VANCOUVER, BC, Nov. 24, 2021 /CNW/ - Defense Metals Corp.
("Defense Metals" or the "Company") (TSXV: DEFN)
(OTCQB: DFMTF) (FSE: 35D) 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.
PEA Highlights
Strong Financial Metrics
- The project has a pre-tax net present value (NPV) of
$765 million1, 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.
____________
|
1 All
figures are in Canadian dollars unless otherwise
specified
|
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
|
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.
- 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.
- 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
- 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.
- 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.
- 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.
- 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.
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.
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 concentrate2, 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.
_____________
|
2 Except ion-absorption
clays
|
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
The expected project cashflows were modelled using a simple
discounted cash-flow model. A discount rate of 8% was used. The
model uses real 2021 USD for all
cashflows and costs and is configured for annual periods, and an
exchange rate of 1.3 CAD/USD was used
for reporting CAD values as used in this Press Release.
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.
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.
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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