Rare Earths Co. IDs New Anomalies at BC Project

Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) announced that it has identified new anomalies that may be previously unknown rare earth element (REE) mineralized carbonatite located largely within the current mineral resource pit shells at its Wicheeda project in British Columbia.

The data is based on extensive core drilling and surface geologic mapping completed as the company advances an ongoing preliminary feasibility study (PFS).

Two previously unknown linear radiometric anomalies were found, each about 40 meters in width and extending about 250 meters northwest from the main body of the Wicheeda deposit.

"The radiometric surveys were initially designed to assist our geologic mapping teams and it came as a surprise when we identified new anomalies under cover having a similar geophysical expression to known drilled and outcropping rare earth mineralization," said Defense Metals Director and Qualified Person Kristopher Raffle. "After reviewing the geophysical data in the context of our updated Wicheeda 3D geological model we recognized the potential for undiscovered near-surface, east-dipping carbonatite bodies."

"We look forward to drill testing these anomalies," Raffle said.

Technical teams and consultants are working with the company to complete infrastructure geotechnical issues at the project.

The company is "well on its way" toward completing the PFS in H1/24, wrote Mark Reichman, research analyst at Noble Capital Markets, in an Aug. 17 research note.

"Defense Metals is advancing toward what we believe will be a compelling PFS," wrote Reichman, who rated the stock Outperform with a CA$0.70 per share price target. "In addition to the significant potential to expand the resource and extend the mine life, we expect grade enhancement and the meaningful conversion of Inferred to Indicated and, potentially, Measured resources."

The Catalyst: 'Positive Surprises' Expected

Defense Metals said several resource definition drill holes undercut the southern half of the eastern anomaly at 150 meters vertical depth. Hole WI21-39 intersected relatively higher-grade carbonatite at depth, returning 2.91% total rare earth oxide (TREO) over 45 meters from a depth of 69 meters downhole.

The majority of the eastern and the entirety of the western anomaly remain untested by core drilling. The company plans to test the western geophysical anomaly during fall 2023 as part of an expanded program of 915 meters of pit geotechnical drilling in four holes, with more holes possible depending on the results.

The ground radiometric survey at Wicheeda consisted of survey lines completed over an area of 800 meters by 900 meters. Ground radiometric surveys are only likely to detect outcroppings or very near-surface sources, the company said.

The work was completed by SRK Consulting (Canada) Inc., one of the principal consultants working on the PFS for the project, which hopes to help the West to compete with China in providing the elements. APEX Geoscience Ltd. is also supporting SRK on the project.

Paradigm Capital senior analyst David Davidson wrote in an April research note that he expected "positive surprises" in the upcoming resource estimate from the company.

"We expect to see the total resource increased by at least another 10–15% and a modest improvement in overall grade," he wrote.

Technical Analyst Clive Maund wrote on July 19 that although the stock's "price hasn't moved — yet," he expected that to change.

"The heavy volume driving this advance and the soaring Accumulation line resulting from this is very bullish," Maund noted.

Global Market Expected to Grow

China accounts for about 60% of REE current mine production and more than 85% of the refined output of REEs.

REEs are in high demand as the economy attempts to turn green. They are used for purifying water, MRIs, fertilizers, weapons, scientific research, wind turbines, computers, and permanent magnet motors for electric vehicles (EVs).

China recently decided to restrict the export of two metals critical to superconductor production, gallium, and germanium. While these metals are not being sought by Defense at Wicheeda, company officials said it's possible China may eventually target the REEs the company wants to provide for wind turbines and EVs.

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." 

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$49.88 million with 255.78 million shares outstanding, 212.98 million free floating. It trades in a 52-week range of CA$0.39 and CA$0.185.

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3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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