The company described the PEA as positive but investors sent the stock down almost 16%.

The study estimated initial capex of C$461 million, an after-tax NPV8 of $512 million and IRR of 16%.

It envisaged a 16-year mine averaging annual rare earth oxide production of 25,423 tonnes, and used base case prices of US$5.76/kg TREO in flotation concentrate and $14.04/kg TREO in mixed REE carbonate precipitates.

By way of comparison, MP Materials' Mountain Pass operation in the US produced 10,320 metric tonnes REO in 2020 but has ramped up production this year, achieving record output of almost 12,000t in the September quarter. 

Defense Metals said concentrate averaging 43% TREO would be sold direct to market in years one to four, with the cash flow partly funding construction of a hydrometallurgical plant.

The PEA was based on an updated resource, which the company said was 36% bigger on a contained metal basis than the 2020 estimate, due to the addition of economically significant medium and heavy REEs and a lower cut-off grade.

It comprised a 5 million tonne indicated resource averaging 2.95% TREO and an inferred 29.5Mt at 1.83% TREA, using a 0.5% cut-off grade.

"The Wicheeda project has the three main aspects for a successful rare earth project, favourable minerology dominated by coarse grained bastnasite family minerals, a metallurgical process that yielded high grade flotation concentrate and great infrastructure in a friendly jurisdiction," director Dr Luisa Moreno said.

"With the positive PEA, the project is undoubtedly a step closer to production."

The company has the option to acquire 100% of Wicheeda under a deal struck in November 2018.

It had raised C$5 million at 32c per unit in May.

Its shares (TSXV: DEFN) closed down 15.9% to 26.5c yesterday, well below February's 75c peak, capitalising it at $21.3 million (US$16.8 million).