PFE increases acreage at its US lithium project

Published 05-MAR-2024 14:39 P.M.

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Our US lithium Investment Pantera Minerals (ASX: PFE) just increased its project area in the Smackover, Arkansas USA by 26%.

PFE added 3,553 acres to its project and now holds >17,000 acres right next door to Exxon Mobil.

For context -

Exxon paid >US$100M for its ~120,000 acres in the Smackover.
New York listed Standard Lithium has ~63,000 acres and is capped at ~$383M.
New York listed Tetra Technologies has ~5,100 acres and is capped at ~$790M.
Lithium giant Albemarle has ~140,000 acres in the Smackover and is capped at $25BN.

Right now, PFE has >17,000 acres and is capped at ~$14M.

PFE is the only ASX listed junior with exposure to the Smackover formation - a part of the US that we think will be the centre for Direct Lithium Extraction style lithium in the US.

Exxon Mobil has picked out the Smackover to become the base for its lithium business in the US:

(source)

AND lithium analyst Joe Lowry is calling it the future of the US lithium industry.

Why we are Invested in PFE -

PFE is 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.
PFE is surrounded by (much) bigger players - PFE is also in the same neighborhood as $25BN Albermarle, $383M Standard Lithium, $790M Tetra Technologies.
Nearby Standard Lithium almost producing - DFS for its phase 1A operation completed. Demo plant already produced lithium from ~15 million gallons of smackover brine. Construction to start in 2025, with first production target for 2026.
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.
Strong on the ground team - we visited the project site and got to know the people helping PFE lease ground in Arkansas - they know the area like the back of their hand. This will be very useful not only for building connections with the local community but also help PFE quickly grow its acreage (and hopefully its eventual lithium resource).
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.