Defense Metals eyes $250M financing for British Columbia rare earth project

Defense Metals (TSXV: DEFN) said Export Development Canada could lend up to $250 million to help the company develop and build its main Wicheeda rare earth project in British Columbia. The stock jumped.

Canada’s export credit agency expressed its interest in participating as a mandated lead arranger for the financing package, Vancouver-based Defense Metals said Wednesday in a statement. EDC issued a letter of interest in response to a company request for potential financing support, Defense Metals said.

A preliminary feasibility study, released in February, put Wicheeda’s initial capital cost at $1.4 billion. It gave the project an after-tax net present value of $1 billion and an after-tax internal rate of return of 19%, based on a discount rate of 8%. Reserves support a 15-year life of mine with an average annual output of 31,900 tonnes of total rare earth oxide in concentrate.

“This is a strong endorsement of the strategic importance of the Wicheeda REE project and shows the key role that EDC might consider playing in its financing,” Guy de Selliers, Defense Metals’ executive chairman, said in the statement. Wicheeda would “contribute to a number of Canadian priorities including the clean energy transition and the security of supply of critical minerals.”

Domestic investment

Shares of Defense Metals rose 6.9% to C$0.155 apiece Wednesday morning in Toronto. That gave the company a market capitalization of about C$47 million ($34 million).

News of the proposed financing comes amid calls in Canada for greater domestic investment in energy, power and mining infrastructure following the imposition of wide-ranging US tariffs by the Trump administration. Western countries such as Canada have been struggling to dent near-universal Chinese domination of critical minerals used in everything from electric vehicles to jet fighters.

Newly elected Prime Minister Mark Carney pledged earlier this year to approve resource projects within two years and broaden exploration tax credits as part of a plan to make Canada both an “energy superpower” and “the global supplier of choice for critical minerals.”

Due diligence

EDC’s proposed financing remains subject to the completion of all due diligence, Defense Metals said. Over the last 25 years, the crown corporation has taken part in about 540 structured and project finance transactions worth more than $40 billion.

“For such a strategically important and financially robust project as Wicheeda we are confident that financing will be available,” Defense Metals CEO Mark Tory said. “EDC’s prospective support can serve as an anchor to mobilize a comprehensive debt package.”

Located about 80 km northeast of Prince George, Wicheeda is a 118-sq.-km property that’s located on the traditional territory of the McLeod Lake Indian Band.

The site, which is accessible by a paved highway and all-weather gravel roads, sits close to infrastructure such as hydro power transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to Prince Rupert, the closest major North American port to Asia.