The NWT’s Nechalacho mine looks set for a quiet summer. Its owner has switched to a “focus on conserving cash,” saying there is no need to keep mining for now.
Nechalacho, east of Yellowknife, is Canada’s first rare earths mine but is also tiny, referred to by owner Vital Metals as a demonstration project and involving around a dozen people at a time.
Since 2021, those workers have mined rare earths in small quantities from an area of Nechalacho known as North T, while Vital works to build a processing plant in Saskatoon. The aim is to have a rare earths supply chain fully contained within Canada, which both the Canadian and US governments say is desirable as it avoids having to rely on China or other countries.
But this week, Vital said it is “pausing all construction-related activities” at the half-finished Saskatoon plant.
The company said an “increased cost profile, lack of an immediate market for our products and lower rare earth prices” mean it needs to develop a long-term, sustainable business model and, in basic terms, either find more funding or a partner.
The knock-on effect at the NWT mine is that with the processing plant on hold, Vital sees no immediate need to continue actively mining at Nechalacho, which it says is currently not making any money.
“There may be some shipment of existing ore stockpiles to Saskatoon,” Vital’s interim chairman, Richard Crookes, told Cabin Radio by email on Friday, asked what work would happen at the mine this year.
“However, there was no prior plan to mine this summer at North T, as we have sufficient ore mined and beneficiated [another term for sorted] to run the plant through to the summer of 2024,” Crookes continued.
“Particularly so now we are pausing construction for up to three months, hence delaying the start of ore processing at Saskatoon to better align with our offtaker’s requirements.”
In mining, an offtaker is the ultimate buyer of the end product. The offtaker Crookes refers to is Reetec, a Norwegian company, which has said it won’t be ready to take Vital’s rare earths until at least 2024.
Vital Metals’ price on the Australian Securities Exchange, which has been steadily dropping over the past year, descended further on this week’s news to AUD $0.010, though it has since rebounded a little to $0.012. This time last year, shares in the company traded at $0.070.
Vital has endured a series of executives’ departures in recent months. Its chairman, managing director and chief financial officer have all declared they are leaving, some after barely a few months in post.
Through that turbulence, the company has pinned its hopes on what it believes is a huge extra deposit of rare earths in another area of Nechalacho known as Tardiff.
This week, Vital said Tardiff is estimated to be “one of the largest single deposits in the western world, with the potential to be one of the largest suppliers of permanent magnet motor minerals in North America.”
The company has been drilling at Tardiff to prove the deposit’s size, and says results have exceeded expectations. Vital has now hired a new executive to supervise that project’s long-term development.