Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
The final stretch. Drilling at Labrador Gold’s 100%-owned Kingsway gold project is targeting the Appleton Fault over a 12-kilometer strike length. The drilling is part of the company’s ongoing 100,000-meter diamond drilling program of which 83,000 meters of drilling has been completed. The company is beginning to receive assays back from the laboratory for samples from approximately 8,877 meters of core which will be released in batches once they have been interpreted. With ~C$11.5 million in cash, Labrador Gold is well-funded to complete the remaining 17,000 meters of planned drilling.
Drilling resumes next week. Labrador Gold expects to resume drilling next week with three rigs. Drilling will target the Gap Zone between the Big Vein and Pristine targets, the Knobby Occurrence, and the Golden Glove target. Permits have been received to drill in the Gap Zone and in the area south of the Big Vein target to the southern boundary of the property which encompasses the Knobby Occurrence and Golden Glove.
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Aurania Resources Ltd. (TSXV: ARU; OTCQB: AUIAF; Frankfurt: 20Q) (“Aurania” or the “Company”) provides a brief update and announces that its directors received their quarterly director fees in the form of stock options in lieu of cash for the period ended September 30th (see press release dated April 12, 2023).
On September 29, 2023, each director was granted 26,800 stock options at an exercise price of $0.235 in lieu of their director fees for Q3 2023. An aggregate of 107,200 stock options were granted. The stock options will be exercisable for three years and will vest on September 29, 2023. The Company will grant stock options equivalent in fair value to the director fees forfeited each quarter during 2023, at an exercise price of one cent above the closing price of Aurania’s shares the day prior to the grant and exercisable at any time for a period of three years following the date of issuance.
Update on Ecuador and France
The next President of Ecuador will be determined in a run-off election on October 15. The two candidates, Luisa Gonzalez (UNES – Correa’s party) and Daniel Noboa (ADN – centrist, business-aligned) are expected to be supportive of responsible mining. Gonzalez was in first place with 34% of the votes on August 20th, and Daniel Noboa held 24% of the votes at that time. The winning candidate will be in power until the next president is elected in Ecuador’s regularly scheduled election in the first half of 2025. After the first-round results, Noboa emerges as the candidate with the most promising prospects for the presidency in the upcoming second round. This is because González’s room for growth on her 34 percent showing remains limited to those supportive of Correa’s former Socialist government (2007-2017). Noboa, by contrast, is positioned to secure substantial backing from voters who had initially supported a variety of “anti-Correísmo” candidates. At time of writing, Noboa is ahead in the polls, from 5-8%. He has already met with the Ecuador Chamber of Mines, of which Aurania is a member, and recognizes the importance of mining to the Ecuador economy. Whomever wins the election will take office in December.
In the meantime, Aurania’s CSR team continues to work with local communities in Ecuador to advance various social programs and initiatives within the areas of the Company’s key targets, strengthening the bonds with the communities and improving the social license the Company has. The management team’s focus is to work on those initiatives with the higher potential to create value for our shareholders in Ecuador and France, where the applications for mineral exploration permits, announced in July 2023, are being processed. The Company will report on those activities as new developments occur.
About Aurania
Aurania is a mineral exploration company engaged in the identification, evaluation, acquisition and exploration of mineral property interests, with a focus on precious metals and copper in South America. Its flagship asset, The Lost Cities – Cutucú Project, is located in the Jurassic Metallogenic Belt in the eastern foothills of the Andes mountain range of southeastern Ecuador.
Click here to view the full press release dated October 2, 2023 on Aurania’s website including contact details and forward-looking statements.
Mark Reichman, Senior Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the bottom of the report for important disclosures
Mining companies outperform the broader market. During the third quarter, mining companies (as measured by the XME) rose 3.3% compared to a decline of 3.6% for the S&P 500 index. The VanEck Vectors Gold Miners (GDX) and Junior Gold Miners (GDXJ) ETFs were down 10.6% and 9.6%, respectively. Gold, silver, and copper futures prices fell 3.3%, 1.6%, and 0.6%, respectively, while zinc and lead were up 8.7% and 6.2%. Gold was likely negatively impacted by the Federal Reserve’s higher rates for longer messaging coupled with a 3.2% increase in the U.S. Dollar Index. Year-to-date through September 30th, the XME, GDX, and GDXJ have all lagged the S&P 500 index return of 11.7%.
