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Ex-Lynas manager to turn Vital Metals into next ASX rare earths producer

SNL Image

Ore from the Nechalacho rare earths project being loaded onto barge prior to transport to Yellowknife, Canada for dispatch for metallurgical testwork.

Source: Vital Metals Ltd

Former Lynas Corp. Ltd. corporate planning manager Geoff Atkins aims to turn Vital Metals Ltd. into the ASX's next rare earths producer with a new flagship asset in Canada he came across while scoping extra material to feed Lynas' Gebeng plant in Malaysia.

Atkins was announced as Vital's new managing director on Oct. 22 upon completion of the acquisition of the private company he led, Cheetah Resources Pty. Ltd., which had done a deal with Avalon Advanced Materials Inc. to buy the near surface resources of the Thor Lake, or Nechalacho, rare earths project in Canada.

SNL Image

Vital Metals Ltd Managing Director Geoff Atkins

Vital's shareholders approved all resolutions at an Oct. 16 general meeting, with zinc producer New Century Resources Ltd.'s Chairman Evan Cranston also appointed to Vital's board as non-executive director.

Vital Executive Director Phillip Coulson stepped into a nonexecutive director role, while nonexecutive chairman Francis Harper and executive director Zane Lewis will remain in their roles at the company.

The junior's share price hit a 52-week high of 1.6 Australian cents per share on June 25 upon announcing it was looking to transform into a developer of rare earth oxides by acquiring Cheetah.

Atkins attributed this to growing market interest over rare earths, which has risen in prominence as a strategic critical material both on a corporate and geopolitical level.

Atkins said in an interview that he studied both Nechalacho and Wigu while scouting other rare earths projects globally to potentially diversify the feed stock for Lynas' Malaysian plant once grades at its West Australian Mt Weld eventually deplete, or to potentially grow the plant's capacity.

As part of that due diligence process, Lynas took a stake in what is now the only other ASX-listed rare earths producer, Northern Minerals Ltd. — which was then called Northern Uranium Ltd — in 2010.

Atkins said the key lesson he learned from his Lynas experience was the need to keep capex and the time to production down so shareholders do not get diluted, then move into cash flow quickly via a simple plant process, rather than focusing on size and grade.

While Avalon was planning a large concentration plant onsite then ship product to Louisiana for separation into individual rare earths, Vital wants to produce a concentrate using a more environmentally friendly ore sorting technology, then process the material off-site to produce a mixed rare earth product.

Avalon completed a feasibility study and some permitting work on Nechalacho, and Vital is now finalizing land use and water licenses for ancillary works.

Vital expects to start ordering long-lead time equipment for the project by the end of 2019 upon the completion of process test work programs, having loaded more than 60 tons of ore on barges and shipped to Yellowknife in Canada's Northwest Territories for dispatch to various labs, mirroring a potential logistics chain of its start-up operations.

Nechalacho has an NI 43-101 resource of 149.3 million tonnes at 1.42% rare earth oxides, or REO, within the upper zone over which Vital has rights to mine, and Cheetah has already started converting the near surface, high-grade resources found in the North T and Tardiff Zones to JORC 2012 standard.

A JORC resource for the North T and Tardiff Zones is expected by November, followed by a proposed process flow sheet in December. This will be the only metallurgical testwork needed before Vital releases its start-up study to becoming the next REO producer.

Shift in focus

The acquisition of Cheetah marks a shift in focus for Vital from gold and base metals exploration in Burkina Faso and Germany.

While Vital mentioned the Nahouri gold project in Burkina Faso and the Aue project in Germany, prospective for cobalt, tungsten, tin, uranium and silver mineralization in the Oct. 22 release, the zinc prospectivity at the Nabenia prospect within its Nahouri property was not cited.

Atkins said Vital's focus is bringing Nechalacho into production as soon as possible, and to bring the Wigu Hill project in Tanzania into the company.

Outside Wigu and Nechalacho, Atkins said Vital would assess how the other projects would fit into its portfolio, cautioning that "if few spent too much time and resources [on the other projects] my concern is we'd be spreading ourselves too thin."

Vital had to suspend exploration in Burkina Faso in March due to ongoing security concerns in the country, and said at the time it had received interest in the exploration data there.