FYI | Sep 20 2018
By Pitt Street Research
Sitting on the world’s largest undeveloped Rare Earth deposit
Greenland Minerals ((GGG)) is a Perth-based resources company focused on the Kvanefjeld Rare Earths Project in Greenland. Demand for Rare Earths is strong given its use in various 21st Century products, most notably electric cars and wind turbines, and Greenland Minerals controls 100% of the world’s largest undeveloped Rare Earths deposit. With the help of Shenghe Resources, a major Chinese Rare Earths player, we expect that Greenland Minerals can move towards an updated Feasibility Study for the project in the next year or so, with the mine potentially starting up in 2021.
The Kvanefjeld Project has considerable advantages as a Rare Earths source, most notably its favorable metallurgy and wide spread of critical Rare Earths. A steady increase in Rare Earth and U3O8 prices, further progress on the Kvanefjeld flowsheet, and completion of permitting in Greenland can help drive favourable sentiment and re-rate the stock into our valuation range, and, potentially, beyond.
Valuation range of A$ 0.18 – 0.43 per share
We value Greenland Minerals at 18 cents per share base case and 43 cents per share optimistic case using a DCF approach with conservative assumptions on Rare Earths. Our valuation is highly sensitive to changes in the prices of critical Rare Earths such as Neodymium. Should prices return to the levels assumed in 2015, Kvanefjeld will be a very valuable Rare Earths mine indeed.
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