Defense Metals (TSXV: DEFN; OTC: DFMTF) says the results of the preliminary economic assessment are positive for development of the Wicheeda rate earth elements (REE) deposit 80 km northwest of Prince George, B.C.
The project has an after-tax net present value with an 8% discount of $512 million, and an internal rate of return of 16%. The initial capital requirement is $461 million, and payback will be five years from the start of production. The capex assumes that part of the construction of a hydrometallurgical plant will be financed from concentrate sales. After three years of construction the mine life will be 16 years.
Revenues are estimated to be $397 million per year from the sale of REE concentrate in years one though four and the sale of mixed REE hydrometallurgical precipitates in years five through 16. The flotation concentrate sold in the initial production period will average 43% total rare earth oxides (TREO).
The PEA suggests annual production would be 25,423 tonnes of rare earth oxide from an open pit mine and 1.8 million t/y processing plant.
Defense calculated the Wicheeda base case economics using a price of US$5.76/kg TREO and US$14.04/kg TREO in REE carbonate precipitates.
The updated Wicheeda resource estimate includes 5 million indicated tonnes at 2.95% TREO and 29.5 million inferred tonnes at 1.83% TREO.
Additional details in the PEA are posted on www.DefenseMetals.com.