Looking ahead to 2024. While we expected weakness in the second half of 2023, prices have remained relatively resilient, and we are increasingly bullish going into 2024. Factors supporting our view include: 1) the Federal Reserve appears to be nearing the end of its tightening cycle, 2) a new norm of heightened geopolitical uncertainty, 3) unsustainable growth in U.S. deficit spending and national debt, and 4) increasing investments in gold by central banks. Given the level of uncertainty reinforced by a dysfunctional U.S. political environment, we think portfolio allocations to precious metals could increase. While much will depend on monetary policy which appears to be working, we think the higher for longer mantra makes for nice messaging but actual policy will be data driven.
Outlook for industrial metals. While a potential economic downturn in the U.S. coupled with sluggish growth abroad could weigh on industrial metals demand and prices, longer-term secular trends such as electrification remain supportive of supply and demand fundamentals for metals such as copper. In the intermediate term, government support for infrastructure spending and strong demand from certain sectors such as aerospace, defense, and electronics are supportive of industrial metals.
Putting it all together. We think precious metals equities may be poised for outperformance in 2024. While well-diversified portfolios should have exposure to precious metals, mining equities may offer a stronger current alternative to bullion. In our opinion, junior companies remain attractive based on valuation and we expect industry consolidation to increase as senior producers seek to replenish reserves and resources. For industrial metals stocks, investors may need to be more selective by focusing on suppliers to end use markets with favorable demand growth fundamentals.
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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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RESEARCH ANALYST CERTIFICATION
Independence Of View All views expressed in this report accurately reflect my personal views about the subject securities or issuers.
Receipt of Compensation No part of my compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed in the public appearance and/or research report.
Ownership and Material Conflicts of Interest Neither I nor anybody in my household has a financial interest
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Near-term weakness presents an opportunity. Lithium stocks have been weighed down by a decline in lithium spot prices this year driven mainly by factors in China. The recent price of battery grade lithium carbonate was ~US$23,300 per tonne. We think it presents an opportunity for longer-term investors based on favorable intermediate and long-term lithium fundamentals supported by growth in the North American electric vehicle market. While commodity spot prices tend to be volatile, long-term supply contracts will likely account for market volume growth as electric vehicle industry participants seek to secure their own lithium sources.
North American lithium projects have gained traction. With critical minerals supplies subject to geopolitical risk, lithium projects in North America benefit from a variety of funding options as battery manufacturers and car makers seek to secure supplies to de-risk their own long-term objectives. General Motors’ investment and offtake agreement with Lithium Americas to advance the Thacker Pass lithium project in Nevada validates the commercial potential of similar projects. Another example is the U.S. Dept. of Energy’s commitment to lend up to US$700 million to develop Ioneer’s Rhyolite Ridge project in Nevada coupled with US$490 million of conditional financing from Sibanye-Stillwater and binding offtake agreements with Ford, Toyota/Panasonic, and EcoPro.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Chesapeake Utilities Corporation announced Monday that it has entered into an agreement to acquire Florida City Gas (FCG) from NextEra Energy for $923 million in cash. The acquisition will significantly expand Chesapeake’s presence in the growing Florida energy market.
FCG is the eighth largest natural gas local distribution company in Florida, serving around 120,000 residential and commercial customers across eight counties. Its infrastructure includes approximately 3,800 miles of distribution pipelines and 80 miles of transmission pipelines.
According to Jeff Householder, President and CEO of Chesapeake Utilities, natural gas demand in Florida continues to rise as consumers and businesses seek reliable, domestic, and affordable energy. With this acquisition, Chesapeake aims to capitalize on the robust growth opportunities across the state.
“This acquisition will more than double our natural gas business in Florida, one of the fastest growing states in the nation,” said Householder. “We see significant potential to continue pursuing long-term earnings growth.”
The deal is expected to close by the end of the fourth quarter of 2023, subject to regulatory approvals. Once completed, FCG will become a wholly owned subsidiary of Chesapeake Utilities.
Chesapeake has a strong track record of successfully integrating acquisitions to drive growth, as seen in its purchase of Florida Public Utilities in 2009. The company believes it can optimize FCG’s operations and execute on additional investments in gas distribution, transmission, and other energy platforms.
