After a good run earlier this quarter which saw the company’s share price double, Defense Metals (DEFN.V) sees its share price take a breather as the company’s shares are currently trading at C$0.17, roughly 20% below its closing price just a month ago.

This means open market buyers are now able to acquire stock at a 15% discount to the C$0.20 hard dollar financing the company is currently conducting. Although Defense Metals didn’t send out a press release announcing the financing, it did disclose the terms when it closed a first tranche of C$1M of the financing (C$865,000 flow-through dollars at C$0.25 and C$135,000 hard dollars at C$0.20 per unit). Each flow through unit consisted of one share and a 2 year warrant exercisable at C$0.35 while the hard dollar units at C$0.20 consisted of a share and a warrant with a strike price of C$0.30 (also valid for two years).

Although the company was successful in raising C$1M, this was just the first tranche and Defense had hoped to raise an additional C$635,000 in flow through dollars and C$365,000 in hard dollars to secure this year’s budget. Completing the flow-through financing is very relevant for Defense as the proceeds will be used to compete the flotation plant to further refine and define the recovery rates of the REE hosting rock from the Wicheeda project. Defense is planning to commission the circuit this month anticipating full operations in July with results in August.

We will discuss the Wicheeda REE project in depth in the near future as the company finally seems to be on the cusp of reaching the critical mass needed to develop the REE project and the results from the flotation plant will be very important to achieve additional milestones in preparation for a Preliminary Economic Assessment at Wicheeda.

REEs appear to be out of favor again but if/when the trade war with China flares up again, Rare Earth Elements could benefit from a paralyzing situation as North America continues its attempts to gain independence from the Chinese REE supply.

Disclosure: The author has a long position in Defense Metals and participated in the three previous capital raises. Defense Metals currently is not a sponsor of the website.

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