Source: Streetwise Reports (12/5/22)
Defense Metals Corp. has now released results from 10 of 18 holes in its 5,500m drill program this year.
Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) has released results from the deepest hole it’s drilled yet at its Wicheeda rare earth element (REE) deposit in British Columbia.
Hole WI22-72 totaled 374 meters, terminating 360 meters below the surface and 150 meters below the pit shell and intersecting high-grade mineralized dolomite carbonate from surface grading 3.02% total rare earth oxides (TREO) over 55 meters.
Assays also returned a broader zone of 2.56% TREO over 122 meters.
With assays from 10 of 18 holes in the 5,500-meter drilling program still pending, results from this year and data from 2021 will be incorporated in a preliminary feasibility study (PFS) for the 100%-company-owned site.
“The 2022 Wicheeda Deposit resource infill drilling continues to yield high-grade REE intercepts from surface exceeding 3% TREO,” wrote analyst Mark Reichman.
“The 2022 Wicheeda Deposit resource infill drilling continues to yield high-grade REE intercepts from surface exceeding 3% TREO,” wrote analyst Mark Reichman in a Nov. 23 note for Noble Capital Markets.
“Results from the 2022 drilling are expected to contribute greatly toward upgrading resource categories in support of the preliminary feasibility study which is expected to be completed by the fourth quarter of 2023.”
Defense Metals Chief Executive Officer and Director Craig Taylor said the drill results “are doubly significant in that they represent the deepest test of the Wicheeda Deposit to date, which yielded a broad mixed lithology interval averaging nearly two times the mineral resource cutoff grade ending 50 meters below the current pit shell. The fact that we continue to see potentially economic REE grades at these depths is extremely encouraging.”
The company also announced a private placement that is expected to close this week to raise up to CA$6 million to advance the project.
The offering consisted of the sale of up to 12.5 million common shares of the company that qualified as flow-through shares (FT) at a price of CA$0.28 per FT share and up to 11.4 million units at a price of CA$0.22 per unit.
Each unit consists of one common share and one-half of a common share purchase warrant.
The Catalyst
Reichman said he expected the PFS to potentially extend the resource and the mine’s life past 19 years.
Analyst Michael Gray of Agentis Capital said, Wicheeda was well-located with access to key infrastructure and “could become a globally significant producer” of REEs.
“The 2022 resource infill drilling continues to yield high-grade REE intercepts from surface exceeding 3% TREO,” Reichman wrote.
“The recent drill results are significant in that they represent the deepest drilling to test the Wicheeda Deposit to date, yielding a broad mixed lithology interval averaging nearly two times the mineral resource cut-off grade ending 50 meters below the current pit shell.”
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 World Needs REEs
Defense Metals hopes to produce as much as 10% of the world’s light REEs to reduce reliance on China, which has about 85% of the world’s REE processing capacity. Political issues between the United States, China, and Taiwan put that vital supply at risk, as well as pressure from within China itself.
REEs are 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).
A preliminary economic assessment (PEA) for Wicheeda in 2021 showed an after-tax net present value of CA$512 million. Its 43-101 technical report showed a 5 million tonne indicated resource at 2.95% total rare earth oxides (TREO) and a 29.5 million tonne inferred resource averaging 1.83% TREO.
Results from another core hole, WI22-70, were released this fall. Drilling there intersected 2.5% of total TREO over 113 meters. DEFN also intersected a broad zone of mineralized dolomite carbonatite averaging 2.14% TREO over 221 meters, including an interval of 3.52% TREO over 111 meters, at hole WI22-69.
Wicheeda could help fill the resource gap with China, Reichman said. “The assay results released thus far have been outstanding,” he wrote.
Ownership, Coverage, and Share Structure
Three money managers — Marquest Asset Management, U.S. Global Investors, and Probity/Qwest Funds — own a small percentage of the company. The rest is retail.
Currently, the analysts covering Defense Metals Corp. include Reichman and Gray. Newsletter writers Clive Maund and Bob Moriarty also follow the stock. You can see all the analyst and newsletter coverage by clicking “See More Live Data” in the data box above.
Defense Metals has a market cap of CA$39.43 million with 183.4 million shares outstanding, 140.6 million of them free floating. It trades in a 52-week range of CA$0.36 and CA$0.165.
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