PFE gets even more land in USA lithium hotspot

Yesterday, our USA lithium Investment Pantera Minerals (ASX: PFE) released new acreage lease numbers from its rapidly expanding project in the Smackover Formation which is located in south west Arkansas, USA.

Big money and household names like ExxonMobil have invested heavily in the region - which promises to be a hub of USA lithium production.

PFE’s latest update reveals that an additional 1,724 acres have been leased, bringing PFE’s total land package to 12,103 acres.

This represents a 127% increase in acres since PFE’s initial investment in Daytona Lithium (PFE has now agreed to acquire all of Daytona Lithium).

Quickly growing PFE’s footprint in the area is very important, as it provides a potential basis for valuation uplift, should PFE tick the boxes on the operational front:

To learn more about the PFE’s ambitions in the Smackover read our latest PFE note: PFE to own 100% of lithium project in the Smackover Formation

Notably, the following players in the Smackover have the following market caps and land holdings in the region:

• NYSE listed Standard Lithium has 63,000 acres in the Smackover and is capped at $565M.
• NYSE listed Tetra Technologies has 5,100 acres and is capped at $815M.
• Lithium giant Albemarle has ~140,000 acres in the Smackover and is capped at $22.4BN.
• ExxonMobil has ~120,000 acres, is capped at $590BN, and paid at least US$100M for its land.

Yesterday, PFE also said the Daytona Lithium acquisition has now been approved by Daytona Lithium shareholders.

To make the 100% acquisition of Daytona Lithium (the private company that owned the Smackover acreage), PFE completed a $2M capital raise at 5c per share.

This will proceed in two tranches, the first of which is for 40M shares and a second tranche of 24M shares which is subject to shareholder approval.

There was a 1 for 2 options deal with the capital raise, the options strike price is 10c with a 3 year term.

We participated in this placement.

PFE is currently capped at ~$6.6M and trading at ~5.1c, at time of writing.

In addition to the capital raise, PFE will also be issuing 106.4M shares to Daytona shareholders initially as consideration for the acquisition, half of which will be escrowed for 12 months. Pending milestones, a further 22.4M will be issued to Daytona shareholders.

Pending the completion of the Daytona Lithium acquisition and shareholder approval we will look to release our latest PFE Investment Memo which will cover:

• Why we are Invested in PFE
• Our long term bet - what we think is the upside Investment case for PFE
• The key objectives we want to see PFE achieve over the next 12-18 months
• The key risks to our Investment thesis
• Our Investment Plan

What’s next for PFE?

Lithium exploration target 🔄

This will give us a better understanding of what amounts of lithium PFE thinks it has on its acreage.

Re-enter a well 🔄

PFE will re-enter a well to test brine grade, permeability, and porosity from the Smackover.

DLE test 🔲

PFE intends to test a re-entry well sample by two “highly regarded” DLE technology providers.

2D Seismic 🔲

This will help with subsurface modelling of PFE’s project and inform drilling locations for the first resource definition wells.

Acquire additional project acreage 🔄

There’s a land rush in the Smackover, so we think the more acreage PFE can lease, the better.