Vital Metals’ future in the Northwest Territories is unclear, but the company’s plan to focus on the Tardiff deposit at Nechalacho remains promising, according to Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines.
“It’s a significant deposit, and it’s much bigger than the one they test mined,” Hoefer said. “So that’s the prize, I would say – at this point, anyway.”
Australian-owned Vital Metals commenced operations at Nechalacho in 2021. The site, which sits about 100 kilometres southeast of Yellowknife, produces rare earth elements (REE), critical minerals used in electronics, green energy, automotive, aerospace, military defence and more.
Until recently, Vital Metals had plans to build a processing facility in Saskatoon. Processed assets would then be sold to Norwegian firm REEtec before being further processed and moved to other parts of Europe for various uses. However, in late September, after spending millions of dollars on the construction of the Saskatoon plant, the company made a stunning revelation.
“In summary we’ve demonstrated that the Saskatoon facility doesn’t make economic sense for us to operate, so we’ve decided to terminate that facility,” Vital Metals chairman Richard Crookes said in a video statement. “We’ve placed the holding company, Vital Metals Canada Ltd. into bankruptcy and we’ve terminated our offtake agreement with REEtec.”
Crookes, who was listed as the point of contact in Vital Metals’ recent news releases, did not respond to three requests for an interview about the company’s current situation, or that of its subsidiary Cheetah Resources, which owns Nechalacho.
The GNWT’s department of Industry, Tourism and Investment would not comment on the status of either company, but noted that “Cheetah Resources has not attained commercial production as defined by section 68 of the NWT Mining Regulations,” which means that the company is not currently required to file a royalty return.
Focus on Tardiff
Vital Metals’ announcement about its Saskatoon plant coincided with its decision to focus on Tardiff, which Crookes called a “very large, high-grade, shallow” deposit and “a fantastic asset in a great jurisdiction.”
Soon after the announcement was made, the company hired a new managing director in Geordie Mark, the former head of mining research at Haywood Securities, a Vancouver-based investment firm.
Weeks later, in late October, Vital Metals unveiled what it called a “cornerstone investment” from a Singaporean subsidiary of Chinese REE company Shenghe Resource Holdings. The investment “will allow the company to establish a new leadership team, and to progress development of the large-scale Tardiff deposit,” stated the news release announcing the deal.
The homepage of Vital Metals’ website claims that the company aims to “become the lowest cost producer of mixed rare earth oxide outside of China,” yet a Chinese firm will now share in any success the NWT project has.
‘Head-scratcher’
While Crookes did not respond to multiple requests for an interview, Hoefer noted that Shenghe likely doesn’t have enough ownership in the company to have controlling interest, but called Vital Metals’ decision to get involved with a Chinese firm “a head-scratcher.”
“If you research the critical mineral strategies of places like the United States and Canada, one of the reasons for having the strategy is also because China is dominating the scene with critical minerals,” he said. “There’s a concern because critical minerals are also used in defense and other strategic things. There’s concern over monopolization of critical minerals out of China.”
No matter how Vital Metals’ future unfolds, Hoefer believes prospects for the critical mineral industry in the territory are bright, and contends that the company has helped show the industry’s potential.
“Certainly the world has a strong demand for rare earths as with all of these critical minerals,” he said. “That’s why these minerals are called critical.
“[Vital Metals] mined the smaller deposit [at Nechalacho] so that they could do proof of concept that they could establish a supply chain of rare earth elements from Canada all the way through to final product, and they did that,” he added.
“I think it’s a tremendous stride that they proved that that could happen with stuff from the Northwest Territories.”
The NWT’s critical minerals industry could become all the more critical in the coming years, with the territory’s three remaining diamond mines all nearing closure. The critical minerals industry won’t replace the diamond mines, but it can help fill the void – provided that the government can entice companies to start digging, Hoefer said.
“The Northwest Territories, and Nunavut for that matter, are hugely attractive from a geological potential,” he said. “Where they suffer is from things like lack of infrastructure, or overly complex regulatory systems, or their geography, which increases the costs. That’s where governments need to start realizing that, yes, we’ve got great potential, but to unlock that potential, we’re going to have to roll up our sleeves and do something about it.
“I think sometimes people think that the reason we have mines is because the mines have come and decided to do what they want to do, but the reality is it’s governments that have a responsibility.”
For more stories from NWT and Nunavut Mining 2023, click this link: https://www.nnsl.com/special-feature-publications/special-feature-pdfs/2023-mining-supplement/