Explorer Renews Rare Earths Campaign in BC

Source: Streetwise Reports   06/09/2022

This company is getting drills turning and renewing its search for rare earth elements in Canada, hoping to reduce the West’s dependence on resources from China.

Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) announced that it has started another 5,000-meter diamond drilling campaign at its Wicheeda rare earth element (REE) deposit in British Columbia.

The company hopes to produce as much as 10 percent of the world’s light REEs to help it compete with China, which has about 85% of the world’s REE processing capacity. And the company said it is testing a new extraction process that could increase its output.

“A big, non-China, rare earth metals project that comes online in a jurisdiction like Canada would be gold dust for investors,” wrote Stuart Fieldhouse, who follows the mining sector for The Armchair Trader. “We are already facing massive demand for rare earth metals from the automotive sector, and that is just likely to increase over time.”

The new economy is demanding more REEs, which are used in purifying water, MRIs, fertilizers, weapons research, wind turbines, and permanent magnet motors for electric vehicles.

Based on the results of the company’s 2021 drilling for the minerals at Wicheeda, analysts are bullish on the project’s prospects.

“In our view, the Wicheeda Rare Earth Project is shaping up nicely, and progress-to-date bodes well for a compelling preliminary feasibility study,” Noble Capital Markets natural resources analyst Mark Reichman said in a research report on April 28. “Based on outstanding results from the Fall 2021 program along with planned drilling, the potential to expand and upgrade the resource is significant. We anticipate interest in offtake agreements and/or strategic partnerships to grow as the company advances toward a PFS.”

New Rare Earth Elements Extraction Process on Horizon

The new drilling program is using existing drill pads prepared in 2021 in the northern area of the Wicheeda deposit, which returned some of the highest-grade intercepts. Two holes there returned 3.79% total rare earth oxides (TREO) over 150 meters, including 4.77% TREO over 60 meters extending 80 meters beyond the current mineral resource and 40 meters beyond the constraining pit shell, the company said.

This interval included 12 meters averaging 8.06%, Defense Metals said, and contained the highest combined neodymium-praseodymium (NdPr) oxide value to date at Wicheeda of 1.41% NdPr oxide at 10% TREO.

“A big, non-China, rare earth metals project that comes online in a jurisdiction like Canada would be gold dust for investors.”

—Stuart Fieldhouse of The Armchair Trader

Drilling in the north will be followed by exploration drilling west of Wicheeda, where holes drilled in 2009 revealed visual indications of potential REE mineralization.

Defense Metals is now testing an acid bake extraction process for REEs that it said could potentially lower capital and operating costs. It uses concentrated sulfuric acid at high temperatures to convert the REEs to water-soluble sulfates, which then dissolve during a water leach, the company said. The REEs are then recovered using a precipitation process.

Acid baking would allow for a more than 95% recovery rate for REEs, as opposed to less than 90% with the alternative caustic cracking process, Defense Metals President and Director Luisa Moreno told Streetwise Reports. Testing for the new process will likely be finished by the last quarter of this year.

“The process requires less equipment and involves fewer steps and circuits,” Reichman of Noble Capital Markets wrote on June 1. “Most of the world’s rare earth elements are produced using the acid-bake process.”

Our Way of Life Depends on It, Company Says

The 2021 preliminary economic assessment (PEA) for Wicheeda demonstrated an after-tax net present value of CA$512 million for the site. Its 43-101 technical report showed a 5 million tonne indicated resource at 2.95% TREO and a 29.5 million tonne inferred resource averaging 1.83% TREO from 4,000 meters of drilling.

The U.S. government has realized the importance of REEs. It announced a $35 million Defense Department grant in February to MP Materials Corp. (MP:NYSE) to separate and process REEs at its California facility. The company has also agreed to invest another $700 million to create more than 350 jobs in the permanent magnet sector by 2024.

“Our way of life depends on advanced materials,” Moreno told Forbes. “From the car we drive to the buildings that house us.”

Defense metals has a market cap of CA$41.26 million with 183.4 million shares outstanding, 180.5 million of them floating. It trades on a 52-week range of CA$0.36 and CA$0.20.

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