To finance the deal, Chesapeake plans to utilize a mix of equity and long-term debt to maintain balance sheet strength. The company has also obtained committed financing from Barclays.
Chesapeake has extended its earnings guidance through 2028 based on the increased scale and opportunities from FCG. It expects earnings per share growth of approximately 8% through 2028. The company also increased its 5-year capital expenditure guidance to $1.5-$1.8 billion.
The FCG acquisition demonstrates Chesapeake’s strategy of consolidating natural gas assets and positioning itself for growth in key geographies. As energy markets evolve, strategic deals allow companies like Chesapeake to enhance their competitive position.
Haynes International, Inc. is a leading developer, manufacturer and marketer of technologically advanced, nickel and cobalt-based high-performance alloys, primarily for use in the aerospace, industrial gas turbine and chemical processing industries.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Updating estimates. We have lowered our fiscal year 2023 EBITDA and EPS estimates to $81.2 million and $3.25 per share from $82.0 million and $3.30 per share. Our estimates reflect lower gross margins during the September quarter due to the negative impact of raw material fluctuations, primarily for nickel and cobalt. We have reduced our 2024 EBITDA and EPS estimates to $104.3 million and $4.50 per share from $106.8 million and $4.65. Our revised 2024 estimates reflect seasonality and more conservative sales volume growth assumptions albeit at modestly higher margins. The first quarter of each fiscal year is typically Haynes’ lowest revenue and earnings quarter due in part to holidays and planned maintenance.
Strong order backlog. Orders during the June quarter resulted in a record backlog of $468.1 million and represented a 4.8% increase compared to the prior quarter and a 38.4% increase on a year-over-year basis. Backlog pounds increased 3.2% during the third quarter to approximately 14.6 million pounds and increased 20.7% compared to the prior year period driven by strong demand in the aerospace and industrial gas turbine markets. In our view, the strong order book is indicative of the company’s strong competitive position and favorable outlook.
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Greenfire Resources, a Calgary-based oil sands company, began public trading on the New York Stock Exchange on Thursday through a merger with a special purpose acquisition company (SPAC). However, shares of Greenfire fell sharply on its debut, dropping around 11% in morning trading.
Greenfire combined with M3-Brigade Acquisition III Corp, a SPAC sponsored by New York-based private investment firm Brigade Capital Management. The deal, first announced in December 2022, valued Greenfire at $950 million.
The new company, Greenfire Resources Ltd, is now listed on the NYSE under the ticker “GFR”. But investors reacted negatively to the stock early on. After opening at $9.80 per share, GFR declined over 37% to around $6.10 by Friday morning.
SPAC deals have faced increased skepticism from investors amid high market volatility this year. Many companies that went public via SPACs have seen their share prices sink below initial trading levels. This broader SPAC downturn could be contributing to the weak debut for Greenfire.
Greenfire operates steam-assisted gravity drainage (SAGD) facilities in Alberta’s prolific oil sands region. It has a 75% stake in the Hangingstone expansion project, which came online in 2017, and 100% ownership of the adjacent Hangingstone demonstration facility. Both produce bitumen using steam injection to mobilize viscous oil sands deposits.
The company raised approximately $42 million through a private placement that closed concurrently with the SPAC merger on September 20. It also put in place $300 million in new senior secured notes and a $50 million senior secured credit facility to boost liquidity.
According to Greenfire’s management, the company will prioritize debt reduction in the near-term to strengthen its financial position. It also plans to increase production at its existing facilities through techniques like infill drilling and debottlenecking.
For example, Greenfire is currently drilling extended reach “refill” wells at the Hangingstone expansion site. These wells are intended to produce incremental volumes from between existing well pairs. No new drilling has occurred at the project since its commissioning in 2017.
In the long-term, Greenfire aims to generate free cash flow thanks to controlled capex spending and its high quality oil sands reservoirs. The company believes it has a structural cost advantage compared to some other SAGD operators in the Athabasca region.
Greenfire says its assets have long-life reserves and relatively low decline rates versus conventional oil and gas resources. For instance, the Hangingstone demonstration project has maintained steady production for nearly 20 years without new wells. This could support continued output for decades.
The company intends to initiate a shareholder returns policy over time once it has made sufficient progress on debt reduction. It also plans to evaluate potential acquisition opportunities to drive further growth down the line.
