Vital Metals (ASX:VML) was ostensibly treading water after suspending all gold exploration activity in Burkina Faso in March, noting “security concerns”.
Vital had $14m in the bank though, which the explorer was planning to use for potential acquisitions “in a climate of depressed valuations for resources assets”.
Today, the company has announced plans to become a rare earth oxide (REO) developer. This briefly sent the share price up about 25 per cent to its highest point since February 2017.
Vital has inked a deal to buy private company Cheetah Resources, a business run by a former manager at global rare earths heavyweight Lynas (ASX:LYC), Geoff Atkins.
The Cheetah team also includes other ex-Lynas management with an in-depth knowledge of rare earth ore bodies, markets and project development requirements, Vital says.
Cheetah has agreements in place to acquire two significant REO projects –Thor Lake in Canada and Wigu Hill in Tanzania for about $8.4m.
Cheetah has a quick, cost effective development strategy; produce and sell a high purity mixed REO product to avoid the very high capex associated with building rare earth separation facilities.
“Our development strategy is not to compete with existing rare earth refiners but rather keep capital and operating costs as low as possible by feeding their facilities, thereby helping them expand with the growing market for rare earths,” says Vital Metals director Zane Lewis.
“This is an exciting opportunity for Vital to be exposed to rare earths at a time when demand is outstripping supply on the back of the electric vehicle market and the need for clean power generation.
“I look forward to updating shareholders as our acquisition of Cheetah Resources progresses.”
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