Funding Boosts Canadian Rare Earth Projects Prefeasibility Study Amid Global Demand

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Defense Metals Corp. (DEFN:TSX.V;  DFMTF:OTCQB;  35D:FSE) recently closed a fully subscribed, non-brokered bridge financing round, raising CA$4 million in gross proceeds through secured convertible notes.

The Vancouver-based company announced that these funds will support its Wicheeda Rare Earth Element (REE) Project's Prefeasibility Study (PFS) in British Columbia. This PFS is expected to conclude by the end of 2024 with final results available in Q1 2025. The project will involve scenario analyses, optimization evaluations, and additional testing overseen by rare earth processing expert John Goode along with engineering partner Hatch Ltd.

The financing round, led by notable stakeholders including Okeburn Corp Limited and RCF Opportunities Fund II, demonstrated the investor interest in Wicheeda's development potential. In the news release, Defense Metals also shared updates on its ongoing CEO search, with a new executive expected to be in place by Q1 2025, bolstering leadership for continued project momentum.

Deeper Dive Into Rare Earth Elements 

On October 7, The Investing News Network reported that "rare earths have become a permanent fixture on national critical metals lists around the world due to their pivotal role in permanent magnets, new energy, and technology." Currently, China dominates the rare earths market, holding approximately 70% of global production. This has led to nations like the United States, Canada, and Australia increasing their focus on establishing secure supply chains outside China. The report noted that this urgency grew following the U.S. government's May 2024 decision to enact a 25% tariff on imports of Chinese rare earth magnets beginning in 2026. As The Investing News Network wrote, the initiative was intended to protect "American industries from China's trade practices and support domestic production."

On September 18, the Eurasian Times highlighted the strategic value of rare earths for the US and its allies, noting that "the U.S. and its allies investing heavily in projects aimed at reducing this dependency (on China's rare earths monopoly)." The report noted "the importance of patience and long-term investment in building a resilient supply chain," reinforcing the long-term commitment required to develop an independent rare earths industry outside China.

Investor News further emphasized the critical need for secure rare earth supply chains in its September 24 report, highlighting the strategic importance of projects like the Cowboy State Mine (CSM) in Wyoming. According to this report, the Export-Import Bank of the United States (EXIM) issued a non-binding letter of interest to provide up to US$456 million to cover CSM's initial capital expenditures. This financing marked "a substantial opportunity for the United States to gain strategic control over rare earth resources," particularly critical metals such as neodymium and praseodymium, essential for clean energy technologies like electric vehicles and wind turbines. As was noted, it illustrated the focus on this sector's importance.

Defense Metal Catalysts

According to Defense Metals' October 2024 Corporate Presentation, this recent financing represents a critical step in advancing the Wicheeda Project. With an estimated production potential of up to 25,000 tonnes of rare earth oxide annually, Wicheeda is poised to become a notable North American contributor to the rare earth supply chain. The PFS is designed to optimize production, and the successful completion of this study, combined with anticipated financing for a Definitive Feasibility Study in early 2025, positions Defense Metals for accelerated project development.

Strategic partnerships and an experienced technical team, including partners like Hatch Ltd. and metallurgist John Goode, provide further support. Additionally, Wicheeda's location near key infrastructure in British Columbia, close to major transportation and power lines, is expected to streamline future operations and lower logistical costs.

Ownership and Share Structure

About 3.5% of the company's stock is owned by insiders, including Director Andrew S. Burgess, who owns 1.5%, and former Chief Executive Officer Craig Taylor, who owns 0.97%, according to Reuters.

About 11% of the company is owned by institutional entities, including RCF Opportunities Fund II LP, with 10%, the company said. The rest, 85.5%, is retail.

Defense Metals has a market cap of CA$27.16 million with 258.62 million shares outstanding. It trades in a 52-week range of CA$0.28 and CA$0.07.