Read Full Company Report 13 December 2011

Event

Maiden JORC Resource for Zone 2 at Kvanefjeld complex.

Highlights

• GGG has announced its maiden JORC-compliant resource for Zone 2 of 242M tonnes @ 304ppm U₃O₈ and 1.1% TREO (Total Rare Earth Oxide). This adds 46% to the existing uranium inventory, bringing the total to 512M lbs and over 39% to its total rare earth resource, bringing the total to 9.2M tonnes. GGG has also announced that a higher grade area within Zone 2 has been identified and drilled. This high grade area contains 119M tonnes of ore at 400ppm U₃O₈ and 1.2% TREO.
• Zone 2 is only 6 km away from the existing Kvanefjeld deposit which has 619M tonnes @ 257ppm U₃O₈ and 1.05% TREO. It now seems that the mineralogy of Zone 2 is similar to Kvanefjeld with metallurgical synergies expected. Zone 2 is still open towards the Kvanefjeld deposit with the possibility that the two deposits may indeed be one giant deposit.
• A total of 23 holes have been drilled in Zone 2, totaling 10,351m. These were used for the independent calculation of the JORC-compliant resource by SRK Consulting.
• GGG’s rare earth resource inventory now includes 330,000 tonnes of heavy REO, 740,000 tonnes of Yttrium.
• We are now waiting for drill results for Zone 3 and Steenstrupfjeld, two other deposits in the region. It is now likely that we could see over 1.0 billion tonnes of ore in the region at +250ppm U₃O₈ and +1.1% TREO making this deposit the largest in the world with over 10M tonnes of rare earths.

Recommendation

• GGG’s Kvanefjeld rare earth and uranium complex is now growing to mega proportions. Indeed, there is probably little added drilling required as the deposit contains over 70 years’ the entire global consumption of rare earths. The game plan appears to be uranium and a major push by GGG in seeking a relaxation to the “Zero Tolerance” stance to uranium by the Greenland Government. With outstanding metallurgical recoveries achieved and very strong beneficiation results via atmospheric leaching, the next stage in the company’s history will be a positive move by the government to give uranium exploitation on the Island the go-ahead. The fact that the Government has only ever issued one licence for the exploration of radioactive materials (to GGG), we believe this is a positive sign to future relaxation to the Zero Tolerance stance. We have a $1.80 price target on GGG and a Buy recommendation.

One of the Great Accumulations of Rare earths & Uranium

The Kvanefjeld complex consists of the main Kvanefjeld orebody, Zone 2 & 3 and a smaller deposit called Steenstrupfjeld. A JORC-compliant resource now exists of 861M tonnes containing 9.22M tonnes of rare earths and 512.8Mlbs of U₃O₈. Over 340,000 tonnes of “Heavy Rare Earths” also exist in the main deposit. Zone 3 & Steenstrupfjeld resources are expected to be released over the coming weeks with a high chance to extending the total deposit past 1.0 billion tonnes. Chart 1 outlines the location of the four (4) mineral deposit on-site.

Zone 2

Zone 2 is 6km away from the main Kvanefjeld deposit and has now added 242M tonnes to the overall resource of the area. The ore appears to be similar to Kvanefjeld and metallurgical testing is expected to see similar results. The important aspect to Zone 2 is the grade, where the grade of rare earth is 5% higher and that of uranium is 18.3% higher. Zone 2 contains 162Mlbs of uranium at a grade of 304ppm. At a valuation of US$1-2/lb, this would underpin the valuation of GGG in itself.

Other Matters

GGG is expected to complete the buyout of its joint venture partner in Kvanefjeld by June 2012. Currently, GGG has 61% of the project and Westrip has the remainder 39%. A cash payment of $35m or equivalent remains. Recent metallurgical and beneficiation test-work by GGG has revealed that the ore can be beneficiated to <15% of its original mass. This will
have a dramatic reduction in mine site infrastructure requirements. The leaching of this concentrated ore under atmospheric conditions has yielded a recovery of between 90-95% of both uranium and rare earth products. These results will form part of the pre-feasibility work on Kvanefjeld project expected to be released by the company in the next 3-4 weeks.
GGG is now looking at a staged development of the project up to 40,000 tonnes per annum of rare earth product and 4-6M lbs of uranium production per annum. A feasibility study is expected to be released in the June quarter 2012. GGG and its joint venture partner have the only licence in Greenland to explore for radioactive minerals. We see this as a positive
move by the Government of Greenland towards the granting of a future Exploitation Licence, subject to all Environmental and Social Impact Studies being completed and endorsed by the Government.

Rating Classification

Risk Rating

Disclaimer

Shaw Stockbroking Limited ABN 24 003 221 583 (“Shaw”) is a participant of ASX Limited and holder of Australian Financial Services Licence number 236048.

ANALYST CERTIFICATION

The Research Analyst who prepared this report hereby certifies that the views expressed in this document accurately reflect the analyst’s personal views about the Company and its financial products.

