PFE now has a bigger lithium project
The US needs a massive amount of lithium for its EV factories - nearly 500% more by 2030.
Forget the China-based lithium benchmark - massive US lithium demand is real.
Our lithium Investment Panterra Minerals (ASX: PFE) just put out an update on its now large lithium project in what could be the US lithium production heartland in just a couple short years.
In May of last year, ExxonMobil paid at least US$100M for its 120,000 acre lithium project in the Smackover region of Arkansas.
That’s a valuation benchmark.
PFE has almost hit the 20,000 acre mark in the Smackover - it has +18570 leased acres.
From a valuation perspective - we think the maths favour PFE at this stage.
Especially if a high concentration sample is produced in a re-entry program, potentially this quarter.
Noting that there are no guarantees, and exploration carries risk - PFE’s project is immediately next door to ExxonMobil’s lithium project:
PFE is positioning itself as a potential source of domestic lithium for the US, at a time when lithium demand in the US is forecast to rapidly ramp up:
(Source)
ExxonMobil has put its money where its mouth is in Arkansas - the oil supermajors lithium project is progressing at rapid pace - ExxonMobil has recently conducted drilling operations for multiple lithium brine wells on their leased acres.
They plan to build a brine processing facility, aimed at advancing their project into full-scale production.
And again, PFE’s project is right next door.
To advance the project, today’s update outlined PFE’s plan to do a well re-entry & sampling program starting in Q2 2024 - which is this quarter.
PFE has scouted out locations and talked with local well owners.
We saw some of this process play out ourselves too - we’ve been to the Smackover - we’ve seen PFE’s project:
Read in full here: Arkansas Lithium Summit - lithium come back?
And the PFE site visit helped us get a good grip on why Arkansas is the right place for lithium:
- Lots of rail in the area - good for shipping products.
- Very flat - no topographical challenges when it comes to logistics.
- New, well sealed roads - even in remote areas.
- Plenty of oil rig sites scattered around - PFE will have a good set of existing drill holes to choose from to re-enter looking for lithium rich brines.
Read in full here: Lithium report filed by our international correspondent and roving reporter
We think PFE may be timing its run well - a potential lithium market comeback, significant operational progress afoot and major players all over the Smackover like ExxonMobil committing significant capital and resources to the region.
Below is what the ultimate upside case looks like for our PFE Investment:
Our PFE Big Bet:
“PFE develops its Smackover Formation lithium brine assets to a point where it is taken over by a major company (Standard Lithium, Albemarle, Exxon Mobil etc) at a 1,000% premium to its current share 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 a lot of work to be done, many risks involved - just some of which we list in our PFE Investment Memo. Success will require a significant amount of luck. There is no guarantee that our Big Bet will ever come true
Read our latest note on PFE’s big lithium plans here:
New PFE Investment Memo - and did lithium sentiment just return?
What’s next for PFE?
Continue leasing more ground 🔄
20K would be a great start. And PFE is mighty close. We think after today, PFE might switch to focussing on well re-entry works around the time that it hits the 20K leased acre mark.
Acquisition of 2D Seismic & geophysical data 🔄
PFE plans to acquire existing 2D seismic data over its acreage. The new data will ultimately be used to guide PFE’s drill programs in the future.
Re-enter a well 🔲 (Q2 2024?)
The first step toward converting its exploration target into a maiden JORC resource will be to re-enter historic oil & gas wells that sit on its acreage.
The goal for the re-entry programs will be to see how much lithium sits in the ground and at what concentrations.
Arkansas is home to some of the highest concentrations of lithium in brine, anywhere in the US.
DLE test 🔲
The re-entry will bring up samples which PFE can then send off to DLE (Direct Lithium Extraction) tech partners.
