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It's all a 'misunderstanding,' says CEO of alleged breach of agreement with N.W.T. First Nation

Deninu Kue First Nation says that it was not notified about business opportunities as part of a rare earths project that is expected to start this year. The company says the agreement refers to a different project.

Deninu Kue First Nation says Avalon Advanced Materials broke a 2012 agreement

Deninu Kue First Nation called a 2012 agreement for economic opportunities a 'milestone' but eight years later, the First Nation's lawyers say the agreement has been breached.

The Deninu Kue First Nation says a company breached an agreement when it failed to notify the First Nation about economic opportunities at the Nechalacho mine project near Thor Lake, N.W.T. 

The First Nation made the claim in a letter to Avalon Advanced Materials CEO Don Bubar, made public in a Facebook post on Wednesday.

The Deninu Kue First Nation found out about the alleged breach through news reports in December that Cheetah Resources awarded a mine manager contract for their work at Thor Lake to the Yellowknives Dene First Nation subsidiary company Det'on Cho Nahanni Construction Ltd.

Bubar said the entire thing is a "misunderstanding." Bubar said the First Nation is referring to a previous agreement signed for a completely different project.

"Different project. Different players. Different resources," he said.

Bubar said the 2012 agreement the First Nation is referring to was about developing a particular deposit at Thor Lake, and a hydrometallurgical processing plant at Pine Point, N.W.T., neither of which are part of current plans at Nechalacho.

The project lies roughly 100 km southeast of Yellowknife. (Google Maps)

Australia-based Cheetah Resources is developing a demonstration project at Nechalacho. The company acquired ownership of near surface resources in the Thor Lake project in 2019. At the time, Avalon introduced the Deninu Kue First Nation to the new owner, said Bubar. 

In the letter to Bubar, Deninu Kue First Nation Chief Louis Balsillie wrote that the company breached its agreement by failing to notify Deninu Kue about business opportunities as part of Cheetah Resources' work at Thor Lake.

The Nechalacho project accommodation agreement, announced in 2012, was signed by Avalon and the Deninu Kue First Nation. It included business and employment opportunities, and up to 50,000 shares in the company for the First Nation, according to a news release dated in June 2012. 

CBC has not seen a copy of the agreement.

The news release related to that agreement, said the agreement committed the First Nation to support the timely completion of the environmental assessment, and permit processes. Once Avalon got "certain" regulatory permits, the news release said the First Nation would acquire a limited partnership. 

The news release does not mention Pine Point specifically, but Bubar said the accommodation agreement was about a possible processing facility at Pine Point, and the development of the "Basal Zone" at Thor Lake.

The Cheetah Resources project involves different zones.

'There is no breach'

At the time, Deninu Kue's Chief Balsillie said the agreement was a milestone. 

"The business and employment opportunities, along with the education and training provisions, are essential components of this agreement," he said in the news release.

Don Bubar, Avalon Advanced Materials president and CEO says the agreement between Deninu Kue and Avalon was not about current work at Nechalacho. (Submitted by Don Bubar)

Bubar said the agreement with Deninu Kue is valid, but Cheetah Resources is pursuing a different project than the one outlined in the agreement.

"There is no breach of the agreement. It's a completely different project."  

Building ice road, moving equipment

Cheetah Resources Managing Director Geoff Atkins says an ice road will be built this winter, to move equipment to the site at Thor Lake. The demonstration operation is expected to pull approximately 600,000 tonnes of rock from the ground starting this year.

Det'on Cho competed to be mine manager. It won the contract, which will create roughly 20 and 25 jobs with six months of employment each year for three years, according to Det'on Cho CEO Paul Gruner. 

Bubar said he has reached out to lawyers for the First Nation, but did not get a response. 

CBC asked Deninu Kue First Nation chief and senior administrative officer for a comment on the letter, but they did not respond to repeated requests.

Corrections

  • An earlier version of this story referred to Paul Gruner as the CEO of Cheetah Resources. In fact, he is CEO of Det'on Cho corporation.
    Feb 17, 2020 9:41 AM CT
  • An earlier version of this story said Det'on Cho was preparing to build an ice road for the work at Thor Lake. While a winter road is being built, Det'on Cho is not involved in its construction.
    Feb 17, 2020 9:42 AM CT