The Research Analyst has not been, is not, and will not be receiving direct or indirect compensation for expressing the specific recommendations or views in this report. As at the date of this report the Research Analyst does not have an interest in the financial products of the Company.

DISCLAIMER

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DISCLOSURE

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RISK STATEMENT

The analyst has determined that the risk profile for this company is significantly higher than for the market as a whole, and so may not suit all investors. Clients should make an assessment as to whether this stock and its potential price volatility is compatible with their financial objectives. Clients should discuss this stock with their Shaw advisor before making any investment decision.

Read Full Company Report

1. Introduction Greenland Minerals and Energy Limited (“the Company”) and its subsidiaries acknowledge the benefits to the Company and all stakeholders arising from employee and board diversity. The Company is committed to workplace diversity and to ensuring a diverse mix of skills and talent exists amongst its directors, senior management and employees, to enhance Company performance. Diversity includes, but is not limited to, diversity in gender, age, ethnicity and cultural backgrounds.

   To the extent practicable the Company will address the recommendations and guidance provided in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations.

2. Objectives
   • Creating a culture conducive to attracting and the appointment of employees, senior management and board candidates with skills best suited to the requirements of the Company.
   • Fostering a work environment that values and encourages contributions of employees from diverse backgrounds, experiences and perspectives.
   • Appreciating and respecting the unique attributes that each individual contributes to the workplace.
   • Improve employment and career development opportunities for women.
   • Taking action to prevent and stop discrimination, bullying and harassment.

   The Diversity Policy does not impose on the Company, its directors, officers, agents or employee any obligation to engage in, or justification for engaging in, any conduct which is illegal or contrary to any anti-discrimination or equal employment opportunity legislation or laws in any State or Territory of Australia or of any foreign jurisdiction.

3. The Board’s commitmentThe Board is committed to workplace diversity, with a particular focus on supporting the representation of women at senior level of the Company and on the board.

   The Board is responsible for developing measurable objectives and strategies to meet the objectives of the Diversity Policy (“Measurable Objectives”) and monitoring the progress of the Measurable Objectives through the monitoring, evaluation and reporting mechanisms listed below.

   The Board may also set Measurable Objectives for achieving gender diversity and monitoring their achievement.

4. Strategies

   The Company’s diversity strategies include:

   • Recruiting, where possible from a diverse pool of candidates from diverse backgrounds, including employees, senior management and board positions.
   • Identifying specific factors to take account of in recruitment and selection processes to encourage diversity.
   • Ensure that employees, senior management and the board attend programs to increase awareness of issues in relation to the employment of staff from diverse backgrounds.
   • Developing a culture which takes account of domestic responsibilities of employees.
   • Any other strategies the Board or Remuneration Committee develops from time to time.
5. Monitoring and evaluationThe Chairman will monitor the scope and currency of the Diversity Policy.

   The Managing Director and senior management of the Company are responsible for implementing and reporting on the Measurable Objectives to the Chairman and the Board. This will include:

   • Ensuring that clear reporting processes and procedures are in place regarding implementation of this policy.
   • Measuring the effectiveness of the Company’s selection process and other diversity initiatives.
   • Measure the effectiveness of the Company’s diversity education and training.
   • Actively monitor recruitment, promotions and staff turnover within the Company and communicate statistics to the Board with reference to the policy

Mr Roderick McIllree is a corporate Geologist. A graduate of Curtin University of Technology School of Mines he has worked extensively throughout the globe from grassroots to mine development. After completing a Graduate Diploma in Mineral Economics, Roderick moved into the finance sector and worked as a mining analyst and equities advisor in mining and resources raising in excess of AU$250M from the Australian and international capital markets during the last decade. This broad based experience in terms of both capital markets and the minerals business provided the platform necessary to be an active member of the various teams that have established several successful mining ventures including Medusa Mining, Anvil Mining, and Kingsrose Mining.

Roderick was the founding Managing Director of Greenland Minerals and Energy Ltd, and planned and executed the push into Greenland with the acquisition of the Kvanefjeld project in 2007 being the outcome. During the last 6 years as the CEO of the company he has built an organisation of top level industry professionals, whilst successfully establishing the international profile of what is certain to be one the world’s largest mining operations of both heavy rare earths and uranium.

Read Recent ASX announcement :
Atmospheric Leaching Extracts 90-95% of Uranium and Heavy Rare Earths

23 February 2012

Read Full ASX announcement

Atmospheric Leaching Extracts 90-95% of Uranium and Heavy Rare Earths

Greenland Minerals and Energy Limited (“GMEL” or “the Company”) is pleased to provide an update on metallurgical developments that continue to enhance the Kvanefjeld multi-element project (rare earth elements, uranium, zinc). Kvanefjeld is recognised as one of the world’s largest resources of rare earth elements and uranium, and is favourably located near existing infrastructure in southern Greenland.

In June 2011, GMEL announced that it had identified a means to effectively beneficiate the Kvanefjeld REE-U mineralisation utilising froth flotation. This method was then piloted successfully under continuous operation to produce bulk mineral concentrates (announced October, 2011). Hydro-metallurgical leach studies on the mineral concentrates have now been completed.

