25 August 2010 Mr Malik Papas Without Prejudice Via email For your personal information Dear Malik You asked for my comments concerning Greenland Minerals & Energy. Firstly we own 39% of the project with a further approximate 6%, (of the remaining 61%), indirectly through the ownership of shares. We also have the rights to buy all of the rare earth production, which we would be willing to do. I believe Kvanefjeld is a world class deposit and it would definitely be in my interest for it to go ahead. However there are two things that override my desire to make money and these are: 1. The local people must want the project. Further it is not my right to try to change or alter local feeling; you must accept what the people decide and be prepared to walk away or wait. 1. The second is mine safety. In this case it is not safe as the company has failed for three years to do the work set out on day one. Why did they not do this work is unknown but I suggest it probably did not match their perceived aims of market price, higher market price, highest market price and then sell the project. None of which really goes well for such a complex program and on point 2 we will probably have to take our losses and leave/wait. What is really wrong with Kvanefjeld? It is not the uranium but other less well known problems that are the issue. My concern with the Company is that certain problems were discussed in 2007 and it was agreed the Company would try to solve the problems. It was also agreed that well worked the share price could exceed $5, perhaps $10 a share. As they did not address any of the problems my potential losses due to this incompetency are massive; and as time goes by the Company is looking more and more like a failure in Australia and elsewhere. I stress that although I would want the mine to go ahead it is not my right to try and change anyone’s mine, certainly not the Greenlanders. The hard line attempts by Greenland Minerals & Energy to change the government policy have been exceptionally embarrassing to me and my group and about the worst example of the “ugly” Australian abroad. As an Australian I can only apologise and say that as a 39% holder I will do all I can to get some common sense into a project that has not seen reason for some time. What sort of things need to be answered before I would feel comfortable in investing in the project so I don’t get sued is listed below. (I should point out that this company has put a security blanket over all of this so no one on my side is allowed to see any data- I wonder why). That not only includes me and my group, but I believe major shareholders, the Greenland Government and especially sad is Ole Ramlau and the former Prime Minister – who is faithfully pushing the company. To push the company without being allowed to see the data is unbelievable, especially when the data is not up to standard and even more so when you personally think it is so good. Problems: Below are a few briefly summarized problems: a. Environmental 1. Solid sodium fluoride dust – with some 4 to 9 million tons of this material floating around and only a gram or two needed to potentially kill humans – this is a major problem. Check the Net on the disaster at Mt Laki in Iceland in 1783 where much of the population of Iceland died after a volcanic eruption. 1. Fluoride ion in water At 1 ppm it’s good for teeth, at 20 ppm you get ulcers, at 130 ppm it will kill. At Lake Tasaq the levels would be at 40,000 ppm. (Lake Tasaq above the town of Narsaq is to be their tailings dam). Of course dust from the mullock heap, which overlooks the town will also carry the sodium fluoride, (which is very soluble in water to give the fluoride ion); to settle in Narsaq drinking water and would be disastrous. Solution to points 1 and 2 – I don’t know what the solution would be on the above two points, however Greenland Minerals & Energy have had three years to work this out but they have, it appears, to have not started. 1. Thorium How can you mine thorium at 1000+ ppm but can only bury it at a maximum of 130 ppm? (Impossible task) 1. Plant If the thorium goes to the plant where is it to report at the mullock dump, in the product, in the water or at the tailings dump? (The highly radioactive thorium is too high grade to put on the mullock or tailings dump, it cannot be sold and can’t go out with the product). In other words the solution to points 3 and 4 – again I don’t know. Perhaps if I was asked three years ago and had the money to spend I might have an answer. 1. Uranium Hexafluoride Uranium hexafluoride is a gas at about 50° C and it may form a gas during the extraction process – again appears to have had no research done on it to see if it does form, but with a process at 200o C lots of fluorine one should do research to see if it does form and how to prevent it. Geology The geology has been kept a secret but clearly we have lots of unanswered questions. Costs Greenland Minerals & Energy have considerably overestimated the sale prices in their pre-feasibility study; uranium from $32 to $80 per pound and REE from $4 to $14 per kilo. Similarly they appear to have overestimated capital costs, (but again we have not been given the back-up data). Thus on the economics of the project either side of the equation is not correct by a factor of three. The pre feasibility gets even more of a joke when their consultant engineers decided to check local labour costs so they asked groups in Norway and France, who replied they didn’t want work in Greenland. Thus they decided to use their own estimates. Oops. Why weren’t people in Greenland, Denmark or even Iceland consulted? When asked, the C.E.O. said they intended to overcome this by opening an office in Copenhagen to get prices etc. (Perhaps the locals in Greenland, such as GMS, would like the work or to even give a quote on this work). Funding Much was recently made of a massive new fund raising of $21 million (~ DKK 100 million), this again is a misrepresentation to some extent. Of this some $6 million (~ DKK 30 million) is largely from a fund trying to reduce their overall cost per share of a previous issue. This will be needed to largely cover costs to the years’ end. The other $15 million (~ DKK 75 million) is from Yorktown and is known in the industry as death spiral finance. Essentially the group sell shares, give you 90% or 95% of the money – then you issue them shares. Of course the result is usually the price keeps falling until the share price is zero or the Company changes its policy. Again as a substantial shareholder we have not been kept informed and have had no access to any documents, thus the true situation is possible worse, (or better), but without data who knows.
Posted on: Fri, 21 Mar 2014 15:51:30 +0000
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