Paradigm Market Research Inc.

Welcome back!

These last few months have been wrought with political, military and financial upheaval. These pressures in conjunction with the FED’s interest rate hike of 75 Basis Points (0.75%) certainly sent shockwaves throughout all facets of the markets (the largest single hike since 1994).

The term “recession” has been increasingly utilized lately; analysts arguing whether or not we are in a recession at present, one is on the way, or this year’s market performance is simply a healthy market correction.

As investors, when faced with multi-pronged issues we seek to keep our emotions in check. We aim to zoom out, look at the macroeconomics – the “big picture.” We attempt to establish trends with our most trusted source – history.

With economic conditions such as stagflation and deglobalization potentially manifesting, nations appear to be distancing themselves from economic reliance on others. Turning inward seeking to establish their own economic strength. In our opinion, we are starting to see this in the form out intermittent supply chain shortages, the increase in the price of goods, services and more.

With these dilemmas in mind, our investing philosophy continues to come back to commodities. Perhaps not immediately apparent, deglobalization may create a premium on energy, base metals, precious metals; manufacturing and commodities as a whole. As the sharing of resources slows, nations may seek to secure their own commodity reserves. While inefficient, this is where we believe value will present itself going forward.

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Defense Metals Corp. (TSX-V: DEFN)

Speaking of securing reserves, look no further than “Rare Earth Elements” or “REE.” While not typically perceived “sexy” as Gold, Silver, Copper and the like, you can be certain this undervalued/ under reported sector is quickly gaining momentum and attention.

In this article from the Financial Times, James Fernyhough writes a compelling article in which Rare Earth Elements take center stage. Highlights include:

• The United States Department of Defense (“The Pentagon”) has recently signed at $120 Million with Lynas Rare Earths;
• The Pentagon plans to partner with Lynas to construct a Domestic rare earth separation facility.
  • This move is in attempt to curb China’s monopoly of mineral supply chains.
• Uses of Rare Earths include, but are not limited to:
  • Consumer electronics,
  • military grade magnets, lasers and guidance systems;
  • fiber optic cables, turbines and more.
• At present, the United States as no Commercial scale operating Rare Earth Element processing facilities.

Enter Defense Metals Corp. (DEFN) A canadian based rare-earth miner with potential to become a globally significant competitor. Their flagship Wicheeda Project is located 80 Km southwest of Prince George, British Columbia.

Please find below the developments made by DEFN over the past ~3 months:

On April 27, 2022 DEFN reported their longest high-grade intercept to date. Highlights include:

• Hole WI21-58 averaged:
  • 3.09% Total Rare Earth Oxides (“TREO”) over 251 meters;
    • including 3.92% over 80 meters.
• Hole WI21-59 averaged:
  • 2.76% TREO over 212 metres;
    • including 3.25% Treo over 90 metres (from surface).

Please see link above for the full press release and comprehensive assay table.

On May 24, 2022 DEFN recruited SRK Consulting inc. to design a pre-feasibility level Geotechnical Drilling program at their Wicheeda Project.

On May 31, 2022 DEFN reported an increased yield in Rare Earth Elements from their Acid-Bake Process. Highlights include:

• “preliminary results show that the acid-bake process is more efficient, yielding 95%+ recovery of neodymium and praseodymium from flotation concentrate into a leach solution.”

Needless to say, a 95%+ recovery rate of rare earth elements is incredibly efficient and will serve the company’s shareholders well going forward.

On June 17, 2022 DEFN provided a drilling update from their Wicheeda Property. Highlights include:

• The near completion if the first (2) resource delineation (outline) holes (approx 615 metres in depth);
  • These delineation holes were drilled in order to infill near WI21-33
    • which yielded 3.17 TREO over 196 metres
      • including 4.29% over 55 meters.
• DEFN’s current 5000-metre drill program is underway in order to facilitate:
  • Delineation of existing resources;
  • Assessment of near deposit exploration targets;
  • Collection of geotechnical and hydrogeological drilling for the purpose of optimization of open pit slope design; and,
  • Generation of additional REE mineralized material for continued metallurgical test work.

Currently trading at $0.23 CAD, we believe DEFN is an excellent buy, both regarding their expansion potential and increased desire by the United States and China to secure REE assets.

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