Get the Latest Investment Ideas Delivered Straight to Your Inbox. Subscribe

TICKERS: DEFN; DFMTF; 35D

Rare Earths Co. Ships Samples for Processors, Refiners to Verify

View Important Disclosures for this Article
Share on Stocktwits

Source:

This company trying to chip away at China's dominance in the production of rare earths vital to the green economy has taken another important step. Find out why one analyst says this company is set to take a leading role in North America for the elements.

Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) announced that samples of mixed rare earth oxide and mixed rare earth carbonate from its Wicheeda rare earth element (REE) project have been sent to select processors, refiners, and metals traders around the world to independently verify their quality.

The samples were generated during this year's hydrometallurgical piloting test work performed on concentrate generated from the wholly owned rare earths project in British Columbia.

Their sample specifications are varied, Defense Metals said. The companies receiving them could represent future offtake or strategic partners for the company. The shipments are a critical first step.

"Given that rare earth magnet production needs to double in the next decade to satisfy the demand created by electric vehicles (EVs), a new and significant western supplier, such as Defense Metals, is essential," said Craig Taylor, chief executive officer of Defense Metals.

China accounts for about 60% of current REE mine production and more than 85% of the refined output of REEs. Bob Moriarty of 321gold.com wrote that attacks by Hamas on Israel show how critical it is for the West to find more sources of the minerals.

Moriarty of 321Gold noted that Defense Metals could produce as much as 10% of the world's REEs at full output.

"In an unstable world, it is vital to have control of the resources you need to maintain your economy," Moriarty wrote.

Moriarty noted that Defense Metals could produce as much as 10% of the world's REEs at full output.

"The world is in a conflict, and finding a reliable source of supply for critical minerals is far more important than price," Moriarty wrote.

The global market for the elements is expected to grow from US$2.6 billion in 2020 to US$5.5 billion in 2028, according to a report by Fortune Business Insights

"The rising demand for consumer durables such as tablets, laptops, and smartphones (are some) of the factors driving the consumption of rare earth elements," the report said. "The demand for these elements in developing economies is estimated to expand rapidly." 

The Catalyst: Co. Has Potential to Be 'Globally Significant'

The company recently announced that tests performed on Wicheeda samples confirmed the production of high-grade flotation concentrate at a high recovery rate at the project.

"Wicheeda is well positioned to take a leading role in the North American and Global REE supply chain," Mark Reichman of Noble Capital Markets wrote.

"Our recent results show that the Wicheeda feedstock can be crushed, ground, and floated to produce a rare earth flotation product with similar or better recoveries and grades to the top producers globally," Taylor said. "Our project has many favorable conditions for success: mineralogy, metallurgy, infrastructure, and community collaboration further supporting a path to production."

Wicheeda has "the potential to be a globally significant producer" of REEs, analyst Mark Reichman of Noble Capital Markets has noted in a research note.

"The project has several competitive advantages, including a mining-friendly location, well-developed infrastructure, and a strong technical team," Reichman wrote. He kept his Outperform rating on the stock and set a target price of CA$0.70 per share.

"Wicheeda is well positioned to take a leading role in the North American and Global REE supply chain," Reichman wrote.

Favorable Results, Updated MRE

The comminution and beneficiation test work on the samples was done by SGS Canada Inc. in Lakefield, Ontario.

A total of 90 open-circuit flotation tests, using 1 or 2 kilograms of feed, were conducted on seventeen individual variability samples, various composites, and blends. Considering all open-circuit flotation tests, at a feed grade of 3% TREO (Total Rare Earth Oxide), the best-fit line indicated 80% recovery to a 45% TREO concentrate, Defense said.

In addition, 29 bulk flotation tests using 10 or 12-kilogram charges were completed to both further optimize parameters and generate 16 kilograms of 46% TREO content with a recovery of 78% for use as feed for hydrometallurgical tests.

The company said very favorable results were obtained in a locked cycle test on a deposit composite, giving a recovery rate of 85% of the rare earths at a concentrate grade of 50.7% TREO.

Defense Metals also recently announced a significant upgrade to its Mineral Resource Estimate (MRE) for Wicheeda, increasing the total TREO by 17%, or a 31% tonnage increase, compared to an MRE in 2021. 

The MRE comprised a 6.4 million tonne Measured Mineral Resource, averaging 2.86% TREO; a 27.8 million tonne Indicated Mineral Resource, averaging 1.84% TREO; and an 11.1 million tonne Inferred Mineral Resource, averaging 1.02% TREO. The results are reported at a cut-off grade of 0.5% TREO within a conceptual open pit shell, the company said.

streetwise book logoStreetwise Ownership Overview*

Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE)

*Share Structure as of 1/18/2024

Once it reaches commercial production, Wicheeda is expected to produce more than 25,000 tonnes of rare earth oxide annually, Reichman wrote. 

"It all begins with developing a world-class deposit that contains high-quality ore," Reichman wrote. "We think Defense Metals is well positioned to benefit from growing demand for rare earths for use in electric vehicle batteries, metal alloys, and advanced technology applications."

Ownership and Share Structure

About 5% of the company's stock is owned by insiders, including Director Andrew S. Burgess with 1.63% or 4.18 million shares, and CEO Taylor with 0.98% or 2.5 million shares, 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, 84%, is retail.

Defense Metals has a market cap of CA$51.16 million with 255.78 million shares outstanding and 212.98 million free floating. It trades in a 52-week range of CA$0.39 and CA$0.18.

Sign up for our FREE newsletter

Important Disclosures:

  1. Defense Metals Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
  2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Defense Metals Corp. 
  3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  4. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.





Want to read more about Critical Metals and Base Metals investment ideas?
Get Our Streetwise Reports' Resources Report Newsletter Free and be the first to know!

A valid email address is required to subscribe