10th Oct 2023 13:42
(Alliance News) - Critical Metals PLC on Tuesday said it entered a non-binding term sheet to rent and subsequently acquire 100% of a hydrometallurgical plant in the Democratic Republic of the Congo.
The Africa-focused mining investor said the proposed deal with Katanga Strategic Resources & Operations Sarl, or Kastro, "will be transformative for the company, capable of creating significant shareholder value."
Pursuant to the heads of terms agreement, Critical Metals will acquire 100% of assets relating to the Kastro Plant for USD8 million. The hydrometallurgical plant is located in Lubumbashi, the DRC's second-largest city and the main industrial centre of the south east.
The company said consideration will consist of USD7.5 million upon completion of the transaction, followed by a hold back of USD500,000 for claims for nine months.
Critical Metals will rent the plant for an initial six-month period, with the option of a lease extension if necessary. The company expects to operate the plant and use it to process copper oxide and cobalt ore from the Molulu project, which is located nearby and in which Critical Metals owns a 70% interest.
"The acquisition of the Kastro Plant would mean the company gets full value for processing Molulu copper and cobalt ores, thereby ensuring superior margins," said Chief Executive Officer Russell Fryer, who said he was "absolutely thrilled" by the transaction.
Critical Metals intends to raise debt from financial institutions which have already expressed interest in the acquisition, in order to fund it.
The firm expects to enter a binding purchase agreement on or before December 31.
Critical Metals shares were up 2.1% at 18.37 pence in London on Tuesday afternoon.
By Emma Curzon, Alliance News reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.