European Lithium (ASX: EUR) Surges 50% as Greenland Pilot Plant Kicks Off: Is It a Buying Opportunity?

European Lithium surges on Greenland Tanbreez milestones

European Lithium (ASX: EUR) has climbed roughly 50% from its lows, trading around A$0.26. The catalyst? Big progress at Critical Metals Corp (NASDAQ: CRML), where European Lithium holds a huge stake. Pilot plant construction started on January 7, 2026, and the company just ordered a US$1 million mobile lab to speed up rare earth testing.

Here’s what makes this stock fascinating: EUR’s stake in CRML is worth over 2.5 times its entire market cap. The market is pricing European Lithium at a steep discount to just one of its assets. For investors, the question is simple: Is this the ultimate value play or a classic holding company trap?

What are the Best ASX Mining Stocks to invest in right now?

Check our buy/sell tips

Why European Lithium Trades at Such a Big Discount

Let’s break down the numbers. European Lithium holds about 53 million shares in Critical Metals Corp. With CRML trading at US$14.76 per share, that stake is worth roughly US$780 million, or around A$1.2 billion. Yet EUR’s market cap sits at approximately A$430 million.

But there’s more. European Lithium also owns a direct 7.5% stake in the Tanbreez project and the Wolfsberg lithium project in Austria and has over A$190 million in cash. Add it all up, and the company’s assets are worth far more than its share price suggests.

Management clearly sees this gap. They’ve started an on-market buyback running until March 2026 to fix what they call the “discrepancy” between market cap and real value.

So why does the discount exist? We believe the market is worried about two things: the risk of actually building a mine in the Arctic and the difficulty of selling a large stake without crashing CRML’s price. Holding company discounts are common, but we think this one looks too large given the catalysts ahead.

Greenland Progress Picks Up with Two Key Milestones

The Tanbreez rare earths project just hit two important milestones.

Critical Metals approved the construction of an Arctic-grade pilot plant in Greenland on January 7, 2026. The facility should be ready by May 2026. This moves Tanbreez from planning to actual building, which lowers development risk.

CRML also ordered a mobile lab that can test rare earth samples on-site in just 80 minutes. For a remote Arctic project, this local testing ability speeds up exploration work significantly.

What makes Tanbreez especially attractive is that 75% of planned production is covered by offtake agreements with US and European partners. Management is targeting the remaining 25% of offtake capacity in Q1 2026, with first deliveries targeted for mid-2028.

The Trump administration’s push to secure Greenland has also put a spotlight on Tanbreez as one of the world’s largest rare earth deposits, adding another potential tailwind.

The Investor’s Takeaway

Bull Case: The discount is hard to ignore. EUR’s CRML stake alone is worth over 2.5 times the market cap, before counting cash, Wolfsberg, or the direct Tanbreez stake. Buybacks, CRML share sales, or a restructure could close this gap. With 75% of the offtake agreements, revenue risk is lower than most early-stage projects.

Bear Case: Holding company discounts can last for years. Tanbreez won’t produce until 2028, Arctic projects face real execution risk, and rare earth prices remain unpredictable.

Our View: For investors comfortable with holding companies, we believe the valuation gap offers a compelling opportunity. Watch for Q1 2026 supply agreements and May pilot plant completion as catalysts that could start closing this discount.