Greenland Minerals and Energy’s (ASX: GGG) flagship project is Kvanefjeld, a multi-element deposit located near the southwest tip of Greenland. Kvanefjeld is rapidly growing into one of the world’s largest undeveloped deposits of rare earth elements, uranium and naturally occurring sodium fluoride.
To settle the transaction, the company paid A$5 million and issued 74.8 million shares and 5 million options exercisable at $0.75.
Under the current trading range, this represents a major discount to the original terms of $60 million to move to 100%.
This equity based deal results in 15.3% of Greenland Minerals’ issued capital being exchanged for 39% of the Kvanefjeld multi?element project.
With the deal Rimbal Pty Ltd becomes a substantial shareholder in Greenland Minerals.
The settlement also provides for all existing litigation, previously on hold for the last 18 months, in all jurisdictions between the parties to cease by mutual agreement.
The Kvanefjeld project is underpinned by several large?scale, bulk?tonnage resources at Kvanefjeld, Sørensen (Zone 2) and Zone 3.
The deposits represent the outcropping expressions of a mineralised system that geological evidence indicates is interconnected at depth.
The project has a resource inventory of 956 million tonnes containing 575 million pounds of uranium, 10.33 million tonnes of total rare earth oxides (TREO) and 2.25 million tonnes of zinc.
The TREO includes 0.37 million tonnes of heavy rare earth oxides and 0.84 million tonnes of yttrium oxide.
Kvanefjeld will have low mining costs due to outcropping, bulk tonnage deposits, with the highest grades near surface.
A recent Pre-Feasibility Study identified the clear potential for Kvanefjeld to be developed as a long-life, cost effective producer of heavy, light and mixed rare earth concentrates, uranium oxide and zinc.
Further, the production profile is of global significance in terms of output capacity, and low production costs.
Kvanefjeld will be able to generate four main products including a high grade zinc sulfide concentrate.
The development scenario from an annual 7.2 million tonne throughput would provide 2.6 million pounds of uranium oxide, 4,200 tonnes of heavy rare earth hydroxide, 10,400 tonnes of mixed rare earth carbonate and 26,200 tonnes of light rare earth carbonate.
Investment in metallurgical developments continue to advance and de-risk the process flow-sheet.
A Feasibility Study for Kvanefjeld project is currently underway and is scheduled for completion in 2013.
The settlement of the acquisition of the remaining 39% interest in the Kvanefjeld multi-element project was done at a significant discount to the original terms of $60 million to move to 100% ownership.
The reduction in the cash component of the acquisition from $39 million to $5 million places Greenland Minerals in a considerably stronger financial position.
Earlier this month, Greenland Minerals completed an oversubscribed capital raising of $15 million to institutions and sophisticated investors in Australia and overseas to fund the move to 100% ownership.
Not only does this deal represent a substantial cost saving to Greenland Minerals, but it should increase the potential strategic partners available to the company as moving to 100% of Greenland assets provides greater certainty to financing partners.