Rare earths, uranium and zinc explorer Greenland Minerals (ASX:GGG) has begun the process of arranging offtake for its highly-prospective Kvanefjeld Project, located in southern Greenland.
As Kvanefjeld pushes towards production, the company has signed a non-biding Memorandum of Understanding (MoU) with Shenghe Resources, a China-based rare earths product supplier, listed on the Shanghai stock exchange with a market capitalisation of close to US$3 billion.
The MoU establishes a framework for both parties to enter into binding agreements in the future.
Under the proposed plan, Greenland Minerals will look to supply offtake for its rare earths, consisting of either 32,000tpa contained rare earth in chemical concentrate, or 34,000tpa contained rare earth in mineral concentrate.
While pricing is yet to materialise, Greenland shareholders will be encouraged by a commitment to offtake the rare earths on “arm’s length” pricing, which will reflect published, internationally traded prices.
Greenland are also set to benefit, with Shenghe agreeing to market any rare earth products that Shenghe does not acquire.
The company will be firmly on the minds of rare earths and uranium investors throughout the financial year with both Greenland and Shenghe agreeing to ink a binding agreement within three months from the mutual acceptance of the Kvanefjeld optimised flowsheet.
An optimisation program is tipped to be completed during the first quarter of 2019.
Commenting on the agreement, Greenland Minerals’ managing director John Mair said:
This MoU represents an important milestone in the relationship between the Company and Shenghe.
“The agreement builds on the strategic cooperation agreement entered into in 2016 that saw Shenghe become our major shareholder. It demonstrates the strong intention of both parties to establish a framework for the commercialisation of the Kvanefjeld project.
Shenghe has the capacity, technology and intent to process a variety of intermediate rare earth products from Kvanefjeld and produce high‐purity, industry ready products.
“The significance of Shenghe’s undertaking demonstrates that all project output at planned volumes will be absorbed into commercial end‐use markets by a prominent and experienced industry participant,” he said.
As part of the agreement, Greenland and Shenghe have arranged a strategic development plan for Kvanefjeld which proposes a staged development path, which may lead to an earlier production of rare earth concentrate before a second stage refinery is constructed in Greenland. The plan also proposes a project‐specific rare earth separation capacity outside China to directly supply growing international demand centres.