#REE #Mining News: Defense Metals (TSXV:
$DEFN.V) (OTCQB: $DFMTF) Announces Positive Preliminary Economic Assessment For
The Wicheeda Rare Earth Element Project; @DefenseMetals
Vancouver, British Columbia –
November 25, 2021: Investorideas.com
Newswire, MiningSectorStocks.com and RenewableEnergyStocks.com -Mining/Metals/ Green Energy Stock
News- Defense
Metals Corp. (TSX-V:DEFN / OTCQB:DFMTF/ 35D: FSE) is pleased to announce the results of its Preliminary
Economic Assessment (PEA) and updated mineral resource estimate for the
development of its Wicheeda Rare Earth Element (REE) deposit located in British
Columbia, Canada. The PEA was prepared by SRK Consulting (Canada) Inc. (SRK).
The effective date of the PEA is November 21, 2021 and a technical report
relating to the PEA will be filed on SEDAR within 45 days of this news release.
Read this news, featuring DEFN and see
all images at https://www.investorideas.com/news/2021/mining/11251DEFN-REE-Preliminary-Economic-Assessment.asp
PEA Highlights
Strong Financial Metrics
·
The project has a pre-tax net present
value (NPV) of $765 million[1], 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.
·
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.
Craig Taylor, CEO of
Defense Metals, stated: “We are pleased to have delivered a positive PEA for
the Wicheeda REE Project that has the potential to be one of the top REE
projects in the world. We chose SRK due to its world class experience and
reputation in the mining industry and in particular its ability to assemble a
team with highly specialized knowledge of Rare Earth Elements projects. The results
of the PEA reveal the Wicheeda Project demonstrates robust economics and
relatively low initial CAPEX via a staged development scenario that provides
the flexibility to capitalize on forecast REE demand pressure.”
Dr. Luisa Moreno, Director,
added: “The
Wicheeda project has the three main aspects for a successful rare earth
project, favorable minerology dominated by coarse grained bastnasite family
minerals, a metallurgical process that yielded high grade flotation concentrate
and great infrastructure in a friendly jurisdiction. With the positive PEA, the
project is undoubtedly a step closer to production.”
PEA Key Metrics
Table 1: Key financial and
project metrics
|
Project
Metric |
Units |
Value |
|
Pre-tax
NPV @ 8% |
$k |
$764,586 |
|
After-tax
NPV @ 8% |
$k |
$511,577 |
|
Pre-tax
IRR @ 8% |
%
(real) |
20% |
|
After-tax
IRR @ 8% |
%
(real) |
17% |
|
Undiscounted
After-tax Cashflow (LOM) |
$k |
$1,785,587 |
|
Payback
Period from start of production |
Years |
5 |
|
Initial
Capital Expenditure |
$k |
$599,845 |
|
Maximum
Production Rate |
Mtpa |
1.8 |
|
Mine
Life |
years |
16 |
|
Ramp-up
Years |
years |
1 |
|
Average
Production Rate after Ramp-up |
Mtpa |
1.73 |
|
Mill
Feed for Concentrate Sales |
tonnes |
5,416,388 |
|
Mill
Feed for HM Plant Precipitate Sales |
tonnes |
20,712,812 |
|
Total
Mill Feed |
tonnes |
26,129,200 |
|
Life
Mine ROM Grade |
% REO
in mill feed |
2.33% |
|
Life
of Mine Waste Rock |
tonnes |
45,658,098 |
|
Life
of Mine Strip Ratio |
Waste:Mill
feed |
1.75 |
|
Net
Revenue from Concentrate |
$k |
$862,520 |
|
Net
Revenue from Precipitate |
$k |
$5,236,095 |
|
NSR
(concentrate and precipitate) |
$/tonne
mill feed |
$228.73 |
|
Operating
Margin |
% |
65.21% |
|
Operating
Costs |
|
|
|
Mining |
$/t |
$13.14 |
|
Beneficiation |
$/t |
$13.63 |
|
Beneficiation
Tailings |
$/t |
$1.25 |
|
Hydrometallurgical
Plant (per tonne of mill feed for HM) |
$/t |
$55.75 |
|
Hydrometallurgical
Tailings (per tonne of mill feed for HM) |
$/t |
$0.86 |
|
Water
Management |
$/t |
$1.91 |
|
Site
G&A |
$/t |
$4.78 |
|
Total
Unit Operating Costs |
$/t
mill feed |
$79.58 |
Figure 1: Pre-tax cashflow
profile for project
Optimization Opportunities and Next Steps
The
PEA describes a well-developed base case flotation concentration and
hydrometallurgical pre-leach-caustic crack-leach flowsheet capable of achieving
high REE recoveries into a mixed REE precipitate product. The base case
represents a well-proven and widely adopted REE recovery flowsheet.
