Greenland’s Rare Earths Hang in the Balance as European Lithium Races a Cash Deadline

European Lithium faces a May 7 deadline to secure a binding merger with Critical Metals Corp, but a A$24M cash shortfall and share buyback jeopardize access to Greenland's Tanbreez heavy rare earths deposit.

The clock is running out on one of the year’s most closely watched mining mergers. European Lithium has until May 7 to ink a binding agreement for its proposed A$835 million all-share tie-up with Nasdaq-listed Critical Metals Corp. If the deal falls through, so does access to one of the world’s largest deposits of heavy rare earths — a prize that Western governments have been scrambling to secure.

At the heart of the impasse is a hard cash condition. The merger agreement requires European Lithium to hold at least A$330 million in liquid assets at closing. As of March 31, the company had roughly A$306 million on hand — a shortfall of A$24 million that is blocking the final signature.

Compounding the problem is a share buyback program launched on April 15. Management is spending up to A$12.6 million to repurchase as much as 10% of outstanding stock, a move designed to prop up the share price but one that is now draining the war chest at the worst possible moment. Under the exclusivity clauses governing the merger talks, European Lithium cannot issue new shares, take on debt, or entertain rival offers. Its options are effectively frozen.

The strategic prize that makes this deal so significant lies not in Europe but in Greenland. The Tanbreez project, one of the largest known deposits of heavy rare earths globally, contains substantial quantities of terbium and dysprosium — critical inputs for high-performance magnets used in electric vehicle motors and defense systems. China currently controls more than 80% of the global market for these metals, and Western governments have been urgently seeking alternative supply chains.

A pilot plant at Tanbreez is scheduled to begin operations in May 2026, with first ore production targeted for late 2028 or early 2029. The U.S. Export-Import Bank has already signed a letter of intent for up to US$120 million in project financing, and potential off-take partners from the European Union, the United States, and Saudi Arabia are evaluating the concentrate.

The merger would give European Lithium shareholders 0.035 Critical Metals shares for each of their existing shares, swapping ASX-listed equity for direct Nasdaq exposure. Critical Metals’ stock has been climbing, recently reaching nearly US$14 after a new supply agreement, and the geopolitical tailwinds are strong: the European Union currently sources all of its heavy rare earths from China and aims to slash that dependency by 2030.

But while the Greenland prize glitters, European Lithium’s legacy business is facing a serious setback. Austria’s Federal Administrative Court has overturned a key permit for the Wolfsberg lithium project in Carinthia. The court annulled a decision by the Carinthian regional government that had exempted Wolfsberg from a full environmental impact assessment on the grounds that the project site covered less than ten hectares. Under the new framework, each project will be evaluated individually regardless of size, and the earliest possible final investment decision has now been pushed back to late 2026.

The BMW offtake agreement — which calls for delivery of roughly 50,000 tonnes of battery-grade lithium hydroxide over six years starting in 2026, with an extension option — remains unaffected. Critical Metals has expressed confidence that the permit can be reissued under the new rules but acknowledges uncertainty around the timeline.

Auditors have already flagged going-concern warnings, pointing to persistent operating losses. European Lithium’s share price, currently A$0.365, suggests the market is already pricing in a significant chance of failure.

The decision comes down to the next few hours. If the board reaches a binding agreement by May 7, shareholders will vote on the merger in the third quarter. If the deadline passes without a deal, European Lithium loses its partner and faces dwindling cash reserves alone.