Critical Metals plc (LON:CRTM), a mining company established to acquire mining opportunities in the critical and strategic metals sector, currently developing a past-producing copper cobalt mine in the Democratic Republic of Congo (“DRC”), has announced its Final Results for the year ended 30 June 2024.
Summary
· Completion of 1000 meters of diamond drilling, encountering encouraging copper intercepts
· Appointment of Dr Avinash Bisnath as a Non-Executive Director
· Completed 28 kilometre road rehabilitation
· Hired consultant to update the Environmental Impact Study (EIS) and Environmental Management Plan (EMP)
· Submitted permit renewal documentation to Ministry of Mines
· The Company, in collaboration with the local community, built a school where over 60 children attend, with teachers’ salaries and school supplies funded by Critical Metals
· Fundraise of approximately £1.6 million through a private placement of convertible loan notes (“CLN”) in April 2024 to advance exploration on the ground and improve infrastructure
· Successful listing on the OTC Market enabling the Company with exposure to the U.S., Canada and Mexican markets
Post Period
· On track to start delivering ore following the completion of the rehabilitation of the 28 kilometre public road leading to the Molulu Project
· Agreed terms of renewed offtake agreement with O.M. Metals S.A.R.L. (“O.M. Metals “) following favourable copper grades from ore testing
· Potential to expand mineralised copper zones from one to three following the discovery of three distinct ones of copper including the possibility of a ROAN hosted copper zone in the south.
· Investment of £455,000 from NIU Invest SE announced in September 2024
Russell Fryer, CEO of Critical Metals said: “There were many positive takeaways from the reporting period, mainly our exploration progress and our decision to take a step back and reevaluate drilling targets, which lead to the identification of two additional mineralized zones and the potential to significantly increase resources. Post period we announced that we are on track to deliver ore following the rehabilitation of the 28 kilometre public road and the renewed offtake agreement with O.M. Metals. While funding pressures persist, we remain cautiously optimistic about the year ahead, given these developments.”
Chairman’s Statement
Dear Shareholder,
The 2023/2024 financial period can be characterised as complex, intricate and challenging.
Our diamond drilling (“DD”) campaign at Molulu began with a Phase 1 diamond drilling programme, focusing on three areas identified by mapping and geophysics analysis completed earlier in the year. consisting of 1000 meters of drilling in the oxide zone and aimed at increasing the geological understanding of the Molulu Project while identifying other potential targets, our goal was to increase the mineral resource with the objective of establishing a JORC resource estimate for copper-cobalt mineralisation in the area.
In July 2023, and on the back of initial drilling results, the Board made the decision to temporarily halt exploration mining activities in order to evaluate planned drilling targets with the aim of establishing a deeper understanding of the copper zones and fault areas.
By then, and due to the significant work carried out prior to halting exploration mining, the Company had stockpiled a meaningful amount of copper oxide onsite, which lead to the Company being approached by several interested buyers of the ore. Consequently, and after a series of negotiations in September 2023, the Company entered into an offtake agreement with O.M. Metals S.A.R.L. (“O.M. Metals”) to purchase the copper ore from Molulu. This offtake agreement was aimed at providing the Company with short-term cashflow for the continued improvement of infrastructure, to further exploration activities, and to optimisation of ground operations. One of the conditions of the offtake agreement with O.M. Metals was the use of 40-tonne trucks and after a brief submission period, the necessary permissions to deliver ore were granted.
October was a transformative social-licence month for your Company as the Molulu team, with the help of villagers, made bricks from ant hill dirt, then created a mud-covered fire kiln to dry and harden the bricks, and finally built a school with two classrooms to provide the first elementary and middle school education for the village children. The school has over sixty students in attendance that are taught by two qualified teachers funded by Critical Metals, that were previously working at the Molulu project as miners.
Since assuming control of Molulu in December 2022, the Company has prioritized community engagement and sustainability development initiations. Critical Metals is committed to expanding educational opportunities in the future as the Molulu project grows and, where possible, will continue to employ local staff. More than 90% of our workforce at the Molulu project are DRC locals. This is not only the right thing to do, but pivotal if we are to maintain our licence to operate in the DRC.
Also in October, two representatives from Washington DC visited the Molulu project with the goal of understanding how the Company is adding value at Molulu and in the surrounding area. This information would be disseminated to the various USA Government agencies in order to attract support for the Company initiatives in the DRC.
In November 2023, trial copper ore deliveries began, and three trucks filled with copper ore were delivered to O.M. Metals. However, it became apparent that the existing road, which is also used by local villagers and is the only road the Company can use to deliver ore to O.M. Metals, was unsuitable for heavy equipment with the additional heavy traffic. Both parties agreed that the road from Molulu to the Mabende village needed to be improved to an all-weather road in order to handle the increased volume of traffic from both the Molulu mine and several local villages.
