REG - Critical Metals PLC - Update re Acquisition of DRC Copper/Cobalt Project

Critical MetalsAnnouncement

24/03/2022 16:45

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RNS Number : 9439F  Critical Metals PLC  24 March 2022

 

 

Critical Metals plc / EPIC: CRTM / Market: Main Market / Sector: Closed End
Investments

 

24 March 2022

Critical Metals plc

("Critical Metals" or the "Company")

 

Update re Proposed Acquisition of DRC Copper/Cobalt Project

 

Critical Metals plc, a mining investment company established to acquire mining
opportunities in the critical and strategic metals sector, is pleased to
provide an update on its proposed acquisition of a majority interest in the
copper/cobalt project located within Small Scale Mining License PEPM 14784
(the "Mining Licence") in the Democratic Republic of Congo (the "Molulu
Project") announced on 20 May 2021 (the "Proposed Acquisition").

 

Further to the Company's announcements of 23 December 2021 and 9 March 2022,
in which it was noted that the original transaction structure was under
renegotiation in relation to the temporary ban on the issuance and transfer of
mining licence permits in the Democratic Republic of Congo. The structure for
the Proposed Acquisition has now been agreed so as to avoid the need for a
transfer of the underlying Mining Licence.

 

The structure for the Proposed Acquisition, as summarised below, has been
agreed with the existing owners of Amani Mining Katanga SA ("AMK"), Madini
Occidental Ltd Mauritius ("Madini Occidental"), and the Company, and the
relevant parties have updated the existing transaction documents (the "Updated
Terms") to reflect this new structure.

 

Pursuant to the Updated Terms, Critical Metals will acquire a majority
controlling 57 per cent equity interest in Madini Occidental by way of a
subscription for new ordinary shares in Madini Occidental, contemporaneously
with Madini Occidental, via its DRC subsidiary Madini Occidental RDC SA,
subscribing for a 70 per cent interest in Amani Minerals Katanga SA, the sole
current holder of the Mining Licence.

 

As a result, on completion of the Proposed Acquisition ("Completion"),
Critical Metals will hold a controlling interest in the Mining Licence via its
majority interest in Madini Occidental, which in turn, will hold a controlling
interest in the Mining Licence, equating to a look-through economic interest
of approximately 40 per cent in the Molulu Project.

 

The consideration for the Proposed Acquisition will be as follows:

·    Cash consideration of USD300,000 will be paid, via Madini Occidental,
to AMK on Completion for the transfer by the existing holders of AMK (the "AMK
Original Partners") of a 70 per cent equity interest in AMK to Madini
Occidental's wholly owned subsidiary Madini Occidental RDC SA, with the AMK
Original Partners retaining a 30 per cent interest in AMK.

·    Cash consideration of USD750,000 will be paid to Madini Occidental on
Completion, in exchange for the issue of such number of new ordinary shares in
Madini Occidental, as provides Critical Metals with a 57 per cent interest in
Madini Occidental.

o  Pursuant to the terms of the investment agreement to be entered into
between Critical Metals and Madini Occidental (the "Investment Agreement"),
such consideration will be loaned, in full, to AMK, to be utilised as working
capital applied to the development of the Molulu Project (the "AMK Loan").

o  The AMK Loan is to be repaid to Madini Occidental from future income from
the Molulu Project, such that Critical Metals will benefit from the repayment
of the AMK Loan, to the extent of its 57 per cent equity interest in Madini
Occidental.

·    In the event that a carried interest of 10 per cent in the Mining
Licence is required to be transferred to the State of the Democratic Republic
of Congo (or affiliated entity) pursuant to DRC Mining Law, it has been agreed
that such interest will be transferred by way of a transfer of equity in AMK
by both AMK Original Partners and Madini Occidental RDC SA pro rata to their
interest in AMK post Completion, being 7 per cent and 3 per cent for Madini
Occidental RDC SA and the AMK Original Partners, respectively.

·    In conjunction with the Investment Agreement governing Critical
Metals' subscription for a 57 percent equity interest in Madini Occidental,
various shareholder and operational agreements will be entered into to ensure
that Critical Metals has operational control of the Molulu Project and also
conducts the sales and marketing of the minerals produced from the Molulu
mine.

·    Critical Metals will provide a loan of USD200,000 after readmission
for the drilling and further delineation of the copper and cobalt ore
bodies.  This loan is to be made on commercial terms and will be repaid in
monthly instalments after the mine reaches steady state production.

·    A final cash consideration payment of USD250,000 will be made to the
AMK Original Partners twelve months after the closing of the transaction.

 

It is noted that there can be no certainty that the Proposed Acquisition will
complete and it remains subject, inter alia, to final binding documentation
and satisfaction of the Condition Precedents being completed. However, the AMK
and Madini Occidential due diligence has been completed and submitted to the
relevant parties.

 

The Company wishes to highlight that, due to the previous work completed and
the imminent ending of the rainy season, the Company will create a mining plan
to access not only the oxide copper zones, but also the higher-value sulphide
copper zones, whilst progressing towards FCA readmission approval.

 

Furthermore, a series of consultations have already begun with the Competent
Person in South Africa, to identify known copper and cobalt areas for a
near-term drill programme, in order to assemble a JORC compliance resource.

 

The Board continues to believe the Proposed Acquisition represents an
excellent opportunity to acquire a controlling interest in a highly
prospective copper/cobalt project, which has previously been in production and
can be quickly brought back into operation to generate near-term free
cashflow.

 

Whilst the undertaking of the transaction structure changes outlined above
were extremely time consuming due to the complexity of the negotiations,
however, thanks to the elevated copper price, the Board believes the economics
of this transaction in the current commodity environment have greatly
improved.

 

Finally, the Board of Critical Metals sincerely thanks our shareholders,
prospective shareholders, and DRC partners for their patience, whilst the
Company look to conclude the Proposed Acquisition.

 

The Board looks forward to providing further updates in due course.

 

**ENDS**

 

For further information on the Company please visit www.criticalmetals.co.uk
(http://www.criticalmetals.co.uk) or contact:

 

 Russell Fryer                                   Critical Metals plc                           Tel: +44 (0)20 7236 1177

 Rory Murphy / James Bellman                     Strand Hanson Limited                         Tel: +44 (0)20 7409 3494

                                                 Financial Adviser

 Lucy Williams /                                 Peterhouse Capital Limited, Corporate Broker  Tel: +44 (0)20 7469 0936

 Heena Karani                                                                                  Tel: +44 (0)20 7469 0933

 Oonagh Reidy/Catherine Leftley/Isabelle Morris  St Brides Partners Ltd,                       Tel: +44 (0)20 7236 1177

                                                 Financial PR

 

About Critical Metals

Critical Metals was formed as an investment company and intends to make equity
investments into operators or near-term production operators within the
natural resources development and production sector in the continent of
Africa. It is envisaged that such acquisition or acquisitions will trigger a
reverse takeover in accordance with the listing rules. The Company intends to
search initially for acquisition opportunities in the natural resources sector
on known deposits and more specifically minerals that are perceived to have
strategic importance to future economic growth. Commodities such as antimony,
beryllium, cobalt, copper, fluorspar, gold, rare earth elements, tin,
tungsten, titanium, and vanadium have been identified by several governments
as "critical minerals" and so guaranteeing supplies is seen as a strategic
necessity. The Company, therefore, believes that the market conditions for
these minerals will remain strong in the short-to-long term.

 

 

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