Highlights
- Defense Metals closes $4M bridge financing to complete Prefeasibility Study for Wicheeda Rare Earth Element Project in British Columbia.
- Company plans to launch Definitive Feasibility Study in Q1 2025.
- A new CEO is expected to be in place by Q1 2025.
- Wicheeda deposit boasts significant mineral resources.
- Strategically located near infrastructure and Asian export routes.
Defense Metals Corp (opens in a new tab). (“Defense Metals” or the “Company;” TSX-V: DEFN / OTCQB: DFMTF / FSE: 35D) reported earlier this month their successful closing of the firm’s previously announced non-brokered bridge financing of secured convertible notes (the “Notes”), raising $4,000,000 in gross proceeds (the “Offering”) to help them proceed with the mining of a major rare element project in British Columbia, Canada.
The proceeds of the Offering will enable Defense Metals to complete the Prefeasibility Study (“PFS”) for the Wicheeda Rare Earth Element Project (opens in a new tab), carry out scenario analyses, evaluate possible optimization of processes, and conduct further testing. The PFS will be substantially completed by the end of the year, with the final results published in Q1 2025.
The firm retained Hatch Ltd. to conduct the PFS, with metallurgical oversight provided by rare earth processing expert John Goode.
Following the completion of the PFS, Defense Metals plans to immediately launch into the Definitive Feasibility Study (“DFS”), with financing expected to take place in Q1 2025.
CEO Search Update the Company is also actively conducting a search for a new CEO, which is being led by executive search firm Johnson Partners. A number of highly qualified candidates have already been identified, and the new CEO is expected to be in place by Q1 2025.
What is the Wicheeda Rare Earth Element Project?
The Wicheeda REE Project, approximately 80 kilometers (~50 miles) northeast of the city of Prince George (opens in a new tab), is readily accessible by a paved highway and all-weather gravel roads and is close to infrastructure, including hydro power transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to the port facilities at Prince Rupert, the closest major North American port to Asia.
As the company reported (opens in a new tab) in July of this year, this British Columbia, Canada-based deposit, the Wicheeda REE deposit (opens in a new tab) 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 ton Measured Mineral Resource, averaging 2.86% (TREO); 27.8 million ton Indicated Mineral Indicated Resource, averaging 1.84% TREO; and 11.1 million ton Inferred Mineral Resource, averaging 1.02% TREO, reported at a cut-off grade of 0.5% TREO.
The 2023 MRE is based on an updated geological model incorporating an additional 10,350 meters of drilling within 45 holes drilled by Defense Metals during 2021 and 2022.
Why an important milestone?
Alex Heath, SVP Corporate Development & Interim CFO of Defense Metals, added: “This financing provides the necessary financial resources we need to complete the pre-feasibility study and further advance our technical and optimization work.
It also positions us to raise the financing required for the Definitive Feasibility Study as a further step towards bringing the Wicheeda deposit into production. We are confident that we will be able to raise the necessary financing for the project with the help of our financial advisor HCF International Advisors, which was instrumental in mobilizing AUD$1 billion debt package for Arafura’s rare earth project in Australia.”
The Terms
Terms of The Notes The Notes bear interest from the date of issuance at a rate of ten percent (10%) per annum, payable quarterly in common shares of the Company (“Common Shares”) at a price per share equal to the applicable 20-day volume-weighted average price of the Common Shares on the TSX Venture Exchange (the “TSXV”), or such other price determined in accordance with the policies of the TSXV. The Notes will mature 12 months after the date of issuance.
Investors have the option to convert the principal amount of the Notes into Common Shares at a deemed price of $0.125 per share up to seven days prior to a Mandatory Conversion Event (as defined below). The Notes will automatically convert into Common Shares upon the occurrence of certain events (each, a “Mandatory Conversion Event”), including the completion by the Company of a new issuance of equity as part of a minimum $4,000,000 financing from third party sources (excluding conversion of the Notes), completion of a sale of all or substantially all of the Common Shares or assets of the Company, or completion of a merger or other corporate transaction coincident with a minimum $4,000,000 fundraise from third party capital (excluding conversion of the Notes).
