The Greenland Minerals Ltd (ASX: GGG) share price is having another corker of a day today. Greenland shares are up 18.18% at the time of writing to 13 cents a share after closing at 10 cents on Friday and opening at 12 cents a share this morning.
The Greenland Minerals share price is now up a lofty 44.44% since last Thursday. However, the picture is less rosy for Greenland shareholders if we zoom out a little. This was a company trading at 34 cents a share back in January. In fact, Greenland was asking 18 cents a share just last week.
So what is this company? And why are Greenland shares bouncing so hard off such a sudden low today?
Greenland far from home
Greenland Minerals is a rather interesting company. It’s an Australian miner that has operated exclusively in the Danish province of Greenland since 2007. Its major asset is the Kvanefjeld rare earth project in southwest Greenland, which houses a significant deposit of the minerals collectively known as ‘rare earths’.
Rare earths are a series of elemental metals, including yttrium, lanthanum and neodymium. These metals have a wide range of modern manufacturing applications, most prominently in rechargeable batteries, electric motors, magnets, renewable energy generation and smartphones.
They are so central to today’s economy that governments worldwide are scrambling to secure supplies for the future. We have seen this in action with the ASX’s fellow rare earths miner Lynas Rare Earths Ltd (ASX: LYC).
Last year, Lynus signed a supply contract with the US Department of Defense, which underscores the importance that countries like the US are placing on rare earths.
Greenland Minerals’ Kvanefjeld project houses many of these rare earths, as well as deposits of uranium, fluorspar and zinc.
The project will consist of a mine, a concentrator and a refinery for processing these minerals. Once up and running, the company expects rare earths to make up 80% of Kvanefjeld’s revenues, with the remaining 20% coming from uranium, zinc and fluorine.
What’s with the Greenland Minerals share price?
As we touched on earlier, this company has had a wild ride over the past few weeks. Most of this volatility came last week when the Greenland share price plummeted 45% in one day.
As we reported at the time, this was a result of a recent election. The environmentalist Inuit Ataqatigiit party reportedly won 37% of the vote. One of its election pledges was to halt the mining project on the basis that it would cause environmental pollution, especially that from uranium, which is radioactive.
As such, the path forward for Kvanefjeld looks to be in tremendous jeopardy.
However, today’s Greenland Minerals share price performance appears to be a continuation of a ‘bounce back’ the company has been enjoying since 9 April. On that date, Greenland Minerals released a market statement addressing investors’ concerns.
All is not lost
In this statement, Greenland Minerals highlighted that the Inuit Ataqatigiit would still need to form a coalition government seeing as it did not obtain an outright majority.
It also stated the following:
Uranium at Kvanefjeld occurs at relatively low grades compared to most primary uranium mines. However, it can be recovered at low incremental cost during rare earth production. It is not of great economic significance to the Kvanefjeld Project.
However revenues along with those from other by-products would serve to reduce rare earth production costs. In the leadup to the election, the IA Party leadership expressed an anti‐uranium position and has reaffirmed this position since the election win…
Greenland Minerals Ltd has operated its 100%‐owned Kvanefjeld rare earth project effectively under all successive Greenland Governments since commencing operations in 2007. The company looks forward to engaging with the new government once it has been established.
As such, it looks as though Greenland Minerals is implying it can make modest adjustments to the mines’ operations that will result in Kvanefjeld remaining online and viable.
We will have to wait and see how this unfolds. But judging by the Greenland Minerals share price performance today, it appears as if investors are keeping an open mind.
On the current Greenland Minerals share price, the company has a market capitalisation of $174.4 million.
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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