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Defense Metals (TSX-DEFN) continues to advance its Wicheeda rare
earth deposit north of Prince George, on Thursday releasing the first assay
results of a bulk sample program.
Taking a 30-tonne bulk sample from the property, located 80 kilometers
northwest of Prince George, was the first step of a multi-step plan by
Defense Metals to develop the advanced exploration project into a rare earth
mine that can provide raw materials for civilian and military uses, in
particular the market for permanent magnets requiring the rare earths
neodymium and praseodymium, of which Wicheeda appears to have ample
supply.
The goal of the sample program is to confirm previous bench-scale testing
and metallurgical testwork of Wicheeda drill cores.
In 2010-11, testing company SGS Canada successfully developed a flotation
flow sheet that recovered 83% of the rare earth oxide (REO) and produced a
concentrate grading 42% REO. Subsequent hydrometallurgical testing in 2012 on
a two-kilogram sample of the concentrate grading 39.7% total rare earth oxide
(TREO), produced an upgraded and purified precipitate that contained 71% TREO
through a process of pre-leaching and roasting.
For more read our Defense
Metals has sights set on rare earths, uranium
Enough historical drilling had been done to compile an inferred resource
estimate of 11.2 million tonnes. The company has plans to produce a 43-101
compliant resource when they can revisit the property this spring.
Assay results
According to Defense
Metals’ news release, “Select head assay results for the 30 tonne bulk
sample include 1.77% lanthanum-oxide, 2.34% cerium-oxide, 0.52%
neodymium-oxide, and 0.18% praseodymium-oxide which the Company considers
potentially economically significant, for a total of 4.81% LREO (light
rare-earth oxide) (see Figure 1 below).”
Of significance is the finding of praseodymium, Wicheeda had, up
to now, been viewed as a cerium-lanthanum-neodymium deposit, the addition
of Pr not only adds another magnet metal but potentially adds to
the economic potential of the project.
Also important to DEFN investors and potential investors is how the
30-tonne random sample was obtained from Wicheeda. First, the sample was
not taken from a known area of mineralization; it was collected from a
single blast trench located about 30 meters east of the 2008 drill pad.
Second, the sample was from an outcrop chosen for its proximity to a
helicopter landing spot, making feasible the delivery of sampling equipment,
and a suitable location from which to fly the 30 sample bags out.
The 30-tonne random sample was trucked to SGS’s testing facility in
Lakefield, Ontario, crushed to a one-inch rock size and blended, before being
further pulverized, and finally analyzed for rare earth percentages.
As the colored chart above shows, the assay results have determined that a
30-tonne random sample from Wicheeda blasted and trenched material
reveals the presence of four rare earth elements that, if made into oxides (the
finished product required by a rare earth consumer such as a battery
company), would show up in the following percentages per tonne of total rare
earth oxide: 2.34% cerium, 1.77% lanthanum, 0.52% neodymium and 0.18%
praseodymium.
These results are impressive for two reasons. First, the presence of
neodymium and praseodymium is critical, because these two REEs are used in
the manufacture of permanent magnets that go into a number
of high-tech applications including computer hard disk drives, wind
turbine generators, MRI scanners and motors in hybrid and electric vehicles.
More on that below.
Second, the results indicate a potential light rare earth deposit of significant value.
CAD$685 per tonne rock
From the table below, we see the current rare earth oxide prices.
Neodymium (Nd) and praseodymium (Pr) are by far the highest, at a respective
US$62.34 and $61.40 per kilogram, compared to lanthanum (La) and cerium (Ce)
oxides, at $1.93 and $1.89/kg.
To get the gross in-situ metal values, we need to have all the numbers in
kilograms. Start by multiplying 1,000 (the number of kilograms in a tonne) by
the percentage of rare earths as a decimal (eg. 2.34% = .0234) to get
the kilograms of rare earths per tonne. Then simply multiply that by the
price per kilogram, to get the value of the particular rare earth
element contained within a tonne of rock. Doing that gives us the following:
Gross In-situ Metal Values
Ce @ 2.34%/tonne
1,000 x .0234 = 23.40 kg/t x US$1.93/kg = US$45.16/t
La @ 1.77%/t
1,000 x .0177 = 17.70kg/t x US$1.89/kg = US$33.45/t
Nd @ .52%/t
1,000 x .0052 = 5.20kg/t x US$62.34/kg = US$324.16/t
Pr @ .18/t
1,000 x .0018 = 1.80kg/t x US$61.40/kg = US$110.52/t
Adding all four REE prices per tonne gives us a total of US$513.29/t or
CDN$685.69/t. That’s the gross in-situ metal value per tonne of a mixed rare
earth oxide comprising cerium, lanthanum, neodymium and praseodymium.
