The company hopes to produce as much as 10% of the world’s current light rare earth elements lowering domestic dependence on China which has 85% of the world’s rare earth processing capacity
In the push to transition from fossil fuels to greener energy, a key piece of the puzzle is accessing materials to help accelerate the technological shift — namely, rare earth elements. If Canada is going to meet its net-zero emission obligation by 2050, a reliable domestic supply of rare earth elements, crucial in climate solutions such as solar energy, wind energy and electric vehicles, is essential. Defense Metals Corp (TSXV: DEFN; OTCOB: DFMTF), who hope to produce as much as 10 percent of the world’s light rare earth metals (being produced in 2022) from its Wicheeda deposit in British Columbia, could be important contributor to achieve these targets.
“Many rare earth mineral projects in Canada are in isolated areas without infrastructure, whereas we are 80km from Prince George, British Columbia, and the project is accessible by road. We have the potential to be in production in a very short time,” says Dr. Luisa Moreno, president of Defense Metals Corp.”
The first exploration recorded on the Wicheeda property, 80 kilometres north-east of Prince George, British Columbia was in 1961 when the Geophysics Division of the Geological Survey of Canada completed an aeromagnetic survey of the area and identified a magnetic high. The property was further prospected in 1976, and in 1987 Teck Exploration Ltd, reported anomalous rare earth elements, which at the time were of little interest, and the property sat idle until 2008 when Spectrum Mining Corporation conducted a comprehensive exploration program and outlined a radiometric anomaly inside the claims, and subsequent drilling intersected significant intervals of rare earth elements. In November 2018, Defense Metals Corp entered into an option agreement with Spectrum to acquire 100% of the Wicheeda project. After meeting the exploration expenditures, requirements and payments to the vendors, the company was able to acquired 100 percent ownership of the Wicheeda project in January 2022.
Maidan mineral resource estimates indicate world class opportunity
Since then, Defense Metals Corp published a preliminary economic assessment (PEA) based on 4,000 meters of diamond drilling, with an Indicated Mineral Resources of five million tonnes averaging 2.95 percent total rare-earth oxide, and an Inferred Mineral Resources of 29.5 million tonnes averaging 1.83 percent total rare earth oxide.
Further-more the PEA demonstrated an after-tax net-present-value of 8 percent of $517 million, and 18% internal rate of return. The PEA contemplates a 1.8 million tonnes per year mill throughput open pit mining operation with 1.75:1 (waste: mill feed) strip ratio over a 19-year mine life producing and average of 25,423 tonnes of rare earth metals annually. A Phase one initial pit strip ratio of 0.63:1 (waste: mill feed) would yield rapid access to higher grade surface mineralization in year one and payback of $440 million initial capital within five years.
The company is also testing an acid bake extraction process for the rare earth elements that could lower capital and operating costs. High-temperature concentrated sulfuric acid is used to convert the rare earth metals to water-soluble sulfates, which can then dissolve during a water leach. A precipitation process is then used to recover the rare earth minerals. The process is expected to allow for a more than 95% recovery rate for the rare earth minerals, compared to less than 90% with the alternative caustic cracking process. Testing for the new process will likely be finished by the end of the third quarter of 2022.
Preliminary feasibility study expected in 2023
On the ground, 12 diamond drill holes totalling 4,000 metres have been drilled this year within the northern and central areas of the Wicheeda rare earth deposit preliminary economic assessment mine pit area, with initial assays results expected in September or October 2022.
The results from these drill holes and those from last year’s successful 5,000 metre drill program will form the basis of a new resource estimation that may be used in the preliminary feasibility study to be completed in early 2023.
The market is eagerly anticipating this year’s drill results. Historically the northern area of the deposit returned some of the highest-grade intercepts in 2021. Two holes returned 3.79% total rare earth oxides over 150 meters, including 4.77% TREO over 60 meters extending 80 meters beyond the current mineral resource and 40 meters beyond the constraining pit shell.
In August 2022, the company started drilling five geotechnical drill holes targeting the north, west, south, and east highwalls of the Wicheeda PEA mine plan ultimate pit are planned. The data collection will include oriented drill core, field point load and laboratory-based intact rock and discontinuity strength testing, vibrating wire piezometer, and standpipe piezometer installation for hydrogeological investigations.
