Major funding for Vital rare earths plan
Canada's first REE producer secures US$32 million financing Metal Tech News – Aug. 3, 2022
Last updated 8/12/2022 at 2:15pm
Vital Metals Ltd. has received an AU$45 million (US$31.6 million) infusion of cash to fund its expanding rare earths business in Canada.
"Vital Metals is on the threshold of becoming North America's only company capable of producing a refined rare earth product from its own mine, completing our transition from exploration and development to production and operations," said Vital Metals Managing Director Geoff Atkins. "This is an important milestone, not only in the development of Vital, but also the North American and European rare earth supply chains."
Vital became Canada's first rare earths producing company with the 2021 start-up of operations at its Nechalacho Mine in Northwest Territories.
Now, the Australian company is focused on ramping up production of a separation facility in Saskatoon, Saskatchewan, that upgrades the concentrates produced at Nechalacho into mixed rare earths carbonate. This product will be shipped to specialized separation facilities in Norway and the United States that produce individual high-purity rare earth elements that are in high demand for electric vehicles, wind turbines, and other high-tech and commercial products.
In June, Vital announced that rare earth concentrates produced with a simple and environmentally friendly ore sorting machine at Nechalacho are being fed into a newly installed dense media separation plant at the Saskatoon extraction facility.
"This is an exciting step for the company as we continue our transition from rare earth developer to operator," Atkins said at the time. "We have been a rare earth miner for more than 12 months and now we can commence production of rare earth carbonate."
With the large equity financing, Vital now has plenty of funds to ramp the Saskatoon facility to commercial production.
"This placement allows us to finalize construction and commissioning and enter the operational phase of our Saskatoon plant with a robust balance sheet and working capital that can sustain our production well into the future, even amid ongoing global economic and geopolitical uncertainty," said Atkins.
The company, however, has loftier targets.
"We have a clear vision of the goal we want our company to achieve – to become the world's first producer of commercial quantities of both light and heavy rare earths," said the Vital managing director.
Looking ahead to Tardiff
To achieve its vision, Vital plans to expand its mining operations at Nechalacho.
The company began its rare earths mining at North T, which hosts 105,000 metric tons of resources averaging 8.9% total rare earth oxides, making it one of the richest light REE deposits in the world.
The ore mined from North T is being crushed, screened, and then fed into a Tomra ore sorter that uses X-ray transmission (XRT) technology to concentrate the ore into a product containing greater than 30% light rare earth oxides, which includes the neodymium and praseodymium used in the powerful magnets used in EV motors, wind turbine generators, computer hard drives, and many other high-tech and everyday applications.
To add heavy rare earths, which are scarcer and tend to be more valuable, Vital is planning to develop a much larger future mine at Tardiff. This deposit south of North T on the Nechalacho property hosts 95 million metric tons of resources averaging 1.46% total rare earth oxides.
Vital says decades of drilling by previous explorers, along with its own ongoing exploration, have demonstrated Tardiff's potential to be a multigenerational, year-round source of both light and heavy rare earths.
Mining could begin at this much larger Nechalacho deposit by 2024.
"Placement funds will allow us to accelerate mining studies and permitting works for Tardiff so that we can realize greater value from this project for our shareholders," said Atkins. "It's important that we take advantage of this strategic opportunity and cement our position in global rare earths production, as Nechalacho is only the first of our project development prospects."
Anchored by Lionhead
Vital's ability to raise the money to fund its much larger rare earths vision is thanks in no small part to Lionhead Resources Fund, a private-equity fund focused on mid-tier mining companies producing minerals critical to the clean energy future, which invested AU$30 million (US$21 million) in the financing.
"Lionhead Resources is excited to be making this significant anchor investment to support Vital Metals to advance development of the Nechalacho project, Canada's first rare earth producer, with Stage 1 on track to deliver NdPr (neodymium-praseodymium) in a mixed rare earth carbonate and Stage 2 set to add significant production, positioning Vital as a globally relevant rare earths producer," said Richard Crookes, founder and managing partner at Lionhead.
The financing involves the issuance of 1.13 billion Vital shares at AU4 cents per share.
As a result of its participation in this placement, Lionhead will own roughly 14.1% of Vital's shares after the closing of the second tranche of the financing, which is scheduled for September.
As an anchor shareholder, Lionhead will have the right to appoint two nominees to the Vital board and up to two members of a new technical advisory committee being established to provide Vital guidance when it comes to technical, financial, permitting, ESG, stakeholder engagement, or other aspects that could affect the company.
Russell Bradford, a Lionhead partner with more than 35 years of project management and operational experience in the mining sector, has been nominated to the technical advisory committee.
Crookes and Lionhead partner Paul Quirk have been nominated as members of the Vital board.
Crookes believes Nechalacho is ideally suited to deliver the rare earths essential to the world's transition to a greener and more sustainable future.
"Underpinned by a robust market outlook with growing demand for rare earths and enjoying enviable community and government support, this strategically located project has the potential to deliver robust economics, a positive ESG profile and attractive risk-adjusted returns for investors, with substantial upside," he said.