Defense Metals (TSX-V: DEFN)(OTC: DFMTF) CEO Craig Taylor on MOU with Leading Global Metallurgical Firm, Sinosteel, Ahead of Pre-Feasibility on Flagship Wicheeda Rare Earth Element (REE) Project, British Columbia, Canada

Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Defense Metals — Mr. Craig Taylor. Craig, it's been a bit. How have you been?

Craig Taylor: We've been great, Gerardo. How have you been?

Gerardo Del Real: I have been well. Thank you for asking. You had some pretty important news, and I don't want to take away from the importance of it. So I will let you provide the context and share it with everyone. 

It's a pretty big deal here given China's dominance in the rare earth space and the activity around rare earths, and the market, and, frankly, the supply-demand fundamentals… all of which are very exciting things. But would you care to share the news that you announced this morning?

Craig Taylor: Yeah, so we've signed an MOU with Sinosteel. And they're one of the leaders in the mining space throughout the world. They're in operation in about 48 countries, and they're one of the world's top contractors. 

So just to give you some context, they're in partnership with the likes of Rio Tinto, BHP, Vale, Saudi Aramco — to name a few. So they built a modular processing plant for Northern Minerals in Australia several years ago. They funded it. And now, Northern is processing and selling a rare earth carbonate presently through that relationship with Sinosteel.

Gerardo Del Real: Excellent! So again, just to be absolutely clear, Sinosteel is a company that has a long commercial history. I think they've completed something in the order of over 400 major metallurgical projects just for the Chinese government. 

So let me play devil's advocate here a bit, Craig. What would attract a company like that to a small, rare earth junior that has, yes, a very prospective project… but given as far as visibility and given the market cap… what do you think it was about Defense and the asset that brought Sinosteel onboard?

Craig Taylor: Well, I think, frankly, they just looked at the fundamentals. I mean, we're grossly undervalued. We've got, probably, one of the premier deposits in North America in terms of volume and grade. And we're working on a PEA to prove that up as well as a drilling program to increase our resource once again. 

And then, we're looking to move to pre-feasibility in 2022. So I think they saw the road we’ve been down… the work we've been doing… the value of our deposit. And they're aggressive, and they're very smart. They understand the value of our deposit.

Gerardo Del Real: That sets the table well for the next several quarters going into 2022. What comes next? I understand that there's a 200 kilogram rare earth sample that you're in the process of obtaining government permits and approvals for, correct?

Craig Taylor: Yeah, so this is going to be ore… so it's not going to be really difficult to get permits given that it's not concentrated; there's no thorium content. So we'll ship that to them. And then, they'll process it through hydro-met and flotation beneficiation. And that should take about four and a half months. 

So if we give it a five or six month window, that's going to tie-in well with our new resource… with our PEA being complete… and the pursuit of a pre-feasibility. And at that point, they can start working on numbers with us to contribute to our pre-feas.

Gerardo Del Real: You talk in today's release about establishing a large-scale pilot plant and investigating, establishing, a large-scale pilot plant. What does that look like? Is that something that Sinosteel is interested in possibly pursuing together? Or are those conversations that are still early-on but definitely options that could be on the table later on?

Craig Taylor: Yeah, I think that's the intention, and that's what they did with Northern in Australia. So they built a large-scale pilot plant for Northern. They built it in modular pieces in China… shipped it to Australia. And now, Northern is processing a high-grade rare earth carbonate which they are selling on the market. 

So that would be the intent. And that's where we could tie-in their numbers and their expertise into our pre-feasibility study in 2022.

Gerardo Del Real: It’s been a consolidation in the industry, right; especially this summer. It's been a quiet summer with everybody getting back out. We know that post Labor Day here in the US — and first to second week of September around the world — the markets tend to perk up… people start paying attention again. 

I think the pullback in the stock here recently during this consolidation presents a pretty compelling opportunity if you believe in the space and the quality of the asset. You laid out what the plan is moving forward. Anything else to add to that, Craig?

Craig Taylor: Yeah, I think just that we've got a number of catalysts that are going to come into play in the next several months here. As I said, we’ll be completing our PEA in Q4 2021. We'll be starting and announcing our drill program shortly. We're currently building pads onsite for the drills.

And that's going to be a 5,000 meter program. And we'll work on upgrading our categories in preparation for pre-feas in 2022. We've got, potentially, four MOUs that we're working on and in discussions with several companies for. 

And then, of course, we've got Sinosteel working on processing our ore, and that should be done in the next four months. So as far as catalysts and news goes, we're going to have a lot over the next six months.

Gerardo Del Real: Well, it sounds like you and I will be having several chats. Look forward to it. Thank you again for your time, Craig.

Craig Taylor: Yep, thanks, Gerardo. Alright, bye-bye. 

Gerardo Del Real: Alright, bye now.