There
are several alternative process and infrastructure development options that
have shown promise in initial testing or based on the characteristics of
Wicheeda REE feed are expected to be viable, that have the potential to yield
simplifications that may contribute to decreased CAPEX and/or operating costs
(OPEX). Future critical path bench and/or pilot-scale testwork and economic
trade-off, and resource estimation studies are planned which include (but are not
limited to):
·
Economic trade off studies designed to
investigate the optimal hydrometallurgical plant location. CAPEX/OPEX reduction
may be achievable in siting the hydrometallurgical plant more remote from the
project site near industrial reagent suppliers versus the base case.
·
Front-end investigation of
pre-concentration (e.g., x-ray transmission (XRT) particle sorting) and flotation flowsheet
metallurgical optimization assessing the effect of grind size and lowered or
alternative reagent dosages, as well required conditioning and flotation slurry
temperature.
·
Hydrometallurgical optimization
including investigation of potential process alternatives including direct
caustic crack, sulphuric acid bake.
·
Further metallurgical test work to
confirm and improve recoveries and better define detailed design parameters
such as liquid-solid separation requirements.
·
Further
definition of the detailed characteristics of the
tailings and water management components.
·
Engage with rights and stakeholders.
·
Design and implementation of a full
environmental base line program in support of Federal and Provincial
Environmental Assessment for the project.
·
Future infill and expansion drilling.
Updated
Mineral Resource
The
Wicheeda deposit is modelled as a southeast-trending, north to northeast
dipping composite layered syenite-carbonatite sill complex having dimensions of
approximately 400 m north-south by 100-250 m east-west. The mineralization is
interpreted as a moderately north-northeast dipping, shallowly north plunging,
layered sill complex having low REE grade syenite at its base, overlain by
transitional intermediate REE grade hybrid xenolithic-carbonatite (fenite), and
finally relatively higher REE grade dolomite-carbonatite rocks, which form the
main mineralization of the Wicheeda REE deposit outcropping at surface.
The
updated MRE comprises a 5.0 million tonnes Indicated Mineral Resource,
averaging 2.95% TREO (Total Rare Earth Oxide: CeO2, La2O3, Nd2O3,
Pr6O11, Sm2O3, Eu2O3, Gd2O3,
Tb4O7, Dy2O3 and Ho2O3),
and a 29.5 million tonnes 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 and is provided in Table 2.
The
lower cut-off grade was established based on consideration of TREO and
concentrate payable, metallurgical recovery, and operating cost assumptions.
The
MRE is predominately based on an unchanged geological model and methodologies
utilized to calculate the 2020 MRE. Differences relate to the incorporation of
pulp REE multi-element fusion inductively coupled plasma mass spectrometry
(ICP-MS), re-assay of the 2008 and 2009 drillholes, reducing the uncertainty
regarding the historical incomplete X-ray fluorescence analytical results,
updated estimation parameters, and a 2020 LiDAR survey. The increased
resolution of the LiDAR allows for more robust mine planning, particularly when
considering the high relief within the Project area.
Table 2: Wicheeda Mineral Resource (effective
date November 21, 2021)
|
Category |
Tonnes |
TREO |
TREO |
CeO2 |
La2O3 |
Pr6O11 |
Nd2O3 |
Sm2O3 |
Gd2O3 |
Eu2O3 |
Dy2O3 |
Tb4O7 |
Ho2O3 |
|
(Million) |
(%) |
(kt) |
(%) |
(%) |
(%) |
(%) |
(ppm) |
(ppm) |
(ppm) |
(ppm) |
(ppm) |
(ppm) |
|
|
Indicated |
5.0 |
2.95 |
148 |
1.44 |
1.04 |
0.11 |
0.30 |
296 |
126 |
60 |
33 |
11 |
3 |
|
Inferred |
29.5 |
1.83 |
539 |
0.89 |
0.61 |
0.08 |
0.21 |
240 |
112 |
50 |
32 |
10 |
4 |
Notes
for Resource Table:
·
The MRE was prepared by Warren Black, M.Sc.,
P.Geo. of APEX Geoscience Ltd under the
supervision of the QP, André M. Deiss, Bsc (Hons), Pri.Sci.Nat. of SRK
Consulting (Canada) Inc., in
accordance with CIM Definition Standards.
