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Graco2019 ANNUAL REPORT
MATERIALS
FOR AN
ENERGY
EFFICIENT
FUTURE
Contents
Corporate Directory
2019 Highlights
Chairman’s letter to shareholders
Operations report
Annual Financial Report
Directors’ report
Auditor’s independence declaration
Independent auditor’s report
Director’s declaration
Consolidated statement of profit or loss and
other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the financial statements
1 General information
2 Significant accounting policies
3 Critical accounting estimates and judgments
4 Segmented information
5 Revenue
6 Expenditure
7
8 Cash and equivalents
9 Trade and receivables
Income tax expense
Lease liability
Issued capital
10 Other assets
11 Property plant and equipment
12 Right-of-use leased assets
13 Capitalised exploration and evaluation expenditure
14 Trade and other payables
15
16 Provisions
17
18 Reserves
19 Dividends
20 Accumulated loss
21
22 Commitments for expenditure
23 Subsidiaries
24 Notes to the statement of cash flows
25 Share based payments
26 Financial instruments
27 Key management personnel compensation
28 Key management personnel equity holdings
29 Transactions with related parties
29 Parent company information
30 Remuneration of auditors
31 Subsequent events
Loss per share
Additional stock exchange information
DIRECTORS
Anthony Ho
Non-executive Chairman
John Mair
Managing Director
Simon Cato
Non-executive Director
Xiaolei Guo
Non-executive Director
CHIEF FINANCIAL
OFFICER/COMPANY SECRETARY
Miles Guy
REGISTERED AND HEAD OFFICE
Unit 7, 100 Railway Road
Subiaco WA 6008
Greenland
Nuugaarmiunt B-847
3921 Narsaq, Greenland
HOME STOCK EXCHANGE
Australian Securities Exchange, Perth
Code: GGG
AUDITORS
Deloitte Touche Tohmatsu
SHARE REGISTRY
Advanced Share Registry
110 Stirling Highzway
Nedlands WA 6009
COMPANY WEBSITE
www.ggg.gl
ABN
85 118 463 004
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2019 HIGHLIGHTS
Greenland hits
international headlines;
rare earths in the spotlight
Outstanding optimisation
outcomes emphasize Kvanefjeld’s
global significance
Community ties
strengthened
via memorandum of
understanding and
ongoing engagement
Major permitting progress; social impact
assessment accepted for public consultation,
environmental studies advanced
1
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT Chairman's Letter
Dear Fellow Shareholder,
In 2019, Greenland hit the international headlines, boosting its profile and mainstream awareness.
This coincided with the finalization of optimization studies on the Kvanefjeld rare earth project that
demonstrated Kvanefjeld is one of, if not the most, significant emerging rare earth projects globally.
Given the recognition of key rare earths, particularly the ‘magnet metals’, as critical elements with
looming supply shortage, a new level of international interest was focused on the Kvanefjeld Project
and our Company’s future strategy and plans. Visitors to the town of Narsaq to visit the project area
included international government representatives, journalists from international media outlets, along
with documentary makers.
The excellent outcomes of the optimization program stemmed from what has been a very productive
and cooperative working relationship with Shenghe Resources Holding Co Ltd, and fulfilled a vision
of how best to maximise the Kvanefjeld projects strengths that was conceived in 2016. Under the
guidance of Shenghe’s internationally renowned metallurgical expertise, a joint technical committee
oversaw work programs in China and Australia. The outcomes of this work, along with markedly
improved civil engineering costs, led to circa 40% reductions in both capital and operating costs. This
has Kvanefjeld positioned as one of the lowest-cost emerging producers that has a unique production
profile rich in neodymium, praseodymium, terbium and dysprosium.
In parallel to optimistation studies, project permitting continued to be a key focal point of activity. It
was a significant milestone to have the social impact assessment accepted for public consultation,
and substantial progress was made toward finalizing the environmental impact assessment. A
heighted level of communication and guidance from the Greenland Government has been of great
assistance in focusing additional studies that are now being finalized. These have been conducted by
carefully selected independent specialists, and we continue to apply highly experienced consultants
to ensure the EIA is thorough, and of a high standard.
