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PFE to work with subsurface expert to find lithium


Published 14-MAY-2024 11:02 A.M.


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Today, our USA lithium Investment Pantera Minerals (ASX: PFE) announced that it will engage with SLB to help find lithium in the Smackover Formation, which is home to some of the highest concentration lithium brines in the US.

We see the huge $105BN oilfield services company as the perfect partner for PFE here - together the two companies will combine a range of geophysics datasets that PFE already has to build a subsurface 3D model of PFE’s acreage.

The desired outcome from this work is to increase PFE’s confidence in finding high concentration lithium on its nearly 20,000 acre lithium project - which is located immediately adjacent to ExxonMobil’s lithium project in Smackover, Arkansas.

PFE also noted that its the company’s reservoir model will be updated to a JORC compliant resource estimation model once lithium brine geochemistry and porosity/permeability data is obtained from a well re-entry program.

We eagerly await that well re-entry program which we hope produces a lithium sample that has a comparable or (ideally) better grade than PFE’s neighbours in the Smackover.

PFE’s current exploration target sits at 436,000 to 2,966,000 tonnes of Lithium Carbonate Equivalent (LCE).

Even at the middle end of the current exploration target - if proven out, that would be on par with the latest 1.5Mt Mineral Resource Estimate that the $165M capped Anson Resources is working with in the Paradox Basin in Utah.

(Noting of course that PFE is earlier stage than Anson Resources).

This was based on a grade range between 225 to 450 mg/L with a median grade value of 338 mg/L.

If PFE hits the top end of that range with a re-entry program - the upside becomes more apparent.

Operational factors aside, we think PFE’s acreage in the Smackover is trading at a steep discount to what two oil supergiants have now paid for land positions in the emerging lithium hotspot:

Read more about what Norwegian oil giant and ExxonMobil have paid for land in the Smackover

What’s next for PFE?

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In the immediate future we’re looking for this:

Complete subsurface 3D model:🔄

SLB is an excellent partner for PFE here - we think the collaboration will increase the chance of PFE achieving exploration success at its large US lithium project.

Re-enter a well 🔲

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.

DLE test 🔲

The re-entry will bring up samples which PFE can then send off to DLE (Direct Lithium Extraction) tech partners.

If PFE continues making progress along these milestones, we think it should move closer to achieving our ultimate upside case for our PFE Investment.

Our PFE Big Bet:

PFE to return 10x by making a discovery and defining a deposit significant enough to move into development studies.

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.