Greenland Minerals and Energy Ltd (ASX:GGG) moves another step closer to the development of its Kvanefjeld rare earths and uranium project located in the Danish territory of Greenland.
Greenland, the territory, has now formalised its status as a signatory to international nuclear conventions allowing for its participation in the uranium industry.
During June, the Greenland and Danish parliaments passed legislation allowing uranium export from Greenland.
This confirms that a regulatory framework will be in place to permit the production and export of uranium as the company developments its flagship Kvanefjeld Project.
A mining license application for Kvanefjeld was submitted in late 2015 and the major reviews of key components are now advanced.
Background
Greenland Minerals' vision is to develop a stable, long-term source of materials for clean energy generation and energy efficient technologies.
Kvanefjeld is one of the world's most advanced rare earth and uranium projects with defined JORC compliant resources of over 1 billion tonnes containing 11.1 million tonnes of rare earth oxide and 593 million pounds of uranium.
As per the updated feasibility study, the net present value of the project is US$1.59 billion and the internal rate of return is 43.4%.
Project financing costs are US$831.9 million and the project has a payback period of 5 years.
Greenland Minerals is exploring the use of hydro‐electric power for Kvanefjeld having signed an agreement with a European multi-national conglomerate to develop a "power concept" based on renewable energy to power Kvanefjeld.
Third party financing, construction, and operation of a port of sufficient scale, accommodation for employees, power supply and supplies of key reagents would enhance strategic partner, offtake and financing imperatives.
Build Own Operate (BOO) arrangements would prove a significant value driver.
Recent strategic partnership
Greenland Minerals recently agreed to issue a 12.5% equity stake to a subsidiary of leading rare earth company Shenghe Resources Holding Co Ltd (SHA:600392), which has a market cap of over A$2.5 billion.
The agreement aligns one of the world’s premier emerging rare earth projects, with one of the most technically-proficient, internationally focussed, and front-footed Chinese rare earth groups.
The combination makes for a very powerful proposition.
Under the subscription agreement Greenland Minerals will receive $4.625 million through the issue of 125 million shares priced at $0.037 to Shenghe.
This will be subject to approval from both shareholders and the Foreign Investment Review Board (FIRB) before November 30, 2016.
The fundamental objective of both parties is to develop the Kvanefjeld rare earth and uranium project in Greenland as a cornerstone to new supply networks.
Shenghe Resources Holding Co Ltd
Shenghe is a leading rare earth company with experience in all parts of the rare earth industrial chain including mining, beneficiation, metallurgy, separation, downstream processing and marketing.
Shenghe also has an extensive financial investment background and solid capital strength.
The Shenghe group:
- Controls domestic sources of rare earth ores and concentrates;
- Controls significant rare earth separation capacity in China;
- Produces rare earth metals and alloys to the highest purities;
- Produces end-use rare earth products such as polishing powders, catalysts, molecular sieves; and
- Has an established international customer base for its products.
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