Election result in Greenland could jeopardize Kvanefjeld project

A snap election on April 6 focused on mining, fishing and the environment, saw Greenland’s Inuit Ataqatigiit (Community of the People party) secure 37% of the votes, giving it 12 seats in the 31-seat national assembly (Inatsisartut).

Inuit Ataqatigiit opposes the development of Greenland Minerals’ (US-OTC: GDLNF; ASX: GGG) Kvanefjeld rare earths project, which would produce uranium oxide as a by-product. The Australian company’s major shareholder is Chinese-owned Shenghe Resources.

“We say no to uranium mining,” Mute Bourup Egede, Inuit Ataqatigiit’s leader, said in a statement to Greenland’s public broadcaster, KNR.

“There are two issues that have been important in this election campaign,” Egede said. “People’s living conditions is one. And then there is our health and the environment.”

Taking second spot with 29% of the votes (10 seats) was the Siumut (Forward) party, which has dominated power (and is not opposed to mining) since 1979. Siumut’s leader, Erik Jensen, has said the proposed Kvanefjeld mine would be “hugely important for Greenland’s economy.”

Inuit Ataqatigiit could form a coalition with another party that opposes the project, like Naleraq, an independence party, Reuters reported.

Greenland Minerals has been operating in the self-ruling Danish territory since 2007 and describes its Kvanefjeld project, 10 km from tidewater in southwestern Greenland near the town of Narsaq, as a “large-scale rare earth project with the potential to become the most significant western world producer of rare earths.”

The company states on its website that it is planning a mine, concentrator and refinery at the project. The concentrator would produce a concentrate containing 20-25% rare earth oxide, a zinc concentrate and fluorspar. The refinery circuit would produce high-purity intermediate rare earth products and uranium as a byproduct.

Greenland Minerals, based in Perth, did not immediately reply to an emailed request for comment on the election results. (Australia is 12 hours ahead of Toronto.)

On the day of the election, the company’s non-executive chairman, Anthony Ho, acquired 100,000 common shares of the company on the Australian Stock Exchange valued at A$17,500 (US$13,334.70).

In mid-December, Greenland’s government approved the start of statutory public consultations for the project’s Environmental Impact Assessment (EIA) and the Social Impact Assessment. The company said in its 2020 Annual Report, published at the end of March, that it expects the public consultation period, which was extended due to the pandemic, will be completed by June 1.

An optimized feasibility study completed in 2019 estimated capital costs of US$505 million, (including a 15% contingency on direct and indirect costs) and a mine life of 37 years.

Based on a JORC-compliant resource estimate in 2015 and at a cut-off grade of 150 parts per million (ppm) U308, Kvanefjeld contains measured resources of 143 million tonnes grading 12,100 ppm total rare earth oxides (TREOs), 303 ppm U308 and 2,370 ppm zinc for 1.7 million tonnes of TREOs, 95.2 million lb. U308 and 0.34 million tonnes of zinc. Indicated resources stand at 308 million tonnes grading 11,100 ppm TREOs; 253 ppm U308 and 2,290 ppm zinc for  3.42 million tonnes of TREOs, 171.9 million lb. uranium, and 0.71 million tonnes of zinc.

Inferred resources add a further 559 million tonnes grading 10,700 ppm TREOs, 264 ppm U308 and 2,463 ppm zinc for 6 million tonnes TREOs, 325.7 million lb. U308 and 1.4 million tonnes of zinc.

Last year the company raised A$34 million (before costs), through a A$30 million placement to international investors and A$4 million through a shareholder purchase plan, according to its 2020 Annual Report. It also stated that this year it “will be in the final stages of the permitting process and working with the Greenland government to ensure the project meets the Greenland community’s expectations. The company will also continue to work with European industrials with a focus on commercial outcomes. Final engineering design and work programs will also commence with the aim to bring the Kvanefjeld project into production expeditiously.”

China’s Shenghe first invested in Greenland Minerals in 2016. According to a corporate presentation Greenland Minerals gave at the Prospectors & Developers Association of Canada last year, Shenghe owned 125 million shares of the company.

Shenghe specializes in mining, smelting and separation, and processing of rare earths and guides Greenland Minerals on rare earth processing technology.