In December, core from the partial Phase 1 drilling programme was initially analysed using a handheld XRF unit. Out of twenty-four holes drilled, eighteen holes had copper mineralisation of wide ranging but quite encouraging grades.
Activities at Molulu and in the DRC in general slowed in December as the Presidential election date of 20 December 2023 approached. The election was completed without mass public rioting or protests, and post year end, the incumbent President was sworn in on 19 January 2024, again, without any mass protests or voter rioting.
In April, we hired DRC Green to conduct an environmental impact study (“EIS”) and an environmental management plan (“EMP”) for submission to the Ministry of Mines for the renewal of the small-scale mining permit. The documents for the renewal of the small scale mining permit renewal were submitted on time in June 2024.
In May, we hired MCSC to conduct the study to rehabilitate the 28-kilometre public road leading to the Molulu Project. The road was rehabilitated and completed in July 2024, post period. With the improved road now in place, sales of stockpiled copper ore can begin.
O.M. Metals visited Molulu in June to resample the ore stockpiles. Three samples were taken and chemically tested at a laboratory to determine the acid-soluble copper in the ore, with the grades returned being 3.56%, 1.97%, and 1.11% copper. O.M. Metals is now preparing trucks to travel to Molulu for ore loading and road permissions are being sought.
Alongside this rehabilitation work we have also been conducting detailed geological work. The original understanding of the Project was that the copper zones were contained in one system. However, our team of geologists have, post-period end, identified what appears to be three distinct zones of copper, including the possibility of a ROAN hosted copper zone in the south. The copper zones are now identified as the Northern zone, the Central zone, and the Southern zone. The Northern zone is the area where exploration mining began in January 2023. The Central zone is the area where previous mechanised mining occurred in the large pit before Molulu was acquired. The Southern zone is the area where two artisanal pits were discovered but little exploration work was done in the zone until recently.
This is a comprehensive analysis and underpins the strong development potential of Molulu. Our focus will now be on undertaking further exploration to better determine the resource potential. This includes a 1,000-meter diamond drill programme due to commence in Q1 2025, subject to funding, which will conclude the 2,000-meter Phase 1 drilling plan we began in 2023. Data collected from this Phase 1 programme will be used to support a JORC resource and initiate a block model study along with other geotechnical activities.
Corporate
In May 2024 we received approval from the OTC Market Group for the Company’s ordinary share capital to cross-trade on the OTC Market’s OTCQB trading platform in the U.S. alongside our current LSE listing. Trading begun on 1 June 2024.
During the period under review, in March 2024, we were delighted to welcome Dr. Avinash Bisnath to the Board as Non-Executive Director. As a qualified PhD geologist, Dr. Bisnath has over 28 years’ experience in the mining industry with a focus on geological exploration. He has spent most of his professional life within the African Continent, including the DRC, and his understanding of geological dynamics has already made him an invaluable addition to the Critical Metals team. Dr. Bisnath replaced Mr. Gordon Thompson who stepped down from his position as Non-Executive Director due to other work commitments and restrictions.
Financing
There is no question that we have made progress operationally, both on site and in supporting the local community around us, however this has been limited by financial restraints. Our inability to deliver ore to O.M. Metals as planned, mainly due to poor road conditions, has resulted in a delay in generating revenues which has had a continued negative impact on operations and our ability to meet our financial commitments. There is no doubt, that we would have been unable to achieve some of outlined activity above, had it not been for the successful fundraise of £1.6 million via a private placement of convertible loan notes announced in April 2024. This was followed by a further cash injection by NIU Invest SE (“NIU”) of approximately £455,000, announced post period as part of an extensive funding round.
Outlook
Despite challenging market conditions, there are a number of undisputable facts, copper is a critical metal which will continue to play a pivotal role in a number of sectors, including energy and defence to name a few. The interest we experienced in our ore in the lead up to signing the offtake agreement with O.M Metals demonstrates that there is significant demand for the ore we are producing. Like all mining projects in complex jurisdictions, there are challenges, but in my view the benefits far outweighs the risks. It is evident, by the continued support of our existing shareholders and our ability to negotiate alternative financial packages in challenging times, that Molulu, a past-producing mine, has the potential to produce copper economically within a relatively short period of time. When you consider the time that it takes to bring a new discovery into production, estimated at 10 years plus, I believe that Molulu and Critical Metals, still represents an excellent value proposition for shareholders who are looking to invest in near production assets in a bullish commodity like copper.
Russell S. Fryer
Executive Chairman & CEO – 30 October 2024
A copy of this announcement and the full Annual Report for the year ended 30 June 2024 will be made available on the Company’s website at www.criticalmetals.co.uk.
