Rare earth elements are absolutely critical to the modern economy — but large, economic, road-accessible deposits in safe jurisdictions are seemingly impossible to find.

…Unless you’re looking at what Defense Metals (DEFN.V; DFMTC.OTC) has with its big rare earths deposit in central British Columbia.

The best part: Defense just released a PEA report suggesting this project is worth a vast multiple of the company’s current market value.

Dear Fellow Investor,

The electrification of the economy is in full swing.

You can see it in all the electric vehicles (“EVs”) that seem to be everywhere these days.

The trend is only going to accelerate: By 2030, the IEA predicts there will be 140 million EVs on the road, a 1,488% increase from current levels.

As it happens, many EV components require exactly the type of rare earth elements Defense Metals (DEFN.V; DFMTC.OTC) has in abundance in its Wicheeda rare earth project in British Columbia.

That demand shows up in the preliminary economic assessment (PEA) the company recently published on its 100%-owned Wicheeda project.

As you’re about to see, that report’s conservative valuation for the deposit is many multiples of Defense Metals’ current market cap…and the blue-sky valuation, if rare earth elements stay at their current price levels, is much higher still.

A Deposit Rich In Rare Earths The Economy Desperately Needs

If you’ll remember back to high school chemistry, rare earth elements are a group of elements in the middle of the periodic table of elements.

These elements aren’t rare, per se, but large economic quantities of them in safe jurisdictions surely are.

And here’s what makes them particularly precious: China controls 90% of the world’s rare earths supply.

In a world where America is looking to lessen its dependence on its economic rival…and in a world where rare earths are vital to critical industries and national defense…having a road-accessible rare earths deposit in North America is more than an advantage. It’s a necessity.

That’s because rare earths are used in a wide array of high-tech and defense-related applications and, as mentioned, are a key input in EVs.

As it happens, the two primary elements at Wicheeda, neodymium and praseodymium, are key to the vehicles’ electric drives and generators.

And get this: It’s predicted that every 10 million new EVs that roll off the production floor will require an additional 10,000 tonnes of neodymium/praseodymium.

That’s 20% of current annual global supply.

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Compelling Economics…

The “in-demand” nature of these elements shows up in the PEA that Defense Metals just published on the rare earths resource at Wicheeda.

Using an 8% discount rate and conservative metals prices, that study projects a net present value for Wicheeda of C$517 million.

With a current market cap of C$33 million, the upside potential for Defense Metals is clear.

And, again, at lower, very conservative rare earth prices, the project is expected to generate a rich operating margin of 60% and an average rare earth oxide production of 25,423 tonnes per year.

…With A Lot Of Blue Sky

Better still, these projections are conservative, base case projections that don’t factor in what happens if prices just stay at their current high levels.

Consider that, in the past 12 months alone, neodymium prices have increased 64% and praseodymium prices have increased 108%.

That matters because, as the sensitivity table below shows, Wicheeda is extremely sensitive to increases in the prices of its underlying rare earths.

As you can see, with a 30% increase in average metal price for the base case scenario, the project NPV more than doubles from C$517 million after-tax to C$1.17 billion.

At sustained rare earth elements prices 50% above base-case levels, that NPV more than triples to $1.6 billion.

These projections are so conservative that current rare earth prices aren’t even considered in the table. So you can only imagine how profitable the Wicheeda project could be if prices just stay at today’s levels.

And with neodymium and praseodymium both expected to be in a potential supply deficit by 2030, it’s not hard to imagine prices going even higher than current levels.

Potential That’s Easy To See

The opportunity before you with Defense Metals is pretty straightforward.

• You have a company with a project that controls a treasure trove of rare earth elements that the modern economy desperately needs.

• The company recently released a PEA showing the project boasts compelling economics at the conservative rare earth prices used in the study.

• But at current rare earth prices, the value of the project would multiply from the study’s current projections.

• Defense Metals’ Wicheeda project is critical to the rare earth supply chain: Numbers in the PEA indicate, for neodymium and praseodymium alone, Wicheeda could supply between 10%-15% of global production.

• That makes for a deposit that will only grow more compelling as Defense Metals continues to de-risk the project this year as they progress toward a prefeasibility study.

As Defense moves toward production, it has overhauled its management team and board to put it in the best position to execute on its plan. That includes physics engineer and former sell-side mining analyst Dr. Luisa Moreno, who recently came on board as president.

If you believe the EV and electrification trends have room to run — and it’s obvious that they do — you’ll want to consider owning Defense Metals at or near current levels.

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