European Lithium’s Greenland Offtake Deal Is Signed — But the Merger Path Remains Rocky

Binding offtake deal for dysprosium and terbium from Tanbreez project amid merger uncertainty, ASX suspension, and US defense procurement shift.

Critical Metals Corp, the Nasdaq-listed merger partner of European Lithium, has turned a non-binding memo into a firm 15-year offtake contract for heavy rare earths from the Tanbreez project in Greenland. The deal with REalloys Inc., signed on 21 May 2026, gives the US-based refiner priority rights to 15% of the mine’s annual output of dysprosium and terbium concentrates — materials that are indispensable in defence electronics and high-performance magnets. Two five-year extension options could stretch the arrangement to a quarter-century.

The binding agreement replaces an MoU from October last year and comes hot on the heels of Greenland’s approval in April 2026 to lift Critical Metals’ stake in Tanbreez to 92.5%. US procurement rules that bar Chinese rare earths from defence contracts from 2027 are the tailwind behind the timing. Tanbreez boasts more than 27% heavy rare earth oxides with low uranium and thorium levels, making it a sought-after western source. Shipments will be made FOB from southern Greenland, with pricing pegged to element-based international benchmarks.

Yet the positive headlines around the Tanbreez offtake sit alongside a deeply uncertain merger process that has left European Lithium shares suspended on the ASX since before the deal was finalised. The binding scheme implementation agreement, inked on 18 May, values each European Lithium share at around 0.58 Australian dollars — a 137% premium to the last undisturbed closing price of 0.415 AUD and 113% above the 20-day average. But the gap between that implied value and the suspended market price reveals the heavy discount investors are attaching to the deal’s execution risk.

The all-stock transaction, under which shareholders receive 0.035 Critical Metals shares for every European Lithium share, must navigate a gauntlet of approvals. As an Australian scheme of arrangement, it needs both a majority of voting shareholders and 75% of votes cast by value. The timetable calls for a scheme booklet in July or August, shareholder meetings in August or September, and then court and regulatory sign-offs. The ASX had expected to lift the trading halt after publication of the final agreement, which was due on 20 May, but the suspension remains — underscoring the market’s caution.

Governance concerns are an extra layer of complexity. Tony Sage serves as both executive chairman of European Lithium and CEO of Critical Metals, a conflict that has prompted an independent committee to safeguard minority interests. On top of that, the ASX is formally investigating whether European Lithium violated its continuous disclosure obligations. The company has countered that the negotiations only became material once the non-binding MoU was signed in late April.

While Tanbreez advances on the offtake and permitting front — the pilot plant in Qaqortoq is finished and a 150-tonne bulk sample is planned for June, though an outstanding local operating permit could still block it — the other flagship project is hitting turbulence. The Wolfsberg lithium project in Austria saw its simplified environmental assessment overturned by the Federal Administrative Court in November 2025. The court has ordered the Carinthian state government to reassess, pushing the final investment decision to at least the end of 2026. The mining licence runs only until early 2028, but BMW’s offtake contract remains intact.

One condition of the merger has been cleared: Critical Metals sold 2.5 million treasury shares for 45 million Australian dollars, boosting its cash reserves to approximately 356 million — well above the required minimum of 330 million. European Lithium, meanwhile, is pressing ahead with a share buyback of up to 10% of issued capital, capped at 12.6 million Australian dollars, with cancelled shares reducing the float.

Production at Tanbreez is expected to begin between late 2028 and early 2029, targeting annual output of roughly 85,000 tonnes of rare earth oxides. Wolfsberg’s spodumene production is scheduled for the same window. Yet whether the merger that is supposed to unlock these assets actually gets over the line will not be clear until the autumn, when Australian shareholders, courts and regulators have their final say.