·
The 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.
·
Mineral Resources that are not Mineral Reserves do
not have demonstrated economic viability. 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. Total may not sum due to rounding.
·
Mean rock densities supported by 795 measurements
applied: 2.94 g/cm3 (dolomite-carbonatite), 2.87 g/cm3
(xenolithic-carbonatite), 2.70 g/cm3 (syenite), and 2.74 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 a Lerchs-Grossman (LG) optimized pit shell
·
The cut-off grade is calculated, and the LG pit is
optimized based on the assumption that the hydrometallurgical processes can
produce mixed REE carbonate precipitates. The parameters utilized 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 cost includes $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 included in the processing cost is
C$6M/yr
•
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
The
PEA for the Wicheeda REE Deposit is preliminary in nature, 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, and there is no certainty that the preliminary
economic assessment forecasts will be realized or that any of the resources
will ever be upgraded to reserves. Mineral resources that are not mineral
reserves do not have demonstrated economic viability.
Mineral Resource Estimate
Methodology
1.
The
drillhole database comprised of 27 exploration diamond drillholes completed in
2008 and 2009 by previous operators (14 holes totalling 2,244 metres) and in
2019 by Defense Metals (13 holes totalling 2,005 metres), containing a total of
1,315 drill core samples analyzed for REE by multi-element fusion ICP-MS.
2.
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.
3.
Search
ellipsoids defined by metal modelled variograms, which range from 130 to 140 m
in the major axis, 100 m in the minor axis, and 9 to 18 m in the vertical axis.
The MRE was estimated with 3 m composites utilizing Ordinary kriging and local
varying anisotropy.
4.
Indicated
Resources were categorized within a search ellipse of 90 m by 60 m by 9 m with
a minimum of 5 drillholes. Inferred blocks do not extend beyond the limits of
the variograms.
5.
Table
3: Mineral Resource cut-off
sensitivity
|
Category |
Cut-off |
Tonnes1 |
TREO2 |
TREO |
CeO2 |
La2O3 |
Pr6O11 |
Nd2O3 |
Sm2O3 |
Gd2O3 |
Eu2O3 |
Dy2O3 |
Tb4O7 |
Ho2O3 |
|
TREO (%)2 |
(Million) |
(%) |
(Tonnes) |
(%) |
(%) |
(%) |
(%) |
(ppm) |
(ppm) |
(ppm) |
(ppm) |
(ppm) |
(ppm) |
|
|
Indicated |
0.25 |
5.032 |
2.94 |
148,186 |
1.44 |
1.04 |
0.11 |
0.30 |
296 |
126 |
60 |
33 |
11 |
3 |
|
0.50 |
5.031 |
2.95 |
148,184 |
1.44 |
1.04 |
0.11 |
0.30 |
296 |
126 |
60 |
33 |
11 |
3 |
|
|
0.75 |
5.030 |
2.95 |
148,173 |
1.44 |
1.04 |
0.11 |
0.30 |
296 |
126 |
60 |
33 |
11 |
3 |
|
|
1.00 |
5.025 |
2.95 |
148,134 |
1.44 |
1.04 |
0.11 |
0.30 |
296 |
126 |
60 |
33 |
11 |
3 |
|
|
1.50 |
4.984 |
2.96 |
147,577 |
1.44 |
1.05 |
0.11 |
0.30 |
298 |
126 |
61 |
33 |
11 |
3 |
|
|
2.00 |
4.654 |
3.04 |
141,608 |
1.49 |
1.08 |
0.12 |
0.31 |
305 |
129 |
62 |
34 |
11 |
4 |
|
|
2.50 |
3.687 |
3.24 |
119,523 |
1.58 |
1.15 |
0.13 |
0.32 |
322 |
135 |
65 |
35 |
12 |
4 |
|
|
Inferred |
0.25 |
34.971 |
1.59 |
557,463 |
0.77 |
0.53 |
0.07 |
0.18 |
215 |
103 |
46 |
31 |
10 |
4 |
|
0.50 |
29.467 |
1.83 |
538,757 |
0.89 |
0.61 |
0.08 |
0.21 |
240 |
112 |
50 |
32 |
10 |
4 |
|
|
0.75 |
25.348 |
2.03 |
515,099 |
0.99 |
0.68 |
0.08 |
0.23 |
259 |
117 |
54 |
32 |
10 |
4 |
|
|
1.00 |
20.888 |
2.28 |
477,214 |
1.11 |
0.78 |
0.09 |
0.25 |
281 |
126 |
58 |
32 |
11 |
4 |
|
|
1.50 |
14.112 |
2.83 |
398,734 |
1.37 |
0.98 |
0.11 |
0.31 |
323 |
142 |
65 |
34 |
