Greenland Minerals and Energy to "claw back" 3% royalty on the Kvanefjeld multi element project

Greenland Minerals and Energy (ASX: GGG) which yesterday announced that the Government of Greenland is set to amend the terms of the company’s exploration license in the country, will claw back a 3% royalty on license 2010/02 - which hosts the Kvanefjeld multi element project.

The agreement is with Greenland Minerals and Energy (Trading) A/S (GME A/S), and will comprise a consideration of 17.5 million shares.

GME A/S is the Greenlandic subsidiary company which holds the exploration license 2010/02 over the northern Ilimaussaq Intrusive Complex in Greenland that contains the world class Kvanefjeld project.

Highlighting the potential of Kvanefjeld, the project hosts the largest occurrence of rare earths (6.6 million tonnes total rare earth oxides (TREO)) as defined by internationally recognised standards, 350 million pounds uranium and 3 billion pounds of zinc.

GME A/S was established through the formation in 2007 of a joint venture with Westrip Holdings Limited (Westrip), and at the inception of the joint venture, a 5% net profit royalty existed on the license.

Once settlement occurs on the royalty and the move to 100% of GME A/S the joint venture will terminate and GMEL will control 100% GME A/S and be the beneficiary of a 3% net profit royalty.


Discussions continue on remaining 2%

The company will continue to advance discussion regarding the remaining 2% on terms that the company anticipates will value accretive to Greenland Minerals. The royalty transaction is contingent upon settlement occurring under the Deed of Settlement with Westrip and is further subject to shareholders’ approval.

Importantly - an independent expert report from BDO Corporate Advisory has determined that the proposal is both fair and reasonable. The company will seek relevant approvals shortly.


Greenland Minerals to benefit from Government of Greenland changes

Under the licensing framework in Greenland, the licensee maintains the right to apply for an exploitation (mining) license for all exploitable elements listed on the exploration license.

Importantly the exploration license (2010/02) now includes radioactive materials, providing the company with the clear right to apply for the exploitation of radioactive elements along with all other exploitable elements - which brings the potential production of heavy rare earths into play.

The granting of the exploitation license will be dependent on establishing an environmentally and socially sustainable development scenario that is economically robust.


Exploitation of Kvanefjeld timeline

The amendment comes around one year after the Government of Greenland issued Greenland Minerals with an evaluation permit to allow for comprehensive feasibility studies to be conducted on a mineral deposit that includes uranium.

Through the first half of 2011, the company conducted extensive stakeholder engagement to establish the terms-of-reference for environmental and social impact assessments.

These terms were approved by the government in July, and both the EIA and SIA are progressing on schedule, with the Greenland Minerals saying that it is extremely pleased with this critical development and expects to lodge an application for the exploitation of Kvanefjeld at the end of 2012.


Greenland Minerals moving to 100% of Kvanefjeld

In August this year in a transformative move, Greenland Minerals completed a pivotal agreement with Westrip Holdings (and Rimbal Pty Ltd) to acquire the outstanding 39% of the exploration license 2010/02 over the northern Ilimaussaq Complex in Greenland.


Article originally posted at: http://www.proactiveinvestors.com.au/companies/news/23079/greenland-minerals-and-energy-to-claw-back-3-royalty-on-the-kvanefjeld-multi-element-project-23079.html