Critical Metals plc said it had signed a non-binding heads of terms for the possible 57% acquisition of Molulu copper-cobalt project in the Democratic Republic of Congo.
The mining investment company signed the deal with Madini Occidental Ltd (MO), which will hold a 70% beneficial interest in a Small Scale Mining Licence (Permis d’Exploitation de Petit Mine) PEPM14784 in the project.
Critical Metals said that the proposed acquisition would be its first since listing on the Standard List of the London Stock Exchange in September 2020.
The company will undertake extensive due diligence before completing the deal.
Molulu is located on the Katangan copper belt, adjacent to a number of existing medium and large scale mining operations in production.
MO is a Johannesburg-based enterprise focused on investment in advanced exploration or near-term production assets in Africa.
TERMS
Critical Minerals will buy US$850,000 shares in MO, of which $100,000 will be paid to the current owners of PEPM 14784, and $750,000 spent on project development.
In addition, two loans of $150,000 and $200,000 will be made available to MO.
The former amount will be advanced to the current owner of the project and the latter will fund an exploration drilling programme for a JORC compliant resource report.
The current owners will retain the other 30% interest in the project with the remaining 43% interest in MO held in equal amounts by MO and Critical Metals chief executive Russell Fryer.
In 2018, Mr Fryer invested $200,000 in MO and has an outstanding interest bearing loan to MO of $800,000.
Other directors of Critical Metals have approved the terms of the deal.
MOLULU
Molulu was previously mined by artisanal miners from four pits and Critical Metals believes that the project could become a new long-term, large copper-cobalt producer.
Madini Minerals has conducted extensive geophysics and geotechnical analyses, and historical drilling shows copper grades ranging between 15% and 40% for sulphides and copper oxide grades of between 2% and 15% based on metallurgical samples undertaken by a copper smelter in Lubumbashi.
Critical Metals said that the historical mining on site would enable a low cost restart of production within six to nine months.
The proximity of the project to certain smelters would allow produced copper to be sold, leading to near term cash flow.
“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,” said chief executive Russell Fryer.
“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.”