This year we aim to work in close communication with the Greenland Government to move the
project through a public consultation phase that we can then follow-up to finalise the requirements
of an exploitation license. We continue to work with Shenghe to advance our development plans,
where greater focus will shift to off-take and marketing discussions and the downstream processing
strategy. Building ties to European industry will build on positive initiatives undertaken in 2019,
which included Shenghe Chairman presenting at the Confederation of Danish Industry’s Greenland
conference in December. The COVID 19 virus will unquestionably influence global logistics through
2020, and we will look to keep shareholders informed as best as we can through this period.
Finally, I’d like to acknowledge the diligent and committed efforts of our staff in Greenland and
Australia, our Shenghe colleagues, and our key consultants.
Yours sincerely
Anthony Ho
Non-executive Chairman
2
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT KVANEFJELD IS ONE OF, IF
NOT THE MOST, SIGNIFICANT
EMERGING RARE EARTH
PROJECTS GLOBALLY.
3
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT Operations Report
2019 OVERVIEW AND REVIEW OF OPERATIONS
In 2019, Greenland’s international profile was boosted substantially, on the back of
heightened interest from the United States that reflected Greenland’s natural resource
endowment and strategic location. Rare earth elements are central to the growing wave
of interest in Greenland’s resources sector owing to their criticality to clean energy
generation and efficient energy use, coupled with limited global supply networks.
Rare earth permanent magnets will see drastic
increases in demand in the coming years
due to the roll out of electric vehicles, wind
turbines, amongst an ever-growing list of other
applications. These magnets utilise the properties
of neodymium, praseodymium, terbium and
dysprosium that will all see unprecedented
demand increases as a result.
Greenland Minerals Ltd’s 100% owned Kvanefjeld
rare earth project is one of the most significant
emerging rare earth projects globally. Favourably
located in southern Greenland, a region which
features a mild climate and the benefits of
existing infrastructure, Kvanefjeld is well-placed
to be developed as a major new supplier of
critical rare earth materials. The Project is
underpinned by one of the largest code-compliant
(JORC, CIM) resources and reserves of rare
earths globally. The unique rare earth minerals
at Kvanefjeld can be effectively processed with a
simple, highly efficient methodology that has been
rigorously developed and tested in conjunction
major shareholder and specialist international
rare earth supplier Shenghe Resources Holding
Co Ltd (Shenghe).
In 2019, GML finalised project optimisation that
delivered exceptional results which included
major reductions to both capital and operating
costs, and a highly competitive cost structure.
Project optimisation drew on metallurgical
studies that were jointly undertaken with
Shenghe through 2017-2019, as well as civil
engineering studies based on field investigations
in southern Greenland by a collective of specialist
engineering firms. This has Kvanefjeld positioned
to be one of the lowest cost, largest producers of
all key rare earths (Nd, Pr, Tb, Dy), over an initial
37 year mine life.
Substantial progress was also made in finalising
the Environmental Impact Assessment (EIA), a
key component of project permitting. EIA reviews
were received in October, and subsequent
meetings with Greenland’s Environmental Agency
for Mineral Resource Activities EAMRA resulted in
a clear and structured approach to finalising the
EIA. Many areas of the EIA are closed out and
additional work programs are set for completion
in the first quarter of 2020. The EIA for Kvanefjeld
draws on many technical studies by a cross
section of specialist independent consultants
that have been carefully selected based on their
reputation and competency. The process has
been designed to be thorough and rigorous in
understanding and investigating risks associated
with project development, operation and closure.
