Vital Metals (ASX:VML) said its subsidiaries Cheetah Resources and Nechalacho Resources have responded to arbitration proceedings initiated by Avalon Advanced Materials concerning allegations that an August 2025 wildfire rendered core samples at the Nechalacho rare earths project unusable, according to a Friday Australian bourse filing.

Avalon is seeking at least CA$16.8 million in damages, claiming that the co-ownership agreement was breached, per the filing.

The subsidiaries consider the claim to be without merit and intend to vigorously defend the proceedings, with arbitration scheduled for November, the filing added.

The company's shares rose 2% in recent Friday trade.