European Lithium must raise A$24M by May 7 to complete a US$835M all-share merger with Critical Metals, targeting Greenland’s Tanbreez rare earths project.

The clock is ticking for European Lithium as it races to seal a A$24 million shortfall in its balance sheet by May 7, the make-or-break date for its planned all-share merger with Critical Metals. The deal, valued at roughly US$835 million based on current exchange rates, would unite the two companies under a single roof and hand investors a pure-play bet on Greenland’s Tanbreez rare earths project.

Under the proposed terms, European Lithium shareholders would swap each of their existing shares for 0.035 units of Critical Metals stock. A tangled cross-shareholding structure will also be unwound as part of the transaction: European Lithium currently owns about 34% of Critical Metals’ outstanding shares, and those holdings will be cancelled upon completion. That move is expected to boost the free float of the combined group significantly.

A Cash Condition That Bites

The deal comes with a hard financial condition attached. European Lithium must hold A$330 million in cash reserves at closing. At the end of March, the company reported roughly A$306 million on its books — leaving management with a shortfall in the double-digit millions. An ongoing share buyback program, estimated to be consuming around A$12.6 million in liquidity, adds further pressure.

Critical Metals, for its part, brings its own firepower to the table. The company holds US$124 million in cash and has lined up a private placement that will see investors subscribe for US$60 million in new shares, strengthening the combined entity’s balance sheet for the development work ahead.

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Tanbreez Takes Centre Stage

The strategic prize driving the merger is the Tanbreez rare earths project in southern Greenland. Critical Metals already controls 92.5% of the asset, with European Lithium holding the remaining 7.5%. Consolidating full ownership is expected to simplify financing and project execution.

A preliminary study has pegged the value of the deposit at US$3 billion, underpinned by 4.7 billion tonnes of resources. Recent Australian test work has delivered encouraging results: concentrate grades of nearly 3% have been achieved, well above historical benchmarks, with recovery rates exceeding 85%. Offtake agreements already cover three-quarters of planned production.

The project benefits from year-round ice-free deepwater access, a significant logistical edge over many Arctic mining operations that face seasonal constraints. The US Export-Import Bank has committed US$120 million in financing. First production is targeted for late 2028 or early 2029.

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Wolfsberg Fades Into the Background

European Lithium’s Austrian Wolfsberg lithium project, meanwhile, is taking a back seat. The mining license has been extended until early 2028, but local opposition and a lack of environmental permits have stalled progress. A final investment decision with Saudi partner Obeikan is not expected before late 2026 at the earliest.

The immediate focus is squarely on the May 7 deadline. By that date, both boards must convert the non-binding heads of agreement into a binding contract. If they succeed, European Lithium shareholders are expected to vote on the transaction in the third quarter, with a final closing pencilled in for the second half of the year.

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