One of the companies leading the Northwest Territories’ efforts to mine critical minerals sent a subsidiary into bankruptcy in what appeared to be a significant course change.
Vital Metals, which operates the Nechalacho rare earths mine east of Yellowknife, said it was ending any hope of operating a Saskatoon processing facility, placing the holding company in charge of that project into bankruptcy, and ending an agreement to sell offtake from Nechalacho to Norwegian firm Reetec.
The Reetec deal and Saskatoon processing plant had previously been pillars of Vital’s plan to create a stream of rare earth minerals from the NWT for sale to the world market.
Vital said Reetec may launch arbitration proceedings following a disagreement over whether “changes in key economic and technical conditions that are beyond the control of Vital” had caused the company unfair hardship.
In a late Thursday statement, Vital – which is Australian-owned – said it would instead focus its efforts on developing the Tardiff rare earths deposit at Nechalacho.
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Tardiff is separate from the deposit previously mined at Nechalacho, which was billed as a small-scale “demonstration” of the rare earth minerals available at the site. By contrast, Vital says Tardiff is a “world class” deposit.
Vital has repeatedly stated in recent years that its focus lies on Tardiff, though this is the first time it has wholly written off any hope of seeing its Saskatoon plant project to a conclusion. The plant was expected to cost upward of $55 million, at least $18 million of which had already been spent as of last year.
“We’ve demonstrated, really, that the Saskatoon facility doesn’t make economic sense for us to operate, so we’ve decided to terminate that facility,” said Richard Crookes, Vital’s interim non-executive chairman, in a video update published alongside this week’s announcement.
“We’ve placed the holding company, Vital Metals Canada Ltd, into bankruptcy, and we’ve terminated our offtake agreement with Reetec.”
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Vital said that bankruptcy does not affect Cheetah Resources, its other Canadian subsidiary, through which it owns Nechalacho.
The latest announcement comes after months of apparent turmoil at Vital, which has seen change after change among its leadership team.
In April, the company switched to “focus on conserving cash” after losing managing director John Dorward just months after appointing him. The company’s chairman and chief financial officer also recently departed.
“You can expect to see some announcements soon around recruitment of an executive management team,” Crookes said this week.
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Continuing strife at Vital comes as the NWT government continues to press its claim to be a future hub for critical minerals.
“We have critical minerals. The market wants the critical minerals. We have the technology, we have the global interest in critical minerals,” Premier Caroline Cochrane told Cabin Radio this week, citing those minerals as she predicted: “I think the future will be positive in the economy.”
“Please stay with us. We thank you for our patience,” Crookes told shareholders, referring to Tardiff as “a great asset.”
“The board has been working really hard to salvage a difficult situation for the company, but we’re through that,” he said.
