Defense Metals (DEFN.V): In Defense of Defense Metals’ PEA for Its Wicheeda Rare Earth Elements Project
After Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE)published its much anticipated preliminary economic assessment (PEA) for its Wicheeda rare earth elements project in south central British Columbia, investors watched as the share price dipped to $0.23 on Nov. 26, down from $0.32 just four days earlier, a 28% drop on average daily volume of about 460,000 shares.
The selloff was predictable. After all, markets are fickle, especially for junior resource stocks. But was it warranted? Let’s look at the numbers.
The PEA, produced by SRK Consulting, says Wicheeda has a pre-tax net present value (NPV) of $765 million ($765M), which dips to $512M after taxes and using an 8% discount rate. The internal rate of return is 20% before taxes, and 16% afterward. Healthy, but not a showstopper…
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