PUR: Lithium back. Market back? Drilling just started on the “blue sky” target

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 5,675,105 PUR Shares and 610,356 PUR Options at the time of publishing this article. The Company has been engaged by PUR to share our commentary on the progress of our Investment in PUR over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

Remember lithium?

Well, it’s back - prices are up almost 300% inside the last ~12 months.

(The lithium batteries in the billions of autonomous AI robots and drones to be built over the next 10 years, PLUS general electricity storage, are going to need a LOT of lithium...)

With this lithium price rise, lithium projects that were previously put on pause are now being developed.

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

And today, our Investment Pursuit Minerals (ASX:PUR) started drilling its giant, advanced stage lithium project in Argentina.

(timed on a coveted “early July” slot - how good was the small end of the market sentiment yesterday, a lot of green, with June tax loss selling beatdowns quickly reversing as we expected)

This is the first drill hole into the area of PUR’s project where blue sky exploration upside could come from (we’ll explain why in a second).

(Drill success here could start to put PUR into the conversation amongst some of the biggest lithium projects in South America)

PUR’s project already has a 1.26Mt LCE (lithium) JORC resource at ~424mg/L

PUR has also completed a Pre Feasibility Study (PFS) on the project and returned a US$364M NPV from CAPEX of ~US$135M and operating costs of ~US$6,500/t.

(costs in the lowest quartile of the global cost curve).

PUR also owns 100% of its project as well as a 250tpa pilot plant that is capable of producing battery grade lithium carbonates.

Here is a picture of that plant:

One of the best parts of the study for us was that PUR used a pretty conservative lithium price - almost ~80-90% below the peaks we saw in 2021-2022...

IF PUR were to plug in prices just 30% higher (still well below the all time highs for lithium) - the NPV of the project goes up to US$601M. (Source)

All of that from just Stage 1 of the development plan.

At full production, PUR’s project generates approximately US$138M per annum in revenue and ~US$55M per annum in free cash flow.

(Note - these financials are based on a number of assumptions which may not prove to be correct. Project economics are highly sensitive to lithium pricing and variations in price may have a material impact on cash flows, project value, development timing, and financing outcomes.)

PUR’s project has a 1.264Mt lithium carbonate equivalent resource estimate, averaging grades of ~424 mg/L Li.

That is a giant resource already... BUT there’s always been the big “what if” question mark in our minds about how much bigger the resource can get with some drilling.

PUR has only ever put two drill holes into the project AND PUR (until today) hadn't drilled its biggest tenement, which sits on the margins of the salar (salt flat).

(source) (source)

A big part of the exploration upside for PUR is based on a theory that whatever lithium brines sit inside the salt lake, extends out onto its margins...

Like the image below shows:

As we said earlier - that ground on the margins of the salt flat has always been where PUR’s blue sky exploration upside would come from.

And today, PUR started drilling its first ever hole on that ground:

(source)(source)

PUR previously ran geophysics on its ground sitting on the edges of the salt lake and identified targets starting from ~250m depths all the way down to ~1,000m.

This will be the first time ever PUR is drill testing them...

(source)

IF the drilling comes in and PUR is able to prove that the lithium brines do actually extend out beyond the edges of the salt lake, then we think it could extend the size/scale of PUR’s lithium project in a big way.

Especially given how much larger the ground held on the edges of the salt lake are relative to the ground that holds PUR’s current resource.

IF PUR can define a 1.26Mt Lithium Carbonate Equivalent (LCE) JORC resource on the small blocks inside the salt lake then we think PUR’s blocks on the edges of the salt lake could multiply those numbers.

Here is the difference in the size of the blocks again for reference:

(source) (source)

We are hoping to see a repeat of PUR’s regional peer NOA Lithium’s results which came from ground also on the edges of the salt lake to the north.

TSX listed NOA Lithium intercepted lithium grades of ~433mg/li at depths of ~101m...

Then after drilling down to depths of ~300-400m started hitting grades of ~773mg/li to ~925mg/li.