Key outcomes:

• Beneficiation through froth flotation has now been well-tested, and reveals industry-leading upgrade ratios from ore to mineral concentrate representing <15% of the original mass
• Leach studies on the mineral concentrates demonstrate that the REE-uranium bearing minerals are highly amenable to conventional acid leach/solvent extraction
• Mineral concentrates can be leached under atmospheric conditions to yield extractions of 90-95% for uranium and heavy REEs
• Favourable leach solution chemistry allows for the generation of both heavy and light rare earth products
• Major advances in beneficiation and atmospheric leaching allow for the development of an enhanced, efficient flowsheet utilising conventional methods with low technical risk
• Developments eliminate the need for whole-of-ore pressure leaching and significantly reduce the scale of leach circuits, leading to a substantial reduction in capital expenditure
• The Company is looking to finalise its preferred flowsheet and development scenario through Q1 2012, before finalising pre-feasibility work on the Kvanefjeld project

Background
Greenland Minerals and Energy Limited (‘GMEL’ or ‘the Company’) has been advancing the Kvanefjeld project, located favourably in southern Greenland, since 2007. A large, outcropping multi-element resource of REEs, uranium and zinc has been defined at Kvanefjeld, with attention now focused on delineating resources at the high-grade satellite deposits Zones 2 and 3.

In parallel with resource development, the Company has been conducting comprehensive metallurgical and process development studies to optimise the Kvanefjeld processing route. A base-case flow sheet was established, as outlined in the Interim Pre-Feasibility Report on Kvanefjeld, released to the ASX in January 2010. The study drew upon extensive historical metallurgical studies generated by Danish Government research agencies, as well as initial studies conducted by GMEL through 2008 and 2009. The 2010 study clearly demonstrated that Kvanefjeld could be developed as a large-scale, long-life and cost effective producer of uranium and rare earth concentrates.

Through 2010 and 2011 focused metallurgical studies continued to advance processing alternatives. Breakthroughs in both mineral beneficiation and hydrometallurgical leaching have firmed up multiple flowsheet options, with trade off studies currently underway to establish the most robust scenario.

In 2011 GMEL commenced environmental and social impact assessments on the Kvanefjeld project, following an extensive phase of stakeholder engagement in Greenland. These studies are scheduled for completion in late 2012, and form key components of an exploitation (mining) license application. Infrastructure studies are also well-advanced. Engineering studies and stakeholder workshops have identified potential locations for key infrastructure items including port, processing plant, accommodation village and tailings storage facilities. Mining studies support a conventional open-pit operation, with a low-strip ratio (1:1) over life-of-mine.

TECHNICAL EVOLUTION

• In Q1 2010, GMEL released an Interim Pre-Feasibility report on the Kvanefjeld project. The study drew upon extensive historical metallurgical studies generated by Danish Government research agencies, as well as initial studies conducted by GMEL through 2008 and 2009. The 2010 study clearly demonstrated that Kvanefjeld could be developed as a large-scale, long-life and cost effective producer of uranium and rare earth concentrates.
• In 2011, GMEL released a new mineral resource estimate for Kvanefjeld that saw an increase in overall tonnage, and the definition of high grade domains through the upper level of the resource.  This allowed for an improvement in both REO and U3O8 grades in the mine schedule.
• Improvements were also made in REO recoveries in the base-case flowsheet that formed the basis of the Interim Pre-Feasibility report.
• Major beneficiation breakthroughs were achieved in 2011, with the establishment of a flotation method to concentrate the bulk of REOs and uranium into <15% of the original mass. The flotation circuit was scaled up and successfully piloted in Q3 2011. This development opened up a number of alternate flowsheet options to the base-case scenario.  By removing the non-economic minerals from the ore, conventional acid leaching methods can be considered along with alkaline leaching methods. Leach circuits can also be significantly downsized.

LEACHING OF FLOTATION CONCENTRATES

The beneficiation stage was piloted in Q3 2011, and importantly produced bulk mineral concentrates for metallurgical leach studies. These studies have now been completed with very positive results.

Controlled atmospheric leaching of the mineral concentrate in tanks produces extractions of 90-95% for both uranium and heavy REOs; the two main value drivers to the Kvanefjeld project. Light REOs are also recovered, but at a slightly lower level of extraction.

Following leaching, uranium and REOs can be recovered from pregnant leach solutions with commercially proven solvent extraction and ion exchange techniques.

The ability to achieve high extractions of uranium and heavy REOs using conventional acid solutions under atmospheric conditions is another critical breakthrough in establishing a cost-competitive, efficient flowsheet with low-technical risk. The synergies in leaching uranium and heavy REOs with a single leach circuit are anticipated to improve the economic metrics of the project significantly.

