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.<\/p>\n
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.<\/p>\n
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.<\/p>\n
A Cash Condition That Bites<\/p>\n
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 \u2014 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.<\/p>\n
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.<\/p>\n
Should investors sell immediately? Or is it worth buying European Lithium?<\/a><\/p>\n Tanbreez Takes Centre Stage<\/p>\n 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.<\/p>\n 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.<\/p>\n 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.<\/p>\n