Source: Streetwise Reports 10/01/2024

Defense Metals Corp. DFMTF announced it has signed a memorandum of understanding with the Saskatchewan Research Council (SRC) to promote and collaborate on a strengthening the rare-earth element (REE) supply chain in Canada.

The agreement outlines a framework for Defense Metals and the SRC to “leverage their respective capabilities and interests in the supply and processing of rare-earth materials that are especially critical to the production of rare-earth magnets” Defense said in a release.

“This MOU represents a significant step forward in our goal of becoming part of a secure and sustainable supply chain for rare-earth elements in North America” Defense Metals Executive Chairman Guy de Selliers said. “By working together with SRC, we believe we can make substantial progress toward closing the rare-earth supply chain loop and ensuring the availability of these critical materials for green energy and defense applications that are essential for national security.”

Objectives of the partnership include exploring potential collaborations in the process and supply of rare-earth products, discussing using SRC’s technology to separate mixed rare-earth carbonates into separated rare-earth oxides, and facilitating negotiations for a long-term agreement with SRC for the sale and purchase of Defense Metal’s mixed rare-earth carbonate.

According to Defense Metals in its release, “This collaboration aligns with the broader Canadian critical minerals strategy, which is focused on developing a domestic industry, reducing reliance on foreign sources of critical minerals and bolstering national security. Furthermore, it supports broader North American goals for economic competitiveness and technological innovation in clean energy and defense technologies.”

Last month, Technical Analyst Clive Maund noted that while the stock has “been on the defense-ive all this year” he said it may have recently reached a turning point.

“The deeply oversold condition shown by the MACD indicator and the now large gap that has opened with the falling 200-day moving average above make a significant snapback rally likely very soon, that … should mark the start of a sustained improvement” Maund wrote on September 4.

Maund warned that the stock has had a habit of making sharp spikes higher that are followed by downtrends.

“If it does this again, it will make rapid gains in a short space of time” Maund noted. “Anyone holding Defense Metals should stay long and it is rated an Immediate Strong Buy.”

‘Crucial Role’ in Green Technologies

This summer, the company announced support from the government of British Columbia for its Wicheeda REE project, a move that is expected to aid in navigating regulatory processes and advancing funding opportunities for the project.

Josie Osborne, BC’s Minister of Energy, Mines, and Low Carbon Innovation, highlighted the project’s significance in a release at the time, stating, “Rare earth elements play a crucial role in green technologies like wind turbines and electric vehicle motors, and projects such as Wicheeda are integral to BC’s critical minerals strategy and the world’s energy transition.”

The BC Critical Minerals Office is anticipated to provide a “concierge-like” service, streamlining the project’s development.

The 8,301-hectare Wicheeda project is about 80 kilometers from Prince George and is accessible by a paved highway and all-weather gravel roads, the company said.

Defense Metals has drilled 58 core holes totaling more than 12,000 meters to define the deposit at Wicheeda, leading to measured and indicated resources of 34.2 million tonnes, averaging 2.02% total rare-earth oxides (TREO), including 17.8 million tonnes of high-grade dolomite carbonatite averaging 2.92% TREO, the company said. It also found 11.1 million tonnes, averaging 1.02% TREO inferred resources.

This represents a 260% increase over the Defense Metals initial 2019 mineral resource estimate and a conversion to (measured and indicated) of 101% of the prior 2021 mineral resource estimate.

The Catalyst: Market to More Than Double

The global market for REEs 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.”

REEs are also used for purifying water, MRIs, fertilizers, weapons, scientific research, wind turbines, computers, and permanent magnet motors for EVs.

Ownership and Share Structure

About 3.5% of the company’s stock is owned by insiders, including Director Andrew S. Burgess, who owns 1.5%, and former Chief Executive Officer Craig Taylor, who owns 0.97%, 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, 85.5%, is retail.

Defense Metals has a market cap of CA$27.16 million with 258.62 million shares outstanding. It trades in a 52-week range of CA$0.28 and CA$0.07.

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