Growing Geopolitical Interest
In May, the Company was an invited participant
in the ‘Future Greenland’ conference, held in
Nuuk, where GML’s Managing Director Dr John
Mair presented in the mining session. During this
period Dr Mair had the opportunity to meet with
4
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT
the US Ambassador to Denmark Carla Sands
and her aids to discuss Greenland’s emerging
mining sector, the rare earth industry, and the
status and outlook of the Kvanefjeld Project.
Through early July, GML participated in a joint
research program conducted by Greenland’s
Department of Geology and the US Geological
Survey that aimed to produce updated geological
and geophysical data over southern Greenland’s
rare metal province. As part of this initiative, the
research team spent several days studying the
geology of the Kvanefjeld Project area through
visiting outcropping ore zones and examining
drill cores at the Company’s operations base in
Narsaq. Datasets along with study outcomes are
to be made freely available and aim to continue
to build the profile of one of Greenland’s most
significant mineral provinces. Following the
USGS field work, Ambassador Sands visited
southern Greenland and GML’s operations
base in Narsaq. The US Greenlandic Affairs
Officer Mr Sung Choi also visited the Kvanefjeld
Project where Ib Laursen, GML’s operations
manager based in Narsaq, provided a tour
of the Kvanefjeld mine area and the planned
infrastructure layout.
In early December, GML’s Managing Director
joined a delegation from Shenghe, GML’s
largest shareholder and strategic partner, to
participate in the Confederation of Danish
Industry’s Greenland-focussed conference, held
in Copenhagen. Shenghe were represented by
Mr Hu Zesong (Chairman and CEO), Mr Guo
Xiaolei (Secretary to the Board, Shenghe, GML
Director), and Ms Jean Fan (Assistant Manager,
Investment and Development, Shenghe).
This was an excellent opportunity for Shenghe’s
Chairman, Mr Hu Zesong, to present an overview
to a cross section of industry, government and
media representatives from Greenland and
Denmark on the outlook for the rare earth sector,
Shenghe’s international growth strategy and
significant role the Kvanefjeld Project can play.
The visit to Denmark allowed for a productive
meeting of the Shenghe/GML delegation with
Greenland’s Minister for Mineral Resources,
Mr Vittus Qujaukitsoq, to discuss the forward
strategy for the Kvanefjeld Project, and its
importance to future rare earth supply. Meetings
were also held with Mr Brian Buss, head of
Greenland’s business association, as well as
Danish government representatives.
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT
5
Operations Report (continued)
Permitting Update
Project permitting remains a key point of
Company focus. Over the last couple of years
GML has worked through a guidance, or review
phase, that is aimed at preparing social and
environmental impact assessments for public
consultation, and the subsequent production
and approval of a white paper. The scope of the
impact assessments is framed by the ‘terms of
reference’, which were approved after public
consultation in late 2015.
Changes to the administrative structure in 2019
that relates to mineral resources have aimed to
centralise responsibilities with areas of Social
Impact Assessments (SIA) and Impact Benefit
Agreements (IBA) shifting from the Ministry of
Industry and Energy, back to the Ministry for
Mineral Resources and Labour.
A new minerals strategy has also been put
forward for consultation by the Greenland
Government to streamline the permitting process
and make it faster, simpler and more transparent.
This reflects a growing awareness that more can
be done to improve the regulatory conditions for
the minerals industry, and that improvements are
required. In the Company’s view, it is positive to
see industry feedback taken on board.
For GML, a lot of progress was made in 2019
on finalising the Kvanefjeld mining license
application for public consultation. The SIA
and Maritime Safety Study (MSS) have been
accepted for public consultation. The latest
feedback on the EIA, received in mid-October,
has been presented in a considerably more
structured approach with feedback focussed on
isolating a small number of priority areas (Type
1 issues) where further information has been
requested prior to a public consultation. This
presents a much clearer and more structured
path forward.
Social Impact
Assessment
In late March, GML announced an important
permitting milestone, with the SIA review and
guidance period coming to completion and the
SIA accepted for public consultation.
