Critical Metals PLC Proposed Acquisition: Advancement of Funds via CLN (7430P)

TIDMCRTM

RNS Number : 7430P

Critical Metals PLC

21 October 2021

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

21 October 2021

Critical Metals plc

("Critical Metals" or the "Company")

Proposed Acquisition of DRC Copper/Cobalt Project:

Advancement of Funds via Convertible Loan Note

Critical Metals plc, a mining investment company established to target near-term, low-capex production opportunities of critical metals which have been identified as playing a strategic role in economic and technological development, as well as national defence and aerospace applications, today provides an update on its proposed acquisition, as announced on 20 May 2021.

Critical Metals is seeking to acquire a majority stake in Mauritius-incorporated Madini Occidental Ltd ("MO"), which will, on completion of the acquisition, have an indirect 70% beneficial interest in a 'Small Scale Mining License' ("Permis d'Exploitation de Petit Mine") PEPM 14784, in the Democratic Republic of Congo ("Molulu" or the "Project") (the "Proposed Acquisition").

Molulu is a copper/cobalt project located on the Katangan Copperbelt, adjacent to several medium and large-scale producers.

All workstreams continue to advance in relation to due diligence and application for readmission to trading on the Standard List ("Readmission"), including the preparation of a Prospectus.

As previously announced, the Proposed Acquisition is expected to be made via an acquisition of ordinary shares in MO to the value of US$850,000 (the "Funding"). In addition, two loans of US$150,000 and US$200,000 are expected to be made available to MO on terms to be agreed, with the former to be advanced to the current owner of the Project on terms to be agreed and the latter is to be used to fund an exploration drilling program to enable a JORC compliant resource to be created.

In order to advance certain facility and infrastructural improvements at Molulu, Critical Metals has agreed to advance US$140,000 of the Funding by way of a subscription for US$140,000 unsecured convertible notes in MO (the "Advanced Funding") pursuant to an unsecured convertible loan note issued by MO (the "MO CLN") for up to US$595,000.

The US$140,000 from the MO CLN will be used as working capital to commence remobilisation to mine site and to provide a pre-completion loan to the current owners in conjunction with and conditional upon MO's subsidiary being granted a Mining License Lease Agreement ("contract d'amodiation") over the Project.

Russell Fryer, CEO or Critical Metals, commented:

" While we are making good progress towards completion of our first potential acquisition, we are eager for opportunistic infrastructural upgrade work to commence on site ready for us to hit the ground running upon completion. As mentioned previously, we believe that the historical mining on site will enable a low cost restarting of production, and these upgrades to roads, the campsite, and a better generator setup, amongst others, will help towards a swift production restart.

"We are seeing continued record demand, and therefore prices, for copper, with prices over $10,300/tonne as I write. The Board believes that the demand for copper, as a 'critical metal', will continue to increase, in part due to the increased environmental agenda globally for which electrification is a central theme. In addition, cobalt is highly sought-after by both the aerospace industry and the rechargeable power unit sector."

Principal Terms of the Convertible Loan Note

   1.         "Long Stop Date": 30 September 2022 

2. The notes issued pursuant to the MO CLN ("Notes") will convert into new fully paid ordinary shares in MO, at the conversion rate set out below, in the following circumstances:

(a) if the Notes have not been redeemed or converted by the Long Stop Date, the noteholders will have the option to convert their Notes into shares in MO; or

(b) if MO enters into an investment agreement ("IA") prior to the Long Stop Date pursuant to which Critical Metals' subsidiary, Critical Metals Mauritius Limited agrees to invest in MO and its subsidiaries, then upon completion of the IA, all outstanding Notes will be converted into shares in MO.

3. Notes are also immediately redeemable or convertible at the option of the noteholder if any of the events of default set out in the MO CLN take place.

   4.         Interest shall be payable as follows: 

(a) in the event that any Notes are not repaid or converted prior to the Long Stop Date interest at a rate of 10% per annum shall be added to each Note in issue for the period commencing on (and including) the issue date and ending on (but excluding) the Long Stop Date; and

(b) in respect of the period after the Long Stop Date interest shall accrue on the Notes at a rate of 12% per annum commencing on (and including) the Long Stop Date and ending on (but excluding) the date the relevant notes are converted into shares or repaid or redeemed.

5. Notwithstanding paragraph 1 above, if the Company does not enter into the IA prior to the Long Stop Date due to the Readmission not being approved by the UK Financial Conduct Authority, no interest shall be charged on any outstanding Notes under the MO CLN.

6. As stated in paragraph 2(a) above, in the event that the Notes have not yet been redeemed or converted by the Long Stop Date, noteholders shall have the option by notice in writing to MO ("Conversion Notice") to convert their notes into ordinary shares in MO. The number of shares issued in MO shall represent, after the issue of such shares, such percentage of the aggregate share capital of MO that is equal to "A" where "A" is calculated according to the following formula:

A=(B/C) x 0.57

Where: A = % of total share capital of MO represented by shares issued pursuant to the conversion of the notes after that conversion takes place.

B = Nominal value of the notes being converted plus accrued interest

C = Total Commitment (being US$850,000)

0.57 represents the expected resulting interest held by Critical Metals of 57% in MO as set out in the non-binding term sheet announced on 20 May 2021 in relation to the Proposed Acquisition

7. MO undertakes that, while the Notes remain in issue, it shall (pending either the payment of any redemption moneys in respect of the Notes or the issue of the ordinary shares on conversion in accordance with the provisions of the MO CLN):

(a) not alter its articles of association in any way which would adversely affect the rights of the noteholders;

   (b)      notify each noteholder if the Company issues any shares or borrows any sums; 

(c) notify each noteholder in writing as soon as reasonably practicable after the relevant board or general meeting of shareholders (whichever is the earliest) has resolved to implement an adjustment event (being, inter alia, any issue or sub-division of ordinary shares in MO, including the issue of any derivative instruments) ("Adjustment Event") specifying the prospective date of the Adjustment Event and the proposed terms of it;

(d) maintain sufficient authorised but unissued equity share capital and/or shareholder authority to satisfy in full, without the need for the passing of any further resolutions of its shareholders, the most onerous of the outstanding rights of conversion for the time being attaching to the notes pursuant to this Instrument, without first having to offer the same to any existing shareholders of MO or any other person.

8. Notes are unsecured but as far as possible in law, they will rank in priority to the other unsecured obligations of MO and its subsidiaries.

   9.         MO has provided standard warranties and representations to the noteholders. 

Related Party Transaction

For the purposes of Chapter 11 of the Listing Rules, MO is a related party of the Company due to the fact that Russell Fryer, CEO of Critical Metals, currently holds a 50% equity interest in MO and has an outstanding interest bearing loan to MO of US$800,000. The independent directors of the Company in respect of the Advanced Funding, being Anthony Eastman and Marcus Edward Jones, have approved the Advanced Funding.

**S**

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

 
 Russell Fryer        Critical Metals                      Tel: [phone] 
                       plc 
 Rory Murphy /        Strand Hanson                        Tel: [phone] 
  James Bellman        Limited, Financial 
                       Adviser 
 Lucy Williams        Peterhouse Capital                   Tel: [phone] 
  /                    Limited, Corporate                  Tel: [phone] 
  Heena Karani         Broker 
 Catherine Leftley    St Brides Partners    : [e-mail] 
  / Isabelle Morris    Ltd, 
                       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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October 21, 2021 02:00 ET (06:00 GMT)