Mining company breached business agreement, says Deninu K’ue First Nation

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Deninu K’ue First Nation says the mining company leading the long-awaited Nechalacho rare earths project breached its agreement with the First Nation by signing a deal with a private partner, who went on to bring in a Yellowknives Dene First Nation-owned construction firm to oversee future operations at the site.

Deninu K’ue First Nation (DKFN), situated in Fort Resolution, signed an “accommodation agreement” with Avalon Advanced Materials Inc. in 2012. Avalon has been planning the development of the territory’s first and only rare earths mine at Thor Lake, 100 kilometres southeast of Yellowknife, since the mid-2000s.

Under the agreement, business and employment opportunities were to be provided to DKFN members, and measures were included in the agreement to “mitigate environmental and cultural impacts,” that could arise from the project’s development, stated a June 2012 news release from Avalon.

“This accommodation agreement is also a significant milestone for our First Nation. The Barren Lands that the Nechalacho Project is located on are an integral part of our traditional territory, which we continue to hunt and trap on today,” wrote Louis Balsillie, chief of the Deninu K’ue First Nation, in the same news release.

“The business and employment opportunities, along with the education and training provisions, are essential components of this agreement,” added Balsillie.

A similar “participation agreement” was ratified between Avalon and the NWT Métis Nation two years later. At the time, the company stated it was committed to consulting with various Indigenous governments in the area, noting ongoing negotiations between Lutsel K’e Dene First Nation, North Slave Métis Alliance, Yellowknives Dene First Nation, Tlicho Government and K’atl’odeeche First Nation.

In 2014, the Nechalacho Project was put on hold due to a sharp decline in rare earth element prices.

A years-long hiatus followed.

Then, last month, Avalon announced a new partnership with Australian-based firm Cheetah Resources Pty Ltd, a deal that will see the latter take ownership of surface resources at the Nechalacho site, meaning both companies will, ultimately, co-own the resource project.

Following the announcement, Cheetah Resources signed a contract with Det’on Cho Nahanni Construction Corporation, a firm owned by the Yellowknives Dene First Nation (YKDFN), at the AME Roundup Conference in Vancouver. Under the contract, Det’on Cho Nahanni Construction Corporation will control mining operations at the Nechalacho Project site, where work is slated to begin this summer.

The move was heralded by Katrina Nokleby, minister of Industry, Tourism and Investment, as a “step forward in (the) territory’s push for Indigenous resource leadership.” Nokleby commended Cheetah Resources for including Indigenous people “at this project’s core.”

But Deninu K’ue First Nation (DKFN) says the recent series of events constitutes a default on the accommodation agreement on the part of Avalon.

In a letter sent to Avalon president and CEO Don Bubar, and Minister Nokleby on Feb. 11, a law firm representing DKFN says the company has breached its obligations to the First Nation under the accommodation agreement.

“Our client recently learned through media releases that Cheetah Resources Pty Ltd. acquired co-ownership with Avalon of the Project and that Cheetah entered into an agreement with Det’on Cho Nahanni Construction Corporation, owned by the Yellowknives Dene First Nation, to run project operations,” reads the letter from law firm Mandell Pinder LLP.

The letter was posted to DKFN’s Facebook page.

Facebook photo. Deninu K’ue First Nation’s letter to Avalon Rare Metals Inc. alleges the mining company breached an accommodation agreement signed in 2012.

Under the agreement, DKFN says Avalon was required to “notify Deninu K’ue of any assignment of its obligations under the accommodation agreement.” The letter says Avalon was also obligated to provide advance notice to the First Nation “regarding business opportunities related to the project,” something DKFN says never happened.
The letter directs Avalon to provide a written response to the default notice, in order to “discuss a proposal to remedy the breaches.”

The lawyer representing DKFN could not be reached for comment.

DKFN chief Balsillie told News/North Thursday he’s still waiting to hear from Avalon, but noted he’s had discussions with Cheetah Resources representatives.

Balsillie said he won’t be commenting further until he gets a response from
Avalon.

News/North has requested comment from both Minister Nokleby and Avalon’s CEO.

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