IF we start seeing grades that high from PUR’s projects combined with how much ground PUR holds on the edges of the salt lake...

It could start to put PUR into the conversation amongst some of the biggest lithium projects in South America - projects owned by companies with market caps much larger than PUR...

For example - the lithium asset (Rincon) also in Argentina that $279BN Rio Tinto paid US$825M to acquire back in 2022 and then committed another US$2.5BN to develop in 2024:

Initial Acquisition: Rio Tinto bought the Rincon project for $825 million in March 2022.

(source)(source)

RIO’s project has similar grades to PUR’s existing resource - here they are one below the other:

Rio’s project is a lot bigger (9.39Mt of LCE) but has grades of ~428mg/L:

(source)

PUR’s project has 1.264Mt of LCE and grades of ~424 mg/l.

(source)

That’s why we think any intercept with grades similar to that Noa Lithium hit at 925mg/Li could be a game changer for PUR.

(both in terms of size and grade...)

Our view is that success with this current drill program could multiply PUR’s resource but more importantly, upgrade the project’s grade in line with the size/grades of the biggest projects in South America.

AND because PUR’s project is in Argentina (the world’s 2nd largest lithium resources and is the 4th largest lithium producer) it could make PUR’s project an asset that starts to generate M&A interest.

Especially with PUR’s project being a lithium brine asset.

A big part of the reason why we like PUR’s lithium asset is because it is a “lithium brine” project.

Lithium brines typically have the lowest marginal costs of production in the lithium space:

(source)

Our view is that when the lithium market stabilises and prices are less volatile, the lowest cost assets will be the ones that survive.

(like owning the oil fields in Saudi Arabia when oil prices are depressed).

As for when prices are low - our view is that the high grade brines in parts of the world that are amenable to evaporation will still find a way of being profitable.

(also probably why Rio Tinto were able to commit that US$2.5BN investment into their asset at the peak of the lithium winter in 2024)

🎓 See our educational article on the differences between hard rock and lithium brine projects here: The different types of lithium projects explained

At the moment, most of the world's unprocessed lithium comes from hard rock spodumene hosted mines even though ~60% of the world's reserves are hosted in brines.

The reality is that it is a lot cheaper to mine lithium from brines than it is hard rock.

Instead of having to dig a big hole in the ground, brine operators just drill wells into the ground and pump their lithium brines up to the surface.

Brine operations typically cost a lot less to develop - almost one-tenth of the cost of hard rock projects.

Source: A Cost Comparison: Lithium Brine vs. Hard Rock Exploration

PUR also has a gold-silver asset that we like (also in Argentina)

Just quietly, gold and silver were both looking pretty good this morning...

Silver up ~3% gold up 2% - what a great start to July, even precious metals that don't care about Australian June tax loss selling are joining in the run for whatever reason...

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Good for PUR... who also has a gold-silver asset in Argentina.

We think PUR’s gold-silver asset is one where the company can make a genuinely material discovery.

PUR’s project sits in the Santa Cruz Province of Argentina, one of the world’s premier precious metals provinces.

This province is host to ~30 million ounces of gold equivalent discoveries.

PUR’s exploration theory is based around a lookalike drill target to where the 8M ounce Cerro Negro deposit was discovered.

(source)

PUR wants to drill below a “silica cap” where it thinks a Cerro Negro lookalike could be sitting.

All the ingredients are there: structure, mineralisation, geophysics, and geochemistry...

Now we just need to see PUR drill and see if the theory is correct.

With the gold-silver asset we are backing PUR’s Chairman Tom Eadie.

Tom is the Chairman of another ASX listed gold company Southern Cross Gold.

Southern Cross, for a long time, was misunderstood by the market because of the type of deposit the company had...

However, Southern Cross has gone from $3.80 to $8/share and a $2.4BN market cap under Tom Eadie’s stewardship.

Both Southern Cross and Cerro Negro are high grade gold assets across multiple thin veins...

