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Ramping up rare earths mining

Vital takes operations in Nechalacho, Saskatoon to next level Mining Explorers 2022 - January 19, 2023

Less than three years after bringing its ambition to mine rare earth elements to Canada, Vital Metals Ltd. is rapidly establishing its presence on the world stage as one of few miners of rare earth minerals outside of China.

In July 2021, the Australia-based company became the first to extract rare earth-rich material for commercial processing from the ground in Canada – a country known to host vast undeveloped quantities of the coveted resources. Vital Metals is also only the second company to mine rare earth elements in North America.

In September, the company celebrated completion of a multi-million-dollar rare earth processing facility in Saskatoon, Saskatchewan, designed to extract rare earths from mineral-rich material shipped from the Nechalacho Rare Earth Elements Property located at Thor Lake in Northwest Territories.

Observers say Vital Metals has advanced the project very quickly, from exploration to mine construction to production of an intermediate rare earth product.

"Overall, Vital appears well on the way to producing commercial quantities of rare earth concentrate, a first in Canada," observed Alastair Neill, president and director of the Critical Minerals Institute, a new mining industry group focused on metals needed for electric vehicle and energy technologies.

Neill also noted that Vital Metals' operation is currently the most advanced rare earths mining venture in Canada.

While Nechalacho has the potential for economic recovery of lithium, zirconium, beryllium, niobium, and tantalum, Vital has focused exclusively on REE.

First staked in 1971, the Nechalacho property hosts a world-class resource of 94.7 million metric tons averaging 1.46% total rare earth oxides.

The project's North T Zone hosts a high-grade resource of 101,000 metric tons at 9.01% light rare earth oxides (2.2% neodymium-praseodymium), making it one of the highest-grade rare earth deposits in the world.

Nechalacho's underlying owner, Avalon Advanced Materials Inc., initially focused on exploring the deposit's deeper heavy rare earths-rich Basal Zone. But it is the deposit's high-grade, near-surface light rare earth resource that is enriched with the key magnet minerals, neodymium-praseodymium, and its potential for near-term, small-scale development that drew Vital Metals to the project.

That potential is already being realized, despite the challenges of developing a mine and constraints imposed by the COVID-19 pandemic.

Fast track development

Vital completed its maiden mining campaign at Nechalacho in 2021 with activity centered in the North T Zone, where 408,000 metric tons of a planned 599,000 metric tons of material extracted yielded about 58,000t of ore.

The company aimed to process about 11,000 cubic meters of crushed material, comprising 1,630 cubic meters of high-grade, 4,240 cubic meters of low-grade and 4,770 cubic meters of fines from Nechalacho in 2022 and 2023.

The explorer planned to ship the mine's first concentrates to Saskatoon to commission and operate the extraction plant before the arrival of additional material mined in 2022.

Based on tests run at the Saskatoon rare earth extraction plant, Vital has said it can get a 75% recovery to produce a 43.7% REE concentrate. The deposit would produce 6,825 metric tons of TREO, containing 1,600 metric tons of neodymium and praseodymium.

Vital used X-ray transmission to sort the ore, since it is hosted in quartz, which is white, and the rare earth mineral is red.

"This is a simple way to upgrade the TREO content at site," Neill said.

Ramping up operations

Vital Metals began resource definition drilling in early 2022 in the Tardiff Zone at Nechalacho, planning to drill 48 holes to follow up on results from its 29-hole program in 2021.

While lower grade than North T, Tardiff is considered high-grade when compared against most rare earth deposits around the world.

The 2022 drill campaign focused on the Tardiff Zone 1 resource area, which contains 4 million metric tons averaging 1.95% (79,000 metric tons) of total rare earth oxides.

Vital envisions mining at Tardiff 1 as part of a growth plan that would increase overall rare earths production, as well as add heavy rare earths to the mix. Toward this goal, the company aims to upgrade the Tardiff resource to a point that it can be converted to reserves with the completion of feasibility-level studies for mining this larger and more heavy rare earth-enriched deposit.

