WICHEEDA PROPERTY

KEY HIGHLIGHTS

PEA Highlights (November 24, 2021)

Strong Financial Metrics

  • The project has a pre-tax net present value (NPV) of $765 million, and after-tax NPV of $512 million, at 8% discount rate.

  • The pre-tax internal rate of return (IRR) is 20%, and the after-tax IRR is 16%.

  • Capital payback could occur within 5 years from start of production, assuming partial self-funding of hydrometallurgical-plant construction from rare-earth concentrate sales.

  • Revenues could average $397 million per year from sales of rare-earth mineral concentrates (years 1-4) and mixed rare-earth hydrometallurgical precipitate (years 5-16).

  • Operating margin is expected to be 65.2%.

  • Production of a high-grade flotation-concentrate, with an average grade of 43% total rare-earth oxide (TREO),  is planned for sale directly to the market directly for the first four years and then for feed to a project hydrometallurgical plant.

  • Project is near to key infrastructure.

  • Base-case economics were calculated using rare-earth-oxide (REO) prices of US$5.76/kg TREO for flotation concentrate and US$14.04/kg TREO for mixed REE carbonate precipitates.

 

Significant Production Potential

  • The study contemplates a 1.8 Mtpa (million tonnes per year) mill throughput, open-pit mining operation with 1.75:1 (waste:mill feed) strip ratio over a 19 year project life, which includes 3 years of construction, and early revenue generation via phased open-pit development. Phase 1 initial-pit strip ratio of 0.63:1 (waste: mill feed) yields rapid access to higher-grade surface mineralization. Pre-production and first mill feed both occur in year 1

  • Average annual REO production is planned to be 25,423 tonnes.

  • Operating costs average $137 million per year over a 16-year life of mine (LOM).

 

Development Capital

  • Initial capital expenditures (CAPEX) are calculated at $461 million (includes a contingency allowance of 20% to 25% for major items), and the expansion capex under a cash-funded scenario is $474 million. Sustaining expenditures for the life of the project are $401 million

  • A scenario that uses concentrate sales to partially self fund the construction of a hydrometallurgical plant reduces overall project cash requirements, compared to constructing the hydrometallurgical plant as part of Phase 1. This development scenario provides significant optionality to accelerate or defer the investment in the hydrometallurgical plant according to market conditions

 

Mineral Resource Estimate

  • The updated Wicheeda Mineral Resource Estimate (MRE) comprises a 5.0-million-tonne Indicated Mineral Resource, averaging 2.95% TREO, and a 29.5-million-tonne Inferred Mineral Resource, averaging 1.83% TREO, reported at a cut-off grade of 0.5% TREO within a conceptual Lerchs-Grossman (LG) pit shell. The current resource represents a 36% increase -n contained metal, when compared to the prior 2020 MRE, which is due to the estimation of additional economically significant medium and heavy REE’s and to a lower cut-off grade (based on consideration of concentrate TREO  payables, metallurgical recovery, and operating-cost assumptions

 

Exploration Upside

  • During 2021, in anticipation of a positive PEA outcome, Defense Metals completed a 29-hole 5,349-metre resource-expansion diamond-drill program at Wicheeda. The results of drilling are expected during Q1 2022 and as such have not been incorporated into the PEA. The drilling is expected to support ongoing advanced economic studies through the development of an updated geological model and mineral-resource estimate

 

View full PEA news release (Nov 24, 2021) by clicking here

The Wicheeda Property consists of 6 mineral claims covering an area of 1,708 hectares, located approximately 80 km northeast of the city of Prince George, British Columbia

Favorable mineralogy and lanthanide distribution make Wicheeda a very attractive light-rare-earth (LREE) deposit
The rare-earth mineral monazite and a group of rare-earth carbonates (bastnaesite-parisite-synchysite) occur in approximately equal proportions. Mineral grains are coarse and well crystalized, which facilitates metallurgical separation and concentration
Ideal opportunity for vertical integration, to support rapidly growing market, reducing reliance on China

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2019 PROJECT MILESTONES

  • In late 2018, a 30-tonne bulk sample  was sent to SGS Canada Inc. (SGS), in Lakefield, Ontario, for metallurgical processing test work

  • SGS flotation locked-cycle test work produced a 48.7% LREO (light-rare-earth oxide) high-grade concentrate of cerium, lanthanum, neodymium, and praseodymium oxides, at 85.7% recovery. This represents a 10 : 1 upgrading ratio from a head grade of 4.81% LREO.1

  • Initial indications from SGS hydrometallurgical studies are that high-REE extractions can be achieved through acid leaching and caustic conversion techniques. Impurity-removal tests are also positive.​​

  • Thirteen diamond-drill core holes, totaling 2,005 metres, further delineated the main body of high-grade dolomite carbonatite and expended REE mineralization northward where the deposit is open to expansion. One of the highest-grade REE intercepts to date, within drill-hole WI19-31, yielded 4.43% LREO over 83 metres, including 5.47% LREO over a drill core interval of 33 meters.2,3

  • Defense Metals has exceeded its Year 1 and Year 2 exploration commitments within 12 months of its option of the Wicheeda REE Project, demonstrating its commitment to rapid advancement of this project.

1. See Defense Metals News Release Dated October 23, 2019.
2. The true width of REE mineralization is estimated to be 70-100% of the drilled interval.
3. See Defense Metals News Release Dated December 12, 2019.

PROPERTY GEOLOGY

 

As of May 13, 2020, Defense Metals Completed an Updated Resource Estimate for the Wicheeda Project with a 49% increase in overall tonnage, and a 30% increase in overall average grade, when compared to previous mineral resources


At that time, Indicated Resources of 5 million tonnes averaging 2.95% TREO (Total Rare-Earth Oxide) and, an Inferred Resources of 29.5 million tonnes averaging 1.83% TREO

property geology

SIGNIFICANT ASSAY RESULTS

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*The true width of REE mineralization is estimated to be 60%-100% of the drilled interval
1 November 20th, 2019 – Defense Metals Drills 4.21% Light Rare Earth Oxide Over 48 Metres and Extends Mineralized Zone at Wicheeda Rare Earth Element Deposit
2 The technical content of this presentation have been reviewed and approved by Kris Raffle, P.Geo., a Director of the Company and a Qualified Person as defined by National Instrument 43-101.

PROPERTY LOCATION

Strategically positioned along a major forestry service road, which connects to BC Highway 97

A major hydroelectric power line, a major gas pipeline, and a Canadian National Railway line are available nearby

Prince George, British Columbia, a mining centre with a skilled workforce, is 80km to the southeast.

Port of Prince Rupert is 500km to the west and accessible by rail and road

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Wicheeda Deposit Looking Northeast Showing 1% LREE Grade Shell
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1See Defense Metal News Release dated May 13,2020. The resource is classified according to the CIM “Estimation of Mineral Resources and Mineral Reserves Best Practice Guidelines” dated November 29th, 2019 and CIM “Definition Standards for Mineral Resources and Mineral Reserves” dated May 10th, 2014. A NI 43-101 technical report disclosing the Updated Wicheeda REE Project MRE will be filed on SEDAR within 45 days. 2LREO sum of Ce2O3+La2O3+Nd2O3+Pr2O3+Sm2O3, 3Total Metal % cut-off expressed as the sum of Ce+La+Nd+Pr+Sm+Nb percentages
WICHEEDA PLAN DEPOSIT VIEW
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