Highlights

• The 2026 program comprised 17 diamond holes totalling 1,824 metres at the Tardiff zone, plus three holes totalling.

• Planned non-dilutive sources are the sale of remaining ore stockpiles and an insurance claim the company expects to.

• Avalon alleges the company's subsidiary breached the Co-Ownership Agreement, leaving core samples unusable after the August 2025 Nechalacho.

• Chair Alexius Chan became interim chief executive on 20 August 2026 after Lisa Riley ceased as CEO and.

Vital Metals (ASX:VML) — has released its quarterly report for the September 2026 quarter. The company is developing the Nechalacho rare earths project in Canada's Northwest Territories, and the report covers drilling results, a resource update in progress, a pre-feasibility study (PFS) timetable, a tight cash position and a legal dispute with Avalon heading to a hearing.

Drilling and resource work

The 2026 program comprised 17 diamond holes totalling 1,824 metres at the Tardiff zone, plus three holes totalling 279 metres testing the R-Zone and S-Zone. Best intercepts, expressed as total rare earth oxide (TREO), were 102.0 metres at 1.47 per cent TREO from 4.0 metres in hole L26-692, 47.0 metres at 1.66 per cent from 37.0 metres in L26-689, and 52.0 metres at 1.35 per cent from 55.0 metres in L26-703, which included 6.0 metres at 3.86 per cent. The company says neodymium and praseodymium (NdPr) make up about 22 to 27 per cent of contained TREO in key intersections, and gallium averaged 182 parts per million gallium oxide across the 102-metre interval. Mineralisation remains open in several directions. These are exploration results, previously reported, rather than additions to the resource.

The current Mineral Resource is 192.7 million tonnes at 1.3 per cent TREO, made up of 7.6 million tonnes Measured, 41.0 million tonnes Indicated and 144.1 million tonnes Inferred. An updated estimate is in progress. The company says it may increase the resource and upgrade some Inferred material to Indicated, subject to Competent Person determination. A PFS is targeted for completion in the first quarter of 2027, and metallurgical studies on gallium are planned.

Cash and funding

Cash at 30 September was $2.4 million, down from $3.755 million. Net operating cash outflow was $663,000, with investing outflow of $641,000 and exploration and evaluation spending of $616,000. The Appendix 5B funding estimate is 1.87 quarters, below the two-quarter threshold, so the company answered the additional going-concern questions. Loans of $924,000 were drawn, including an unsecured, interest-free C$1.26 million loan from CanNor.

Planned non-dilutive sources are the sale of remaining ore stockpiles and an insurance claim the company expects to receive within the next quarter. Neither is confirmed receipt. Operating outflows are expected to rise in the December 2026 quarter because of arbitration legal costs. Payments to related parties were $202,000, relating to existing director remuneration arrangements.

Arbitration with Avalon

Avalon alleges the company's subsidiary breached the Co-Ownership Agreement, leaving core samples unusable after the August 2025 Nechalacho wildfire, and seeks damages of at least C$16.8 million. Vital considers the claim without merit. A hearing is scheduled for November 2026. The outcome is uncertain and could be material.

Leadership and tenure

Chair Alexius Chan became interim chief executive on 20 August 2026 after Lisa Riley ceased as CEO and managing director, and a permanent appointment has not been announced. David Herlihy joined as an independent non-executive director on 17 July 2026, while Andrew Nesbitt resigned as a non-executive director on 18 September 2026. The company maintained its 100 per cent interest in the Nechalacho tenements, holding all mineral rights above the 150-metre reduced level, with licences held 50/50 with Nechalacho Resources Corp and Avalon.

Risks and next steps

The report carries standard forward-looking caveats covering commodity prices, costs, exploration risk, permitting and litigation. Confirmed milestones include the November arbitration hearing, the updated resource estimate, completion of the PFS targeted for the first quarter of 2027, and expected insurance proceeds. Rare earths projects at this stage remain subject to study outcomes, funding and approvals.