Coming off the heels of a successful 2022 drilling campaign at its Wicheeda rare earth elements (REE) project, Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) has hired a consulting company and a project development coordinator to help guide its planned preliminary feasibility study (PFS).
SRK Consulting also worked with the company on its preliminary economic assessment (PEA) for the site in British Columbia. Kevin Weston has been appointed the new coordinator of the project.
The company also released assay results from the final two holes of the 18-hole 2022 campaign, both geotechnical core drill holes. One of them, hole WI22-79, intersected an upper high-grade interval from surface returning 3.66% total rare earth oxides (TREO) over 138 meters, and 0.50% TREO over 43 meters.
"The upper interval in WI22-79 represents the best intercept returning during the 2022 drilling campaign," analyst Mark Reichman of Noble Capital Markets wrote in a Jan. 25 update note.
This morning, February 22, Reichman reiterated his Outperform rating and CA$0.70 target price once again, saying building the plant was an "important new phase."
He held onto his Outperform rating with a target of CA$0.70 on the stock.
"We think Defense Metals is well positioned to benefit from growing demand for rare earths used in electric vehicle batteries, metal alloys, and advanced technology applications," Reichman wrote.
All of this is leading to a busy year for the company, as it builds a pilot plant, upgrades the project’s resource with thousands of meters of drilling, and completes the PFS.
This morning, February 22, Reichman reiterated his Outperform rating and CA$0.70 target price once again, saying building the plant was an "important new phase."
"Given the pilot plant program's impact on the engineering design and economics of the feasibility study, we think adoption of the acid bake hydrometallurgy process, along with outstanding results from the 2021 and 2022 drilling programs, bode well for a compelling preliminary feasibility study," he wrote. "We believe the current stock price offers an attractive entry point for investors."
The Catalyst: Catch Up With China
China has about 85% of the world’s processing capacity of REEs, in high demand in the new green economy for purifying water, MRIs, fertilizers, weapons, research, wind turbines, computers, and permanent magnet motors for electric vehicles (EVs).
Defense Metals hopes to produce as much as 10% of the world’s light REEs to reduce that reliance on China.
Analyst Michael Gray of Agentis Capital recently initiated coverage on the company, saying Wicheeda was well-located with access to key infrastructure and "could become a globally significant producer" of REEs. He set a 12-month valuation of CA$3.50 for the stock.
"DEFN is a best-of-breed North American REE developer that is well-positioned to its leverage-growing global REE demand and government support to become part of a North American REE critical metals supply chain," Gray wrote.
The company said SRK Consulting’s work will inform look at geotechnical engineering, hydrology, site infrastructure, tailings facilities, geochemistry, and site water management for the PFS.
SRK will perform field investigations, including preliminary characterization of shallow soil subsurface and bedrock foundations, the company said.
That work will help with the PFS-level design criteria, such as siting evaluation and studies on technical, environmental, and permitting risks, and ways to support community and stakeholder engagement in the project.
"Defense Metals is pleased to continue its relationship with SRK given their prior involvement in our positive PEA and recently completed pit slope geotechnical study," Defense Metals Chief Executive Officer and Director Craig Taylor said.
Weston has more than 40 years of experience in mine permitting, operations, and project management, the company said. A graduate of McGill University’s mining engineering program, he was the chief operating officer of JDS Silver Inc. between 2013 and 2017. He oversaw the engineering, permitting, and construction of the Silvertip silver-lead-zinc mine in northern British Columbia.
He will coordinate the technical, geological, engineering, environmental, socio-economic, and First Nations engagement for future development permit applications at Wicheeda.
‘A Huge Milestone’
Defense Metals also completed flotation tests on variability samples and a master composite from Wicheeda, which gave an average of 81% recovery to a concentrate assaying 45% rare earth oxide.
Company President Luisa Moreno called the results "a huge milestone."
Those results mean Defense Metals will have "the ability to produce a high-grade mineral concentrate that will make the next stage, which is the hydrometallurgical stage of leaching, more economic," Moreno told Streetwise Reports.
Using the process to concentrate the ore before processing reduces the amounts of reagents used and the CapEx for the facility, she said.
Analyst Michael Gray of Agentis Capital recently initiated coverage on the company, saying Wicheeda was well-located with access to key infrastructure and "could become a globally significant producer" of REEs.
Construction of the hydrometallurgical pilot plant at SG Lakefield in Ontario has started, the company said. Commissioning is scheduled to start in the second half of March, and pilot operations should be completed by the end of April.
The data from the pilot plant will be used in the PFS, and the samples will be shared with potential end users.
"We also likely will upgrade or update our resource, and that might be published before the (PFS)," Moreno said. "We’ve added more than 10,000 meters of drilling (since the 2021 PEA), so that will be used in the new resource estimation."
Ownership and Share Structure
Streetwise Ownership Overview*
Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE)
About 5% of the company’s stock is owned by insiders, including Director Andrew S. Burgess with 2.01% or 4.18 million shares, and CEO Taylor with 1.2% or 2.5 million shares, according to Reuters.
About 5% of the company is owned by institutional entities, including U.S. Global Investors Inc. with 0.72% or 1.5 million shares, Reuters said.
The rest, 90%, is retail.
Defense Metals has a market cap of CA$69.58 million with 207.7 million shares outstanding, 164.9 million of them free floating. It trades in a 52-week range of CA$0.39 and CA$0.165.
Sign up for our FREE newsletter
Disclosures:
1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He and members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Defense Metals Corp. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Defense Metals Corp. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees, or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Defense Metals Corp., a company mentioned in this article.
