Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) has reported favorable crushing and grinding (comminution) results from multiple samples at its Wicheeda rare earth elements (REE) project in British Columbia.
The results will help determine the design of the crushing and grinding plant in the project's preliminary feasibility study (PFS) expected in the first quarter of 2024.
"Tests on samples and a master composite from drill core confirmed that the ore is amenable to conventional grinding operations, including a conventional semi-autogenous grinding (SAG) mill-ball circuit, resulting in relatively low energy and supply costs," Noble Capital Markets analyst Mar Reichman wrote in an updated note on March 1.
He kept his rating of Outperform for the stock with a CA$0.70 target.
Noble Capital Markets analyst Mark Reichman kept his rating of Outperform for the stock with a CA$0.70 target.
"Crushing and grinding is the first step in processing mined material where ore is reduced to sand-like particles suitable for upgrading by flotation or other means," Reichman wrote. "It accounts for a fairly significant percentage of the mineral processing plant energy requirements, production cost, and carbon emission profile."
The tests were done on 17 variability samples and a master composite. They show "the ore is soft, amenable to conventional grinding operations, and has a low abrasion index," Defense Metals metallurgy advisor John Goode said.
"The data show that a conventional . . . (SAG) mill-ball mill circuit will work well, and that grinding energy and supply costs will be relatively low," Goode said.
The Catalyst: Positive Implications for Cost
The results were very similar to those from a bulk sample taken from Wicheeda in 2019, giving additional confidence in the new data, the company said. Those data were used in preparing for a 2021 Preliminary Economic Assessment of the site.
Comminution turns the ore into particles typically less than 1 millimeter in size. It usually accounts for a "significant percentage" of the energy demand, production cost, and carbon footprint of mineral processing plants, the company said.
The results have positive implications for the project's cost profile, Reichman wrote.
"Defense Metals is advancing toward what we believe will be a compelling preliminary feasibility study that will incorporate data from the 2021 and 2022 drilling programs," he wrote.
"In addition to significant potential to expand the resource and extend the mine life beyond 19 years, we expect grade enhancement and the meaningful conversion of inferred to indicated and potentially measured resources."
The variability samples and the master composite were studied using industry-standard tests, Defense Metals said.
Busy 2023 for Defense Metals
The company is heading into a busy year as it builds a pilot plant, upgrades Wicheeda’s resource with thousands of meters of drilling, and completes the PFS.
Construction of the hydrometallurgical pilot plant at SG Lakefield in Ontario has started and commissioning is scheduled to start in the second half of March. Pilot operations should be completed by the end of April.
The data from the pilot plant will also be used in the PFS, and the samples will be shared with potential end users.
"We also likely will upgrade or update our resource, and that might be published before the (PFS)," Defense Metals President Luisa Moreno said. "We’ve added more than 10,000 meters of drilling (since the 2021 PEA), so that will be used in the new resource estimation."
The results have positive implications for the project's cost profile, Reichman wrote.
All of this is to catch up with China, which has about 85% of the world’s processing capacity of REEs. The elements 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).
Defense Metals hopes to produce as much as 10% of the world’s light REEs to reduce that reliance on China.
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 company has also completed flotation tests on variability samples and a master composite from the project. They gave an average of 81% recovery to a concentrate assaying 45% rare earth oxide, results Moreno called "a huge milestone."
Ownership and Share Structure
Streetwise Ownership Overview*
Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE)
About 5% of the company’s stock is owned by insiders, including Director Andrew S. Burgess with 2.01% or 4.18 million shares, and CEO Taylor with 1.2% or 2.5 million shares, according to Reuters.
About 5% of the company is owned by institutional entities, including U.S. Global Investors Inc. with 0.72% or 1.5 million shares, Reuters said.
The rest, 90%, is retail.
Defense Metals has a market cap of CA$68.54 million with 207.7 million shares outstanding, 164.9 million of them free floating. It trades in a 52-week range of CA$0.39 and CA$0.165.
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Defense Metals Corp. Disclosures:
The information disclosed herein is only summary information about Defense Metals Corp. and the industry in which it operates in. Visit www.sedar.com and www.defensemetals.com to review additional disclosures and filings for Defense Metals Corp.
Independent Preliminary Economic Assessment for the Wicheeda Rare Earth Element Project, British Columbia, Canada, dated January 6, 2022, with an effective date of November 7, 2021, and prepared by SRK Consulting (Canada) Inc. is filed under Defense Metals Corp.’s Issuer Profile on SEDAR (www.sedar.com).
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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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