12 |
4 |
|
|
2.00 |
12.258 |
2.99 |
366,258 |
1.45 |
1.04 |
0.12 |
0.32 |
335 |
146 |
67 |
35 |
12 |
4 |
|
|
2.50 |
8.402 |
3.33 |
279,680 |
1.62 |
1.17 |
0.13 |
0.35 |
359 |
155 |
72 |
37 |
13 |
4 |
Notes
1. 1 Tonnes constrained within a
LG open pit.
2. 2 TREO % sum of CeO2,
La2O3, Nd2O3, Pr6O11,
Sm2O3, Eu2O3, Gd2O3,
Tb4O7, Dy2O3 and Ho2O3.
3. Grades are reported as
in-situ grades.
Table 3 above illustrates the
sensitivity of the 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 the choice of a specific
cut-off grade.
Mine
Planning
SRK developed and evaluated a series of
operational scenarios involving different production rates and saleable
products to arrive at an optimum solution for mine development. An optimization
model was used to check the sensitivity of the deposit against various key
variables, and multiple high-level schedules were costed and economically
assessed under varying pricing assumptions.
From this scenario analysis, a go-forward
scenario was selected for further refinement. An updated pit optimization was
run to select a pit based on optimizing the balance of NPV and risk. This pit
was the basis of a production schedule for the LOM. Over the LOM, the project will generate 26.1
Mt of mill feed at a strip ratio of 1.75:1 (waste:mill feed) and an average
grade of 2.3% TREO.
Figure 1: PEA mine schedule
The Wicheeda deposit will be mined as a
conventional open pit operation. In-pit haulage for both mill feed and waste
will be by 65 tonne haulage trucks. Mill feed will be mined in six-metre
benches and hauled to the crusher close to the pit rim. Crushed mill feed will
be conveyed to the flotation mill.
Waste rock will be mined and hauled to an
on-site rock storage facility as well as to the tailings storage facility (TSF)
for embankment construction.
The mining operation has been costed as owner
operated.
Flotation Concentrator
Material from the Wicheeda
deposit is to be processed in a flotation concentrator to produce a flotation
concentrate that is further processed at the hydrometallurgical plant. The
flotation concentrator is to incorporate unit operations that are standard to
the industry and include: crushing and grinding to liberate the REE minerals
from the waste rock, followed by conditioning at elevated temperature with the
required reagents followed by rougher and scavenger flotation. The resulting
rougher-scavenger flotation concentrate is to be further upgraded during
multiple stages of reagent conditioning and cleaner flotation. The upgraded
flotation concentrate is then thickened, filtered and prepared for transport to
the hydrometallurgical plant for further processing. The flotation concentrator
tailings is to be pumped to the TSF for disposal.
An
important aspect for a successful rare-earth project is the production of a
flotation concentrate[2],
and only a select number of companies have been able to report such
achievement. A high-grade flotation concentrate leads to smaller
hydrometallurgy plant equipment and consequently considerably lower capital
expenditures. As lower volumes of mineral concentrate are processed, there are
also operating costs benefits as less reagents are consumed.
Hydrometallurgical Plant
Flotation
concentrate is subjected to a pre-leach process using hydrochloric acid (HCl)
to remove gangue minerals that are present. The pre-leach residue is then
processed by caustic cracking using a strong sodium hydroxide (NaOH) solution
at elevated temperature. This converts the REE phosphate and fluorocarbonate
minerals to hydroxides and dissolved phosphate, fluoride and carbonate species.