ESTABLISHMENT OF AN ENHANCED FLOWSHEET

The beneficiation and leaching developments form the basis of a flowsheet which consists of sequential froth flotation to firstly concentrate sphalerite (zinc sulphide), and then REE-uranium phospho-silicate minerals, which are then leached using conventional acid solutions under atmospheric conditions (Figure 1). This enhanced flowsheet is designed to produce uranium oxide, a heavy rare earth concentrate, light rare earth concentrate, and zinc concentrate (sphalerite). The Company views this scenario as a logical first phase of a staged development program.

The enhanced flowsheet represents an efficient and scalable development option. Its development reflects the ‘mineral-driven’ approach that the Company has taken throughout its metallurgical studies. The beneficiation-step provides a highly effective means of concentrating the dominant REE-uranium mineral group, from which uranium and REEs can then be simply and efficiently leached. The leach solution chemistry allows for the production of both heavy and light REE concentrates.

The Kvanefjeld project offers the potential for multiple product streams and revenue drivers. GMEL is primarily focused on optimising the project towards uranium and heavy REO production, which then provides greater flexibility in the marketing and pricing of light REE products.

Figure 1. A conceptual representation of the enhanced Kvanefjeld process flowsheet. Flotation produces a zinc concentrate, then a uranium- and REE-rich mineral concentrate that is leached using conventional acid solutions under atmospheric conditions. Uranium is recovered by solvent extraction prior to a stage of impurity removal before REOs are recovered. The majority of ore feed (gangue minerals) is stored as untreated flotation tailings, with only a small proportion (economic minerals) treated chemically to leach uranium and REOs.

In contrast to the base-case that featured an alkaline pressure leach circuit (uranium extraction) then an acid leach circuit (REO extraction), the enhanced flowsheet features a single leach circuit to extract both uranium and rare earths. That single leach circuit delivers high extraction rates from the flotation concentrate for both uranium and heavy REEs under atmospheric conditions. The leach circuit will also be of significantly smaller scale than those in the base-case as it will be treating a higher-grade mineral concentrate that represents <15% of the original ore mass.

As part of a staged development program future increases in uranium and rare earth output can be readily achieved through ramping-up mine throughput. This will be facilitated by expansion of the project’s global resource base following the imminent release of initial resource estimates for the Zones 2 and 3 satellite deposits.

The Company is extremely pleased with the technical developments that have been achieved by the in-house process development team in conjunction with external consultants, and is looking forward to finalising the pre-feasibility program in the coming months.

For the complete ASX announcement go to http://www.ggg.gl/docs/ASX-announcements/Technical-Breakthrough-Atmospheric-Leaching.pdf

Greenland Minerals & Energy [ASX: GGG]

Event
Dec.’11 Quarter Production & Cash Flow Report

Key Elements

• During the December quarter 2011, GGG’s mineral license EL 2010/02 was upgraded to the “right to exploit all economic components of the world‐class Kvanefjeld resource, pending outcomes of environmental and social impact assessments”. This was a major plus to the project’s future dynamics and paths the way for future development.
• Through the first half of 2011, GGG conducted extensive stakeholder engagement to establish the terms‐of‐reference for the Environmental Impact Statement [EIA] and [Social Impact Assessment [SIA]. These terms were approved by the Greenland Government in July 2011, and both the EIA and SIA are progressing on schedule. Both studies are expected to be completed by late 2012. The EIA and SIA form a critical part of an exploitation license application.
• A second zone of mineralisation, Zone 2, was subject to further drilling in the quarter with best results being 66m @ 474ppm U3O8 & 1.55% TREO, 60m @ 486ppm U3O8 & 1.15% TREO and 65m @ 417ppm U3O8 and 1.36% TREO. GGG is expecting to have its first JORC on this zone by the end of the March quarter 2012.
• Drilling at Zone 3 was also conducted during the quarter with a number of results expected in the next few weeks. Again management is expecting to release a JORC resource on this zone by the end of the March 2012 quarter.
• In June 2011, GGG announced it had established an effective means of beneficiating the Kvanefjeld ore to produce a high‐grade, low mass concentrate. This step has paved the way for a number of alternate development scenarios. Piloting of the beneficiation step was successfully conducted in September 2011, and the mineral concentrates produced provided the basis for hydro‐metallurgical leach studies. Detailed evaluation of the possible flow‐sheet scenarios is now underway taking into account project economics and sensitivities, market risk and technical risk. GGG is aiming to firm up the optimal process flow‐sheet for the project through Q1 2012.
• Agreement to buy-out the 39% equity partner [Westrip] in the project advanced with settlement by June 15th 2012. Pursuant to the buy-out agreement, GGG will pay the sum of A$39,000,000 in cash, 7,825,000 shares, and 5,000,000 options (ex $1.50) in a predetermined proportion to all shareholders of Westrip Holdings, the joint venture vehicle.
• In November 2011, GGG negotiated terms to acquire a 3% royalty on the net profits of GME A/S, the Greenlandic subsidiary company through which the Kvanefjeld project is owned. The acquisition of the 3% net profit royalty will be finalised when GGG completes the transaction with Westrip to move to 100% ownership of GME A/S, and thereby full ownership of the Kvanefjeld project. GMEL will issue 17,500,000 ordinary shares to acquire the royalty.

