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Investment Memo:

Solis Minerals Ltd (ASX:SLM)


Opened: 08-Jun-2023

Shares Held at Open: 2,863,636

What does SLM do?

Solis Minerals (ASX: SLM) is a lithium explorer focused on hard rock lithium exploration in Brazil.

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.

SLM will be looking to replicate some of the success of Brazilian lithium companies Sigma Lithium and Latin Resources.

Brazil is already the world’s second largest producer of iron ore (second to Australia), now the Brazilian government is looking to grow its lithium production.

Our Big Bet for SLM Big Bet Tooltip

SLM discovers and defines a large resource, leading to a long term re-rate in the company’s share price by >1,000%

Why did we invest in SLM?

Lithium hot, lithium in Brazil even hotter

We have written excessively about the broader lithium market and the decade long investment thematic we are in.

Once it gets to full capacity, Sigma Lithium will be one of the world’s largest lithium producers.

Off the back of this, “Lithium Valley” was launched in the State of Minas Gerais with the ultimate view of promoting foreign investment in Brazilian lithium projects.

We think a tidal wave of capital is going to come into Brazilian lithium projects. SLM is an early stage Investment in this sector.

Junior explorers have had success in Brazil

Sigma has gone from a junior developer with a market cap of <$200M to now trade at $6.5BN. Latin Resources has also gone from <$40M to now trade at $470M. Exploration success in Brazil is typically rewarded with a re-rate in a company’s market cap.

Latin Resources success

We have had success Investing in our other Portfolio Company Latin Resources which made a hard rock lithium discovery in March 2022 and has since gone from a share price of ~3.5c to 18.5c per share. Latin is now being called “Sigma 2.0”.

In a similar way, we hope to see SLM become a “Latin 2.0” (while remembering that just because Latin performed well doesn’t mean that SLM will do the same).

Same team as Latin Resources (Latin 2.0?)

SLM is backed by the same team that delivered Latin Resources discovery last year.

Latin’s Managing Director Chris Gale is SLM’s non-executive Chairman.

Chris Gale has taken Latin Resources from pre-discovery to a maiden JORC resource in <12 months and managed to raise $72M along the way.

SLM Managing Director Matt Boyes also holds a country manager role at Latin Resources. He has also had previous success in early stage lithium - overseeing Red Dirt Mining as it grew from a $15M market cap to $200M.

Backed by Latin Resources (14% shareholder)

Latin Resources hold 17.79% of SLM shares - which means they are incentivised to see SLM succeed. We hope that SLM can leverage its Latin Resources connection to deliver success in Brazil for itself.

Original asset spinout from a well supported, successful bigger company

The SLM to Latin Resources structure has some similarities to how Kuniko was spun out of Vulcan Energy Resources. KNI had an outrageous run from 20c to touch $3.60 in the peak of the bull market, and has now settled at 40c.

We like to back a successful management team in sectors with strong momentum. We certainly aren’t expecting anything like this again, but note that the management team does play a role in the market's interest in a company.

We also have a view that a lot of the interest in Kuniko initially came from investors that had success with Vulcan, wanting to follow the Vulcan team’s new venture.

SLM Managing Director built a $200m+ lithium company before

SLM’s MD Matthew Boyes has been there and done it before.

Boyes was the Managing Director at Red Dirt Metals where he oversaw early development of the Mt Ida lithium project - which took Red Dirt’s market cap from ~$15M to in excess of $200M.

Low EV and tight capital structure

SLM has only ~75 million shares on issue with the majority held by Latin Resources (17.79%).

We note there are ~27 million options on issue too, with the majority having an exercise price of 30c.

SLM has plenty of room to re-rate if it makes a successful discovery.

Latin Resources has a big investor following

SLM should benefit from the crowd of investors that follow (and have made money from) Latin Resources (Latin Resources has ~12,300 shareholders).

SLM is following a similar style exploration process and so investors who have had success with Latin Resources may look to buy into SLM with the hope SLM becomes “Latin 2.0”.

