Resource Upgrade Raises Questions on Patagonia Lithium’s Path to Production

Significant Resource Upgrade

Patagonia Lithium Limited (ASX, PL3) has reported a remarkable 319% increase in its lithium mineral resource estimate at the Formentera/Cilon project in Argentina. The updated Mineral Resource Estimate (MRE), released in July 2025, now stands at 103,000 tonnes of lithium metal equivalent, translating to approximately 551,000 tonnes of lithium carbonate equivalent (LCE). This substantial uplift reflects improved lithium concentration and specific yield metrics compared to the maiden resource announced earlier in January 2025.

The company applied a 100 ppm lithium cut-off grade to the resource, identifying three major domains based on specific yield. The indicated resource, concentrated around wells one and two, is estimated at 14,800 tonnes of LCE, providing a solid foundation for advancing the project.

Advancing Exploration and Drilling

Building on this momentum, Patagonia Lithium is preparing to commence drilling of wells five and six at Formentera and Cilon respectively, with a rig secured for early November 2025. These drilling programs aim to increase geological confidence and confirm basement contacts, critical steps toward refining the resource and progressing toward feasibility studies.

Complementing drilling efforts, the company is implementing a comprehensive geophysical program, including seismic surveys and reprocessing of magnetotelluric data, to better understand the hydro-stratigraphy and faulting within the salar. These initiatives are expected to enhance the geological model and support future resource updates.

Brazil Concessions and Rare Earth Elements

In Brazil, Patagonia has renewed all 25 exploration concessions across Minas Gerais, Goiás, and Mato Grosso states. The company plans reconnaissance work prioritizing Goiás concessions near the Araxá rare earth anomaly, a region known for heavy lanthanides such as Holmium, Lutetium, and Yttrium, which have diverse industrial applications. Ground truthing of spectral satellite data is underway to validate these findings.

Financial Position and Corporate Updates

Patagonia Lithium closed the quarter with a cash balance of $2.41 million, bolstered by a fully underwritten entitlement offer completed in August 2025 that raised $2.68 million. Exploration expenditure during the quarter was modest at $76,000, primarily directed toward drilling preparations. The company maintains a lean team focused on advancing its lithium and rare earth element projects.

While the mineral resources reported are not yet classified as mineral reserves and thus lack demonstrated economic viability, the company is actively addressing recommendations from its technical consultants to progress toward this milestone. Environmental impact statement preparations are also underway, marking another critical step in project development.