Project Location

Kvanefeld uranium, rare earth and speciality metals project

JORC Resources

Recommendation

Mr Michael Hutchinson, BSc.
Chairman

Mr Michael Hutchinson has had a distinguished career in resources and commodity trading, having served as Director of the London Metal Exchange, the world’s largest market in options and futures contracts on base and other metals. Michael has also served as Chairman of RBS Sempra Metals Limited, and Wogen PLC; a trader of off-exchange metals that sources metals worldwide for industrial end users. In addition, Mr Hutchinson previously served as a director of MG PLC.

Mr Hutchinson also served as Chairman of RBS Sempra Metals Limited, and Wogen PLC; a trader of off-exchange metals that sources metals worldwide for industrial end users. In addition, Mr Hutchinson previously served as a director of MG PLC.

Roderick McIllree, B.Sc. (Geology), Grad Dip. (Mineral Economics) MAusIMM
Managing Director

Mr Roderick McIllree is a corporate Geologist. A graduate of Curtin University of Technology School of Mines he has worked extensively throughout the globe from grassroots to mine development. After completing a Graduate Diploma in Mineral Economics, Roderick moved into the finance sector and worked as a mining analyst and equities advisor in the mining/resources finance sector raising in excess of AU$250M from the Australian and international capital markets during the last decade. This broad based experience in terms of both capital markets and the minerals business provided the platform necessary to be an active member of the various teams that have established several successful mining ventures including Medusa Mining, Anvil Mining, and Kingsrose Mining.

Roderick was the founding Managing Director of Greenland Minerals and Energy Ltd, and planned and executed the push into Greenland with the acquisition of the Kvanefjeld project in 2007 being the outcome. During the last 6 years as the CEO of the company he has built an organisation of top level industry professionals, whilst successfully establishing the international profile of what is certain to be one the world’s largest mining operations of both heavy rare earths and uranium.

Dr John Mair
Executive Director – Business Development

Dr John Mair completed a Bachelor of Science with Honours, majoring in geology, at the University of Western Australia, before commencing a career in the minerals sector, working in gold exploration and mining in Western Australia’s goldfields. He returned to the university system to undertake a PhD study on the gold and base metal deposits of Canada’s Yukon Territory and east-central Alaska. After completing the PhD in 2004, John returned to the minerals industry working in exploration for porphyry Cu-Au deposits in New South Wales, and gold deposits in China. In mid-2005 John took the position of Post-Doctoral Research Fellow at the University of British Columbia, with a focus on the metallogeny of southwest Alaska.

At completion of the project in 2006, John returned to the minerals industry as a project co-coordinator for Vancouver-based exploration group Geoinformatics Exploration Inc., who in alliance with Kennecott, were exploring for Cu-Mo-Au deposits in western North America from Mexico to Alaska. During this period, John planned and implemented large-scale exploration programs through remote northern British Columbia, as well as providing technical expertise to exploration programs in Alaska and Mexico. In mid-2008 John returned to Australia to join Greenland Minerals and Energy Limited as General Manager.

John has published several papers in leading international scientific journals on tectonics, structural geology, mineral deposit geology, igneous petrology and mineralogy. He has also presented at Masters short courses on ore deposit geology. Of particular relevance is his understanding of the behavior of rare earth elements, and is experienced in separating pure rare earth elements from a wide variety of rock types from start to finish. He is a member of the Society of Economic Geologists and the Australian Institute of Mining and Metallurgy.

Since 2008, John has been instrumental in the technical development of the Kvanefjeld project, and also in the corporate evolution of the company. He presents on the Company’s behalf in commercial, technical and political forums internationally.

Mr Simon Cato, B.A., MSDIA
Executive Director

Mr Simon Cato has had over 20 years capital markets experience in both broking and regulatory roles. He has been employed by the ASX in Sydney and in Perth in the company’s department which oversees the activities of listed companies.

Over the last 12 years he has been an executive director of two stockbroking firms and in those roles he has been involved in many aspects of broking including management issues such as credit control and reporting to regulatory bodies in the securities industry.

As a broker he has also been involved in the underwriting of a number of initial public offers and has been through the process of an initial public offer listing in a dual role of broker and director.

Mr Cato is also a director of Transactions Solutions International Limited, Advanced Share Registry Limited, Queste Communications Limited and Convergent Minerals Limited.

Mr Tony Ho, B. Com, CA, FAICD, FCIS
Non-Executive Director

Mr Tony Ho is an experienced company director having held executive directors and chief financial officer roles with a number of publicly listed companies.  Tony was executive director of Arthur Yates & Co Limited, retiring from that position in April 2002.  His corporate and governance experience include being chief financial officer/finance director of M.S. McLeod Holdings Limited, Galore Group Limited, the Edward H O’Brien group of companies and Volante Group Limited.

