Rare Earths Co. Working With Leading Corp. Finance Firm

Source: Streetwise Reports 03/26/2024

Defense Metals Corp. announced it has appointed a leading London corporate finance advisory boutique to review the strategic financing of its wholly owned Wicheeda rare earth element (REE) project in British Columbia. One analyst says the company could become a major global producer of the critical elements.

Defense Metals Corp. DFMTF announced it has appointed a leading London corporate finance advisory boutique to review the strategic financing of its wholly owned Wicheeda rare earth element (REE) project in British Columbia.

HCF International Advisors Ltd., specializes in providing financial advisory services with a "primary focus on the metals and mining sector," the company said in a release.

HCF's review will help Defense will thoroughly analyze potential financing options and strategic partnerships for development and advancement of the project beyond the completion of its preliminary feasibility study (PFS), expected in Q2 2024.

The project "has the potential to be a globally significant producer" noted analyst Mark Reichman of Noble Capital Markets in an updated research note on March 20.

"We think the Wicheeda project benefits from significant advantages, including: 1) location, 2) favorable mineralogy, metallurgy, and grade, 3) the ability to produce a REE product as established by pilot plant operations, 4) a long mine life, and 5) social license and support of the McLeod Indian Band" Reichman wrote. "We think the project is well-positioned to serve the growing demand for rare earths sourced from North America."

China is responsible for two-thirds of current REE mine production and more than 85% of the refined output of REEs, which are needed for the transition to clean energy, a fact Western governments would like to change.

Noble rated the company Outperform with a CA$0.70 per share target price, a more than 200% increase over Monday morning's share price.

The Catalyst: A Possible Global Producer

HCF has given its expertise to international mining projects, in particular critical mineral projects in Canada and Africa, Defense noted. In particular, HCF advised Arafura Rare Earths Ltd. on the financing of its Nolans NdPr (neodymium-praseodymium) project in the Northern Territory of Australia.

Nolans will encompass a mine, processing plant, and related infrastructure. An important part of any final investment decision in the project, Arafura said on its website, was to finalize commercially binding sales agreements for a large portion of the offtake from the site.

It hopes to finish Nolans soon enough to "take full advantage of an anticipated mid-2020s supply shortfall in NdPr oxide."

"It is a globally significant and strategic NdPr project which, once developed, will become a major supplier of these critical minerals to the high-performance NdFeB permanent magnet market" the company said.

Defense's Wicheeda also has the potential to become a global producer of REEs, Reichman noted.

"The project has important advantages, including a mining-friendly location within North America, access to well-developed infrastructure and logistics, and a strong technical team" Reichman wrote. "While China remains the largest global supplier of rare earths, Wicheeda is well-positioned to take a leading role in the North American and Global REE supply chain. Once the project commences commercial production, it is expected to produce ~25,000 tonnes of rare earth oxide annually, or roughly 10% of current global production."

Noble rated the company Outperform with a CA$0.70 per share target price, a more than 200% increase over Monday morning's share price.

The company said it had drilled 58 core holes totaling more than 12,000 meters to define the deposit at Wicheeda and provide the metallurgical test samples.

This has led to measured and indicated resources of 34.2 million tonnes, averaging 2.02% 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.

It was "rather surprising that its stock is not already higher than it is" Technical Analyst Clive Maund wrote on January 29. He rated the stock an Immediate Strong Buy for all timeframes.

"It is not regarded as being an unduly speculative investment" Maund wrote.

Co.'s Expertise Will Be 'Instrumental'

Defense Chief Executive Officer Craig Taylor said the company will collaborate with HCF on a strategic funding review of Wicheeda.

"Following our PFS, as we navigate the dynamic landscape of the metals and mining sector, having HCF's expertise on board will be instrumental in evaluating and pursuing optimal funding and strategic partnership opportunities, especially in Europe" Taylor said.

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 5% of the company's stock is owned by insiders, including Director Andrew S. Burgess, who owns 1.5%, and CEO 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, 84%, is retail.

Defense Metals has a market cap of CA$55.6 million with 258.62 million shares outstanding and 248.44 million free-floating. It trades in a 52-week range of CA$0.35 and CA$0.15.