But in the short-term, investors seem cautious on the newly public company as oil prices waver. Energy stocks have seen significant volatility in 2022. Greenfire traded down double-digits in its NYSE debut as traders reacted hesitantly.
Its success at boosting production from existing assets through relatively low-cost techniques like infill drilling may dictate whether shares can rebound over the coming months. For now, the market is taking a wait-and-see approach with the SPAC-backed oil sands operator.
Explore other SPAC Mergers via SPACtrac reports from Noble Capital markets
Newrange is focused on district-scale exploration for precious metals in the prolific Red Lake District of northwestern Ontario. The past-producing high-grade Argosy Gold Mine is open to depth, while the adjacent North Birch Project offers additional blue-sky potential. Focused on developing shareholder value through exploration and development of key projects, the Company is committed to building sustainable value for all stakeholders. Further information can be found on our website at www.newrangegold.com .
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Americas-focused silver-gold exploration company. In May,Newrange executed a binding Scheme Implementation Deed (SID) to acquire 100% of Mithril Resources Limited (ASX: MTH) in a reverse takeover (RTO). Pending approval by the TSX Venture Exchange, the resulting company will be named Pinnacle Silver & Gold Corp. and will be listed on the TSX Venture exchange under the symbol “PINN.” The transaction is subject to various conditions, including approval by Newrange and Mithril shareholders and by various governmental and regulatory bodies. The transaction is expected to close following the Newrange and Mithril shareholder meetings on October 5th and October 13th, respectively. Mithril would then be delisted from the ASX exchange.
Flagship project. The Copalquin gold-silver project is in Durango State, Mexico and covers an entire mining district containing several dozen historic gold and silver mines and workings. The district is within the Sierra Madre Gold-Silver Trend which extends north-south along the western side of Mexico and hosts many world-class gold and silver deposits. Based on a recent NI 43-101 compliant technical report, the El Refugio target area is estimated to contain indicated resources of 121,000 ounces of gold and 2,538,000 ounces of silver and inferred resources of 252,000 ounces of gold and 8,414,000 ounces of silver.
Equity Research is available at no cost to Registered users of Channelchek. Not a Member? Click ‘Join’ to join the Channelchek Community. There is no cost to register, and we never collect credit card information.
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*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary. Proper due diligence is required before making any investment decision.
Comstock (NYSE: LODE) innovates technologies that contribute to global decarbonization and circularity by efficiently converting under-utilized natural resources into renewable fuels and electrification products that contribute to balancing global uses and emissions of carbon. The Company intends to achieve exponential growth and extraordinary financial, natural, and social gains by building, owning, and operating a fleet of advanced carbon neutral extraction and refining facilities, by selling an array of complimentary process solutions and related services, and by licensing selected technologies to qualified strategic partners. To learn more, please visit www.comstock.inc.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Sale of battery recycling facility. Comstock’s LINICO subsidiary sold its battery recycling facility in the Tahoe Reno Industrial Center and associated assets to American Battery Technology Company (OTCQX: ABML) for $27 million comprised of cash and ABML shares. LINICO had leased the facility with an option to purchase for $15.25 million, of which $3.25 million was paid. Comstock made the remaining $12.0 million payment to Aqua Metals, Inc. (Nasdaq: AQMS) to purchase the facility prior to closing its transaction with ABML. American Battery Technology Company initiated a 1-for-15 reverse split of its common stock effective at 9:00 am ET on September 11, 2023.
Sale of American Battery Technology Company shares. Comstock recently sold its 9,076,923 ABML common shares for approximately $5.5 million. Related to the sale of the battery recycling business, Comstock has now generated total and net cash proceeds of $26.5 million and $14.5 million, respectively, representing a net gain on the sale of ~$7 million that will be reflected in the company’s third quarter financial statements. American Battery Technology Company will make a final payment of $0.5 million in cash during the fourth quarter of 2023.
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Defense Metals Corp. is a mineral exploration and development company focused on the acquisition, exploration and development of mineral deposits containing metals and elements commonly used in the electric power market, defense industry, national security sector and in the production of green energy technologies, such as, rare earths magnets used in wind turbines and in permanent magnet motors for electric vehicles. Defense Metals owns 100% of the Wicheeda Rare Earth Element Property located near Prince George, British Columbia, Canada. Defense Metals Corp. trades in Canada under the symbol “DEFN” on the TSX Venture Exchange, in the United States, under “DFMTF” on the OTCQB and in Germany on the Frankfurt Exchange under “35D”.
