China-based rare earths company Shenghe Resources has agreed to take a cornerstone stake in troubled rare earths developer Vital Metals, which owns the Nechalacho project in Canada’s Northwest Territories.
Shenghe has agreed to subscribe for 9.99% of the issued share capital in ASX-listed Vital at A$0.01 a share to raise A$5.9-million.
Subject to its election and Vital shareholder approval, the Chinese group could subscribe for a further 492-million shares at A$0.015 a share, which if exercised would raise about A$8.9-million.
The investment would enable Vital to establish a new leadership team and to progress development of the large-scale Tardiff deposit at Nechalacho.
Shenghe CEO Wang Xiaohui commented that the Tardiff deposit had the potential to be a world-class large scale and long-life rare earth project.
Shenghe’s investment in Vital also affords the China-based company exposure to Vital’s Wigu Hill project, in Tanzania.
Shenghe will acquire an initial 50% interest in Wigu Hill and will have an option to earn up to 75% ownership by sole funding a preliminary feasibility study.
Richard Crookes is currently interim chairperson of Vital. The firm recently appointed Lara Iacusso its CFO and Geordie Mark its MD and CEO.