AUZ to drill NSW scandium project - fast-tracking its Pre-Feasibility Study

Our critical minerals Investment Australian Mines (ASX: AUZ) is about to start drilling at its scandium project in NSW.

As part of AUZ’s fast-tracked Pre Feasibility Study (PFS).

AUZ's project is one of the highest grade scandium projects in the world.

It also happens to sit right next door and on the same geological structure as $2.7BN capped SRL’s scandium project.

SRL received a US$400M funding commitment from the US government this month to help develop its project.

It also has an agreement with the $182BN capped defence contractor Lockheed Martin to take up to 25% of production over the first 5 years.

AUZ is our most recent addition to our portfolio, see why further down.

The Flemington resource sits at 6.3Mt at 446ppm scandium, with ~98% already in the higher confidence Measured and Indicated categories.

(source)(source)(source)(source)

AUZ also included this image today, to give a better idea of just how AUZ is placed on the exact same intrusion providing the mineralised scandium as neighbour SRL:

(source)

The project is already well drilled out - the program announced today would allow AUZ to:

1. Test for extensions to the resource
2. Collect samples for more metallurgical testwork (the scoping study already showed a 90.8% recovery)
3. Optimise the planned processing plant

All of this would then feed into a fast-tracked PFS, where AUZ is also looking to potentially scale-up production from 60t up to 180 tonnes of scandium oxide per year.

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):

(source)

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 commenced and fast-tracked (May 2026)
• 🔄 Mine optimisation and metallurgical testwork
• 🔄 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