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Uranium gets boost in Greenland

A small Australian company has benefited from Greenland's decision to relax its hardline stance against uranium mining.
By · 29 Oct 2013
By ·
29 Oct 2013
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A small Australian company has benefited from Greenland's decision to relax its hardline stance against uranium mining.

Shares in ASX-listed junior Greenland Minerals and Energy soared by close to 10 per cent on Monday, after the Greenland government last week eased its opposition to the uranium sector.

After decades of "zero tolerance" towards uranium mining, the government narrowly voted to allow some mining in a bid to boost its economy.

Despite the decision being closely fought and the company still needing to apply for licences before any mining begins, the local market responded warmly to the policy change by lifting the stock by 3¢ to 35¢.

The rise continues a rally that began at 27¢ before the policy change being announced on Friday morning Australian time.

The stock is now testing its highest share price for the year, which was set in February.

While much of Greenland is above the Arctic circle, the company's flagship Kvanefjeld project is just below the circle in the south of Greenland.

Company managing director Roderick McIllree welcomed the move and said he now hoped to push ahead with environmental and social approvals and ultimately a mining licence application.

"The company now looks forward to continuing discussions on the Kvanefjeld project with Greenland stakeholders and regulators in order to finalise the development strategy of what is emerging as a world-class mining opportunity in Greenland," he said.

The ASX-listed company is not the only mining aspirant in Greenland, with miners from the UK and China also eyeing a share of the nation's mineral wealth.

The change of stance in Greenland is a rare bright spot for the uranium industry, which remains in the doldrums more than 30 months after the Fukushima nuclear crisis destroyed investor confidence in uranium.

Despite many predicting the sector would see some improvement in 2013, the spot price for uranium fell even further to about $US34 a pound in July and August.

The spot price has improved marginally in recent weeks to be fetching about $US35.25 a pound on Monday.

The continuing weakness in the uranium price has kept other local uranium stocks such as ERA, Toro Energy and Paladin Energy under pressure. Paladin has particularly struggled as low uranium prices have undermined its revenue streams and its attempts to sell a stake in its flagship Langer Heinrich mine in Namibia.

The predicament has some Paladin shareholders agitating for leadership change ahead of the company's annual meeting in Perth in November.

Meanwhile, Toro's attempts to lure major investors to help it develop Australia's next uranium mine at Wiluna in WA have been made harder by the low uranium price.
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Frequently Asked Questions about this Article…

Greenland Minerals and Energy's shares rose by nearly 10% after the Greenland government decided to relax its stance on uranium mining, which was seen as a positive development for the company.

Greenland's decision to ease its opposition to uranium mining marks a shift from its previous 'zero tolerance' policy, potentially boosting the local economy and providing opportunities for mining companies like Greenland Minerals and Energy.

The Kvanefjeld project is Greenland Minerals and Energy's flagship mining project located in the south of Greenland, just below the Arctic Circle. The company is looking to advance this project following Greenland's policy change on uranium mining.

The uranium market has been struggling, with prices remaining low since the Fukushima nuclear crisis. Although there was a slight improvement recently, the spot price for uranium is still around $US35.25 a pound.

Companies like Paladin Energy and Toro Energy are under pressure due to low uranium prices, which have affected their revenue streams and made it difficult to attract major investors for new projects.

Following the policy change, Greenland Minerals and Energy plans to pursue environmental and social approvals and apply for a mining license to advance the Kvanefjeld project.

Yes, besides Greenland Minerals and Energy, mining companies from the UK and China are also interested in exploring Greenland's mineral wealth.

The Fukushima nuclear crisis significantly damaged investor confidence in the uranium industry, leading to prolonged low prices and challenges for companies in the sector.