(Reuters) -Shares of Critical Metals surged over 75% in premarket trading on Monday after Reuters reported the Trump administration is discussing taking an equity stake in the development-stage mining company, citing four people familiar with the talks.

If completed, the deal would give the U.S. government a direct interest in Greenland's largest rare earths project.

Earlier this year, President Donald Trump had invoked emergency powers to boost domestic production of critical minerals as part of a broad effort to offset China's near-total control of the sector.

President Trump has previously suggested that the United States should take over Greenland given its strategic location and rich mineral resources.

The United States has recently taken stakes in companies mining critical minerals such as Lithium Americas and MP Materials.

Rare earths are a group of 17 metals used in consumer electronics, electric vehicles, aircraft engines and military applications.

Critical Metals, which wants to secure lithium and rare earths for U.S. and European markets, acquired Tanbreez deposit in Greenland last year for $5 million in cash and $211 million in stock.

The New York-based company applied earlier this year for a $50 million grant under the Defense Production Act, and over the past six weeks Washington began talks about converting that grant into an equity stake, three of the sources said.

If the deal proceeds, converting $50 million would equate to roughly an 8% stake, though negotiations are not final, the sources said.

Part of the discussion involves how to structure warrants to give Washington the stake.

As of last close, shares of Critical Metals have gained over 17% so far this year, giving the company a market capitalization of about $786.9 million.

(Reporting by Vallari Srivastava in Bengaluru; Editing by Tasim Zahid)

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