Greenland Minerals seeks clarity on Kvanefjeld licence

Greenland's parliament passed new legislation (referred to as Act No.20) concerning uranium mining on 9 November 2021. The new legislation prohibits preliminary investigation, exploration, and exploitation of uranium, which it defines as uranium content which occurs at 100 parts per million (ppm) or greater in the total resource. The legislation also permits the government to extend that prohibition to other unspecified radioactive elements by imposing permitted limit values on those elements. It serves to reverse initiatives, policies and legislation adopted by successive governments over the past decade.

Greenland Minerals said it has held discussions with the Greenland government to determine the effect (if any) of this new legislation on its entitlements under its existing exploration licence, including its entitlement to an exploitation licence for the Kvanefjeld rare earths project, from which uranium would be produced as a by-product. However, it said these discussions "failed to deliver any viable solution".

The company said its main objective in the arbitration is to protect its investments in the project and to obtain the exploitation licence that is required for the project to proceed. To that end, it is maintaining its application for an exploitation licence and, in the arbitration, is seeking an independent legal ruling on whether Act No.20 applies to its exploration licence.

Greenland Minerals said if Act No.20 does not apply to its exploration licence, then it retains its entitlement to an exploitation licence for Kvanefjeld and the company's existing application for an exploitation licence must be granted by the government of Greenland. However, if it is determined that Act No.20 does apply to its exploration licence, the company will claim compensation for expropriation in an amount that takes into account the fair market value of the project.

The government of Denmark has been named as a respondent in the arbitration on the basis of its involvement in the exploration licence and the wider project, Greenland Minerals noted.

"We tried to find a constructive solution through dialogue with the government of Greenland, but they made it clear that they would not move from their position that Act No.20 applies to us and our exploitation licence will not be granted," said Greenland Minerals Managing Director Daniel Mamadou. "In these discussions, the government also made it clear that they do not consider themselves to be under any obligation to compensate us. Greenland Minerals has spent more than ten years and has invested over USD130 million in the Kvanefjeld project. The company followed every government regulation and request throughout the process."

In a statement, the government of Greenland said: "In requesting arbitration, Greenland Minerals has chosen not to respect the wishes of the people of Greenland for a ban on uranium and is seeking, through a Danish arbitration tribunal, to enforce the possibility of extracting uranium from Kvanefjeld."

Greenland Minerals commenced operating in Greenland in 2007 to explore the broader Kvanefjeld area and evaluate a multi-element mining operation. In November 2011, its exploration licence for the project was amended by the government of the time to add a conditional right for the company to apply for an exploitation licence to include radioactive elements, which provided the company with a regulatory framework to effectively evaluate a multi-element mine development. The company completed a feasibility study for the project in May 2015. In January 2016, the governments of Denmark and Greenland signed of a series of agreements setting the framework for future cooperation on foreign, defence and security policy issues related to the mining and commercial export of uranium.

In June 2015, Greenland Minerals formally announced JORC-compliant maiden ore reserves for the Kvanefjeld project. Total ore reserves of 108 million tonnes contain uranium at 362 ppm U3O8, comprising 43 million tonnes of proven reserves with 352 ppm U3O8 (12,834 tU) and 64 million tonnes of probable reserves with 368 ppm U3O8 (19,970 tU).

The Kvanefjeld project will consist of a mine, a concentrator and refinery. The concentrator will produce a mineral concentrate containing 20-25% rare earth oxide, a zinc concentrate and fluorspar. The refinery circuit will produce high-purity intermediate rare earth products, and uranium as a by-product. Rare earth products are forecast to generate over 80% of the project's revenue, with uranium, zinc and fluorspar by-products contributing to the balance.