Power Minerals [ASX:PNN]
Metals & Mining
A diversified critical minerals growth story
We initiate coverage on Power Minerals (ASX: PNN) with a 12-month target price of A$0.315, representing a ~225% upside from the current share price. PNN has adopted a dynamic, multi-commodity development strategy centred on critical minerals. The company is building a portfolio of high-potential assets, providing exposure to a highly sought-after suite of critical minerals—primarily targeting lithium, niobium, gallium and rare earth elements (REEs). The two cornerstone assets – the Santa Anna Niobium-REE Project in Brazil and the Salta Lithium Project in Argentina’s Lithium Triangle – position PNN to capitalise on several converging global megatrends driving the urgent need to secure critical mineral supply chains outside China.
At the core of PNN’s portfolio is the Santa Anna Project, a high-grade niobium-hosted, district-scale alkaline complex (~17km²) in Goiás State, Brazil, the world’s largest producer of niobium. The Project is also prospective for REEs, gallium, and phosphate. Santa Anna’s geology is analogous to CBMM’s Araxá, the world's largest niobium mine, which has been in production for several decades. Drilling conducted by PNN as part of the due diligence process to acquire the Project has confirmed broad zones of niobium and high-grade REE mineralisation from surface to depth. Encouraging results include assays up to 33,600ppm (3.36% Nb₂O₅) and REEs up to 62,027ppm (6.20% TREO), reinforcing the Project’s potential for a significant high-grade MRE. With substantial exploration upside, a geologically promising setting, and multi-commodity potential, the Project presents a compelling value proposition.
Salta Lithium offers a near-term development opportunity
In addition to the Santa Anna project, PNN holds the Salta Lithium Project, offering nearterm exposure to the EV battery market, with a JORC resource of ~715kt LCE across multiple Salars (Rincon, Incahuasi and Pular) in Argentina’s Lithium Triangle. Preliminary Economic Assessment (PEA) at Rincon confirmed a robust, low-cost operation with annual revenue of US$195m over a 14-year mine life, producing ~7ktpa of battery-grade LCE, delivering attractive economics with a pre-tax NPV of US$502m, an IRR of 42%, and a 3-year payback period. This highlights Rincon’s potential as a scalable, high-purity lithium carbonate producer. Together with Santa Anna, the strong economics of the Salta Lithium Project position PNN at the intersection of global decarbonisation, supply chain security, and growing demand for critical minerals.
Strategic partnerships strengthen PNN’s execution capability
PNN has implemented a tailored approach by engaging distinct partners for each project. The company has entered into a Joint Venture Agreement with Navigate Energy Technology for the Rincon Project, a Binding Term Sheet with Summit Nanotech for the Incahuasi Project, and a Definitive Acquisition Agreement with EDEM for the Santa Anna Project. These alliances mitigate technical and capital risks while accelerating project development. We believe these targeted alliances not only mitigate technical and capital risks but also accelerate the pace of project development.
SOTP-based valuation reflects a range of A$0.258-0.372 per share
To determine the fair valuation of PNN, we have employed a Sum of the Parts (SOTP) methodology, analysing the REE district and benchmarks against the established regional competitor, St George’s Araxa project, which serves as a credible reference due to its geological and strategic similarities. PNN currently trades at a ~93% discount to SGQ, offering strong re-rating potential as it progresses into an aggressive drilling and testing phase. Our valuation range of A$114.3m to A$165.8m reflects PNN’s potential as drilling activity intensifies. The midpoint target of A$0.315/share, reflecting a P/NAV of 0.31x, implies a ~225% upside from the current price of A$0.097. Key risks to our thesis include volatile commodity prices, funding risk, and unfavourable potential metallurgical outcomes.