The investment company, which floated in London last September, has signed heads of terms on a deal to potentially acquire a 57% stake in Madini Occidental Limited (MO), which will hold a 70% beneficial interest in the Molulu project in the DRC.
The acquisition, if completed, would constitute a reverse takeover under London listing rules and so the company has requested its shares be suspended pending a further announcement providing more details, the publication of a prospectus or a the calling off of the deal.
Molulu, which is defined as a ‘small scale mining license’ (Permis d’Exploitation de Petit Mine) with the official title of PEPM 14784, is located in DRC’s Katangan Copperbelt next to a number of existing medium- and large-scale mining operations that are already in production.
Under the terms of the deal, Critical Metals will buy US$850,000 worth of shares in MO, which will then pay US$100,000 to the current Molulu owners and reserve the remaining US$750,000 to spend on the development of the project.
Furthermore, Critical Metals has agreed to make a loans of US$150,000 available to MO to be advanced to the current owner of the project and another US$200,000 loan for MO to fund an exploration drilling program to enable the creation of a JORC compliant resource.
The current owners of the Molulu project will retain the other 30% interest in the project, with the remaining 43% interest in MO held in equal amounts by Madini Minerals and Russell Fryer, the chief executive officer of Critical Metals.
In 2018, Fryer invested US$200,000 in MO and has an outstanding interest-bearing loan to MO of US$800,000.
As such, the directors of Critical Metals other than Fryer have approved the terms of the deal.
With Molulu having previously been mined by artisanal miners from four pits and Madini Minerals having conducted extensive geophysics, geotechnical analysis, and historical drilling at the site, Critical Metals said it believes that the project has “the potential to be developed to become a new long-term, large copper-cobalt producer”, with the potential for a low-cost restarting of production within roughly six to nine months.
Madini’s groundwork has shown copper grades ranging between 15% and 40% for sulphides and copper oxide grades of between 2% and 15% based on metallurgical samples.
With due diligence to include a competent person’s report on the project, the company has agreed an exclusivity period of two months with the option to extend for a further month.
Fryer said: “We are delighted to have agreed a term sheet on our first potential acquisition, the first of what we expect will be a series of transactions.
“In that time, we have reviewed numerous projects and believe the proposed acquisition meets our stated objective of identifying a low capex and opex project with near term production.
“The Democratic Republic of Congo is an area which the board is familiar with and believe successful completion of the targeted transaction should position Critical Metals well for subsequent transactions.
“The demands for copper, as a ‘critical mineral’, are ever increasing as is seen in the buoyant copper price of late. Predicted to continue, an increased environmental agenda globally and electrification are at the centre of this with the proliferation of electric vehicles, the increased use of renewable energy sources, energy efficiency and increased consumption of electronics. In addition, cobalt is highly sought-after by both the aerospace industry and the rechargeable power unit sector.
“I believe this is an opportune time to gain exposure to copper/cobalt and I look forward to updating shareholders in due course.”