Critical updates continue to be positive for GMEL

Short term price target: A$0.90

Medium term target: A$1.80 to A$6.36 

RM Research is attracted to GGG because it has demonstrable scale with world class uranium and rare earth resources, a process flow sheet that is improving rapidly and ticking all the right boxes and the jurisdiction of Greenland, which has suffered from scepticism in the past, appears to be coming round to a pro-uranium position, albeit in the special context that is Kvanefjeld with its REE resource. 

We expect to see this resource expand significantly in the near term, technical issues to be systematically resolved in the mid-term and GGG put in place all the right building blocks to complete their DFS sometime early 2013. With challenging equity markets attention will turn to how they will fund the project but by the time the question is asked RM Research suspects GGG will introduce a strategic partner to take the company to the next stage.  

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Highlights Below: Speculative Buy Coverage Initiated 

• Important technical breakthroughs are being made on the metallurgy and an optimized process flow sheet is imminent;
• The JORC resource has been increased to a level (512Mlb U3O8, 9.22mt REE), giving further support to a world-class deposit capable of producing uranium and rare earth elements ("REE's") for many decades to come;
• The two principal products from Kvanefjeld, uranium and REE, have market structures undergoing significant change with most analysts forecasting buoyant pricing over the next several years;
• GGG is moving to 100% ownership of the Kvanefjeld Project in the process bringing the legal dispute with Westrip/Rimbal to an end, clearing the way for a strategic investor to step in and help finance the project;
• The Greenland government appears to be warming to the idea of uranium mining, certainly as a by-product of REE mining and it is expected that an exploitation license will be issued in the near term.
• The ability of GGG to secure the exploitation license will hinge on the quality of the EIS and SIA reports and their relevant conclusions.

With a contained metal content of over 9mt TREO and 500mlb U3O8 (defined over 2 deposits totaling 860mt) the project is no longer a question of size - the resource will sustain many decades of mining - but rather the focus now shifts to how to economically extract the REE and uranium.

The DFS, based on a finalized process flow sheet and tested in a pilot plant in 2H 2012, is likely to put technical and project execution questions to rest. With moderated capital costs, improving markets in uranium and REE's, the timing appears to be right for GGG.

The technical studies and pre-development activity undertaken by GGG during 2012 will be critical in determining the future of their flagship project and potentially set the timeline to development. With some key milestones out of the way and critical penultimate ones due for completion in the next 12 months.

RM Research believes it is now time for investors to get set in this exciting company.

RM Research, short term price target is A$0.90 with a medium term target of A$1.80 to A$6.36 as the project moves closer to the development phase and more emphasis is placed on cash flow based methods of valuation. 

RM Research believes the exploration target could be in the range of 2-10bt at similar grades which may approach, over time, the giant Olympic Dam Deposit of BHP Billiton Limited (ASX: BHP) of 8.3bt Measured, Inferred and Indicated Resources @ 0.88% Cu, 0.31g/t Au and 280ppm U3O8.