Vital Metals Limited announced the commencement of mining operations at its Nechalacho rare earths project in Northwest Territories, Canada with the mining fleet mobilising this week.

Mining contractor Det’on Cho Nahanni Construction will commence operations at Nechalacho’s North T Zone within days following its mobilisation via the private Nechalacho ice road which is a 110km long, 1.1m thick engineered ice road on the Great Slave lake from Dettah, Yellowknife Bay, NWT to the Nechalacho Rare Earth Project on the Hearne Channel in Chief Drygees Territory.

All plant and equipment, including an ore sorter and associated infrastructure, will arrive at site by the end of March in preparation for rare earth production at Nechalacho.

Vital Metals’ Managing Director Geoff Atkins said: “We have been progressively achieving all the steps necessary to commence mining and rare earths production at Nechalacho over the past 12 months, and mobilisation of the mining fleet is another important milestone.

We are excited to be commencing operations at Nechalacho rare earth project and following our recent $43m raising, proud to be fully funded to become Canada’s first rare earth producer.”

Vital and its subsidiary Cheetah Resources held a ceremony on 20 March 2021 marking the commencement of mobilisation.

Vital’s Nechalacho Development Strategy

Vital’s strategy is to develop Nechalacho in two stages. Stage 1 of the operations focuses on the North T Zone resource and Stage 2 will involve the development of the much larger Tardiff deposit.

Det’on Cho Nahanni Construction will mine the North T Zone as a small open pit, with material transported to Vital’s ore sorter on site at Nechalacho for sorting. This will create a product suitable for further processing off-site at Vital’s rare earth extraction plant, to be constructed in Saskatoon, which will produce a mixed rare earth carbonate product for sale to separation facilities.

Det’on Cho Nahanni Construction will undertake mining and crushing during a single campaign between March and September 2021, under the control and direction of Cheetah Resources. Mined ore will be stockpiled for use in ore sorting operations which will be undertaken by Cheetah personnel during the summer periods of 2021 to 2023.

It is anticipated that a second mining campaign will be required in 2024 to replenish stockpiles.

Performance Shares

800 million Performance Shares were issued by the Company in accordance with the terms of the acquisition by Vital Metals of Cheetah Resources Pty Ltd (Cheetah Resources) (see ASX announcement dated 25 June 2019). The purpose of the Performance Shares, which were issued to the original Cheetah Resources’ shareholders, was to link part of the consideration for the acquisition of Cheetah Resources to certain key performance criteria.

The commencement of commercial mining operations at the Nechalacho1 or Wigu Hill projects is a key performance criterion for the conversion of all Performance Shares into fully paid ordinary shares in the capital of the Company (Shares). Therefore, all Performance Shares will convert to Shares on a 1:1 basis on commencement of mining operations.

The Company is pleased to announce that Vital Directors and key shareholders holding ~70% of the Performance Shares have agreed to voluntarily escrow the converted shares for a period of 6 months.