Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) is "entering an important new phase" of its Wicheeda rare earth (RE) project with the construction of a hydrometallurgical pilot plant, now underway, reported Noble Capital Markets analyst Mark Reichman in a Feb. 23 research note.
"The pilot plant is being configured to produce a high-purity RE precipitate suitable as feedstock for a rare earth element (REE) separation plant," noted Reichman.
Good Time To Buy
Defense Metals is currently trading at about CA$0.37 per share, much lower than Noble Capital's CA$0.70 per share target price on the Outperform-rated company, Reichman wrote.
Thus, the potential return with Defense Metals is significant, and Reichman noted now is an opportune time to invest in it.
"We believe the current stock price offers an attractive entry point for investors," the analyst added.
Timeline for Plant, Operations
Defense Metals plans to commission the pilot plant in March, ultimately feeding it 600 kilograms of mineral concentrate processed from a Wicheeda deposit bulk sample.
The Canadian company will carry out operations in two parts and be done by April.
Dual Objectives in Sight
The reasons for the plant are twofold, noted Reichman. For one, Defense Metals aims to use it to show, on a large scale, that rare earths can be produced using acid-bake hydrometallurgy on flotation concentrate from Wicheeda.
The acid bake method, more commonly used and less complicated, yielded better recovery rates for the critical metals company on testing than gangue acid leaching on which the preliminary economic assessment was based. Noble expects the use of the acid bake process to result in improved project design and economics for Wicheeda.
"Samples produced from the pilot plant will be shared with potential end users for product qualification," Reichman wrote.
PFS Coming Up
Defense Metals' second objective with the pilot plant is to collect data during operations to be used in the upcoming preliminary feasibility study (PFS), due out in Q1/24.
"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, bodes well for a compelling PFS," commented Reichman.
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Disclosures for Noble Capital Markets, Defense Metals Corp., February 22, 2023
ANALYST CREDENTIALS, PROFESSIONAL DESIGNATIONS, AND EXPERIENCE
Senior Equity Analyst focusing on Basic Materials & Mining. 20 years of experience in equity research. BA in Business Administration from Westminster College. MBA with a Finance concentration from the University of Missouri. MA in International Affairs from Washington University in St. Louis. Named WSJ ‘Best on the Street’ Analyst and Forbes/StarMine’s “Best Brokerage Analyst.” FINRA licenses 7, 24, 63, 87.
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