Mr Ho is currently a non-executive director of Dolomatrix International Limited where he chairs the Audit and Compliance Committee. He is also non-executive director and chairman of the Audit Committee of Apollo Minerals Limited Metal Bank  Limited, Hastings Rare Metals Limited and Mariposa Health Limited.

Mr Ho was a past non-executive director of Brazin Limited (September 1997 to January 2007) where he was also a member of the Audit and Remuneration Committees.

Prior to joining commerce, Mr Ho was a partner of Cox Johnston & Co, Chartered Accountants, which has since merged with Ernst & Young.

Mr Ho holds a Bachelor of Commerce degree from the University of New South Wales and is a member of the Institute of Chartered Accountants in Australia and a fellow of both the Chartered Institute of Company Secretaries and the Institute of Company Directors.

See More>>  Senior Management and Key Personnel

Read Full Company Announcement 23 March 2011

Greenland Minerals and Energy Limited (“GMEL” or “the Company”, ASX:GGG) is pleased to announce a new resource estimate for the Kvanefjeld multi-element project that further confirms Kvanefjeld’s status as one of the world’s most significant resources of rare earth elements and uranium.

Key Highlights of New Kvanefjeld Resource Estimate

• Total resource of 619 Mt (an increase of 162 Mt)*
• Indicated resources now 437 Mt (an increase of 72 Mt)*
• Contained metal inventory of 6.6 Mt TREO (Total Rare Earth Oxide), 350 Mlbs U3O8 and 3 Blbs Zn ( TREO includes 0.24 Mt heavy REO, 0.53 Mt Y2O3)
• Near surface, higher grade zones defined, including 122 Mt @ 1.4% TREO, 404ppm U3O8 (0.05% heavy REO, 0.12% Y2O3) Resources domained by geochemical and mineralogical characteristics, in line with metallurgical process development and mining studies

*Estimated resources at 150 ppm U3O8 cut-off, consistent with previous resource estimate

Introduction

The new resource estimate has been prepared by SRK Consulting (SRK), and is compliant with the code for reporting mineral resources set out by the Australian Joint Ore Reserve Committee (JORC). The significant improvements in the new estimate can be attributed to further drilling at Kvanefjeld undertaken during the 2009 and 2010 field seasons, the generation of a new geological model, and the development by GMEL in conjunction with SRK of a methodology to domain the unique multi-element resources. The higher grade, near surface zones that have now been defined provide the opportunity to significantly improve on mine scheduling, which will serve to strengthen the projects economics (e.g. at a 350ppm U₃O₈ cutoff – 122 Mt @ 1.4% TREO, 404 ppm U₃O₈, and at a 300ppm U₃O₈ cut-off – 200 Mt @ 1.3% TREO, 373ppm U₃O₈).

The resources of the northern Ilimaussaq complex are both extensive and unique, and offer the potential to produce both light and heavy rare earth products, uranium and zinc concentrates, fluoride compounds and a zirconium product. GMEL’s base-case mining scenario evaluates an operation to produce a rare earth concentrate and uranium oxide. Current metallurgical programs are advancing the process route to produce both a light and heavy rare earth product (including yttrium), uranium and zinc concentrates. The Company also has key mineralogical and beneficiation studies underway which aim to significantly enhance the project’s efficiency and economics.

The finalization of the new resource estimate follows the recent announcement of the discovery of substantial new multi-element (REE, U, Zn) deposits within the broader project area. These key developments serve to underline GMEL’s operations on the northern Ilimaussaq Complex as one of the world’s most strategically important emerging mineral projects.

Background

Greenland Minerals and Energy Ltd is a mineral exploration and development company operating in southern Greenland. The Company is primarily focused on advancing the Kvanefjeld multi-element project (both light and heavy rare earth elements, uranium, and zinc) through the feasibility phase and into mine development.

Kvanefjeld is located within the Company’s license over the northern Ilimaussaq Intrusive Complex; a unique geological entity that is highly prospective for specialty metals. Mineral resources at Kvanefjeld now stand at 619 Mt, and new deposits have recently been discovered in the broader project area (see dill intercepts reported in recent company announcements). Kvanefjeld is a highly-accessible resource that outcrops on a broad plateau, with the higher grade portions located close to ground surface.

An Interim Report on the Kvanefjeld pre-feasibility study was released in February 2010 that indicates the potential for the multi-element resources to sustain a large-scale mining operation for decades (for more information visit the Company’s website at http://www.ggg.gl).

Figure 1. View over GMEL’s multi-element project on the northern Ilimaussaq Complex in Greenland. Resources have been defined at Kvanefjeld, with Steenstrupfjeld, Zone 2 and Zone 3 representing new areas of significant mineralisation. See recent company announcements for drill results from these zones. The distance from Kvanefjeld to Zone 2 is 6 km. The deposits identified represent the outcropping expressions of a vast ore system that is interconnected at depth.

