Critical Metals fully gains Tanbreez in $835M deal

Critical Metals (Nasdaq: CRML) says it plans to acquire European Lithium (ASX: EUR) in an all-stock deal to consolidate ownership of its Tanbreez rare earth project in Greenland while removing a large shareholder. Shares surged. 

Under a letter of intent announced on Monday, Critical Metals has proposed to offer 0.035 of a common share for each European Lithium share acquired, a ratio that values the transaction at US$835 million based on the stocks’ closing price and exchange rates on April 22.

The offer, says Critical Metals, represents a “logical” business combination that creates minimal dilution for its shareholders and increases the company’s public float.

The move would give the company more control in the market and makes it “more attractive to future potential strategic investors and/or future potential acquirers,” Critical Metals says.

Huge deposit

Located at Killavaat Alannguat in southern Greenland, Tanbreez is regarded as one of the largest undeveloped heavy rare earth assets outside China. After entering the project over a year ago, Critical Metals has overseen several further developments, including a preliminary economic assessment that estimated a $3 billion value based on a 4.7-billion-tonne resource divided between two deposits.

Shares of Critical Metals shot up 25% to $14.45 apiece on the announcement, taking its market capitalization to $1.76 billion. The stock has traded in a 12-month range of $1.29 and $32.15. 

European Lithium presently owns about 34% of Critical Metals’ outstanding shares, which as of April 22 had a market value of $540 million. Upon completion of the transaction, Critical Metals plans to cancel those shares.

Full ownership

In addition, the deal would give Critical Metals the remaining 7.5% interest in the Tanbreez project previously held by European Lithium. It follows recent approval by the Greenland government of the indirect transfer of the Tanbreez licence to Critical Metals, which confirmed its 92.5% ownership after securing a majority stake from its previous owner last October.

While the company continues to work on expanding what it considers to be a vastly untapped resource, offtake agreements for three-quarters of its future production have already been secured, and the project has also been lined up for $120 million in US Export-Import Bank financing.

The plan is to begin first ore production in the fourth quarter of 2028 or the first quarter of 2029, Critical Metals has said.