Greenland Minerals and Energy Limited
ASX : GGG

August 14, 2011 21:40 ET

Greenland Minerals Gains Full Control of World's Largest Rare Earth Project

PERTH, WESTERN AUSTRALIA--(Marketwire - Aug. 14, 2011) - Greenland Minerals gains full control of world's largest rare earth project.

Greenland Minerals and Energy Limited (ASX:GGG) ("GMEL" or "the Company") has finalized an agreement with Westrip Holdings ("Westrip") and Rimbal Pty Ltd ("Rimbal") to acquire the outstanding 39% of the exploration license (EL 2010/02) over the northern Ilimaussaq Complex in Greenland that contains the Kvanefjeld multi-element deposit (rare earth elements, uranium, zinc) and nearby satellite deposits; namely Zones 2 and 3.

Kvanefjeld's significance is underpinned by the world's largest JORC-code or NI 43-101 compliant resource of rare earth oxides with substantial resources of uranium and zinc (contained metal inventory of 6.6 Mt total rare earth oxide, 350 Mlbs U3O8, 3 Blbs zinc). Three drill rigs are currently operating on the recently discovered satellite deposits, with the program anticipated to lead to a substantial increase in the project's overall resource base.

Feasibility studies, conducted in close-consultation with Greenlandic stakeholders and regulatory bodies, are well-advanced in identifying a robust and sustainable development scenario. Initial studies indicate that Kvanefjeld could be developed as a large-scale multi-commodity mining operation that would have one of the world's largest rare earth production capacities. The diversified revenue streams that would stem from multi-commodity production strengthen the projects economics, and ensure a highly-competitive equivalent cost of rare earth production.

As a key aspect of GMEL's ongoing corporate development the executive team recognized the importance to now secure 100% ownership of the Kvanefjeld project, in a manner that is value accretive for the company's shareholder base. Importantly, 100% ownership will place GMEL in a strong position to engage potential strategic partners looking to gain access to the extensive resource base, and facilitate its development.

The acquisition terms require GMEL to pay $39M (AUD), and issue 7.825M shares, and 5 million options (ex $1.50). The Company has a 150 day period to finance the acquisition. With the market currently valuing GMEL's 61% share at approximately $210M (AUD), the terms of the agreement are considered to be highly accretive for the company's valuation. GMEL has a number of financing proposals under review. Given the 150 day (5 month) settlement period the Company is confident that it has the time and flexibility to ensure the most appropriate outcome for shareholders. The Company's priority will be to take the least dilutive and lowest cost-of-capital route and is confident of an outcome that will maximize shareholder value, and minimize risk exposure.

Roderick McIllree, Managing Director of GMEL, stated,

"Securing 100% ownership of the Kvanefjeld project is an important step and comes at a time when the Company is making major technical advances in process development that will strengthen Kvanefjeld's great potential, and the environment and social impact assessments are progressing on schedule in close consultation with Greenlandic stakeholders. In the context of our future development, we believe the time is now right to secure 100% of what is clearly a tier 1 mining asset."

Download Full Announcement

For further information on Greenland Minerals and Energy, or to sign-up for newsletter visit http://www.ggg.gl/Contact/Contact.htm.

Greenland Minerals and Energy Ltd is aware of and respects the Greenlandic government's stance on uranium exploration and development in Greenland which is currently a zero tolerance approach. However, a new amendment has been introduced to the standard terms for exploration licenses in Greenland that creates a framework for the evaluation of projects that include uranium amongst other economic elements. Within this framework the Company is permitted to fully evaluate the Kvanefjeld project, inclusive of radioactive elements.

Greenland Minerals will continue to advance this world class project in a manner that is in accord with both Greenlandic Government and local community expectations, and looks forward to being part of continued community discussions on the social and economic benefits associated with the development of the Kvanefjeld Project.

Contact Information

  • Greenland Minerals and Energy Limited
    Roderick Mcillree
    Managing Director
    +61 8 9382 2322
    www.ggg.gl