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 Defense Metals Corp.
  3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
  4. This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

Disclosures for Noble Capital Markets, Defense Metals Corp., March 20, 2024:

GENERAL DISCLAIMERS

All statements or opinions contained herein that include the words "we", "us", or "our" are solely the responsibility of Noble Capital Markets, Inc. ("Noble") and do not necessarily reflect statements or opinions expressed by any person or party affiliated with the company mentioned in this report. Any opinions expressed herein are subject to change without notice. All information provided herein is based on public and non-public information believed to be accurate and reliable, but is not necessarily complete and cannot be guaranteed. No judgment is hereby expressed or should be implied as to the suitability of any security described herein for any specific investor or any specific investment portfolio. The decision to undertake any investment regarding the security mentioned herein should be made by each reader of this publication based on its own appraisal of the implications and risks of such decision.

This publication is intended for information purposes only and shall not constitute an offer to buy/sell or the solicitation of an offer to buy/sell any security mentioned in this report, nor shall there be any sale of the security herein in any state or domicile in which said offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or domicile. This publication and all information, comments, statements or opinions contained or expressed herein are applicable only as of the date of this publication and subject to change without prior notice. Past performance is not indicative of future results.

Noble accepts no liability for loss arising from the use of the material in this report, except that this exclusion of liability does not apply to the extent that such liability arises under specific statutes or regulations applicable to Noble. This report is not to be relied upon as a substitute for the exercising of independent judgement. Noble may have published, and may in the future publish, other research reports that are inconsistent with, and reach different conclusions from, the information provided in this report. Noble is under no obligation to bring to the attention of any recipient of this report, any past or future reports. Investors should only consider this report as single factor in making an investment decision.

IMPORTANT DISCLOSURES

This publication is confidential for the information of the addressee only and may not be reproduced in whole or in part, copies circulated, or discussed to another party, without the written consent of Noble Capital Markets, Inc. ("Noble"). Noble seeks to update its research as appropriate, but may be unable to do so based upon various regulatory constraints. Research reports are not published at regular intervals; publication times and dates are based upon the analyst's judgement. Noble professionals including traders, salespeople and investment bankers may provide written or oral market commentary, or discuss trading strategies to Noble clients and the Noble proprietary trading desk that reflect opinions that are contrary to the opinions expressed in this research report.

The majority of companies that Noble follows are emerging growth companies. Securities in these companies involve a higher degree of risk and more volatility than the securities of more established companies. The securities discussed in Noble research reports may not be suitable for some investors and as such, investors must take extra care and make their own determination of the appropriateness of an investment based upon risk tolerance, investment objectives and financial status.

Company Specific Disclosures

The following disclosures relate to relationships between Noble and the company (the "Company") covered by the Noble Research Division and referred to in this research report.

The Company in this report is a participant in the Company Sponsored Research Program ("CSRP"); Noble receives compensation from the Company for such participation. No part of the CSRP compensation was, is, or will be directly or indirectly related to any specific recommendations or views expressed by the analyst in this research report.

Noble intends to seek compensation for investment banking services and non-investment banking services (securities and non-securities related) within the next 3 months.

Noble is not a market maker in the Company.

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.

CONTINUING COVERAGE

Unless otherwise noted through the dropping of coverage or change in analyst, the analyst who wrote this research report will provide continuing coverage on this company through the publishing of research available through Noble Capital Market's distribution lists, website, third party distribution partners, and through Noble's affiliated website, channelchek.com.

This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate for any recipient particular investment objectives, financial situation or particular needs. Prior to making any investment decision, recipients should assess, or seek advice from their advisors, on whether any relevant part of this report is appropriate to their individual circumstances. If a recipient was referred to by an investment advisor, that advisor may receive a benefit in respect of transactions effected on the recipients behalf, details of which will be available on request in regard to a transaction that involves a personalized securities recommendation. Additional risks associated with the security mentioned in this report that might impede achievement of the target can be found in its initial report issued by . This report may not be reproduced, distributed or published for any purpose unless authorized by .

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 in the securities of the subject company or any other company mentioned in this report.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
Posted In: NewsPenny StocksMarketsTrading Ideascontributors
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!