Saskatchewan Research Council Strikes $3M Deal To Keep Rare Earths Away From China

Vital Metals (ASX: VML) has secured a significant deal worth $3 million with the Saskatchewan Research Council (SRC) to sell its stockpiled rare earth material from the Nechalacho North T deposit. This move, facilitated by Natural Resources Canada, marks a strategic shift from the previously announced sale to Chinese interests and underscores Canada’s commitment to securing its critical minerals supply chain.

The agreement, announced on June 17, 2024, comes as part of Canada’s broader Critical Minerals Strategy, which identifies rare earth elements (REE) as strategic assets crucial for the country’s economic prosperity and its ambitions in electric vehicles, advanced manufacturing, and defense technologies.

Vital Metals’ Managing Director, Dr. Geordie Mark, highlighted the importance of this deal, stating, “This agreement highlights the strategic value and importance of the Nechalacho rare earths project, and the prioritization of a rare earths value chain in Canada.”

Heather Exner-Pirot, Director of Energy, Natural Resources and Environment at Macdonald-Laurier Institute and an industry analyst, also noted the significance of this development.

“The rare earths stockpile from NWT’s Nechalacho mine is no longer being sold to the Chinese, as announced in December. The Saskatchewan Research Council will now purchase it in a move backed by Natural Resources Canada,” Exner-Pirot posted.

The agreement outlines specific terms between SRC and Cheetah Resources Corp, a wholly-owned subsidiary of Vital Metals. The purchase price of $3 million will be paid in two installments: 50% within three business days following the execution of the agreement, and the remaining 50% in stages within a maximum of ten business days following the delivery and sorting of the inventory.

The deal also includes provisions for termination if either party defaults and fails to remedy the default within ten days of written notice.

The Canadian government’s support for this transaction reflects its recognition of the Nechalacho project in the Northwest Territories as a critical asset. By securing these materials within Canada, the government aims to strengthen domestic capabilities in producing essential components for high-tech industries, thus reducing reliance on foreign sources, particularly China.

Natural Resources Canada has played a role in facilitating this agreement, aligning with the national vision to support value chain integration and enhance the country’s position in the global market for critical minerals.

Vital Metals said it is now focused on developing the Tardiff deposit at Nechalacho, with a scoping study planned for completion by the end of 2024. This study will assess the potential size and scalability of the Tardiff deposit, aiming to advance the project as a significant contributor to the Canadian and global rare earths market.

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