Greenland Minerals and Energy Ltd (ASX.GGG) Last sale 6.4c GGGOB...

Greenland Minerals and Energy Ltd (ASX.GGG) Last sale 6.4c GGGOB (8c,Sept 2018) Last sale 2.4c

Following on from the update last week, please find attached a comprehensive research report prepared by RM Capital, whereby they estimate an initial price target of 23c with significant upside potential toward and beyond $1 on the achievement of certain milestones which in turn reduce the risk discount from the 70% they have chosen.

GGG shareholders voted overwhelmingly in favour of approving A$3b Shanghai-listed and major Rare Earth participant Shenghe Resources 12.5% strategic stake last week, paving the way for Shenghe and GGG to continue cooperating on technical enhancements for this world class project and moving the mining licence application through the system.

Based on the intention of Shenghe to negotiate a larger project stake in the future, RM Capital assume the most conservative position whereby GGG may end up with a 40% free carried interest in a project which based on the updated feasibility study has an NPV circa $1.6 billion.

40% of A$1.6b is A$640m ie 64c per share.



Ultimately, further investment may not be to this level, and will be subject to future negotiations following optimisation work and updating the projects economic metrics. Regardless, the strategy aims to reach a free carried position through to production.

It would be expected that with Shenghe’s expertise the capital costs may be reduced significantly and the processing efficiency improved, which has the potential to increase the NPV of the project substantially. With greater than a 10% shareholding, Shenghe becomes a ‘related party’ to any further commercial transactions in relation to GGG or the Kvanefjeld Project. This requires third party valuations, and subsequent shareholder approval.

The risks noted include political, permitting and processing risk, and as discussed in the note we believe the company is heading in the right direction to best manage and reduce those. We believe the outlook for Rare Earths and uranium is also very bright.

2016 has been a transition year for Greenland Minerals and Energy and with a top-tier industrial partner on the registry, the company is well-positioned to see significant share price appreciation through 2017.

You may have noted today that Global X Uranium ETF lodged a substantial shareholder announcement to the ASX, on the back of recently increasing their holding. Shenghe, North American Fund Tracor Ltd, and Global X will be the three largest shareholders in what is an increasingly sophisticated registry. This is a strong endorsement of the substantial progress made by GGG over the last couple of years in bringing the Kvanefjeld Project to the global stage.