The dissolved species are precipitated using lime and the NaOH thereby
regenerated and re-used. The REE hydroxide is leached with HCl, impurities
removed and the REE then precipitated with lime to form a REE hydrate which is
dried, packaged, and sent to market.
As noted, NaOH used
is regenerated using lime and the hydrochloric acid is regenerated using
sulphuric acid. Waste products from the hydrometallurgical plant consist mainly
of gypsum, excess lime, calcium phosphate and carbonate and minor metal
precipitates. The hydrometallurgical residue is combined with the flotation
tailings for storage.
The
hydrometallurgical plant design summarized above is based on extensive
bench-scale hydrometallurgical testing by SGS Lakefield on bulk samples of
flotation concentrate produced during pilot plant flotation operations on
Wicheeda mineralized material. Hydrometallurgical testwork is continuing and
will result in pilot plant demonstration of the selected process.
On-site Project Infrastructure
Water Management
The Wicheeda Project will consist of
infrastructure on the east and west extents of Wichcika Creek, and upstream of
Wicheeda Lake. Water management infrastructure are required to capture the
surface water runoff and seepage from the open pit, waste rock storage
facilities, mill feed stockpiles, and the tailings storage facility.
A single collection pond down stream of the
pit and waste storage area will have sufficient storage capacity to manage a 1
in 100-year rainfall event. Water collected in the open pit will be directed to
the pond, along with runoff from the processing plant pad. Inflows to the pond
will be pumped to the processing plant or will be treated and discharged to
Wichcika Creek.
The TSF will provide sufficient water storage
capacity to handle the Inflow Design Flood based on its dam classification and
safely manage more extreme events. A
minimal TSF decant pond will be maintained, with a dedicated water management
pond downstream of the water storage area, as noted above which will maintain a
minimum pond volume to meet monthly water demand at the processing plant. All
excess water will be pumped to the dedicated water management facility and/or
contact water ponds at the processing plant area for recirculation in the plant
or to be treated and discharged. A series of seepage collection stations will
also be located along the downstream toe of the TSF dam to pump seepage back
into the TSF pond.
Waste rock and pit wall
water quality are expected to have elevated levels of molybdenum, arsenic,
uranium and radium. Water in the TSF is expected to be elevated for the same
parameters as waste rock and pit wall areas, along with fluoride. A water
treatment plant has been sized based on a monthly water balance with the 1 in
25-year annual runoff contributions to the waste rock areas, open pit, and TSF.
The plant is expected to treat for molybdenum, arsenic, uranium, radium and
fluoride and will be situated at the processing area. The plant is sized to
treat up to 2300 gpm of water and will discharge excess water from the water
management facilities to Wichcika Creek.
Long-term water quality predictions for the
project area will be developed to determine the duration of water treatment
requirements. Closure strategies will be implemented to reduce the long-term
water treatment requirements, including flooding the open pit, as well as
resloping and covering of waste rock dumps and the tailings area.
Tailings
The
TSF is a key aspect of the operation. The following operating and mine life
assumptions were used to determine the required tailings storage capacity:
·
Total mill feed to be
mined – 26 million tonnes
·
An assumed annual mining
rate – 1.8 Mtpa (= average of 5,000 tpd)
·
LOM is 16 years (minimum)
·
100% of tailings and
hydrometallurgical residue go to the TSF
·
Required TSF capacity = 20
million cubic meters (m3) (at an average assumed dry density of 1.4
t/m3)
SRK completed
several site selection exercises. Each site selection exercise was based on
slightly different criteria provided by the operation and included
consideration of both dewatered (thickened, filtered) and conventional slurry
tailings. Conventional slurry tailings disposal is the basis of the PEA.
The TSF location,
layout depositional approaches and water management will be further developed
to meet both provincial regulations as well as Canadian and Global standards of
good practice as the project advances through the PEA to future studies.
General Site Infrastructure
An additional
allowance for general site infrastructure such as buildings, site roads and
other items of $26 million was added to the capital costing.
