TIDMCRTM
RNS Number : 4606P
Critical Metals PLC
10 October 2023
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014, as
it forms part of UK Domestic Law by virtue of the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
Critical Metals plc / EPIC: CRTM / Market: Main Market
10 October 2023
Critical Metals plc
("Critical Metals" or the "Company")
Head of Terms Signed
Rental and Proposed Acquisition of Processing Plant
Critical Metals plc, a mining investment company established to
acquire mining opportunities in the critical and strategic metals
sector, is pleased to announce that the Company has entered into a
non-binding term sheet (the "Term Sheet") with inter alia Katanga
Strategic Resources and Operations SARL ("Kastro SARL"), pursuant
to which Critical Metals will (subject to entering definitive legal
agreements) acquire 100% of the Kastro Plant assets (the "Kastro
Plant"), a hydrometallurgical plant located in Lubumbashi in the
Democratic Republic of the Congo ("DRC") for US$8 million (the
"Proposed Acquisition").
Under the Term Sheet, Critical Metals, which owns a 70% interest
in the Molulu copper/cobalt project in the DRC, has in principle
agreed (subject to completing due diligence), to initially rent the
Kastro Plant for a period of six months with the option to extend
this lease if required. Under the lease arrangement it is
anticipated that Critical Metals will operate the Kastro Plant and
use it to process ore from the Molulu Project which is located only
98 kilometers from the Kastro Plant. This allows Critical Metals to
increase its margins on the ore from the Molulu Project by being
able to sell the higher value-add products that the Kastro Plant
produces, as well as giving the Company a product with a wider
global market.
The Directors understand that the Kastro Plant has a feed
capacity of 12,000 tonnes per month of copper oxide/cobalt ore. The
finished goods production capacity of the Plant is 400 tonnes of
LME-grade 99.99% copper cathode and 200 tonnes of LME-grade 30%
cobalt hydroxide per month. After a recent visit to the Kastro
Plant by experienced process and electrical consulting engineers
from South Africa, Critical Metals has identified ways to
potentially increase the monthly plant production.
For general sales pricing guidance, the LME copper price is
about $8000 per tonne and the LME cobalt price is about $33,000 per
tonne.
The Board of Critical Metals believe that the Proposed
Acquisition of the Kastro Plant will be transformative for the
Company, capable of creating significant shareholder value.
Commenting on the transaction, CEO Russell Fryer said:
"I am absolutely thrilled to have signed the heads of terms to
acquire the assets within the Kastro Plant in the DRC. We believe
that the best way to increase shareholder value is to be in control
of our own destiny and I have signalled to the market several times
that Critical Metals was on the cusp of a major plant transaction
that is incredibly value accretive to our shareholders. The
acquisition of the Kastro Plant would mean the Company gets full
value for processing Molulu copper and cobalt ores, thereby
ensuring superior margins. The Directors appreciate this is a
transformational acquisition which is in line with the Company's
aggressive growth strategy of acquiring high quality assets capable
of optimising and adding value to the Company's current
portfolio.
"The Company has access to funding via the recently announced
US$3 million loan facility and, if the Proposed Acquisition
proceeds, the Company will look to raise further debt to finance
the Kastro Plant transaction, limiting shareholder dilution. A
number of international financial institutions have already
expressed an interest in providing this funding although no
definitive agreements have yet been reached.
"To further strengthen our balance sheet, we recently announced
the copper ore sales agreement with a local buyer to purchase all
the copper oxide ore that is ready for sale now, along with copper
ore that will be mined between now and the restart of the Kastro
plant. "
Principal Terms include:
-- Critical Metals (or one of its subsidiaries) will pay a total
consideration to the Sellers that will equal the amount of US$7.5
million to be settled in cash or wire upon completion subject to
the assumptions and conditions below (the "Purchase Price") and a
hold back of US$500,000 for claims for 9 months.
-- Critical Metals will rent the Kastro Plant for six months
(6-months) from the date of lease ("Initial Period") at US$100,000
per month. This total rent amount of US$600,000 will be made
available when needed to the owner of the Kastro Plant to meet the
cost of refitting and restarting of the plant within 45 days of
first drawdown. If the cost of refitting the Kastro Plant exceeds
US$600,000, the excess cost will be for the account for the current
owner.
-- The underlying controller of the Kastro Plant has agreed to
enter a 6-month consultancy agreement with the Buyer to assist with
operating the Kastro Plant during the initial lease period.
-- Critical Metals shall have an option to extend the lease of
the Kastro Plant on a rolling monthly basis for up to 6 further
months however, the rental for this period is increased to $115,000
per month.
Anticipated Funding and Conditions Precedent
To fund the Kastro Plant asset acquisition, Critical Metals
intends to raise debt from a series of financial institutions that
have already expressed interest in this transaction. Further to the
Company's announcement of 18 September 2023, Critical Metals'
management is highly sensitive about shareholder dilution and no
equity placement is being contemplated.
There are several conditions precedent to the Proposed
Transaction including completion of technical, legal,
environmental, and financial due diligence, agreement on definitive
legal documentation (including the lease and the asset purchase
agreement), Director and regulatory approvals from the FCA in
connection with the publication of a secondary prospectus if
required.
Timetable
A binding Purchase Agreement for the proposed Acquisition is
expected to be entered into on or before 31 December 2023 (the
"Closing Date") or such later date agreed by the parties.
Although both parties will use reasonable endeavours to reach
agreement on the terms of the Acquisition as soon as practicable,
at this stage, there can be no guarantee that the Proposed
Acquisition will complete, nor as to the final terms of the
Proposed Acquisition.
The refitting of the Kastro Plant is forecast to take 45 days
once the US$600,000 is made available to the owner of the Kastro
Plant. The first copper cathode tonnage is expected to be produced
from the Kastro Plant within 30 days of the completion of the
refurbishment.
Further announcements and updates will be made as appropriate in
due course.
**ENDS**
For further information on the Company please visit
www.criticalmetals.co.uk or contact:
Critical Metals plc
Russell Fryer, CEO Tel: +44 (0)20 7236 1177
Peterhouse Capital Limited
Corporate Broker
Lucy William / Charles Goodfellow Tel: +44 (0)20 7469 0936 / +44
(0)20 7220 9797
---------------------------------
St Brides Partners Ltd
Financial PR
Catherine Leftley /Ana Ribeiro/Isabelle Tel: +44 (0)20 7236 1177
Morris
---------------------------------
About Critical Metals
Critical Metals PLC has acquired a controlling 100% stake in
Madini Occidental Limited, which holds an indirect 70% interest in
the Molulu copper/cobalt project, a producing asset in the Katangan
Copperbelt in the Democratic Republic of Congo.
The Company will continue to identify future assets that are in
line with its stated acquisition objective of low CAPEX and OPEX
brown-field projects with near-term production and cash-flow,
whilst concentrating on minerals that have strategic importance to
future economic growth thereby generating significant value for
shareholders.
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