European Lithium Pivots Strategy, Elevates Greenland Rare Earths Project

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European Lithium enters the new year with a substantially reconfigured strategic focus. The company’s former flagship asset, the Wolfsberg lithium project in Austria, is being de-prioritized for the time being. Instead, investment attention is shifting decisively toward the Tanbreez rare earths project in Greenland, accessed through its stake in the US-listed Critical Metals Corp (CRML).

A notable discrepancy exists in the market’s current valuation. European Lithium’s approximate 45% stake in Critical Metals Corp, comprising around 53 million CRML shares, holds a theoretical value that exceeds European Lithium’s entire market capitalization. Market analysts attribute this discount primarily to perceived execution and project risks.

Nevertheless, in December, First Berlin Equity Research raised its price target for European Lithium by 57%, from €0.14 to €0.22. The research firm cited the company’s robust liquidity position and the secured offtake agreements already in place as key reasons for the upgrade. Collectively, European Lithium and Critical Metals hold cash reserves exceeding $205 million.

The New Core: Tanbreez Project Timeline and Commitments

The Tanbreez project in Greenland, one of the world's largest known rare earth deposits, is now central to the investment thesis. Critical Metals has already presold 75% of Tanbreez’s planned production to buyers in the United States and Europe. Contracts for the remaining 25% are slated to be finalized in early 2026.

Key operational milestones have been established:
- Downstream Processing: A 50/50 joint venture with the state-owned FPCU in Romania for downstream rare earth processing was signed in December 2025.
- US Offtakes: Supply agreements have been secured with Ucore and REalloys.
- Pilot Plant: A test and demonstration facility, acquired for approximately 3 million AUD, is scheduled for commissioning in Q2 2026.
- Production Start: Mining is planned to commence in 2027, with first production targeted for mid-2028.

Geopolitical Tailwinds and Funding Dialogue

The project benefits from a favorable geopolitical context. CEO Tony Sage reported advanced funding discussions with potential investors from Saudi Arabia, Qatar, Bahrain, Oman, and the United Arab Emirates. These nations are expanding their rare earth processing capabilities, leveraging lower energy costs and typically faster permitting processes compared to Western markets.

Concurrently, the US Trump administration is intensifying efforts to secure domestic supply chains for critical minerals. Government officials have held talks regarding a potential direct US investment in Critical Metals. The company has also applied for funding under the Defense Production Act.

Capital expenditure for the Greenland operation is estimated at around $500 million, while downstream processing facilities could require over $1 billion.

Wolfsberg on Hold, Share Price Volatility

CEO Tony Sage confirmed that the Wolfsberg lithium project will remain suspended until battery-grade lithium prices show a sustained recovery. This moves the former core project firmly to the back burner.

The stock’s performance in 5 reflected the strategic shift, posting gains between approximately 280% and 350% depending on the measurement period. December trading was particularly volatile, with shares fluctuating between 0.145 AUD and 0.235 AUD before closing the final trading day of the year at 0.155 AUD. This combination of strong annual gains and high volatility underscores how expectations for Tanbreez and the corporate pivot are now heavily factored into the share price.

Near-Term Catalysts for Re-rating

Three primary factors are expected to influence the share price in the coming months:
- The stock performance of Critical Metals Corp.
- Price developments in the global lithium market (relevant for a potential restart of Wolfsberg).
- Regulatory and operational progress at both the Tanbreez and Wolfsberg projects.

The first quarter of 2026 is shaping up as a critical period. News regarding binding offtake agreements for the remaining 25% of Tanbreez production, alongside potential US financing or equity participation from Middle Eastern investors, possesses the potential to significantly alter market sentiment toward European Lithium and recalibrate the current valuation gap.