Upon the occurrence of a Mandatory Conversion Event, the principal amount of the Notes will automatically convert into Common Shares at a fifteen percent (15%) discount to the applicable price of the offering implied by the Mandatory Conversion Event, provided that if such conversion price would be less than the Conversion Price there will be no mandatory conversion.
The Notes were issued on a private placement basis to eligible accredited investors, with lead orders from Okeburn Corp Limited (opens in a new tab) (“Okeburn”), a company owned by a family trust of Guy de Selliers (opens in a new tab), Defense Metals’ Executive Chairman and RCF Opportunities Fund II L.P. (“RCF”).
Okeburn invested $1,768,000, and RCF subscribed for Notes in the principal amount of $500,000. In connection with their investments, both RCF and Okeburn entered into separate investor rights agreements, granting them certain board observer rights, cashflow reporting rights, and rights to participate in future financings of the Company. The participation of Okeburn in the Offering is exempt from formal valuation and minority shareholder approval requirements pursuant to exemptions contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101. Suite 1020-800 West Pender St. Vancouver, BC V6C 2V6 (DEFN:TSXV) www.defensemetals.com (opens in a new tab) 119985341 v1.
The Notes are secured against all personal property of the Company and a first ranking security interest against the Company’s mining claims in respect of the Wicheeda REE Project. All note holders rank pari passu among themselves. The Company intends to use the proceeds of the Offering for completion of the pre-feasibility study for the Wicheeda REE Project and general corporate matters.
Defense Metals Corp (opens in a new tab). (“Defense Metals” or the “Company;” TSX-V: DEFN / OTCQB: DFMTF / FSE: 35D) reported earlier this month their successful closing of the firm’s previously announced non-brokered bridge financing of secured convertible notes (the “Notes”), raising $4,000,000 in gross proceeds (the “Offering”).
The proceeds of the Offering will enable Defense Metals to complete the Prefeasibility Study (“PFS”) for the Wicheeda Rare Earth Element Project (opens in a new tab), carry out scenario analyses, evaluate possible optimization of processes, and conduct further testing. The PFS will be substantially completed by the end of the year, with the final results published in Q1 2025.
The firm retained Hatch Ltd. to conduct the PFS, with metallurgical oversight provided by rare earth processing expert John Goode.
Following the completion of the PFS, Defense Metals plans to immediately launch into the Definitive Feasibility Study (“DFS”), with financing expected to take place in Q1 2025.
The company is also actively conducting a search for a new CEO, which is being led by executive search firm Johnson Partners. A number of highly qualified candidates have already been identified, and the new CEO is expected to be in place by Q1 2025.
What is the Wicheeda Rare Earth Element Project?
The Wicheeda REE Project, approximately 80 kilometers (~50 miles) northeast of the city of Prince George (opens in a new tab), is readily accessible by a paved highway and all-weather gravel roads and is close to infrastructure, including hydro power transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to the port facilities at Prince Rupert, the closest major North American port to Asia.
As the company reported (opens in a new tab) in July of this year, this British Columbia, Canada-based deposit, the Wicheeda REE deposit (opens in a new tab) 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 ton Measured Mineral Resource, averaging 2.86% (TREO); 27.8 million ton Indicated Mineral Indicated Resource, averaging 1.84% TREO; and 11.1 million ton Inferred Mineral Resource, averaging 1.02% TREO, reported at a cut-off grade of 0.5% TREO.
The 2023 MRE is based on an updated geological model incorporating an additional 10,350 meters of drilling within 45 holes drilled by Defense Metals during 2021 and 2022.
Why an important milestone?
Alex Heath, SVP Corporate Development & Interim CFO of Defense Metals, added: “This financing provides the necessary financial resources we need to complete the pre-feasibility study and further advance our technical and optimization work.
It also positions us to raise the financing required for the Definitive Feasibility Study as a further step towards bringing the Wicheeda deposit into production. We are confident that we will be able to raise the necessary financing for the project with the help of our financial advisor HCF International Advisors, which was instrumental in mobilizing AUD$1 billion debt package for Arafura’s rare earth project in Australia.”
Daniel
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