But wait, it gets better…
We know that the Wicheeda deposit has an inferred (not NI 43-101
compliant) resource of 11.2 million tonnes. If the material in the 30-tonne
bulk sample is spread evenly throughout the mineralized area used to
calculate the inferred resource, if the bulk sample turns out to be
representative of the current inferred resource of 11m/t, and remember mineralization
is open in many directions, we are looking at a potential gross
in-situ metal value of 7.679 billion Canadian dollars! (CAD$685.69/t x
11,200,000 tonnes = CAD$7,679,728,000)
To put this into terms most resource investors can understand, that is equivalent
to a 6 million oz gold deposit grading about 12.7 grams of gold per tonne (or
555,000,000 ozs of silver) - which any precious metal exploration
company would be extremely lucky to have.
Permanent magnets, EV batteries
The identification of neodymium and praseodymium in the 30-tonne bulk
sample is probably the best result that Defense Metals could have gotten out
of the SGS assay sample results. That’s because these two rare earth elements
are valuable due to their use in permanent magnets.
As mentioned the prices of neodymium and praseodymium are far
higher than more run-of-the-mill REEs like cerium and lanthanum. From the
charts below we can see that Nd and Pr oxide prices are up 35-40%
from mid-2016 lows.
One of the most common uses of permanent magnets is in the generators of
wind turbines. A 2-megawatt wind turbine contains about 800 pounds of
neodymium according to the Bulletin of Atomic Sciences. Allied
Market Research estimates the CAGR (compound annual growth rate) of
wind turbines to be 7.2% from 2017 to 2023.
Permanent magnets are also a key technology in the massive transformation
that the transportation industry is undergoing, from combustion
engine-powered to electric vehicles. Demand for the materials that go into
these magnets is only going to grow. An example is neodymium. The market for
neodymium-iron-boron magnets is estimated at $11.3 billion; demand for
neodymium has increased every year since 2015. (chart below) And with
electric vehicle sales expected to grow 24% a year until 2030, it’s a valid
question whether there’s going to be enough REE magnet materials to go
around.
According to Roskill, “Demand for rare earth permanent magnets is
forecast to show strong growth in the years to 2028, which is expected to
further distort rare earth demand ratios with Neodymium, Praseodymium &
Dysprosium forming a greater proportion of total demand.”
The metals consulting firm expects the prices of Nd and Nd-Pr to
increase by an annual 15% until 2021, on tight supplies, and demand for
neodymium and praseodymium oxides to grow by a respective 5.6% and 7.2% a
year, to 2028.
While the two REEs are expected to be in high demand for energy generation
including wind turbines, this is expected to be dwarfed by automotive
applications, according to Roskill. In fact the consultancy
believes the importance of neodymium will actually control the entire REE
market, “as producers look to target /maximize their Neodymium output,
with other REEs becoming by-products…”
Since becoming cheaper in the 1990s, neodymium magnets have replaced
earlier alnico and ferrite permanent magnets in a number
of high-tech applications. Common uses include computer hard disk
drives, wind turbine generators, speakers/ headphones, MRI scanners, cordless
tool motors, and motors in hybrid and electric vehicles.
Nickel-metal-hydride (NiMH) batteries used in certain electric and hybrid
vehicle brands contain all four rare earth elements found in
the Wicheeda 30-tonne bulk sample: lanthanum, neodymium,
praseodymium and cerium.
An alloy of these REEs can be found in the NiMH
batteries of GM’s EV1, Honda EV Plus, the Ford Ranger EV
and the Toyota Prius.
The anode of a rechargeable NiMH battery cell is most commonly a mix of
lanthanum, cerium, neodymium and praseodymium. Every Prius contains about 10
pounds of lanthanum.
Oil refining, weapons
A lesser-known application of lanthanum is for oil refining. Fluid
catalytic cracking (FCC) catalysts employ lanthanum and cerium to convert
crude oil into value-added products like gasoline. These two REEs substantially
increase the activity and stability of zeolites, commonly used as adsorbents
and catalysts.
