Critical Metals lifts Greenland rare earth stake to 92%

Critical Metals Corp (Nasdaq: CRML) is to boost its ownership in the Tanbreez rare earth project in southern Greenland to a controlling stake in one of the world’s largest rare earth deposits, major shareholder European Lithium (ASX: EUR) announced Thursday.

Under the revised agreement, Critical Metals will raise its stake in Tanbreez Mining Greenland AS to 92.5% from 42% by issuing 14.5 million shares to Rimbal Pty, a company controlled by project founder Gregory Barnes. The agreed price of $8 (C$11.16) per share represents a 23% premium to Critical Metals’ last close of $6.49, valuing the transaction at $116 million.

“This significant milestone agreement with Mr. Greg Barnes and Rimbal positions us to be laser focused on bringing this world-class asset into production,” European Lithium executive chairman, Tony Sage, said.

Significant deposit

Tanbreez, made up of the Fjord and Hill zone deposits, hosts 25.4 million indicated tonnes grading 0.37% total rare earth oxides (TREO) and 19.5 million inferred tonnes at 0.39% TREO, according to a preliminary economic assessment from March. About 27% of the deposit is  categorized as heavy rare earths, highly sought by Western suppliers for their use in clean energy, defence and other high-tech applications.

Critical Metals shares gained 5% to $7.45 apiece on Thursday morning, valuing the company at $727.54 million. The stock has traded in a 12-month window of $1.23 to $9.89.   

Barnes waived an earlier requirement for Critical Metals to invest $10 million before qualifying for the increased stake. The deal remains subject to Greenland government approval, with closing expected in October or November.

European Lithium will retain its 7.5% interest in Tanbreez, alongside a 60% shareholding in Critical Metals worth about $408 million at current prices. “This significant milestone agreement with Mr. Greg Barnes and Rimbal positions us to be laser focused on bringing this world-class asset into production,” European Lithium executive chair Tony Sage said.

Game-changer

As one of the world’s largest untapped heavy rare earth (HREE) deposits, Barnes described the project as “a game-changer” for the rare earths supply chain in the West. 

China currently dominates the sector, accounting for about 60% of global rare earth production and 85% of processing capacity. In 2023, its production totalled 240,000 tonnes, nearly six times that of the United States.

Critical Metals’ March preliminary economic assessment valued Tanbreez at a pre-tax net present value of $3.04 billion, with an internal rate of return of 180%.

The deal comes as the U.K., EU allies and Greenland are reportedly exploring a critical minerals partnership.

Greenland’s foreign minister has signalled interest in expanding EU ties, highlighting the island’s mineral wealth as a key area for cooperation. But despite its vast natural resources, Greenland presents logistical and environmental challenges to mining development.