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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%.
  • The capital payback is 5 years from start of production, and assumes partial self-funding of construction of hydrometallurgical plant from concentrate sales.
  • Revenues average $397 million per year from sale of REE mineral concentrate (years 1-4) and mixed REE hydrometallurgical precipitate (years 5-16).
  • Operating margin of 65.2%.
  • Production of a saleable high-grade flotation-concentrate, with average 43% total rare earth oxide (TREO) for the life of the mine. It will be sold to market directly for years 1-4 and will then feed a project hydrometallurgical plant starting in year 5.
  • Project near to key infrastructure.
  • Base case economics were calculated using rare earth oxide (REO) prices of US$5.76/kg TREO in flotation concentrate and US$14.04/kg TREO in 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 mine (project) life that 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 in year 1.
  • Average annual REO production of 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 $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 capex for the life of the project is $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 on a contained metal basis in comparison to the prior 2020 MRE due to the estimation of additional economically significant medium and heavy REE’s and a lower cut-off grade established based on consideration of TREO and concentrate payable, 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 and delineation 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 LREE deposit

Two specific rare earth minerals Monazite and Synchysite/Parasite-Bastnaesite with contained in approximately equal proportions

Ideal opportunity for vertical integration, to support rapidly growing market, reducing reliance on China

2019 Project Milestones

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

May 13, 2020 Defense Metals Completes Updated Resource Estimate for the Wicheeda Project 49% increase in overall tonnage, and 30% increase in overall average grade compared to previous mineral resource

Indicated Resources of 4,890,000 tonnes averaging 3.02% LREO2 (Light Rare Earth Oxide) and, Inferred Resources of 12,100,000 tonnes averaging 2.90% LREO reported at a cut-off grade of 1.5% total metal.3

Wicheeda Deposit Looking Northeast Showing 1% LREE Grade Shell
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

Significant Assay Results

*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.

Wicheeda Plan Deposit View

Property Location

Strategically positioned alongside a major forestry service road connected to Highway 97

Major hydroelectric power line, major gas pipeline and a Canadian National railway line it the nearby village of Bear Lake

Trained nearby workforce

Prince George is a strategic mining centre