Mark Reichman, Managing Director, Equity Research Analyst, Natural Resources, Noble Capital Markets, Inc.
Refer to the full report for the price target, fundamental analysis, and rating.
Mineral resource estimate. Defense Metals released results from its updated mineral resource estimate (MRE) for the Wicheeda Rare Earth Element (REE) Project. The 2023 mineral resource estimate is based on an updated geological model incorporating the results from 10,350 meters of drilling within 45 holes drilled by Defense Metals during 2021 and 2022.
Larger and higher-quality resource base. The 2023 resource estimate includes a 6.4 million tonne measured mineral resource averaging 2.86% total rare earth oxide (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 2023 mineral resource estimate represents an 18.2% increase in TREO and a 31.3% in tonnage compared to the 2021 MRE. Total measured and indicated mineral resources of 34.2 million tonnes, averaging 2.02% TREO is a significant upgrade compared to the previous estimate and can be included in the mine plan for the preliminary feasibility study that is expected to be completed in the first half of 2024.
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Uranium prices have entered a new bull market in 2023, surging 20% so far this year. The nuclear fuel recently hit $60 per pound for the first time in over a decade. This milestone comes on the back of rosier demand forecasts from the World Nuclear Association (WNA) and vastly outperforms other metals markets.
The WNA recently released its biennial report at the World Nuclear Symposium in London. The report provides insights into future uranium demand, underscoring the role nuclear power will play in the global energy transition. It predicts world reactor requirements for uranium will reach almost 130,000 tonnes by 2040, up from 65,650 tonnes in 2023.
Even the WNA’s most conservative projection of 87,000 tonnes in 2040 represents robust demand growth. This is driven by an expected expansion of nuclear capacity from 391 gigawatts currently to 686 gigawatts by 2040 under its base case scenario. The bulk of new reactors will be located in China, which is aggressively decarbonizing by replacing coal plants with nuclear.
China has 23 reactors under construction, 23 more planned, and 168 proposed to add to its existing fleet of 53 reactors. The WNA report increased its overall uranium demand growth projections to 4.1% annually through 2040, up from 3.1% in its 2021 forecast.
This surging demand presents a huge opportunity for growth in the uranium mining sector. As the market transitions from oversupply to undersupply, uranium companies are poised to benefit tremendously. Their revenues, earnings, and valuations could rapidly improve as prices rise. Many junior miners could become acquisition targets for larger producers looking to add resources.
A key driver of demand is the accelerated adoption of small modular reactors (SMRs). These compact, modular designs allow nuclear plants to be constructed faster and cheaper. The WNA sees SMRs reaching 31 gigawatts of installed capacity by 2040, significantly boosting uranium demand. However, forecasts remain relatively conservative given SMRs’ potential applications in shipping, data centers, and other sectors.
According to BMO Capital Markets, SMRs could play a pivotal role in powering remote mines looking to replace diesel generators with cleaner energy solutions. With ample space and ideal climates, mines are adding solar and wind power. But in colder regions like Canada, SMRs may be the only viable zero-carbon option.
In much the same way platinum miners are testing hydrogen trucks onsite, uranium producers could pioneer SMR installations at operations. This would create new demand from uranium miners themselves. BMO estimates SMR capacity could reach 58 gigawatts by 2030, or around 10% of total nuclear generation.
While secondary supplies like reprocessed fuel and stockpiles have bridged the supply-demand gap for decades, the WNA report acknowledges these inventories are diminishing. With roughly 3.7 years of reactor requirements in current stockpiles, the WNA projects secondary supplies will fall from 11-14% of demand now to just 4-11% by 2050.
This decline underscores the need for new mine supply to meet growing reactor demand in the long run. With secondary sources drying up, uranium prices must rise to incentivize investment in expansion and new projects. The uranium bull run still appears to be in its early innings, as rosier demand forecasts confront constrained mine supply. Nuclear energy’s role in global decarbonization efforts continues to expand, brightening the outlook for uranium markets and uranium mining companies.
Apple just recently announced its first carbon neutral products – the new Apple Watch lineup. This achievement comes from innovations across Apple’s global supply chain over years to dramatically reduce emissions. It’s a major milestone toward Apple’s 2030 goal to make all products carbon neutral.
