Critical Metals Regulatory News (CRTM)

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 or contact:

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.