GGG Greenland Minerals Limited

Greenland's government Thursday partially changed a decades-old ban on uranium mining in one of its most significant acts since gaining limited autonomy from Denmark a year ago.

The move could open the icebound and sparsely populated country to exploration for uranium and rare earths and gives a nod to an Australian mining company to develop a mine plan for what the company says is the world's biggest undeveloped deposit of rare earths.

Months of intense debate within the country and negotiations with mining companies preceded the decision as the government sought to balance environmental concerns with the need for revenue to wean Greenland off Danish aid, a necessary step towards achieving full independence.

In its decision, Greenland's government amended the terms of its exploration licensing to allow for the exploration of radioactive elements such as uranium and thorium on a case-by-case basis, said Lars Emil Johansen, a former prime minister of Greenland who is chairman of Australian mining company Greenland Minerals & Energy Ltd.'s (GGG.AU) local subsidiary.

"We just got the information that the government has made a decision to change the uranium mining policy," he said. "It's not permission to start mining, but it is permission to make studies for mines with uranium. It's a very big step forward for the company."

Government officials were unavailable for comment. A press release in Greenlandic has been issued. The amendment is a reversal to the zero-tolerance policy that was instituted in the 1980s. The government is still conducting a full review of mining radioactive elements, which is expected to produce a broader decision on mining.

The ban's removal brings immediate benefits to Greenland Minerals & Energy, which owns 61% of the uranium-rare earth deposit Kvanefjeld in southwest Greenland.

Under the ban, the company was unable to develop and mine the rare earths deposit because of its uranium content.

But concurrent with Thursday's decision, Greenland's government approved an updated exploration license for Greenland Minerals that will allow it to develop a mine plan for both rare earths and uranium at the Kvanefjeld deposit. The company will still need to obtain a license to mine the deposit after developing a mine plan.

The Australian mining company said Kvanefjeld is the world's second-largest rare earths deposit and the sixth-largest uranium deposit. A prefeasibility study estimates the mine can produce 43,729 metric tons of rare earths oxides and 3,895 tons of uranium a year during a 23-year lifespan.

Rare earths are a small group of metals that are almost all produced in China. Their increasing use in green technologies and military applications combined with China's monopoly of supply have prompted the European Union and the U.S. to declare them strategic metals.

If the company satisfies the government's health, safety and environmental requirements after a feasibility study, an exploitation license can be issued to build a mine, said Greenland Minerals & Energy Managing Director Rod Mcillree.

The Kvanefjeld deposit has enough uranium alone to pay for the cost of the mine, with all revenue from rare earths marked as profit. The company said it would be the biggest rare earths mine outside of China.

Mcillree said the decision allows it to start a feasibility study in 2011 to develop a mine plan.

Greenland Minerals & Energy's shares have been suspended from trading since Aug. 3 pending the talks with the government.

Greenland's decision to open the country to uranium mining comes at the start of an exploration boom for minerals, oil and gas that has raised the hopes of resource companies but has sparked environmental concerns for Greenland's fragile Arctic ecosystem.

London-listed Cairn Energy PLC (CNE.LN), which this summer is carrying out its first drilling campaign off the west coast of Greenland, last month said initial results were "encouraging."

But its drilling has attracted the attention of environmentalists and the Canadian government. Greenpeace activists last month climbed aboard a Cairn oil rig to protest exploration in the Arctic.

The Canadian government has expressed concerns that an oil spill would be difficult to control in Greenland's short open-water season and could reach Canada's nearby coastline. The government installed an inspector in Greenland in June to monitor Cairn's drilling campaign.

-By Matthew Walls, Dow Jones Newswires; +44 (0)20 7842 9412; matthew.walls@dowjones.com

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