Vital Metals blazing path to commercial production with Canada’s first rare earth mine 

It’s a year of many firsts for Australia’s Vital Metals (ASX: VML; US-OTC: VTMXF) and its rare earth elements operation in the Northwest Territories. 

Following the establishment in 2021 of Nechalacho, Canada’s first rare earths mine, Vital’s Yellowknife-based subsidiary Cheetah Resources will this week ship its first load of mixed rare earth concentrate to a processing facility in Saskatchewan. 

David Connelly, Cheetah’s vice-president of strategy and corporate affairs, said the 500-tonne load will be shipped by road or rail from the southern port city of Hay River, N.W.T., to Saskatoon. 

“We are excited,” he said. “Strategically, it demonstrates that Northern Canada is emerging as a cornerstone of the critical mineral supply chain for Canada and its allies.” 

Vital acquired the near-surface resources at Nechalacho from Avalon Advanced Materials (TSX: AVL; US-OTC: AVLNF) in 2019. 

The first batch is part of the more than 5,000 tonnes that was mined last year at  Nechalacho, which is officially at the mining stage, about 100 km southeast of Yellowknife, and just north of the East Arm of Great Slave Lake. 

Mining and concentrating work at Nechalacho is seasonal and runs from April to October. This year, crews at the site will focus on concentrating because enough elements were mined in 2021 to last for two years. By 2025, Cheetah expects to mine annually. 

Vital opted against conducting a feasibility study as its cost would have exceeded the cost of going into production, Connelly said.  

“Instead, we went straight to production and will scale up in three to four years,” he said. 

The currently producing North T Zone at Nechalacho hosts measured and indicated resources of 101,000 tonnes grading 9.01% light rare earth oxides (2.2% neodymium-praseodymium). It will support more than four years of mining.  

The larger Tardiff Zone that has not yet been developed is expected to support more than 50 years of mining.  

It contains measured resources of 286,563 tonnes grading 2.7% total rare earth oxides (TREO) and indicated resources of 1.6 million tonnes of 2.4% TREO. Inferred resources add 1.3 million tonnes at 2.2% TREO. The estimates used a cutoff grade of 0.3% ND₂O₃.  

Saskatoon rare earth processing plant 

The concentrate will be held at Vital’s Rare Earth Extraction Facility in Saskatoon until the summer, when construction of the plant, owned by Vital Metals Canada is expected to finish and metallurgical processing will begin. Vital Metals paid for most of the $20 million itself, with Prairies Economic Development Canada contributing a $5-million loan. Construction began in late 2021. 

The 3,997-sq.-ft. facility will in its first phase be able to process 5,125 tonnes of rare earths concentrate per year and produce 1,000 tonnes of cerium-reduced mixed rare earth carbonate, according to a company brochure.  

The expected annual yield of that output is 464 tonnes of neodymium and praseodymium magnet metals. 

The phase two expansion of the facility, planned for 2024 will double that capacity. Vital is seeking to hire more than 40 skilled technicians at the plant.  

The expansion can help meet Cheetah’s anticipated rise in production from Nechalacho, which Connelly said will yield 5,000 tonnes of concentrate annually for the next two to three years, then increase to 25,000 tonnes in four or five years, subject to permitting in the Northwest Territories. 

Start of commercial sales 

But perhaps Vital’s most significant milestone this year will be the shipment to its first customer: REEtec, a rare earths producer based in Norway. 

Connelly expects the first load of cerium-reduced mixed rare earth carbonate will be shipped from Saskatoon to Norway in the second half of the year. 

“They have a rare earth separation refinery. After they separate it, REEtec sells it to the people who make the metal and the magnets and the electric vehicle motors. It’s a long supply chain,” he said. 

Under an agreement between the two companies, Vital will annually sell carbonate that contains at least 750 tonnes of neodymium and praseodymium contained within 2,000 tonnes of rare earth oxides that have a maximum of 25 per cent cerium, according to a Vital news release. 

