08-03-2010:
Greenland Minerals and Energy seeks $80m in LSE listing
GREENLAND Minerals and Energy plans to raise roughly $80 million in a listing on the London Stock Exchange's main board by the end of 2010 or early 2011.
Managing Director Rod McIllree said the listing will fund a feasibility study for its 61 per cent-owned Kvanefjeld rare earths and uranium mine and will occur after Greenland's parliament decides on a new uranium mining policy in November,
Evolution Securities has been hired to lead the listing.
Uranium mining is banned in Greenland, but the government is considering allowing uranium mining if it is a byproduct.
"The Greenlandic authorities are now looking at having a proper public debate about having this mine," Mr McIllree said.
"We're confident that the government will reach an appropriate decision."
Greenland Minerals has a 61 per cent stake in the Greenland subsidiary that owns Kvanefjeld, and the option to buy out the rest from its partner Westrip for $60m, which it intends to eventually, Mr McIllree said. It is now in a legal dispute in the UK with Westrip over whether or not Westrip is still the legal owner of its 31 per cent stake.
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Mr McIllree said a recent pre-feasibility study estimated the revenue from rare earths would be slightly larger than uranium. But the miner believes its recovery of rare earths could improve so that they would generate three to four times the revenue from uranium.
A pre-feasibility estimated the mine could annually produce 43,729 tonnes of rare earths oxides and 3,895 tonnes of uranium oxide for 23 years.
Rare earths are common minerals but are rarely found in high enough concentrations to be mined profitably. Their usage extends from green technology and automotive catalysts to missile defence systems and high-tech consumer electronics. Almost all are produced in China.
Kvanefjeld is at an early stage in its development. Environmental and social studies have to be completed this year, and the feasibility study in 2011.
Its high capital costs -- estimated at $2.31 billion -- will require the small miner to find offtake partners and strategic investors. A uranium offtake partner would likely be legally required because of security regulations governing the global uranium industry.
The miner is also looking to find a partner to fund and build the port and power facilities required to make the mine successful.
Mr McIllree said it is unlikely to partner with a Chinese company because the mine's selling point is that it will reduce China's monopoly of rare earths production.
North American investors are interested in investing in a rare earths company, while Japanese companies have expressed interest as offtake partners, he said. "Those guys are very keen to do some kind of deal. I think what attracts them is the scale."
Serious discussions with partners are likely to begin in a year's time after the environmental and feasibility studies are finished and the government has decided on the uranium policy, Mr McIllree said.
"We feel we can add a lot of value to this (company) in the next 12 months before we start discussions."
Uranium assets owned by companies are usually valued by the market at around $US4-$US5 per pound of uranium, Mr McIllree said, compared to Greenland Minerals' valuation of US55 cents per pound.
BUSINESS with The Wall Street Journal
Matthew Walls From: Dow Jones Newswires March 03, 2010 6:43AM
www.theaustralian.com.au