Greenland’s Mineral Resources Act requires
that applicants for mining exploitation licences
submit a Social Impact Assessment, and
a complementary Environmental Impact
Assessment (“EIA”), as part of their applications.
Both assessments must be made available
for public consultation once they have been
reviewed and accepted by the relevant
Greenlandic authorities.
An SIA is reviewed by the Ministry of Industry
and Energy (“MIE”) and an EIA is reviewed by
Greenland’s Environmental Agency for Mineral
Resource Activities (EAMRA).
The purpose of public consultation is to allow an
opportunity for stakeholders to provide feedback
on impact assessments thereby helping to
ensure that the all impacts and potential issues
are described and addressed to the satisfaction
of local communities.
Importantly, GML has conducted consistent
stakeholder meetings such that the SIA and
EIA have been developed with considerable
stakeholder input.
The Company’s SIA was prepared by Shared
Resources Pty Ltd, an independent Australian
consultant specialising in international social
impact assessments for natural resources
projects incorporating best practice benchmarks
and the International Finance Corporation’s
“Performance Standards”. The SIA has been
translated to Greenlandic and Danish and is
standing by for the public consultation phase
when the EIA has been finalised.
THE PURPOSE OF PUBLIC CONSULTATION IS TO ALLOW
AN OPPORTUNITY FOR STAKEHOLDERS TO PROVIDE
FEEDBACK ON IMPACT ASSESSMENTS THEREBY
HELPING TO ENSURE THAT THE ALL IMPACTS AND
POTENTIAL ISSUES ARE DESCRIBED AND ADDRESSED
TO THE SATISFACTION OF LOCAL COMMUNITIES.
6
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT Environmental Impact
Assessment
In June, GML lodged the revised EIA with the
Greenland Government. The EIA included
additional background studies that were updated
by independent specialist consultants following
ongoing guidance by the Greenland Government
and their advisory groups. This did not change
the outcomes of the EIA but continued to build
an in-depth understanding of the project and all
potential impacts and associated risks.
The EIA for Kvanefjeld was reviewed through
August – September 2019, with feedback received
from Greenland’s Environmental Agency for
Mineral Resource Activities (EAMRA) in October.
In the review feedback EAMRA separated
outstanding environmental issues into two
categories: Type 1; those where EAMRA require
more information before the EIA can be accepted
for public consultation; and Type 2; which can
be answered after the process of formal public
consultation has been completed and finalised
before exploitation plans are approved. This
represents an important step as it brings further
work down to a small subset of areas in order to
see the EIA accepted for public consultation.
Through November and early December GML
conducted a series of constructive meetings with
EAMRA and their advisors, to discuss Type 1
issues and the approach to finalising the EIA.
Scopes of work for additional studies were
reviewed, and additional work programs were
commissioned.
Most of the supplemental work relates to tailings
storage facilities: more detailed modelling of
scenarios for embankment failure; more detailed
review of seismic conditions to validate long
term stability of tailings structures; and a request
to investigate the viability of an alternative “dry
closure” option for the planned tailings facility.
Independent specialist consultant Klohn Crippen
Berger (KCB) have been engaged to perform
the supplemental tailings studies. Work by KCB
will build on existing tailings studies conducted
by AMEC Foster Wheeler (now Wood Group).
KCB are a new consultant to contribute to the
project and will provide an external assessment
of existing environmental designs. Their work on
the tailings-related Type 1 issues was completed
in March 2020.
Arcadis, who have conducted several studies on
the Kvanefjeld Project on radiation, were retained
by GML to conduct supplemental work and
further clarify the outcomes of existing studies.
The supplemental studies will add further detail
to the EIA and is an important step in developing
the EIA to the highest standards possible.
Through this rigorous approach GML will
provide confidence to Greenland stakeholders
that the environmental impact of the Kvanefjeld
Project has been investigated rigorously. The
supplemental studies will build upon previous
assessments and are not addressing any gap or
any new environmentally critical issues.
