Mr. Alex Heath reports

DEFENSE METALS ANNOUNCES CONVERTIBLE BRIDGE FINANCING

Defense Metals Corp. has proposed a non-brokered bridge financing of secured convertible notes for minimum gross proceeds of $2.5-million and maximum gross proceeds of up to $4-million. The company will not proceed with its previously announced private placement of units most recently disclosed in the company's news release dated Aug. 6, 2024.

The notes will bear interest from the date of issuance at the rate of 10 per cent per annum, payable quarterly in common shares of the company at a price per share equal to the applicable 20-day volume-weighted average price of the common shares on the TSX Venture Exchange or such other price determined in accordance with the policies of the TSX-V. The notes will mature on the date that is 12 months after the date of issuance. At any time up to seven days prior to a mandatory conversion event (as defined below), investors may elect to convert the principal amount of the notes into common shares at a deemed price per share of 12.5 cents.

The notes will automatically convert into common shares upon the occurrence of certain events, including the completion by the company of a new issuance of equity as part of a minimum $4-million financing from third party sources (excluding conversion of the notes), completion of a sale of all or substantially all of the common shares or assets of the company, or completion of a merger or other corporate transaction coincident with a minimum $4-million fundraise from third party capital (excluding conversion of the notes). Upon the occurrence of a mandatory conversion event, the principal amount of the notes will automatically convert into common shares at a 15-per-cent discount to the applicable price of the offering implied by the mandatory conversion event, provided that if such conversion price would be less than the conversion price, there will be no mandatory conversion.

The notes will be issued on a private placement basis to eligible accredited investors, including lead orders from RCF Opportunities Fund II LP and Guy de Selliers, Defense Metals' executive chairman. RCF has indicated that it intends to subscribe for notes in the principal amount of $500,000, and Mr. de Selliers has indicated that he intends to subscribe for notes in the principal amount of $1-million. In connection with their investments, each of RCF and Mr. de Selliers is expected to enter into a separate investor rights agreement, pursuant to which each will receive certain board observer rights, cash flow reporting rights and rights to participate in future financings of the company.

The notes will be secured against all personal property of the company and a first ranking security interest against the company's mining claims in respect of the Wicheeda rare earth element project. All noteholders will rank pari passu among themselves.

The company intends to use the proceeds of the offering for completion of the prefeasibility study for the Wicheeda REE project and general corporate and working capital purposes. The notes and any underlying common shares will be subject to a four-month hold period from the date of issuance of the notes as set out in National Instrument 45-102 (Resale of Securities).

The offering is expected to complete in September, 2024. Closing of the offering is subject to a number of conditions, including receipt of all necessary corporate and regulatory approvals, including the TSX-V. The offering is subject to minimum subscriptions in the amount of $2.5-million.

As described above, Mr. de Selliers, the company's executive chair, intends to subscribe for $1-million of the notes in the offering. Other members of the company's board or management team may participate in the offering, including subscriptions from related parties of the company as defined in Multilateral Instrument 61-101 (Protection of Minority Security Holders in Special Transactions). The participation of management in the offering is exempt from formal valuation and minority shareholder approval requirements pursuant to exemptions contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101.

Investors who are interested in participating in the offering should contact the company's senior vice-president, corporate development, and interim chief financial officer, Alex Heath, at alex@defensemetals.com. Participation in the offering is limited to accredited investors (as defined under applicable securities laws) and may be subject to a minimum subscription amount, and total investments may not exceed $4-million.

About Defense Metals Corp.

Defense Metals is focused on the development of its 100-per-cent-owned, 8,301-hectare (approximately 20,534-acre) Wicheeda REE project that is located on the traditional territory of the McLeod Lake Indian Band in British Columbia, Canada.

The Wicheeda REE project, approximately 80 kilometres (approximately 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.

Defense Metals is a proud member of Discovery Group.

We seek Safe Harbor.