A New Resource Estimate for the Kvanefjeld REE-U-Zn Deposit

Since acquiring the Kvanefjeld project in 2007, GMEL has released three previous resource estimates as work programs have evolved. The most recent was released in June 2009. In 2010, GMEL set out to develop an improved resource estimate for Kvanefjeld, with a focus on converting Inferred resources into Indicated resources. The areas that were addressed included increasing the drill density in certain areas of the deposit, utilizing the increased understanding of the geological nature of the deposit to domain the resources, and to effectively break out the components of the multi-element resource in order to clearly understand the value distribution. Importantly, substantial developments in understanding the deposit have resulted in an improved geological model that is closely aligned with the Company’s metallurgical development programs, and ultimately, how the deposit will be mined.

SRK were engaged by GMEL in mid-2010 to prepare a resource update that includes data from the 2009 and 2010 drilling. The work conducted by SRK included a four-day site visit toward the end of the 2010 field season.

Apart from the additional holes, the major advancement from the previous (June 2009) estimate is the development of a technique to geologically domain the resources, resulting in division of the mineralized body into five new domains. SRK is currently compiling the full report to accompany the March 2011 resource update. The notes below summarize the key inputs, methods, and parameters used to prepare the estimation.

Lujavrite: Host-rock to REE-U-Zn Mineralisation

Multi-element REE-uranium-zinc mineralization is hosted by the black lujavrite rock type; an agpaitic nepheline syenite. The main body of lujavrite is a series of broadly sub-horizontal lenses, ranging from tens of metres to over 200 m in thickness. The lujavrite lenses are exposed at surface (outcropping). The lateral extents of the main lujavrite body are about 2200 m SW-NE, and 1000 m NW-SE.

Drilling

Table 1 summarises the metres and number of holes drilled at Kvanefjeld. All the drilling has been by diamond coring. Drill hole spacing is variable (Figure 2), but is approximately 70 m by 70 m across most of the northeast part of the deposit, and 140m by 140m in the southwest. The drill holes are generally vertical or close to vertical, and most are between 200m and 300m deep. The deepest hole (K174) is 500 m, extending down to 130 mRL.

The dominant core sizes used are BQ and NQ. Recovery is generally 100%, or close to 100%.

Table 1: Summary of Kvanefjeld drilling by purpose.
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Figure 2. Kvanefjeld drill hole layout: Green = 2010, Blue = 2009 (Geotechnical, Metallurgic, Sterilization), Orange = 2008, Red = 2007, White = 1977 and earlier.

Survey

Hole collars up until the end of 2009 were picked up by ASIAQ, a Greenland-based surveying company. The 2010 holes have not been surveyed and are stored in the drill hole database with their design coordinates. The GMEL holes, and many of the Historical holes, were downhole surveyed using an Auslog Deviation Tool. Orientation data at 0.5 m increments are stored in the drill hole database. End-of-hole Eastman camera shots are available for most of the historical holes that could not be accessed by the downhole surveying tool.

Assays

Assaying has been done selectively on half-core from the historical and GMEL drilling. In general, intervals not selected for assaying are from the non-mineralized lithologies outside the lujavrite host. Most samples are 1 m long, although minor variations from 1 m sampling were used in the historical drilling (1977 and earlier), in order to align sample boundaries to geological contacts.

The majority of the assays values from the mineralised zone were obtained by chemical analysis. Where no chemical analyses are available, spectral probe values for U₃O₈ have been included in the assay database. GMEL has previously done extensive comparison of chemical versus spectral results where both are both available for the same intervals. SRK has reviewed this work and agrees that it is reasonable to combine both data sources.

The assay table contains values for elements of economic significance at Kvanefjeld, such as the lanthanide series, Y, U, and Zn (Table 1). In addition, many other elements have been routinely included in the chemical analyses: Li, Be, F, Na, Mg, Al, P, S, K, Ca, Sc, Ti, Mn, Fe, Ga, Rb, Zr, Nb, Mo, Sn, Hf, Ta, Pb, and Th.

Table 2: Metres of assay data in the Kvanefjeld database

GMEL shipped all the half-core for assaying to Genalysis Laboratories in Perth, Western Australia. The remaining half-cores are stored at the Company’s operations base in Narsaq, Greenland. Samples were crushed to -3 mm, and then a 1 kg subsample was taken and pulverized to -75 μm. A 50 g split was taken and used for multi-element analysis. In early work done by GMEL, both four acid digest and fusion methods were used for many elements during the analytical step, but later GMEL concluded that four acid digest alone was sufficient. After digestion, the samples were tested by either Inductively Coupled Plasma (ICP) Mass Spectrometry, or Inductively Coupled Plasma Optical Emission Spectrometry, depending on the element being measured.

The key components of GMEL’s QA/QC program are:

1. Insertion of off-the-shelf REE and U Certified Reference Material from Ore Research Pty Ltd in the samples sent to Genalysis
2. Selection of 5-10% of the pulps from Genalysis to be check assayed by Ultratrace in Perth

SRK has analysed the QA/QC data, visited Genalysis’ lab, reviewed the sampling and QA/QC reports done by GMEL since 2007, and done statistical checks of different generations and methods of sampling against each other. SRK concludes that the overall quality of the data in the Kvanefjeld database is very good, and that resource estimation can confidently be based on these data.

