Vital Metals pauses trading — Is a rare earth breakout in their future?

Junior miner, Vital Metals Ltd [ASX:VML] has halted trading of its stock this morning.

This isn’t an uncommon request, plenty of stocks will halt and resume trading on a near daily basis. Many of which will be in regard to capital raisings.

Vital though has a different reason.

They have requested this pause, pending a key announcement. One that regards a ‘mineral resource update in respect to the Nechalacho Rare Earth Project.

Which, raises more questions than answers at this time.

But, considering some of the company’s recent news, it could be big…

Digging for potential

This time last week, Vital released another announcement. This one though was far more forthcoming.

Vital confirmed that their Canadian-based project (Nechalacho) had decent grades of rare earth concentrate. In other words, some sample rock / mineral contained a decent amount of rare earth elements.

See, rare earths aren’t all that rare. However, finding them in significant concentrations can be tough. So, when Vital announced grades of up to 41%, that is fairly remarkable.

Here is how Managing Director, Geoff Atkins surmised it:

The results achieved confirm the potential for high grade (>35% REO) rare earth concentrate to be produced from the North T deposit at Nechalacho utilising low cost mechanical sorting. We believe that this is the first time that a high grade rare earth concentrate can be produced using only simple ore sorting technology.

That is something worth getting excited about. Especially when you consider the state of the rare earths market right now.

There has been plenty of talk this year about China’s stranglehold over rare earths. Particularly their ability to extract and refine them at a far cheaper cost than other miners. So, if what Atkins’ is saying is true, they could be a genuine competitor.

However, they are still a barebones player at the moment. Getting a production facility up and running, no matter how simple, isn’t cheap or quick.

Nevertheless, there could be potential. And given the proximity of the site to the US it may be in the pole position. After all, America has been talking up its need for an alternative source of rare earths. Vital may just be a cost-effective option.

Which, brings us to back the trading halt.

Currently we don’t know what it is about. But, given the timing, if it is positive in nature it could light a fire under this stock. Even more than the gains it has already enjoyed this year.

Since early January, Vital is up about 40%. Though it has peaked even higher than that at times.

If it can find a footing with a new rare earths boom, then who knows how high it could go. It will all depend on just how promising their mine can be.

As for rare earths at large, it is an industry we are keeping an eye on. Here at Money Morning, we’ve been following the sector for some time now, and things are brewing. Signs that a secondary boom may be closer than some think.

If that piques your interest, then you should check out our full report on the matter. Get your free copy, right here. You won’t regret it.

Regards,

Ryan Clarkson-Ledward,
For Money Morning


Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read. Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.


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