Offsite Project
Infrastructure
Power
Power is assumed to be supplied via a new
high-voltage line connecting to the BC Hydro 138 kV line (1L 365) running to
the west of the project to the project site. Costing has been derived from
benchmarks and no detail design has been undertaken
Access
The existing forestry road from Bear lake to
the project site is assumed to be upgraded for logistics access. The road
crosses Wichcika Creek. The construction of a bridge is required, and this has
been costed at a conceptual level. The bridge is also required for the backhaul
of rock from the mine for the construction of the TMF.
Water Supply
Water is relatively abundant in the project
area with multiple streams, lakes and rivers within proximity. An allowance for
a local source was made in the costing.
Costing assumptions for offsite project
infrastructure is shown in Table 3. A 25% contingency is
included in the estimates.
Table 3: Offsite
infrastructure capex estimates
|
Offsite Infrastructure Capex |
Total ($million) |
|
Power Line |
$48.3 |
|
Substation and connection |
$8.1 |
|
Water Supply |
$8.1 |
|
Access Road |
$84.5 |
|
Access Bridge |
$9.8 |
|
Offsite Infrastructure Total |
$158.8 |
Environmental and Social
The project is located within Treaty 8
territory. A robust Engagement Management Plan will be developed and
implemented in order to initiate the federal and provincial environmental
assessment process the project will be required to complete.
In addition to the engineering work required
to advance the design of the water and tailings management Defense Metals will
also be developing and initiating the collection of a thorough environmental
baseline database. The environmental database which will contain data on
physical properties (hydrogeology, hydrology, geochemistry, climatic
conditions) as well as all biological properties of the immediate and regional
project areas (flora and fauna, terrestrial and aquatic species). Following the
collection of the environmental baseline database an environmental assessment
satisfying the Canadian Impact Assessment Act and British Columbia’s
Environmental Assessment Act will be completed in order to advance the project
through to production.
Capital Costs Summary
The initial project capital cost is estimated
at $461 million, including a contingency allowance of 20% to 25% for major
items. Initial operating cashflows from the project are re-invested in the
construction of the hydrometallurgical plant.
Table 4: Total capital
cost estimates
|
Category |
Units |
Initial |
Expansion |
Susex |
Closure |
Total |
|
Open
Pit Capex |
$k |
$30,845 |
|
$24,602 |
|
$72,081 |
|
Flotation
Plant Initial |
$k |
$102,551 |
|
|
|
$133,316 |
|
Hydromet.
Plant |
$k |
$0 |
$474,091 |
|
|
$616,319 |
|
General
onsite infrastructure |
$k |
$26,000 |
|
|
|
$33,800 |
|
Water
Management |
$k |
$67,704 |
|
|
|
$88,015 |
|
Beneficiation
Tailings Handling |
$k |
$15,803 |
|
|
|
$20,544 |
|
Offsite
Infrastructure |
$k |
$158,844 |
|
|
|
$206,497 |
|
Tailings
Management Facility |
$k |
$59,672 |
|
$195,307 |
|
$331,472 |
|
Site
wide Susex |
$k |
|
|
$181,464 |
|
$235,904 |
|
Closure
Costs |
$k |
|
|
|
$164,996 |
$214,494 |
|
Total
Capex |
$k |
$461,419 |
$474,091 |
$401,373 |
$164,996 |
$1,952,443 |
The duration of the detailed design
and construction phase of the project has been estimated to be 36 months.
Operating
Costs Summary
The operating cost estimates
are shown in Table 5. For the hydrometallurgical plant costs, only mill feed associated with
the plant operation is considered for calculation of unit costs.
Table
5: Total operating cost estimates
|
Operating
Costs |
LOM ($k) |
LOM
Average |
Units |
|
Mining Total Opex |
$343,246 |
$13.14 |
$/t total mill
feed |
|
Beneficiation plant |
$356,235 |
$13.63 |
$/t total mill
feed |
|
Beneficiation tailings |
$32,607 |
$1.25 |
$/t total mill
feed |
|
Hydrometallurgical plant |
$1,154,837 |
$55.75 |
$/t of mill
feed for HM |
|
Hydrometallurgical
tailings |
$17,797 |
$0.86 |
$/t of mill
feed for HM |
|
Water Management |
$49,920 |
$1.91 |
$/t total mill
feed |
|
Site G&A |
$124,800 |
$4.78 |
$/t total mill
feed |
|
Total
Operating Costs |
$2,079,443 |
$79.58 |
$/t
total mill feed |
Financial
Analysis and Sensitivity
A simple tax model was
constructed using a depletion model for depreciation estimates. No opening
balance of tax credits or eligible prior expenditure was used. The estimates of
tax payable are considered to likely be conservative (high) from the perspective
of Defense Metals. Table
7 summarizes the estimated total LOM cashflows. The column at the right
is the NPV (cost) of those cashflows.
