DEFENSE METALS SETTLES DEBT WITH HATCH THROUGH EQUITY

Rhea-AI Summary

Defense Metals (OTCQB: DFMTF) has entered into a shares-for-debt settlement agreement with Hatch Ltd. to settle $846,547.31 in outstanding payables through the issuance of 5,290,920 common shares at $0.16 per share. Additionally, the company will issue 2,645,460 warrants at $0.21 per share, exercisable for 36 months.

The agreement includes a six-month hold period for the shares and warrants. Defense Metals has also indicated its intention to engage Hatch for engineering services for the full feasibility study of its Wicheeda Rare Earth Element Project in British Columbia, subject to agreeable commercial terms.

Positive

• Elimination of $846,547.31 in debt without using cash resources
• Strategic partnership with globally respected engineering firm Hatch
• Potential continuation of relationship for full feasibility study of Wicheeda Project
• Hatch's willingness to accept equity suggests confidence in project potential

Negative

• Share dilution through issuance of 5,290,920 new common shares
• Additional potential dilution from 2,645,460 warrants if exercised
• Six-month lock-up period for new shares may impact trading liquidity

VANCOUVER, BC, July 28, 2025 /PRNewswire/ - Defense Metals Corp. ("Defense Metals" or the "Company" (TSXV: DEFN) (OTCQB: DFMTF) (FSE: 35D) announces that it has entered into a shares-for-debt settlement agreement (the "Agreement") with Hatch Ltd. ("Hatch") in connection with outstanding debt related to engineering services previously provided to the Company.

Pursuant to the Agreement, Defense Metals will settle an aggregate of $846,547.31 in outstanding payables owed to Hatch through the issuance of 5,290,920 common shares at a deemed price of $0.16 per share (the "Settlement Shares"). In addition, the Company will issue to Hatch 2,645,460 common share purchase warrants (each, a "Warrant"), representing one-half Warrant for each Settlement Share. Each Warrant will entitle Hatch to purchase one additional common share of the Company at a price of $0.21 per share for a period of 36 months from the date of issuance.

Discussions with Hatch have revolved around pricing this agreement on the same terms as the company's previous raising as announced on May 21, 2025 (that was 15 cents with a half warrant at an exercise price of 20 cents). However, given the share price appreciation, there are regulations that state a maximum discount of 25% is allowed, therefore the pricing agreed as above.

The Settlement Shares and Warrants will be subject to a six-month hold period in accordance with the Agreement.

As part of the transaction, Defense Metals and Hatch have also entered into a side letter agreement whereby Defense Metals has indicated its intention to engage Hatch to provide engineering and related services for the full feasibility study on the Company's 100%-owned Wicheeda Rare Earth Element Project in British Columbia, subject to the parties reaching agreement on commercially acceptable terms. This side letter reflects the Company's commitment to working with top-tier engineering partners as it progresses toward full project development.

Mark Tory, President & CEO of Defense Metals, commented: "We are pleased to be strengthening our relationship with Hatch, a globally respected engineering firm. Their willingness to accept equity demonstrates their positive view of the Wicheeda Project and confidence in its future. We look forward to continuing our collaboration as we move toward the next phase of technical studies."

The shares-for-debt transaction and issuance of Warrants are subject to the final approval of the TSX Venture Exchange.

About Defense Metals Corp. and its Wicheeda REE Deposit

Defense Metals Corp. is focused on the development of its 100% owned, 11,800-hectare (~29,158-acre) Wicheeda Rare Earth Element (REE) property that is located on the traditional territory of the McLeod Lake Indian Band in British Columbia, Canada.

The Wicheeda Project, approximately 80 kilometres (~50 miles) northeast of the city of Prince George, is readily accessible by a paved highway and all-weather gravel roads and is close to infrastructure, including hydro power transmission lines and gas pipelines. The nearby Canadian National Railway and major highways allow easy access to the port facilities at Prince Rupert, the closest major North American port to Asia. The Company recently completed a Preliminary Feasibility Study (PFS) that demonstrated the robust economics of the project.

For further information, please visit www.defensemetals.com or contact:

Mark Tory
President and CEO
Tel: +1 604-445-8179
Email: mark@defensemetals.com 

Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this news release.

Cautionary Statement Regarding "Forward-Looking" Information

This news release contains "forward‐looking information or statements" within the meaning of applicable securities laws, which may include, without limitation, any statements (expressed or implied) relating to: advancing the Wicheeda Project and the proposed debt settlement agreement. Forward-looking statements are typically identified by words such as "plan," "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "continue," "could," "may," "might," "possible," "potential," "predict," "should," "would" and other similar words and expressions, but the absence of these words does not mean that a statement is not forward-looking. All statements in this news release, other than statements of historical facts, that address events, contribution or developments that the Company expects to occur, are forward-looking statements.  Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which the Company will operate in the future, including the price of rare earth elements, the anticipated costs and expenditures, the ability to achieve its goals, that general business and economic conditions will not change in a material adverse manner, that financing will be available if and when needed and on reasonable terms. Such forward-looking information reflects the Company's views with respect to future events and is subject to risks, uncertainties and assumptions, including the risks and uncertainties relating to the interpretation of exploration and metallurgical results, risks related to the inherent uncertainty of exploration and development and cost estimates, the potential for unexpected costs and expenses and those other risks filed under the Company's profile on SEDAR+ (www.sedarplus.ca). While such estimates and assumptions are considered reasonable by the management of the Company, they are inherently subject to significant business, economic, competitive and regulatory uncertainties and risks. Factors that could cause actual results to differ materially from those in forward looking statements include, but are not limited to, continued availability of capital and financing and general economic, market or business conditions, adverse weather and climate conditions, failure to maintain or obtain all necessary government permits, approvals and authorizations, failure to maintain or obtain community acceptance (including First Nations), risks relating to unanticipated operational difficulties (including failure of equipment or processes to operate in accordance with specifications or expectations, cost escalation, unavailability of personnel, materials and equipment, government action or delays in the receipt of government approvals, industrial disturbances or other job action, and unanticipated events related to health, safety and environmental matters), risks relating to inaccurate geological, metallurgical, engineering and pricing assumptions, decrease in the price of rare earth elements, the impact of viruses and diseases on the Company's ability to operate, restriction on labour and international travel and supply chains, loss of key employees, consultants, officers or directors, increase in costs, delayed results, litigation, and failure of counterparties to perform their contractual obligations. The Company does not undertake to update forward–looking statements or forward–looking information, except as required by law.

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SOURCE Defense Metals Corp.

FAQ

What is the value of the debt Defense Metals (DFMTF) is settling with Hatch?

Defense Metals is settling $846,547.31 in outstanding payables owed to Hatch Ltd.

How many shares will Defense Metals issue to Hatch for the debt settlement?

Defense Metals will issue 5,290,920 common shares at a deemed price of $0.16 per share, plus 2,645,460 warrants exercisable at $0.21 per share.

What is the exercise price and duration of the warrants issued to Hatch by Defense Metals?

Each warrant has an exercise price of $0.21 per share and is valid for a period of 36 months from the date of issuance.

What future collaboration is planned between Defense Metals and Hatch?

Defense Metals intends to engage Hatch for engineering services for the full feasibility study of its Wicheeda Rare Earth Element Project in British Columbia, subject to agreeable commercial terms.

What restrictions apply to the shares issued to Hatch by Defense Metals?

The settlement shares and warrants will be subject to a six-month hold period in accordance with the Agreement.