Greenland Rare Earths Fuel European Lithium's Rally and Merger Momentum

European Lithium shares jump 75% after signing binding offtake for Greenland rare earths and formal merger with Critical Metals Corp, targeting production by 2027.

European Lithium’s shares have climbed 75% in four weeks on the ASX, touching a daily high of A$0.45 on Friday with a near-10% gain. The surge reflects accumulating confidence in two interlocking catalysts: a binding offtake agreement for heavy rare earths from Greenland and a formal merger schedule with Nasdaq-listed Critical Metals Corp.

The critical anchor for both companies is the Tanbreez project in Greenland, one of the most promising deposits of heavy rare earths outside China. Critical Metals, which is absorbing European Lithium in an all-share transaction, has now locked in a 15-year purchase agreement with REalloys Inc. The deal covers 15% of Tanbreez’s annual concentrate production and grants REalloys preferential access to dysprosium and terbium — metals essential for high-performance magnets used in defence systems and electric-vehicle motors. A price floor embedded in the contract will rise 2% annually, linked to ex-China rare earth indices.

The merger itself is running on a tight timetable. Both parties signed the binding Scheme Implementation Deed earlier this week, setting up shareholder votes in August or September 2026. The scheme booklet, containing an independent expert’s report and full transaction terms, is expected to be dispatched in July or August. Under the deal, European Lithium shareholders will receive 0.035 Critical Metals shares for each of their own shares, representing roughly 41% of the combined group.

A key condition of the transaction requires European Lithium to hold net cash or liquid assets of at least A$330 million at the time of implementation. As of late March 2026, the company reported A$306 million in cash and about US$18 million in marketable securities — leaving a narrow gap to close.

On Critical Metals’ side, the accounts show the cost of building a rare earth producer. The company ended last week with approximately 146.9 million shares outstanding, closing at US$10.98. Adjusted cash stood at US$135.7 million, but the operating loss widened to US$153.3 million against just US$769,000 in revenue. A separate SEC filing on May 22 registered up to 20.65 million shares for potential resale by existing holders, including participants in an April private placement. Critical Metals itself receives no proceeds from those sales.

Despite the deep losses, Freedom Broker analysts raised their price target on Critical Metals from US$15 to US$17, maintaining a buy rating and citing milestones at Tanbreez. The target remains commercial production by January 2027 — ahead of expected US Department of Defence restrictions on rare earth magnets sourced from problematic countries.

The broader lithium sector has been gaining momentum too, helping European Lithium’s rally. Core Lithium restarted mining at the Finniss operation this week, and Mineral Resources confirmed production is beginning at Bald Hill. Rising battery-metal prices are encouraging mine reopenings across Australia.

If the merger completes as planned, the combined entity will trade on Nasdaq as a strategic minerals heavyweight. The next critical period falls in July and August, when European Lithium shareholders will cast their vote on a deal that weds a Greenland resource to Western supply-chain ambitions.