Critical Metals plc has signed a non-binding term sheet with Katanga Strategic Resources and Operations SARL (Kastro SARL) for the acquisition of the Kastro Plant assets in the Democratic Republic of the Congo (DRC) for $8 million. The company plans to initially rent the plant for six months and operate it to process ore from its Molulu copper/cobalt project, located 98 kilometers away. The Kastro Plant has a feed capacity of 12,000 tonnes per month and can produce 400 tonnes of LME-grade 99.99% copper cathode and 200 tonnes of LME-grade 30% cobalt hydroxide per month. The acquisition is expected to create significant shareholder value.

CEO Russell Fryer expressed excitement about the acquisition, stating that it would allow the company to get full value for processing Molulu copper and cobalt ores, ensuring superior margins. The company plans to raise further debt to finance the transaction and has already received interest from international financial institutions. The company recently announced a copper ore sales agreement with a local buyer to purchase all ready-for-sale copper oxide ore and future copper ore until the Kastro Plant restarts.

The principal terms of the acquisition include a total consideration of $7.5 million to be settled in cash or wire upon completion, with a holdback of $500,000 for claims for nine months. Critical Metals will rent the Kastro Plant for six months at $100,000 per month, with an option to extend the lease for up to six additional months at $115,000 per month. The underlying controller of the Kastro Plant will enter a six-month consultancy agreement with Critical Metals to assist with operating the plant during the initial lease period.

To fund the acquisition, Critical Metals plans to raise debt from financial institutions, with no equity placement being contemplated to minimize shareholder dilution.