AUZ confirms water licence for NSW scandium project

Our critical minerals Investment Australian Mines (ASX: AUZ) confirmed the water licence for its 100% owned scandium project in NSW is current and valid.

AUZ’s Project is one of the highest grade scandium projects in the world and sits right next door neighbour from the same mineralised intrusion the $3BN capped SRL.

SRL last week received a US$400M funding commitment to help develop that project, the same company which is backed by mining entrepreneur Robert Friedland.

It also has an agreement with $193BN capped major American global aerospace, defense, and security company Lockheed Martin to take up to 25% of production over the first 5 years.

You can see more on this lower down and why we made AUZ our most recent Investment to our portfolio last week.

Now onto yesterday’s update, water is one of the more unglamorous boxes a mining study needs ticked to show the project has merit, before anyone would bother funding development.

AUZ has held the licence since 2017, when it was bought on the open market, and it sits within the Lachlan water system.

AUZ's scoping study estimated the project would need ~454 ML of water per year for the 60 tonne per annum scandium oxide development case.

So the existing licence forms part of the baseline water supply for the project.

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The bigger picture in the background here though is the fast-tracked PFS, which is assessing a potential scale-up from 60tpa to up to 180tpa of scandium oxide per year.

(AUZ was quite clear the 180tpa scenario is an assessment case only, not a new production target.)

A bigger project would need more water, so AUZ is also evaluating supplementary surface water and groundwater sources, with hydrogeological investigations being scoped as part of the PFS.

What does AUZ have with the Flemington scandium project?

The Flemington project sits on the same geological intrusion as its next door neighbour, the ~$3BN capped Sunrise Energy Metals.

Small de-risking steps like today's are what we want to see as AUZ works toward completing its PFS.

We added AUZ to our portfolio last week, because we see a developing story for scandium which has some beneficial use cases and only a few projects with a high primary grade to stand up on scandium alone.

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So while SRL is further advanced, we feel that AUZ is in a position that it can make similar progress which could result in the valuation gap closing.

Here are the recent studies side by side (noting that SRL is at a more comprehensive study stage):

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Our AUZ Big Bet

"AUZ re-rates to a $500M+ market cap by advancing its scandium project toward a development decision and/or becomes the subject of a corporate transaction (takeover, JV, or US-listing event) at multiples of our Initial Entry 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 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 and commodity price risk - just some of which we list in our AUZ Investment Memo.

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

The 9 reasons we are Invested in AUZ

1. AUZ has one of the highest-grade scandium resources in the Western world
2. AUZ’s neighbour has 80x’ed in the last 18 months
3. AUZ’s neighbour has an offtake option with Lockheed Martin and a US$400M loan commitment from the US government
4. AUZ’s project has a scoping study with an NPV of up to US$2BN
5. Scandium is a critical mineral dominated by China who has export controls in place
6. Scandium is used in AI data centres (the biggest driver of demand)
7. Scandium also has military applications
8. We think AUZ’s asset is suited to a US listing or M&A
9. AUZ went to a ~$235M market cap before on one of its other projects
10. We also like AUZ’s gold project too

There is also a demand side story with $95BN capped US listed Bloom Energy that could see itself requiring more than the current global scandium supply in coming years.

And it needs to find non Chinese sourced supply, which is why we have backed AUZ and the Flemington Project, you can find out more in our initiation article:

We covered the full AUZ story in our launch note: Our Latest Investment is Australian Mines Ltd (ASX: AUZ)

What we want to see AUZ achieve next

Progress the scandium project through to development

We want to see AUZ progress its scandium project through to being development ready. The next major catalyst being a Pre Feasibility Study (PFS)

Here are the milestones we are tracking:

✅ PFS formally commenced and fast-tracked (May 2026)

🔄 Mine optimisation, metallurgical testwork, infrastructure

🔄 Assessment of 180tpa scale-up case

🔲 PFS completed (~Q1/Q2 2027)

Commercial progress for scandium asset

We also want to see AUZ execute the SRL playbook and convert:

🔄 Offtake / strategic partner discussions

🔲 First offtake, MOU or government-linked funding

Corporate - progress toward a US facing listing

This one is all about building up the company to get listed on a major US stock exchange OR become a takeover target for one of the big US listed critical minerals players (OR SPAC’s).

This one is out of AUZ’s control to some extent but we would like to see some progress toward a listing.

Progress on gold project in Brazil

We want to see AUZ complete its earn-in for 80% of the project and convert the existing historic foreign resource estimate (~336k ounces) into JORC status.

Here are the milestones we are tracking:

✅ 14 new gold targets identified (July 2026)

🔄 6,000-10,000m two-rig drill program (from ~Aug/Sep 2026)

🔲 Maiden JORC resource at VG1 (early 2027)