“The Wicheeda deposit is the most prospective deposit in North America because of the favorable metallurgy, and the fact that we can produce a high-grade mineral concentrate at good recovery rates,” says Dr. Luisa Moreno, president of Defense Metals Corp.
Timing to bring these resources to market is critical
According to the International Energy Agency’s special report on The Role of Critical Minerals in Clean Energy Transitions today’s supply and investment for rare earth minerals fall well short of what is needed to support the accelerated deployment of technologies necessary to make global progress toward a clean energy future, and therefore could hamper international efforts to tackle climate change.
The annual demand for rare earth minerals doubled from 125,000 metric tonnes in the 15 years to 2021 and is projected to reach 315,000 tonnes in 2030.
Adamas Intelligence forecasts that the value of global magnet rare earth oxide consumption will triple from US$15.1 billion in 2022 to US$46.2 billion by 2035. Rare earth oxides are essential to many industries worth trillions of dollars.
Following a Covid 19-related lull in 2020, the global consumption of neodymium magnets leapt by 18.1% in 2021, mostly on the back of a surge in electric vehicle sales. Adamas Intelligence forecasts that global shortages of alloys and powders will amount to 66,000 tonne a year by 2030 and 206,000 tonnes annually by 2035, almost one-third of the total market. From 2022 through to 2035, it forecasts that global demand for magnets will jump at a compound annual growth rate (CAGR) of 8.6%, underpinned by double-digit growth from the electric vehicle and wind power sectors. However, over the same period it forecasts that global production of rare earth elements will collectively increase at only 5.4%.
The mismatch between demand and supply has already led to a jump in rare earth metals prices and it could climb much higher in coming years as new mined supply is unable to keep pace with surging demand.
Constrained by an expected under-supply of neodymium, praseodymium, dysprosium and terbium oxide from 2022 onward, Adamas Intelligence forecasts that global shortages of neodymium alloys and powders will amount to 66,000 tonnes annually by 2030 and 206,000 tonnes annually by 2035—nearly one-third of the total market.
According to recent Adamas Intelligence findings, the lack of new primary and secondary supply sources coming to market from 2022 onward, coupled with the inability of existing producers to increase output steadily at the rate of demand growth, Adamas forecasts that global shortages of neodymium, praseodymium and didymium oxide (or oxide equivalents) will collectively rise to 21,000 tonnes annually by 2030 and 68,000 tonnes by 2035—an amount roughly equal to China’s total production last year.
China dominates rare earth minerals supply chain
China dominates the rare earth minerals supply chain. In 2021, China made up 54% of global rare earth minerals mine supply, followed by North America at 18%, the rest of Asia at 14%, Australia at 12% and Europe at 2%. However, its dominance of neodymium’s global mine supply is higher, at 62%. In 2021, China accounted for 85% of the global supply of refined rare earth minerals followed by the rest of Asia at 13% and Europe at 2%. In the case of neodymium, it made up 84% its refined supply.
Furthermore, China has a more than 90% share of the global production of downstream rare earth products and technologies, including magnets, according to consultancy Tahuti Global.
This concentration poses a supply concern. The emergence of the green energy sector and the electric vehicle industry has focused attention on the need to diversify the supply of rare earth minerals and many initiatives are ongoing to diversify the supply and de-risk supply chains, which will be difficult to do soon.
In Canada’s budget 2022, $3.8 billion was committed over eight years to implement Canada’s first ever critical minerals strategy, plus $25 million for early engagement and capacity building with Indigenous communities.
“I’m hoping the government will make available funds to directly support the metallurgical test work that junior mining companies are engaged in from very early stage to a much later stage. That is essential work to advance projects to feasibility stage, and it will be very good, if that is available in form of credits, or grants or favorable funding for junior mining companies,” says Moreno.
Today only 11 major mines and seven major processing plants are found worldwide; six of the latter are in China and one in Malaysia, as well as a smaller plant in Estonia. (The first rare earth metal ingots produced in Canada were processed during a test run at Saskatchewan Research Council’s rare earth processing in Saskatoon, Saskatchewan in August 2022.)
New mines and processing facilities are under development in Australia, Canada, Norway, South Africa, the United States and several African countries. But often these projects have long-time frames for their development, struggle with financing or gaining their social licensee to operate, making companies with advance rare earth mineral projects like Defense Metal Corps’ Wicheeda property even more critical.