All supplemental studies are scheduled to
be completed in Q1, 2020, and an updated
EIA incorporating the supplemental studies to
address all Type 1 issues will be lodged with the
Greenland Government around end of Q1 2020.
7
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT Operations Report (continued)
Participation Agreement with
South Greenland Community
In early March, GML entered a Memorandum
of Understanding with Kommune Kujalleq and
Kujalleq Business Council establishing the
three parties’ intention to conclude a Participation
Agreement supporting and supplementing the
Impact Benefit Agreement (IBA) which will be part
of a successful mining licence application for the
Company’s Kvanefjeld Project.
Kommune Kujalleq, headquartered in Qaqortoq,
is the municipal authority for the region of
southern Greenland which includes Narsaq and
the Kvanefjeld Project areas. Kujalleq Business
Council is the energetic local organisation
representing the local workforce and businesses.
In the Memorandum of Understanding, signed at
the PDAC Conference in Toronto on 4th March
2019, the three Parties have agreed to a timeframe
and a process for negotiating a Participation
Agreement which will cover community capacity
development in terms of needs identification and
skills development for the local workforce and
businesses. The parties have also agreed on
the importance of sharing knowledge about local
culture and land use practices with the projected
influx of Project workers.
The Memorandum is a demonstration of
community support for the Project, and a
familiarity with the Company that reflects many
years of stakeholder engagement. It marks an
important step in increased dialogue, as GML
works to establish clear toward project timelines
with the Greenland Government, which benefits
planning for local businesses and stakeholders.
8
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT COMMUNITY TIES
STRENGTHENED VIA
MEMORANDUM OF
UNDERSTANDING AND
ONGOING ENGAGEMENT
Technical Work – Laboratory
Metallurgical test work continued in Q1 and
Q2 with a main focus on the development of
a simple single stage leach for the recovery
of rare earths. The simplified leach process
significantly reduces capital and operating costs
and process complexity. The leach process
results in better overall rare earth recoveries with
the simultaneous dissolution of rare earths and
uranium. Vendor filtration test work confirmed
good filterability of the leach residues and high
wash efficiencies.
Following the completion of technical studies
in Q1 and Q2 that focussed on metallurgical
flowsheet optimisation, laboratory work shifted to
further improve radionuclide removal. This has
been highly successful with the elimination of
thorium and residual uranium from intermediate
rare earth concentrate, without rare earth
losses. This process also removes other non-
radioactive species to improve the overall purity
of intermediate rare earth concentrates. Test
work in this area is ongoing and will ensure
that intermediate products can be exported to
a number of facilities for further processing to
produce individual rare earth oxides and metals.
SGS Oretest Laboratories (Perth) has also
been successful in producing uranium oxide
(non-commercial quantities) from Kvanefjeld
ore utilising the optimised flowsheet. A detailed
chemical analysis was performed on the
resulting uranium precipitate which confirmed
that it meets all relevant specifications for a
commercial uranium oxide product (meets all
the specifications of the Orano and ConverDyn
converters). SGS Oretest Laboratories is
an independent laboratory which has full
accreditation in radiation testing and as a
storage facility.
9
GREENLAND MINERALS LIMITED – 2019 ANNUAL REPORT Operations Report (continued)
Kvanefjeld Project – Optimised Feasibility
Outcomes
The optimisation of the Kvanefjeld Project, which
has been underway since 2017, has focused
on metallurgical performance and civil design
and engineering. These studies built on the
2016 Kvanefjeld Feasibility Study, following the
commencement of cooperation with Shenghe.
The outcomes of these studies were finalised
during Q2, 2019. The reduction in the capital
cost estimate is the result of optimisation studies
covering all elements of the Project from the
flowsheet to civil construction. The results of
individual optimisation studies have been the
subject of progressive updates to the market
since 2016.
Key Outcomes:
Capital cost reduced by 40% to
US$505M
Operating costs reduced by 40%,
resulting in unit costs of
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