“They’ve contracted to purchase the majority of the output of phase one of our Saskatchewan facility for the next five years,” Connelly said.  

REEtec has also secured a five-year purchase agreement for its rare earth oxides and will in 2024 begin selling to German auto parts supplier Schaeffler, the first deal of its kind in Europe, according to a Vital news release on Apr. 22.  

Schaeffler is a major manufacturer of drivetrains for hybrid and electric vehicles. 

“REEtec’s agreement with Schaeffler has validated the quality of Vital’s product and demonstrated the need for EV makers and parts suppliers to have access to a transparent rare earth supply chain that a company such as Vital could provide,” said Geoff Atkins, Vital’s managing director. 

The agreement will help REEtec build a commercial separation facility and marks the first time in the rare earth industry where a deal “encapsulates the entire rare earth supply chain from raw material to electric motors,” Vital said.  

Vital’s sales to REEtec could continue after 2028 through an additional, expanded 10-year agreement. 

The price of the yearly shipments is confidential, said Connelly and Sven Røst, REEtec’s vice-president of communications. 

However, global prices for rare earth elements surged in late 2021 to the highest levels seen in five years before peaking in February and then dipping somewhat. Neodymium oxide currently sits at US$137,005 per metric tonne, according to data from the Shanghai Metals Market.

Future commercial sales anticipated 

Further down the road for Vital’s commercial operation is a developing agreement with Halifax-based UCore Rare Metals (TSXV: UCU; US-OTC: UURAF). 

Under a non-binding memorandum of understanding announced last October, Vital will sell at least 500 tonnes per year of rare earth oxide beginning in 2024 to Ucore for a heavy and light rare earth separation plant in southeast Alaska. 

Vital would ship the rare earths to Ucore’s Alaska Strategic Metals Complex, slated to be built near the port city of Ketchikan.  

The plant is expected to separate and purify 2,000 tonnes of oxides per year after 2024 and at least 5,000 tonnes per year by 2026. 

Connelly said Vital is very proud that the Nechalacho project has progressed from the acquisition stage to producing Canada’s first “value-added rare earth product” in less than three years, and during the COVID-19 pandemic. 

“To be part of the North emerging as a cornerstone for the supply of critical minerals and Saskatchewan developing as a continental hub for rare earth processing and research is very rewarding,” he said. 

‘Very pleased’ with support for critical minerals in budget 

Another development this year is giving Vital and Cheetah reasons for optimism: the up to $3.8 billion earmarked for Canada’s Critical Minerals Strategy in the federal budget that was tabled on April 7. 

Connelly said Budget 2022 goes further than any previous budget in supporting critical minerals development.  

“Myself and my colleagues from other critical minerals companies shared with (Minister of Natural Resources Jonathan Wilkinson) that we were very pleased with the budget,” he said.  

Connelly pointed to parts of the budget that are aimed at benefiting Indigenous participation in the critical minerals strategy.  

It proposes to provide $103.4 million over five years starting in 2022-23 to Natural Resources Canada for developing a National Benefits-Sharing Framework and the expansion of the Indigenous Partnership Office and the Indigenous Natural Resource Partnerships program. 

With 70% of Nechalacho’s 58 employees coming from the Yellowknives and Lutsel K’e Dene First Nations and other NWT Indigenous communities, Connelly said Cheetah is hopeful the budget will help Indigenous people acquire equity interests in critical minerals projects.  

“It’s very important that the Indigenous people, whether it’s our project or other people’s projects, get to participate fully in the extraction of green minerals for a green economy,” he said. 

The budget also sets aside up to $1.5 billion over seven years, starting in 2023-24 for infrastructure investments to support critical minerals supply chains, an allocation that Connelly explained could benefit remote communities and remote mines.  

“In the N.W.T., the proposed Taltson power line could benefit three critical minerals projects but it could also bring green power to a number of Indigenous communities,” he said. “That line could run across to the Osisko zinc project, the Nechalacho project and then connect to the Snare system that comes to Yellowknife to power the NICO cobalt project.”