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CEO Interview, Max Sali Of Defense Metals Corp.

|About: Defense Metals Corp. (DFMTF)

Defense Metals Corp. has a very promising Light Rare Earth Elements deposit, 4.81% Total Rare Earth Oxide from 4 elements.

2 of the 4 Light Rare Earth Elements are Neodymium & Praseodymium.

Neodymium & Praseodymium are 2 of the highest demand Rare Earth Elements and have strong prices.

The in-situ (in the ground) value of the 4 Light Rare Earth Elements is > US$500/tonne. That's equiv. to about 12 g/t gold.

Defense Metals (TSV-V: DEFN) / (OTCQB: DFMTF)is a great name. The Company is defending against Chinese dominance of Rare Earth Elements (“REEs“), and Defense Departments require select REEs to defend their countries! Several REEs are very difficult or impossible to replace in critical applications, yet enable products essential to modern civilization. Any company outside of China that can reliably produce a few key REEs will have a license to print money. This week, SGS Canada provided select head assay results from a 30-tonne bulk sample. Four REE assays were reported in this press release {see chart below}. Using the price/kg of each metal, the in-situ value is ~US$ 535/t. That’s equivalent to ~ 0.41 troy ounces Gold or ~12.8 g/t Gold.

In the following interview of CEO Max Sali, readers will learn more about REEs and about Light Rare Earth Elements (“LREEs“), which REEs are in highest demand, and for which applications. Spoiler alert, Neodymium & Praseodymium are in the top 4 or 5. I asked Max why his team believes that its deposit of LREEs might be economically viable given the odds stacked against any deposit becoming a mine. To finish off, we discussed some early-stage uranium assets the Company picked up in the famous Athabasca basin. {Corporate Presentation}

Please give readers the latest snapshot of Defense Metals.

Sure. Defense Metals (TSV-V: DEFN) / (OTCQB: DFMTF) is focused on sourcing, exploring and developing rare earth & uranium properties in Canada. Our flagship project is the Wicheeda rare earth deposit. NOTE: {here’s a good, brand new article by Rick Mills on Defense Metals}

The Wicheeda deposit (6 mineral claims, 1,780 hectares) is 80 km northwest of Prince George, in British Columbia, (“BC“) Canada, and contains potentially exploitable concentrations of Rare Earth Elements (Pell, 1994; Lane, 2009, 2010). The deposit was explored in the 1970’s & 1980’s, but received little further attention until 2008 when it was drilled by Spectrum Mining Corp. They reported an Inferred resource of 11.3 million tonnes.

More recently, SGS Canada provided us with an important update on the deposit. Four REE assays from a 30 tonne bulk sample we sent them earlier this year showed significant concentrations of both Neodymium & Praseodymium.

The Wicheeda deposit is a very exciting project because we can potentially get it into production fairly quickly, especially given nearby infrastructure (roads, rail, water, power, labor, mining equipment & services). A favorable mineralogy & Light Rare Earth Element (“LREE“) distribution make the Wicheeda deposit highly attractive. Some impurities can be removed through electromagnetic separation done on site. The press release we put out this week was important because it gave us a new understanding of the deposit, {see graph below}. Total Rare Earth Oxide (“TREO“) was 4.81%, which we feel is attractive.

Wicheeda is ideally suited for open pit mining and conventional flotation to produce a REE-enriched oxide concentrate. In addition to Lanthanum, Cerium and Neodymium, we also have Praseodymium. Importantly, the deposit is open in most directions and outcrops at surface, meaning a low strip ratio and the potential for expansion. Encouraging bench-scale tests have been done, giving our team the goal of a 60%+ concentrate.

Although the main focus is our rare earth deposit, we also have 2 prospective uranium properties (5 claims blocks), in the heart of the eastern Athabasca basin near Denison Mines and IsoEnergy. Both of those companies are spending millions on drilling this year. IsoEnergy has made a new high-grade discovery 5-10 kms from one of our properties.

Which rare earths are in the deposit? Which rare earths in your deposit are most valuable?

The following REEs can be found, Lanthanium, Cerium, Praseodymium, Neodymium, Samarium, Europium, Gadolinium, Yttrium & Dysprosium. There are also trace amounts of a few others. Neodymium & Praseodymiumare the most valuable in the suite.

How have the prices of your most important rare earth metals trended over the past few years?

Neodymium and Praseodymium are the most important rare earth metals we have identified at the Wicheedadeposit. Neodymium (Nd) & Praseodymium (Pr) are the two rare earth elements which form the majority of rare earth permanent magnets. Below are 5-yr price charts from Kitco. The most recent prices of US$62.0 per kg for Neodymium Oxide and US$78.4 per kg for Praseodymium Oxide are down from recent highs, but up 35%-40% from mid-2016 lows.

Does management have any indicative information on metallurgy, the potential recoveries of individual metals?

Bench-scale flotation and hydrometallurgical testwork was done on Wicheeda deposit drill cores at a SGS Lakefield lab during 2010/2011. SGS 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 2-kg sample of the concentrate grading 39.7% TREO (total REO) produced an upgraded and purified precipitate containing 71% TREO through a process of pre-leaching and roasting.

SGS Canada is well into the planned work program which includes chemical & mineralogical characterization, grindability & laboratory flotation testing on a 200-kg subsample (of the 30 tonne surface bulk sample). The objectives are to validate the process and confirm that conditions of the previously established 2010/2011 bench-scale drill core flotation testwork can be upscaled to the current bulk sample; in addition to further optimization of the process flowsheet.

What will management learn from SGS Canada’s work?

As mentioned, Defense Metals delivered a 30 tonne surface bulk sample from the Wicheeda deposit to SGS Canada. SGS is conducting a multi-phase program of bench-scale metallurgical test work preparatory to commissioning larger scale flotation pilot plant testing. Larger scale pilot plant production is expected to validate bench-scale metallurgy and produce LREE product samples for potential off-take partners.

The ultimate goal of the test work is to finalize the process flowsheet prior to the commissioning of larger-scale pilot plant testing. SGS has agreed to give us regular updates on its progress. In addition, Defense Metals plans to re-assay the ‘pulps’ used to produce a new 43-101 Inferred resource estimate. A Preliminary Economic Assessment (“PEA“) will follow.

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Disclosure: I am/we are long DEFN.