... similar to what PUR is looking for on this new asset - and naturally, PUR will be applying the same geological model and exploration strategy that unlocked those finds.

Previous drilling on PUR’s project only went down to 170m.

PUR’s theory is that if it drills down to 150-400m it could make a giant gold discovery that was previously missed because of the shallower silica cap that sits on top of the gold mineralisation.

This is exactly how the 8 million ounce, Newmont owned, Cerro Negro was discovered...

PUR plans to drill test the veins marked with a (?) on the map below and soil sample, channel sample and follow up previous hits:

PUR plans to drill the project in September.

This is high-risk, high-reward exploration from PUR.

They might not find anything valuable.

Or one good drill hit could unlock the entire project and be a company maker.

Success here could be what makes PUR achieve our Big Bet as follows:

Our PUR ‘Big Bet’

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

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 no guarantee that our Big Bet will ever come true. There is a lot of work to be done, many risks involved, including development risk, country risk and commodity price risk - just some of which we list in our PUR Investment Memo.

Success will require a significant amount of luck. Past performance is not an indicator of future performance.

What’s next for PUR?

🔲 Lithium asset (Drilling started today)

PUR kicked off its drill program on this project today.

We have been waiting for a hole to be put into this part of PUR’s project for a few years now so it will be interesting to see what comes from it.

We are hoping to see PUR hit grades similar to what its Canadian peer did when it drilled on the edges of the salt lake (up to 925m/li).

(source)(source)

🔲 Drilling at PUR’s gold-silver project in Argentina

PUR also owns 100% of an earlier stage gold-silver project in Argentina.

On that project PUR is hunting an 8M ounce "Cerro Negro lookalike" gold discovery.

Cerro Negro is the 8 million ounce mine owned by US$105BN capped Newmont, ~100km north of PUR's ground.

Recently on that project ~55% of priority mapping was complete and an IP survey was underway to define targets - with maiden drilling to follow "in the near term". (source)

Today PUR confirmed that this mapping and field work had been completed with drilling expected in September (source)

See why we like that project from the acquisition in a Deep Dive here: PUR: Acquires Gold Project in Argentina - Gold price smashing records

What are the risks?

In the short term the key risks for PUR will be “exploration risk”.

There is no guarantee PUR find any economic quantities of lithium with this current round of drilling.

IF the results are poor it could take away a lot of the exploration upside for the lithium project.

There is also a chance the market starts to re-rate PUR and IF any expectation of a good result is built into the company’s share price, poor results could mean an even bigger re-rate lower.

We are hoping the drilling is a success but as with any exploration project there is always a chance they don’t...

Exploration risk

PUR is still a long way from a discovery, and even further from defining a resource. Like all micro cap minerals explorers, the risk is that PUR finds no economic mineralisation on its assets - in which case we would expect to see the share price re-rate lower.

Source: “What could go wrong” - PUR Investment Memo 01 October 2025.

Other risks

Like any small-cap exploration and development company, PUR carries significant risk, here we aim to identify a few more risks.

While lithium prices have staged a massive comeback, the project's economics are highly sensitive to commodity price fluctuations. Any sudden downturn or volatility in the lithium market could severely impact the project's projected NPV and development timelines.

With a Stage 1 CAPEX requirement of US$135M, PUR faces a massive funding hurdle relative to its small-cap size. Securing this capital will likely require major debt financing, a joint venture partner, or significant equity raises that could heavily dilute current shareholders.

Operating entirely within Argentina exposes the company to specific sovereign and macroeconomic risks. Despite a more favorable political environment for foreign investment recently, historical challenges with high local inflation and shifting regulations could still disrupt project economics.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our PUR Investment Memo

You can read our PUR Investment Memo in the link below.

We use this memo to track the progress of all our Investments over time.

Our PUR Investment Memo covers:

• What does PUR do?
• The macro theme for PUR
• Our PUR Big Bet
• What we want to see PUR achieve
• Why we are Invested in PUR
• The key risks to our Investment Thesis
• Our Investment Plan