Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) has signed a Collaboration Agreement with the McLeod Lake Indian Band (MLIB) covering project design and planning for the Wicheeda rare earth element (REE) deposit, according to analysts Michael Gray and Jake Savage in a January 17 Agentis Capital report. 

MLIB is also set to acquire a 1% equity stake in Defense Metals, indicating further support for advancing the asset.  The analysts view indigenous alignment and impact investment as positive derisking steps.

Establishing Cooperation Framework

The co-design pact sees Defense Metals commit to integrating MLIB priorities into Wicheeda's feasibility study. Funding mechanisms are in place for community participation, including backing members' mining-related education.

By enabling local input and review involved in permitting, the collaborative development approach could streamline regulatory timelines down the road, according to the analysts. The agreement cements Defense Metals' relations with this key indigenous community.

Validating Support via Equity Investment

MLIB has agreed to a CA$665,000 investment to gain 2.6 million Defense Metals shares at CA$0.26, equating to a 1% ownership stake. The analysts believe this displays further conviction in progressing Wicheeda into a producing REE mine meeting sustainable goals.

The analysts highlight other major projects within MLIB traditional territory, demonstrating the band's openness to development and partnerships with industrial players in the region when impacts are properly addressed.

No Valuation Change But Further De-risking

The analysts' report makes no modifications to the undisclosed firm's discounted cash flow model price target for Defense Metals.

However, the analysts note that strengthened local indigenous community alignment and impact investment helped derisk Wicheeda's path to production.

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Disclosures for Agentis Capital, Defense Metals Corp., January 17, 2024

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