera Minerals Ltd (ASX:PFE)


Opened: 23-Feb-2022

Closed: 04-Mar-2024

Shares Held at Open: 2,467,000

Shares Held at Close: 9,916,667

Reason Memo Closed: New Project Acquired

What does PFE do?

Pantera Minerals (ASX:PFE) is an early stage minerals exploration company based in Western Australia. PFE has a diverse suite of commodities within its tenements, including Iron-Ore, Lead, Zinc, Silver, Copper and Manganese.

What is the macro theme?

PFE is an exposure to what we believe will be a coming commodity super-cycle leading to sustained high prices across several commodities. With the US & the EU looking to increase fiscal stimulus to spur economic growth, we think decades of under-investment in new mines will lead to higher demand and therefore higher commodity prices.

In particular, iron ore - the primary raw-material for steel - will benefit the most from increased construction and infrastructure activity, which are almost guaranteed through new stimulus programs across many nations worldwide. However, it is the higher grade iron ore that will be even more desired as steel producing nations (in particular China) also look to mitigate greenhouse and environmental issues caused by using lower grade materials.

[Memo Assessment - 04-Mar-2024]: Sentiment = Weak

Rising interest rates have impacted construction activity worldwide. As a result the iron ore price has cooled from ~US$150 per tonne when we launched our PFE Investment Memo to now trade at ~US$109 per tonne.

Our Big Bet for PFE Big Bet Tooltip

PFE to return 10x by making a discovery and defining a deposit significant enough to move into development studies.

Why did we invest in PFE?


PFE’s Yampi project sits right next door to Australia’s highest grade iron ore operation, Koolan Island (owned by $503M capped Mount Gibson) & all of its deep water port infrastructure. In December 2021 PFE acquired a lead/silver project with nearology to Galena Mining’s Abra project, a globally significant lead/zinc/silver mine currently in development.

[Memo Assessment - 04-Mar-2024]: Grade = F

Whilst the nearology looked good, and despite some exploration by PFE, to date no economic discovery has been madea at Yampi or Abra.

Takeover target if a commercial discovery is mad

Any successful discovery made by PFE would make it the ideal takeover target for nearby producers who may seek bolt-on acquisitions to their assets.

[Memo Assessment - 04-Mar-2024]: Grade = N/A

PFE did not make a discovery big enough to capture the interest of any nearby producers.

Tight capital structure and low EV

Relatively low Enterprise Value with a large portion of the stock in escrow (majority of our holding is escrowed for 2 years) means that exploration success is likely to lead to strong market re-rating.

[Memo Assessment - 04-Mar-2024]: Grade = B

On IPO the PFE share price moved from 20 cents to a high of ~53 cents before settling around the ~30 cent mark for the remainder of the iron ore drilling campaign.
Poor drilling results, and a lack of material results on any other project has seen PFE’s share price fall to as low as 5 cents.
Although our theory was correct initially, that PFE was a tightly held stock, the company did not have exploration success and a sustained market re-rate never eventuated.

What do we expect PFE to deliver?

Objective #1: Drilling of the Flagship Yampi Iron Ore project.

[Memo Assessment - 04-Mar-2024]: Grade = F

Analysis of results from 60 half core samples from 3 diamond drill holes in 2022 returned only modest grades and widths of hematite (iron ore).
Also due to inclement weather, only 3 of 5 planned holes were drilled.
This was disappointing, as our initial interest in investing in PFE was the hematite potential at Yampi.

[Published 22, June 2022.]

Objective #2: Drilling of the newly acquired Lead/Silver project.

VTEM surveying leading-up to diamond drilling in Q2-22.

[Memo Assessment - 04-Mar-2024]: Grade = C

[November 2022] Although PFE did identify two targets worthy of drilling - with overlapping VTEM and gravity anomalies - no economic mineralisation was intercepted from 4 diamond drill holes.
We grade this objective as a C given the exploration program was done on time and on budget, but can’t grade any higher than this given no economic mineralisation was found.

Objective #3: Drilling at PFE’s Manganese project.

Geochemical sampling program leading up to RC Drilling in Q2-22.