To become carbon neutral, Apple steeply cut watch emissions first via clean energy, recycled materials, and low-emission transportation. Any remaining emissions are addressed with high-quality carbon credits from nature-based projects like forests.
This shift demonstrates how companies can decarbonize operations and products through renewable electricity, material innovation, and carbon removal. If adopted widely, these strategies can significantly benefit the environment.
Apple’s progress was enabled by large investments in wind and solar energy. Their actions helped create over 15 gigawatts of new clean power. Scaling renewable energy is crucial for the transition away from fossil fuels.
The company also pioneered using recycled metals and fibers in devices. This reduces the need for carbon-intensive mining and materials manufacturing. Broad adoption would lessen impacts on natural resources.
Additionally, Apple funded carbon removal through forest restoration. This supports nature-based solutions to sequester CO2. The climate impact could grow exponentially if more firms financed conservation projects.
In summary, Apple’s carbon neutral product milestone highlights the environmental promise of renewable energy, the circular economy, and carbon removal. It demonstrates the potential for these strategies to transform manufacturing, conserve natural resources, and fight climate change.
VANCOUVER, BC, Sept. 12, 2023 /CNW/ – Defense Metals Corp. (“Defense Metals” or the “Company“) (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D) is pleased to announce an updated Mineral Resource Estimate (the 2023 MRE) for the development of its Wicheeda Rare Earth Element (REE) deposit located in British Columbia, Canada.
Highlights of the 2023 Wicheeda REE Deposit Mineral Resource Estimate
The 2023 MRE comprises a:
6.4 million tonne Measured Mineral Resource, averaging 2.86% Total Rare Earth Oxide (TREO1);
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,
all reported at a cut-off grade of 0.5% TREO within a conceptual open pit shell;
Total Measured and Indicated (M+I) Mineral Resources of 34.2 million tonnes, averaging 2.02% TREO, is a significant upgrade representing a conversion of 101% of the 2021 MRE comprising some indicated and mostly inferred resources (see Defense Metals’ news release of November 24, 2021) to M+I on a contained metal basis;
Measured and Indicated resources are inclusive of 17.8 million tonnes of dolomite carbonatite, averaging 2.92% TREO;
The 2023 MRE represents a 17% increase in TREO on a contained metal basis, or 31% tonnage increase, in comparison to the prior 2021 MRE.
The 2023 MRE is based on an updated geological model that incorporates an additional 10,350 metres of drillhole data, from 45 holes drilled by Defense Metals during 2021 and 2022.
Craig Taylor, CEO of Defense Metals, stated, “Defense Metals is excited to release our updated mineral resource estimate for the Wicheeda Deposit, one of North Americas most advanced Rare Earth development projects. With over 10,000 metres of additional drilling completed since our 2021 mineral resource we have now converted 100% of the that resource to the measured and indicated categories, in addition to growing the overall resource by 17%. Importantly, we believe the upgrading of resources now demonstrates that we have established the tonnage and grades necessary to carry forward into our ongoing preliminary feasibility study.”
The effective date of the 2023 MRE is August 28, 2023, and a technical report relating to the PEA will be filed on SEDAR within 45 days of this news release. The 2023 MRE was prepared by APEX Geoscience Ltd. (APEX).
2023 Mineral Resource
The Wicheeda REE deposit is a southeast-trending, north to northeast dipping syenite-carbonatite intrusive complex having dimensions of approximately 450 m north-south by 250 m east-west which intrudes a mixed sedimentary host rock package (limestone). Relatively high REE grade dolomite-carbonatite rocks, which outcrop at surface, and form the main body of REE mineralization are surrounded by an envelope of intermediate REE grade hybrid xenolithic-carbonatite rocks that intrude lower REE grade syenite.
The 2023 MRE comprises a 6.4 million tonne Measured Mineral Resource, averaging 2.86% TREO CeO2, La2O3, Nd2O3, Pr6O11, Sm2O3, Eu2O3, Gd2O3, Tb4O7, Dy2O3 and Ho2O3); 27.8 million tonne Indicated Mineral Indicated Resource, averaging 1.84% TREO; and 11.1 million tonne Inferred Mineral Resource, averaging 1.02% TREO, reported at a cut-off grade of 0.5% TREO within a conceptual Pseudoflow algorithm open pit shell; see Table 1 and Figure 1.
