In an Aug. 11 research note, Greg Nolan of Highballer Stocks reported that Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) signed a "landmark" memo of understanding (MOU) with the Sinosteel Corp. subsidiary, Sinosteel Equipment & Engineering, "a big name in the mineral (processing) arena."
Pursuant to the MOU, as described in Defense Metals' news release, the two companies will look into building a large-scale, on-site pilot plant at Defense Metals' Wicheeda property that would be used to determine whether full-scale mine development would be technically feasible and economically viable.
"I believe Sinosteel's involvement adds heaps of validity to the Wicheeda project," wrote Nolan.
To achieve this goal, Defense Metals will give Sinosteel information about its Wicheeda rare earths project. Sinosteel will provide Defense Metals information about the rare earths industry, on topics to include beneficiation, engineering procurement construction (EPC), EPC financing, pricing, costs, and the like.
As for the proposed pilot plant, it would be equipped to perform beneficiation and hydrometallurgical processes to produce bulk samples of rare earth concentrate, mixed rare earth carbonate, and high-purity rare earth oxides. Sinosteel, as the general contractor, is responsible for the plant design, equipment procurement, construction, installation, commissioning, training, and other related necessary work.
"Sinosteel has a long commercial history and has completed more than 400 major metallurgical projects for the Chinese government and built many of the largest international projects ever undertaken by People's Republic of China," Brendan Jephcott, director of Golden Dragon Capital Ltd. and advisor to Defense Metals, said in Defense Metals' release.
Nolan pointed out that Sinosteel built Northern Minerals' heavy rare earth pilot plant project in Australia, which is "more like a mid-sized facility," with a capacity of 60,000 tonnes per year of raw ore.
Finally, according to the MOU, both companies agree to discuss Sinosteel possibly financing or sourcing financing for development the pilot plant.
"If everything plays out by the numbers — if a positive preliminary economic assessment (due to drop in Q4/21) leads to a positive prefeasibility study (H2/22) — this connection will open the door to project financing," Nolan wrote.
In the meantime, Nolan noted, Defense Metals is continuing to drill at Wicheeda and is scheduled to release an updated resource estimate in Q1/22.
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