This use of lanthanum has good potential for DEFN, considering that
Alberta is looking at building new oil refining capacity. Premier Rachel
Notley announced in December the provincial government is asking
for expressions of interest from the private sector to build a
refinery that would use Alberta crude oil.
One of the most common uses of cerium is in catalytic converters. The
average auto catalyst contains 20 to 30 grams Ce per cubic liter. Cerium is
also used as a polishing media, in flints for cigarette lighters, inside
ovens to prevent build-up of cooking residues, and in flat-screen TVs, light
bulbs and floodlights.
The US Military is an important buyer of rare earth elements especially
permanent magnets. Because neodymium-iron-boron (NdFeB) magnets are so
small, light and powerful, they are ideal for defense weapon systems
including actuators that control various air surfaces.
Smart weapons rely on sophisticated motors and actuators to steer them
towards their targets. Fin actuators in missile guidance and control
systems, which control the direction of the missiles, employ neodymium,
praseodymium, samarium, dysprosium and terbium.
Stealth helicopters have neodymium magnets in their noise cancellation
technology blades.
Cerium-based compounds are used for optical lenses encountered in the
battlefield, while lanthanum is incorporated into cameras, telescopes and
night vision goggles.
For a more complete list of REE military uses, visit our Rare
earths in the cross-hairs of new high-tech arms race
All told, the Wicheeda rare earth deposit is a repository of
rare earth elements that are ideal for the latest technologies - due not only
to their uses in permanent magnets, found in everything from wind turbines to
electrical vehicles to cruise missiles, but also for the REES, present
at Wicheeda, that are needed for electric/ hybrid vehicle batteries,
catalytic converters and sophisticated military equipment.
Conclusion
Defense Metals has a rare opportunity to move the Wicheeda rare
earths deposit forward into a mine that has the potential to supply valuable
rare earths for important military, civilian, industrial and clean energy
purposes.
Cerium, lanthanum, neodymium and praseodymium values were reported in
the press
release detailing the assay results from a 30-tonne bulk sample.
Applications for these rare earth elements include cerium in catalytic
converters; lanthanum in hybrid vehicles and oil refining; and most
critically, neodymium/ praseodymium in permanent magnets.
DEFN is slowly proving the metallurgy and plans to scale its operation up.
SGS is now conducting a multi-phase program of bench-scale metallurgical test
work. The next step is to develop a flow sheet from a 200-kg sub-sample (from
the 30-tonne bulk sample), to get 20 kg of REE concentrate. Then a pilot
plant to test whether the original 30-tonne bulk sample can produce a
concentrate at industrial scale. And finally, a hydrometallurgical test plant
that can produce three tonnes of REE concentrate - enough for commercial use.
Each step that is successfully completed will provide more confidence for
investors, and further de-risk the project.
Consider too, that several rare earth elements are difficult or impossible
to replace; they have no substitutes. Yet these REEs, including those found
at Wicheeda, are essential to the functioning of modern militaries and
for feeding high-technology industries such as electric vehicles and
renewable energies.
Any company outside of China that can reliably produce rare earth oxides
will have no shortage of customers lining up for off-take agreements, nor
suitors ready to make an acquisition once the elements in the
ground and the metallurgy have been proven out.
Legal Notice / Disclaimer
This document is not and should not be construed as an offer to sell or
the solicitation of an offer to purchase or subscribe for any investment.
Richard Mills has based this document on information obtained from sources he
believes to be reliable but which has not been independently
verified. Richard Mills makes no guarantee, representation or warranty and
accepts no responsibility or liability as
to its accuracy or completeness. Expressions of opinion are those of
Richard Mills only and are subject to change without notice. Richard Mills
assumes no warranty, liability or guarantee for the current relevance, correctness
or completeness of any information provided within this Report and will not
be held liable for the consequence of reliance upon any opinion or statement
contained herein or any omission. Furthermore, I, Richard Mills, assume no
liability for any direct or indirect loss or damage or, in particular,
for lost profit, which you may incur as a result of the use and
existence of the information provided within this Report.
Defense Metals (TSX-V:DEFN) is an advertiser on Richard’s site
aheadoftheherd.com. Richard owns shares of DEFN.
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