The 2023 MRE is based on an updated geological model incorporating an additional 10,350 metres of drilling within 45 holes drilled by Defense Metals during 2021 and 2022.
Notes for Resource Table:
The 2023 MRE 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.
The 2023 MRE was prepared by Warren Black,M.Sc., P.Geo. and Tyler Acorn, M.Sc., of APEX Geoscience Ltd under the supervision of the QP, Michael Dufresne, M.Sc., P.Geo. in accordance with CIM Definition Standards.
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability. There has been insufficient exploration to allow for the classification of the indicated and inferred resources tabulated as a measured mineral resource; however, it is reasonably expected that the majority of the indicated and inferred mineral resources could be upgraded to measured or indicated mineral resources with continued exploration. There is no guarantee that any part of the mineral resources discussed herein will be converted to a mineral reserve in the future.
All figures are rounded to reflect the relative accuracy of the estimates. Totals may not sum due to rounding.
Median rock densities are supported by 8,075 measurements applied: 2.95 g/cm3 (mineralized dolomite-carbonatite), 2.90 g/cm3 (unmineralized dolomite-carbonatite), 2.85 g/cm3 (mineralized xenolithic-carbonatite), 2.76 g/cm3 (unmineralized xenolithic-carbonatite), 2.73 g/cm3 (syenite), and 2.76 g/cm3 (limestone).
The reasonable prospect for eventual economic extraction is met by reporting the Mineral Resources at a cut-off grade of 0.50% TREO (total rare earth oxide, sum of 10 oxides: CeO2, La2O3, Nd2O3, Pr6O11,Sm2O3,Eu2O3, Gd2O3, Tb4O7, Dy2O3 and Ho2O3), contained within an optimized open pit shell.
The cut-off grade is calculated, and the open pit shell is optimized based on the assumption that the hydrometallurgical processing can produce mixed REE carbonate precipitates. The parameters utilized, as in the 2021 MRE, include the following considerations:
TREO price: $18.66/kg
Exchange rate of 1.30 C$:US$
Precipitate production grades of 81.09% of TREO
Processing costs include $21.47/t of mill feed for flotation plus a variable cost for hydrometallurgical plant that varies based on the feed grade. The average cost of hydrometallurgical plant is assumed to be $1,204/t of concentrate.
Mining cost of C$2.00/t for mill feed and waste
G&A Costs of C$3.33/t for mill feed.
The overall process recoveries: For TREO>=2.3%, recovery is 69.6%; between 2.3% and 1.5% TREO, recovery is 65.3%; and less than 1.5% TREO, recovery is 52.2%. These assume variable flotation recoveries and a constant 87% hydrometallurgical recovery.
Overall pit slope angles vary by zone between 40 and 48 degrees.
Figure 1: Cross Section of the Wicheeda RE Deposits 2023 MRE (CNW Group/Defense Metals Corp.)
The 2023 MRE for the Wicheeda REE Deposit includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Mineral Resource Estimate Methodology
The drillhole database comprised of drilling that intersected the estimation domains consists of 14 exploration diamond drillholes (totalling 2,107 meters) completed in 2008 and 2009 by Spectrum Mining and 58 exploration core drillholes during 2019, 2021 and 2022 by Defense Metals (totalling 12,073 metres), providing a total of 4,903 drill core samples analyzed for REE by multi-element fusion ICP-MS.
The 3D geological modeling integrates assay and geological data collected from diamond core drilling; surface geologic mapping; soil geochemical; and airborne magnetic and radiometric geophysical surveys.
Ordinary kriging is employed to estimate metal concentrations using a three-step pass search strategy guided by domain-specific variography. The estimates utilize capped composites with a 3-meter length.
Measured Resources are categorized within a search ellipse of 35 m by 30 m by 15 m with a minimum of 3 drillholes. Indicated Resources are categorized within a search ellipse of 90 m by 60 m by 30 m with a minimum of 3 drillholes. Inferred Resources are categorized within a search ellipse of 120 m by 120 m by 30 m with a minimum of 2 drillholes.
Table 2 above illustrates the sensitivity of the 2023 MRE to different cut-off grades for a potential open-pit operation scenario with reasonable outlook for economic extraction. The reader is cautioned that the figures provided in these tables should not be interpreted as a statement of mineral resources. Quantities and estimated grades for different cut-off grades are presented for the sole purpose of demonstrating the sensitivity of the resource model to cut-off grade.