Geological Modeling

The lujavrite contacts were modeled by SRK using Leapfrog software. All the lithological logging in the database was converted to an indicator variable, i.e. coded as 1 or 0 depending on whether lujavrite or another rock type had been logged. The indicator variable was composited to 5 m, and then a 3D contour shell was generated from the composites. The anisotropy used for contouring was set from partial wireframe surfaces built in areas where the orientation of the lujavrite contacts is obvious; these orientations were therefore used to influence in the contouring in areas where correlations are more ambiguous.

Once the lujavrite domain had been established, GMEL and SRK looked at a number of different elements and combinations of elements that could be used to identify subdomains. Inter-element relationships were identified by geostatistical modeling conducted by GMEL, as part of an ongoing geometallurgy program. One of the most useful markers was found to be the ratio of either Zr or Hf to the heaviest rare earth elements. In particular, plotting the ratios of Hf to Yb revealed five statistical groups, and these groups were found to represent broadly coherent entities in three dimensions with distinctive REE and U grade distributions. The subtle differences in the groupings identified correspond to subtle differences in the relative abundance of the key ore minerals, most notably steenstrupine, lovozerite group minerals, and eudialyte-group minerals. Domain contacts were wireframed by SRK based on the Hf:Yb geochemical marker.

Geostatistical Modeling

SRK prepared the block model of estimated grades using Isatis and Gemcom Surpac software. Estimations were performed for the following variables:

• LREO (sum of La₂O₃, CeO₂, Pr₆O₁₁, Nd₂O₃, Sm₂O₃)
• HREO (sum of Eu₂O₃, Gd₂O₃, Tb₄O₇, Dy₂O₃, Ho₂O₃, Er₂O₃, Tm₂O₃, Yb₂O₃, Lu₂O₃)
• Y₂O₃ (yttrium is not part of the lanthanide series, but is considered a REE, and behaves in a very similar manner to the heavy REEs of the lanthanide series)
• U₃O₈
• Zn

As noted above, there are more U₃O₈ assays in the database than REE and Zn assays, because spectral values are often available for U₃O₈ where no chemical assays were taken. One of the steps during data preparation was to use regression equations to infer missing LREO, HREO, Y₂O₃, and Zn values from the available U₃O₈ values. The correlations between REE, Zn, and U are sufficiently strong for this regression method to be viable.

The raw data were composited to 5 m for statistical analysis and estimation. No top-cutting or restriction on the influence of the highest grades was applied. For all domains and variables, distributions are closer to normal than lognormal, the very highest and lowest values are not far removed from the mean, and the coefficients of variation (ratio of standard deviation to mean) are typically in the range 0.3 to 0.5.

LREO, HREO, Y₂O₃, U₃O₈, and Zn were estimated by Ordinary Kriging in a single pass within each of the five lujavrite domains, and also outside the lujavrite as a sixth domain. The domain contacts were set as hard boundaries. The block model parameters are given in Table 3 below:

Table 3: Block model parameters

Bulk Density

A nominal value of 2.75 t/m³ was assigned to all blocks to convert volumes to tonnages. This value has been used for the previous Kvanefjeld resource estimations, and is supported by measurements taken on diamond drill core (at the completion of the 2008 field season 4212 density measurements had been taken).

Classification

SRK classified most of the Mineral Resource as Indicated. An Inferred component is made of up:

• Mineralisation outside the lujavrite
• Mineralisation in two isolated zones of lujavrite, intersected by only one drill hole each.
• Mineralisation at the lateral margins of the main lujavrite unit, and near the depth limit of the drilling coverage within the main lujavrite unit. Based on kriging quality and parameters generated during the Ordinary Kriging, SRK constructed a wireframe to separate the Indicated from the Inferred resources.

Table 3.1. Statement of Identified Mineral Resources, Kvanefjeld Multi-Element Project, March 2011.

Figure 3. Sections through the Kvanefjeld deposit. Drill stings are coloured red for lujavrite, and blue for non-lujavrite. Purple represents the main lujavrite body. The red line in the cross section represents the medium-coarse grained lujavrite (MC), the blue line represents the contact between domains 2 and 3 the green line represents the contact between domains 3 and 4, and orange represents the contact between domains 4 and 5.

Summary

The new resource estimate for the Kvanefjeld project prepared by SRK Consulting represents the culmination of numerous work programs conducted by GMEL over 2009 and 2010. A strong emphasis has been placed on developing a resource estimate that is in close alignment with the geological characteristics of the deposit. The new estimate confirms Kvanefjeld’s status as one of the world’s largest REE-U resources, and sees improvements in key aspects including overall resources (619 Mt), Indicated resources (437 Mt), the definition of near-surface, higher grade zones, and overall contained metal.

View over the broader geography of GMEL’s multi-element project on the northern Ilimaussaq Complex located in southern Greenland. The fjord system is open to the north Atlantic shipping lanes all year round. The distance from Narsaq to Narsarsuaq International Airport is 45km.