Defense Metals Delivers Excellent PEA

Defense Metals Delivers Excellent PEA

Bob Moriarty

Bob Moriarty of 321Gold discusses Defense Metals’ recent PEA and explains why this company is important for the Western EV market.

For most of the last year I have been predicting the start of a major market crash, long overdue, to take place starting in October. I got it totally wrong. The giant crash started weeks late but is now with us. Tax Loss Silly Season this year is going to be the biggest blood bath and greatest opportunity most of us will ever see. While it’s true that the clipto currencies and major markets will suffer the greatest losses, when the margin clerk is on the other line, investors sell everything they can get a bid on.

Green eyeshade wearing account clerks in the back office convinced management of every western auto manufacturer that the way to maximum profits was to adopt a system of “just in time” parts delivery. In theory the auto companies saved money because they weren’t paying interest on the money they tied up in keeping a healthy supply of spare parts. That theory actually didn’t make any sense in an environment of zero interest rates.

The big car companies have lost hundreds of billions in revenue this year for lack of ten-dollar memory chips. All made in China or Taiwan to save money. Single sourcing anything is a sure way of life biting you on the ass.

I have been writing about Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) for nearly three years. And here. And here.  And here. The primary focus of Defense Metals is on their Wicheeda REE project located in British Columbia, Canada. While China mines and processes the bulk of Rare Earth Elements (REE) in the world, we are right back to that ticking time bomb of single sourcing critical elements. China’s share of production of REE needed for high performance magnets and other ultra high tech metals has actually been growing as production in the rest of the world has slowed to a crawl. China produced 85% of REE in 2019 and 90% of the finished products. You could say China has a stranglehold on REE just as they did with microchips. And the result will be similar.

Last week Defense Metals released a long awaited preliminary economic assessment (PEA) on the Wicheeda REE property. The numbers were good showing a NPV of $765 million pretax and after-tax NPV of $512 at an 8 percent discount rate. The after tax IRR is 16 percent and I highly suspect the company is sharpening their pencils in order to raise that number. The PEA envisions a nineteen-year mine life with an operating margin of a nice 65.2 percent.

Capex for the mine and mill is estimated at $461 million with a twenty to twenty-five percent contingency allowance. The 43-101 shows a five million tonne indicated resource showing a 2.95% TREO and a twenty-nine point five million tonne inferred resource averaging 1.83% TREO. During 2021 DEFN finished an additional 5,340-meter drill program in 29 holes. Those assays have not yet come back from the labs. DEFN expects those results will come out in early 2022.

Poor planning on the part of auto companies has costs them hundreds of billions in revenue. If the governments of Canada and the US don’t get their act together, the lack of domestically sources REE will destroy the EV manufacturing in the West. Action needs to take place soon.

I have participated in several private placements in DEFN and bought shares in the open market. I am biased. In addition they are advertisers so naturally I am biased. As always do your own due diligence.

Defense Metals Corp
DEFN-V $0.23 (Nov 26, 2021)
DFMTF – OTCQB 117 million shares
Defense Metals website

Bob Moriarty
President: 321gold
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321gold

Bob Moriarty founded 321gold.com, with his late wife, Barbara Moriarty, more than 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.

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Disclosures:
1) Bob Moriarty: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Defense Metals. Defense Metals is an advertiser on 321 Gold. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned are billboard sponsors of Streetwise Reports: Defense Metals. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for 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. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.  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, a company mentioned in this article.


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