Table 3: Wicheeda Mineral Resource by Lithology (cut-off grade of 0.5% TREO)
Table 3 above illustrates the 2023 MRE by lithology which illustrates the relatively high REE grade nature of the dominant dolomite carbonatite unit, intermediate grade xenolithic dolomite carbonate rocks and lower grade syenite and limestone lithologies peripheral to the main body of the Wicheeda REE Deposit.
Qualified Persons
The scientific and technical information contained in this news release as it relates to the Wicheeda REE Project has been reviewed and approved by Kristopher J. Raffle, P.Geo. (BC), Principal and Consultant of APEX Geoscience Ltd. of Edmonton, AB, a director of Defense Metals and a “Qualified Person” as defined in NI 43-101. Mr. Raffle verified the data disclosed which includes a review of the analytical and test data underlying the information and opinions contained therein.
About the Wicheeda REE Property
Defense Metals 100% owned, 6,759-hectare (~16,702-acre) Wicheeda Project is located approximately 80 km northeast of the city of Prince George, British Columbia, Canada; population 77,000. The Wicheeda Project is readily accessible by all-weather gravel roads and is near infrastructure, including hydropower transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to the deep-water port facilities at Prince Rupert, the closest major North American port to Asia.
About Defense Metals Corp.
Defense Metals Corp. is a mineral exploration and development company focused on the development of its 100% owned Wicheeda Rare Earth Element Deposit located near Prince George, British Columbia, Canada. Defense Metals Corp. trades in Canada under the symbol “DEFN” on the TSX Venture Exchange, in the United States, under “DFMTF” on the OTCQB, and in Germany on the Frankfurt Exchange under “35D”.
Defense Metals is a proud member of Discovery Group. For more information please visit: http://www.discoverygroup.ca/
National Instrument 43-101 Technical Report
A technical report for the Wicheeda Project will be prepared in accordance with National Instrument 43-101 and will be filed on SEDAR at www.sedarplus.ca and on the Defense Metals’ website within 45 days of this news release. Readers are encouraged to read the technical report in its entirety, including all qualifications, assumptions and exclusions that relate to the details summarized in this news release. The technical report is intended to be read as a whole, and sections should not be read or relied upon out of context.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Cautionary Statement Regarding “Forward-Looking” Information
This news release contains “forward–looking information or statements” within the meaning of applicable securities laws, which may include, without limitation, statements relating to completion of the PFS and the expected timelines, the completion of the environmental tests on flotation and hydrometallurgical and the expected timelines, advancing the Wicheeda REE Project, the technical, financial and business prospects of the Company, its project and other matters. All statements in this news release, other than statements of historical facts, that address events or developments that the Company expects to occur, are forward-looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the price of rare earth elements, the anticipated costs and expenditures, the ability to achieve its goals, that general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed and on reasonable terms. Such forward-looking information reflects the Company’s views with respect to future events and is subject to risks, uncertainties and assumptions, including the risks and uncertainties relating to the interpretation of exploration and metallurgical results, risks related to the inherent uncertainty of exploration and development and cost estimates, the potential for unexpected costs and expenses and those other risks filed under the Company’s profile on SEDAR at www.sedarplus.ca. While such estimates and assumptions are considered reasonable by the management of the Company, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks. Factors that could cause actual results to differ materially from those in forward looking statements include, but are not limited to, continued availability of capital and financing and general economic, market or business conditions, adverse weather and climate conditions, failure to maintain or obtain all necessary government permits, approvals and authorizations, failure to maintain community acceptance (including First Nations), risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of personnel, materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), risks relating to inaccurate geological, metallurgical and engineering assumptions, decrease in the price of rare earth elements, the impact of Covid-19 or other viruses and diseases on the Company’s ability to operate, an inability to predict and counteract the effects of COVID-19 on the business of the Company, including but not limited to, the effects of COVID-19 on the price of commodities, capital market conditions, restriction on labour and international travel and supply chains, loss of key employees, consultants, or directors, increase in costs, delayed results, litigation, and failure of counterparties to perform their contractual obligations. The Company does not undertake to update forward–looking statements or forward–looking information, except as required by law.