[Memo Assessment - 04-Mar-2024]: Grade = B

PFE found some medium grade manganese at its Weelarrana project from one of four key areas of interest.
This first drilling was in line with our “Base Case” expectations.
While PFE was drilling, its regional neighbour Element 25 signed an offtake and investment agreement with Stellantis - highlighting the interest for manganese in the region.
PFE consolidated its land position in the area and went for a second round of drilling.
This second round of drilling however did not show that the first area of interest materially extended at a high-grade.
We graded this one a B due to the success of the first round of drilling, but couldn’t grade any higher due to the lack of scope for the project.

What could go wrong?

Regulatory Risk

As with all other junior exploration companies there is a risk with ELA's that the necessary approvals/agreements like land-access, heritage & native title agreements are not reached and permits can go un-granted.

[Memo Assessment - 04-Mar-2024]: Risk = Unchanged

PFE’s drilling programs were largely unaffected by issues with land access, native title or heritage surveys.

Exploration Risk

PFE’s projects are relatively early stage exploration assets and the company is still refining high-priority drill targets. With early stage explorers there is a risk that the targets identified return no mineralisation.

[Memo Assessment - 04-Mar-2024]: Risk = Materialised

On all three of PFE’s projects, none of them returned economic mineralisation.

Funding Risk

As a junior explorer with early stage projects, the company does not have revenues, meaning it needs to be able to tap the markets for funding in-between major exploration programs. Markets may lose momentum and funding for early stage higher risk exploration like this could dry up.

[Memo Assessment - 04-Mar-2024]: Risk = Materialised

We first invested in PFE at the IPO price of 20 cents in August 2021. Since then, it has become harder for small cap companies to raise capital with PFE raising $2M at a 7 cent down round and again $2M at a 5 cent round.

What is our investment plan?

Our investment strategy for our exploration investments is to take a position during the quiet periods before speculation around drilling results. This is when we typically see share prices run upwards - at this stage we aim to take some profit and possibly free carry, holding the rest of the position into the drilling results.

Our original plan for PFE was to sell 20% prior to the first results IF the share price ran, BUT after the heat came out of the iron ore market, PFE share price didn’t really move as much as we had hoped, so we ended up holding nearly all of (~94%).

Our revised investment plan for PFE is to hold onto 94% of our position into the assay results from the first drilling program at the iron ore project, we will reassess completing the top slice (i.e. taking some profits) going into potential step-out/extensional drilling in 2022.

[Memo Assessment - 04-Mar-2024]: Grade = F

The assay results of the first drill program showed now economic mineralisation.
On reflection, we should have stuck to our original investment plan and sold ~20% of our holdings to de-risk against this eventuality.
The company has fallen ~75% since our Initial Entry Price and we are still holding on to 94% of our original position.

Disclosure: The authors of this article and owners of Next Investors, S3 Consortium Pty Ltd, and associated entities, own 2,467,000 PFE shares at the time of writing this investment memo. S3 Consortium Pty Ltd has been engaged by PFE to share our commentary on the progress of our investment in PFE over time.

Our Investment Summary

Date of Initial Coverage


Inital Entry Price


Returns from Initial Entry


High Point


PFE: Another oil major enters US lithium in the Smackover - joins Exxon (...and PFE)

May 17, 2024

PFE: Another oil major enters US lithium in the Smackover - joins Exxon (...and PFE)

New PFE Investment Memo - and did lithium sentiment just return?

Mar 4, 2024

New PFE Investment Memo - and did lithium sentiment just return?

PFE announces exploration target… and we are going to Arkansas to see it.

Jan 29, 2024

PFE announces exploration target… and we are going to Arkansas to see it.

PFE to own 100% over 10,000 acres in the Smackover Formation: USA’s new lithium hotspot

Dec 14, 2023

PFE to own 100% over 10,000 acres in the Smackover Formation: USA’s new lithium hotspot

Pantera enters the Smackover- Next to $435BN “lithium hopeful” … uhhh Exxon Mobil?

Aug 24, 2023

Pantera enters the Smackover- Next to $435BN “lithium hopeful” … uhhh Exxon Mobil?