Australia's Vital Metals (ASX: VML), the first rare earths producer in Canada, has walked away from a deal with Quebec Precious Metals Corp. (TSX-V: QPM) to buy the junior's Zeus project and a 68% stake in the Kipawa heavy rare earths, inked last year.
Vital's new management informed QPM that it had not been satisfied with the results of its due diligence on the projects, in particular the ability to progress its understanding of the Kipawa (Kebaowek) First Nation's position.
The Australian miner also noted it was discontent with the technical due diligence completed by the company's former management.
QPM, which will continue to seek a buyer for its projects, said Vital's decision came after not being able to agree on terms to extend the due diligence period to enable the Sydney-based company to further reduce risk.
"We believe that significant value can be realized for our shareholders through the monetization of the Kipawa and Zeus projects," QPM's CEO Normand Champigny said in a statement. "With the current market conditions for rare earth projects, we expect that we will receive further expressions of interest for these projects".
Vital also felt that proceeding with the acquisition of Kipawa and Zeus would have diverted funds from its current high-priority Nechalacho rare earths mine, in Canada's Northwest Territories, and that the development of the QPM projects would not occur for several years.
Vital began operations at Nechalacho last year, becoming North America's second producer of the elements used in magnets for electric vehicles, aerospace, defence and electronics, after California's Mountain Pass mine. The regulatory authority of the N.W.T, the Mackenzie Valley Land and Water Board currently classifies Nechalacho as a demonstration project.
Vital aims to produce a minimum of 5,000 tonnes of contained rare earth oxide (REO) by 2025 at Nechalacho.
The company is focusing on its Saskatoon rare earths production facility and development of the Tardiff deposit at Nechalacho, which will consume all resources in the short to medium term.
Vital has already signed an off-take agreement with Norwegian company REEtec for Stage 1 production with the supply of 1,000 tonnes of cerium-reduced REO a year for an initial five-year period.