Power Minerals Ltd (ASX:PNN)

Investment Memo:

Power Minerals Ltd (ASX:PNN)

- LIVE

Opened: 08-Oct-2025

Shares Held at Open: 7,186,000

Options Held at Open: 3,675,500

What does PNN do?

Power Minerals (ASX:PNN) owns a portfolio of exploration projects including:

Rare earths in California, USA - early stage project where PNN is exploring for light and heavy rare earths in California 195km away from America’s only rare earths producing mine Mountain Pass owned by MP Materials.

Rare earths in Brazil - PNN is aiming to unlock a hard rock carbonatite hosted rare earths discovery similar to two of the biggest operating rare earth deposits in the world owned by Lynas Rare Earths and MP Materials projects.

Lithium in Argentina - PNN’s most advanced assets with a combined 714,864kt LCE JORC resource estimate across three projects.

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.

PNN has exposure to:

Rare earths - a set of niche minerals used in the production of magnets for various military applications and AI.
Lithium - a critical component for lithium-ion batteries, leveraged to electrification, energy storage and electric vehicle update.

Our Big Bet for PNN

“PNN makes an economic discovery on either of its US or Brazilian 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 PNN Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

Why did we invest in PNN?

PNN has a US critical minerals project

PNN’s US project is 195km away from A$20BN MP Materials. More importantly, it's got heavy rare earth exploration potential (the less common and more valuable type of the rare earth materials). Both types of rare earth are needed for advanced magnet production the USA is seeking to onshore.

Strong macro theme #1: Capital is flowing into US critical metals macro thematic

We think PNN’s US rare earths project could attract increased capital flows into PNN.

We have seen this play out in other stocks where they list on the OTC, attract US attention and eventually capital.

PNN has a REE project in Brazil

PNN also has a rare earths asset in Brazil that we think could mirror a project that the market is really liking right now (SGQ’s project)

Strong macro theme #2: Capital is flowing into Brazilian rare earths projects looking for “the next SGQ”

We have had success with Brazilian rare earths assets before with SGQ which is up 500% in the last 9 months, and there will be investors who have made cash (and ones who missed SGQ) looking for “the next SGQ”. We think some of this cash could come into PNN.

(the past performance is not an indicator of future performance)

IF PNN attracts capital and re-rates to a valuation high enough it could acquire more advanced assets

IF PNN 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 three of our recent Investments - LKY (up 626% at its peak), AVM (up 250% at its peak) and RCM (up 151% at its peak).

We like their approach to resources investing and they have deep pockets.

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 get set in junior explorers with new assets.

We think the next 6-9 months will see 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 or Brazil).

PNN also has advanced assets in an out of favour sector

PNN has advanced lithium projects in Argentina with one of them even having a Preliminary Economic Assessment done that shows an after-tax Net Present Value of US$308.8M.

We think that IF sentiment improves in the lithium sector these assets could justify PNN’s current valuation.

Uranium free kick on the new US project

All of the old exploration was focused on uranium - mind you that old drilling found uranium over at least 2km with grades as high as 1.3% in drilling and 1.786% in rock chips.

Gold free kick on the new US project

PNN’s new US asset was initially explored for gold. We could see PNN go back and look at the gold potential of the project.

What do we expect PNN to deliver?

Objective #1: Target Generation on US rare earths project

We want to see PNN sample, map and run geophysics on its US asset to identify priority drill targets.

Milestones

not done Mapping and sampling (soil and rock chips)

not done Geophysics

not done Drill targets confirmed

Objective #2: Drilling on PNN’s US rare earths project

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

Milestones

not done Drill permitting

not done Drilling

Objective #3: Macro objectives

We want to see PNN 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: Drilling at Brazilian rare earths project

We want to see PNN drill out and define a maiden JORC resource estimate in Brazil to enable comparison to peers.

Milestones

not done Geophysics/Geochemistry work

in-progress Drilling starts

in-progress Drilling results

not done Maiden JORC resource estimate

Objective #5: (Bonus): PNN uses its market cap to acquire more advanced assets

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

What could go wrong?

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 prices fall, this could hurt the PNN share price.

Permitting Risk

PNN 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 PNN share price.

Funding risk/dilution risk

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

PNN - requested to brief Ambassador ahead of Trump-Albanese meeting [17-Oct-2025]

Other risks

PNN is an early-stage explorer with projects in the USA, Brazil, and Argentina. None are producing, and there is no certainty exploration will lead to an economic discovery.

The company’s value is highly exposed to sentiment in the rare earths and lithium markets. Prolonged weakness in these commodities could affect funding access and share price performance.

As a pre-revenue small cap, PNN depends on capital raisings to advance its projects. Any new equity issues may dilute existing shareholders, and financing may not always be available on favourable terms.

Multi-jurisdiction operations bring permitting and regulatory risks, including possible delays or policy changes that could affect project timelines.

Finally, general market or sector downturns could impact PNN’s share price regardless of company progress.

Investors should consider these risks carefully and seek professional advice before investing.

What is our investment plan?

We are adding PNN to our Catalyst Hunter Portfolio.

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

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

In 12 months, a discovery on either of two rare earths projects OR a bull market in the lithium space will mean our Investment in PNN pays off.

There is no guarantee PNN 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 7,186,000 PNN Shares and 3,675,500 PNN Options at the time of publishing this Investment Memo. Some shares and options are subject to shareholder approval. The Company has been engaged by PNN to share our commentary on the progress of our Investment in PNN 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.