Table
7: Key financial and
project metrics
|
Cashflow |
Units |
LOM |
NPV |
|
Net Revenue from
Concentrate |
$k |
$862,520 |
$585,259 |
|
Net Revenue from
Precipitate |
$k |
$5,236,095 |
$2,245,223 |
|
Royalty |
$k |
$121,972 |
$56,610 |
|
Net Revenue after
Royalty |
$k |
$5,976,643 |
$2,773,872 |
|
Total Operating
Costs |
$k |
$2,079,443 |
$975,049 |
|
Operating
Cashflow |
$k |
$2,384,417 |
$764,586 |
|
Total Capex |
$k |
$1,501,879 |
$987,841 |
|
Working Capital |
$k |
$10,904 |
$46,396 |
|
Pre-tax Cash Flow |
$k |
$2,384,417 |
$764,586 |
|
Total Tax Payable |
$k |
$598,830 |
$253,009 |
|
After-tax Cashflow |
$k |
$1,785,587 |
$511,577 |
Figure
2 show simple single factor sensitivity to changes in the main parameters
of commodity price, capital costs and operating costs.
Breakeven (zero) NPV corresponds to a reduction in price assumption of
22% compared to base case.
Figure
2:
Sensitivity chart
About
the Wicheeda REE Property
The 2,008 hectare Wicheeda
REE Property, located approximately 80 km northeast of the city of Prince
George, British Columbia, is readily accessible by all-weather gravel roads and
is near infrastructure, including power transmission lines, the CN railway and
major highways.
Geologically, the property
is situated in the Foreland Belt and within the Rocky Mountain Trench, a major
continental geologic feature. The Foreland Belt contains part of a large
alkaline igneous province, stretching from the Canadian Cordillera to the
southwestern United States, which includes several carbonatite and alkaline
intrusive complexes hosting the Aley (niobium), Rock Canyon (REE), and Wicheeda
(REE) deposits.
Qualified Persons
SRK Qualified Persons (QPs) are all independent as defined by National
Instrument 43-101 – Standards of
Disclosure for Mineral Projects and have contributed to
their corresponding sections of the PEA, and have reviewed and approved the
scientific, technical, and economic information contained in this news release.
The SRK QPs include André Deiss, (geology and mineral resources), Andy
Thomas (pit geotechnical), Anoush Ebrahimi (mining), Eric Olin (flotation
concentration), Samantha Barnes (water management), Mark Liskowich
(environmental-social -permitting), and Neil Winkelmann (infrastructure,
marketing and economics). Associate consultant, John Goode, is the QP for
hydrometallurgical processing.
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 SRK
SRK is an independent, global network of consulting
practices in over 45 countries on six continents. Its experienced engineers and
scientists work with clients in multi-disciplinary teams to deliver integrated,
sustainable solutions across a range of sectors – mining, water, environment,
infrastructure and energy.
About
Defense Metals Corp.
Defense
Metals Corp. is a mineral exploration company focused on the acquisition 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 has an option to acquire 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”.
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.sedar.com and on the Company’s 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.
For
further information, please contact:
Todd Hanas, Bluesky
Corporate Communications Ltd.
Vice President, Investor
Relations
Tel: (778) 994 8072
Email: todd@blueskycorp.ca
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 the PEA and its potential
and expected outcomes including the capital costs, operating costs, internal
rate of return, annual production, and net present value of the Wicheeda
Project, the ongoing optimization test work and the expected outcomes, plans
for its Wicheeda Property, assays, drill results and expected timelines,
results and outcomes, expanded resource and scale of expanded resource,
potential production, the advancement and development of the Wicheeda Property,
further metallurgical work, engagement with stakeholders, 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 results, risks related to the
inherent uncertainty of exploration and cost estimates, the potential for
unexpected costs and expenses and those other risks filed under the Company’s profile
on SEDAR at www.sedar.com. 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 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 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, loss of key employees,
consultants, or directors, increase in costs, delayed drilling 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.
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