Highlights from 2022 drilling at Tardiff include 13.7 meters averaging 3.91% TREO from a depth of 10.3 meters; 22.95 meters averaging 2.21% TREO from 28.5 meters; 32 meters averaging 2.11% TREO from 60 meters; and 48.1 meters averaging 2.03% TREO from 13 meters.

The explorer said results from the latest drilling program will be used to define an initial reserve for Vital's ongoing Tardiff operation.

The Tardiff deposit is to be developed in a modular fashion, commencing at Tardiff Zone 1, before expanding to Zone 3, with further expansion along open boundaries. The current resource for the three modules (excluding results of recent drilling programs) is 16.3 million metric tons averaging 1.85% TREO.

The modular development plan is designed to allow Vital to apply flexibility to its operations to meet the requirements of customers and increase production as needed.

Vital Metals envisions mining at Tardiff as part of a stage 2 growth plan as it builds a large-scale, long-life rare earths operation at Nechalacho in three stages, with production of heavy rare earth elements in the third stage.

The 2022 drilling could define a reserve to support the first 5-10 years of operation at Tardiff, depending on customer demand, the company said.

Extraction plant opens

In September, Vital unveiled its 3,000-square-meter rare earths extraction plant in Saskatoon, Saskatchewan and began commissioning the facility to produce a "high-purity" mixed rare earths carbonate later in the year.

More than 200 leaders in the global rare earth industry, from India to Estonia and Germany to Australia, gathered in Saskatoon Sept. 22 to celebrate completion of the facility and to celebrate Vital's progress in establishing a "responsibly" sourced supply chain of rare earths.

The commissioning of the dense media separation plant at the Saskatoon extraction facility began last summer. The DMS produced a concentrate averaging 43.7% TREO while recovering 75.2% of the rare earths during the first pass of running 2,300 metric tons of ore from Nechalacho. Adjustments are being made to increase the quantity of rare earths recovered while continuing to produce a concentrate with at least 40% TREO.

To fund its plans to establish the first two links of a rare earths supply chain in Canada, Vital received an A$45 million (US$30 million) infusion, which included a A$30 million (US$20 million) investment from Lionhead Resources Fund LP.

"Completion of A$45 million in funding via a targeted share placement, including the A$30 million cornerstone investment from Lionhead Resources Fund, was an important step in our strategy that will allow us to finalize construction activities and undertake commissioning, ramp-up and operations at the Saskatoon facility," said Russell Bradford, a partner at Lionhead Resources and interim CEO of Vital Metals.

Vital also secured a zero-interest loan of C$5 million ($3.7 million) from Canada's Jobs and Growth Fund to provide initial working capital for the Saskatoon processing plant. The terms of the loan require repayment in equal monthly installments over the next five years.

Marketing strides

Vital inked an offtake deal with Norway-based REEtec in 2021 to sell 2,000 metric tons of rare earth carbonate containing 750 metric tons of neodymium/praseodymium every year, beginning in 2023.

In April 2022, REEtec signed a purchase agreement to supply rare metals for magnets used in electric motors to German auto parts supplier Schaeffler AG over five years beginning in 2024.

The agreement is the first reported deal by a European auto sector supplier or automaker to source rare earths within the region as the demand for electric vehicle components continues to grow. It represents a total of 75% of Vital's Stage 1 operation.

Vital Metals plans to produce a 2.5-metric-ton REE carbonate sample in the coming months for REEtec as the next step of product qualification.

The REE miner also entered a nonbinding agreement with Ucore Rare Metals to supply rare earth carbonate feedstock containing a minimum of 500 metric tons rare earth oxides (excluding cerium) per year to Ucore, beginning in the first half of 2024.

Ucore is a rare earth processing technology developer that until recently had planned to build a plant in Southeast Alaska to separate heavy and light rare earth elements. Lured away by a package of financial incentives, Ucore now intends to adapt an existing facility in Louisiana to its needs.

This locale change will likely not impact the deal between Ucore and Vital, which would establish a complete rare earths supply chain in North America.


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