SLM about to drill what we are calling ‘Pegmatite Grand Canyon’

In the photo on the acquisition announcement, you can see the exposed spodumene crystals on SLM’s project.

SLM expects to drill test this area within the 90 day due diligence period and see what kind of high grade intersections it can deliver.

SLM is already listed in the US, Canada and Germany

“SLM” is the ASX stock code and the primary listing, but we also note that SLM is also already listed on the following other global small cap exchanges: TSXV: SLMN 🇨🇦 OTCQB: SLMFF 🇺🇸 FSE: 08W 🇩🇪.

This means that the potential investor pool that can invest in SLM is not just limited to Australian investors, but also much larger pools of investors in the USA, Canada and Germany.

What do we expect SLM to deliver?

Objective #1: Drilling at the company’s newly acquired Lithium project (option) in Brazil

We want to see SLM drill its new lithium project prior to the 90 day project option expiry. SLM expects to be drilling in June 2023.

Once drilling starts we will be watching for the following:

  1. During drilling - We want to see visual spodumene in the drillcores. Spodumene is generally the host rock for high grade lithium, visual spodumene will be a positive first indication of potential economic lithium mineralisation.
  2. After drilling - This will be all about waiting for the assay result — we’ll be looking for lithium grades above a level that is considered typically economic.

We have set up expectations for the assays as follows:

  • Bull case (exceptional result) = Lithium grades >1.5%.
  • Base case (good result) = Lithium grades 1-1.5%.

Bear case (poor result) = Lithium grades <1%.


complete Drilling commencement

in-progress Assay results

Objective #2: Complete due diligence and acquire Brazilian lithium projects

SLM has a 90 day due diligence period within which it can acquire its new Brazilian lithium projects.

We want to see the company run its first drill program do enough work to justify acquiring its project.


in-progress Due Diligence

not done Acquisition completed

Objective #3: Acquire new projects in South America/Brazil

SLM said in its 31 May 2023 announcement that ”Solis’s primary objective is to quickly position itself by acquiring highly prospective underexplored projects in the northeast of Brazil”.

We want to see the company continue to leverage its in-country experience and acquire new projects in South America/Brazil.


not done Acquire/apply for new ground across South America/Brazil

What could go wrong?

Exploration Risk

SLM is yet to have drilled its lithium project, there is always a risk that after drilling the company doesn't find any economic lithium mineralisation. As a result exploration risk is one of the primary risks going into the upcoming drill programs. Even if SLM does hit lithium, if the result is below market expectation the share price might react negatively.

Funding Risk

Like most small cap exploration stocks, SLM is not generating any revenue, and is reliant on capital markets to fuel its growth plans.

SLM just raised $8M (8th June 2023) and should be funded for at least the next few quarters, but at some point the company should look to raise more funds to cover the development of its projects.

This might be at a lower share price if initial drilling results do not meet market expectations.

Sovereign risk

Whilst Brazil is a mining friendly country, it is a developing nation, and there is always some risk with regards to investing here.

Market risk

While lithium is a popular investment theme at the moment, lithium prices have pulled back before and its possible supply/demand dynamics change and in turn impact market sentiment for junior lithium explorers like SLM.

What is our investment plan?

Our Initial Investment is escrowed for the next two years, so we will be holding 100% of this position until June 2025.

We just have participated in the placement at 55c, this stock is freely tradable but our plan is to hold until the company has had a chance to deliver some material progress.

If the company materially re-rates from the placement price on the back of positive news we may look to Top Slice some of the placement shares to try and claim back our Initial Investment and be Free Carried on the position.

This is our standard plan across all early stage exploration Investments.

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 2,863,636 SLM shares at the time of writing this memo. The Company has been engaged by SLM to share our commentary on the progress of our Investment in SLM over time.

Our Investment Summary

Date of Initial Coverage


Inital Entry Price


Returns from Initial Entry


High Point