Critical minerals explorer Critical Resources has notched another arrow to its bow, signing a binding terms sheet with Essential Metals (ASX:ESS) and International Lithium Corporation (TSVX:ILC) for a 100% interest in the Mavis Lake lithium project in Canada.

The proposed acquisition is a big opportunity for Critical Resources (ASX:CRR) to add a high-quality critical minerals project with excellent further exploration potential to its portfolio.

Especially considering the strong outlook for the lithium market.

The price for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price CIF China, Japan, and Korea is sitting around US$26/kg.

Not to mention, Canada is a first-class low-risk mining jurisdiction which is strategically located for lithium offtake into the North American manufacturing markets – with the project close to the Trans-Canada highway and railway arteries.

Critical Resources
Pic: Location of the Mavis Lake lithium project.

Excellent opportunity to enter the lithium market

Previous drill programs in 2018 returned high-grade lithium oxide intercepts including 55.25m at 1.04% from 82.75m, and 26.30m at 1.70% from 111.9m including 7.70m at 2.97% from 130.5m – which the company says presents significant exploration potential.

“The Mavis Lake terms sheet presents an excellent opportunity for the company to add a high-quality project to our portfolio that further increases our exposure to critical minerals,” Critical Resources (ASX:CRR) CEO Alex Biggs said.

“The company is on a trajectory to become a high growth business focused on building a project pipeline based on asset quality and exposure to in-demand minerals.

“Our focus for this year remains on the upcoming exploration of our Halls Peak base metals asset in New South Wales, Australia which we are very excited about.

“The Mavis Lake project fits all these requirements and provides an excellent entry to the lithium market with an asset that offers excellent prospectivity in a tier 1 jurisdiction.

“Due diligence is ongoing, and we will update the market in due course.”

Exclusivity fee allows due diligence 

As part of the terms of the agreement, the company will pay a total non-refundable exclusivity fee of $200,000, which provides exclusivity until 4 January 2022 – during which Critical Resources will undertake due diligence on the project.

Subject to the satisfaction of the conditions precedent, at completion the company will be required to:

  • Pay $1.5 million cash payment to the sellers;
  • Issue 68,000,000 shares in Critical Resources to the sellers (or their nominees) at an issue price of $0.022 per share (a deemed value of $1.496 million); and
  • Issue 8,000,000 fully paid ordinary shares to the deal facilitator who is a non-related party.

Milestone 1 payment and deferred consideration includes:

  • Payment of $1.50 million cash to the sellers; and
  • $100,000 of fully paid ordinary shares in Critical Resources (up to a maximum of 4,000,000 shares) to the facilitator upon definition of JORC compliant resource of not less than 5.00 million tonnes containing not less than 50,000t of Li2

Milestone 2 payment and deferred consideration includes:

  • Payment of $1.50 million cash to the sellers; and
  • $100,000 of fully paid ordinary shares (up to a maximum of 4,000,000 shares) in Critical Resources to the facilitator upon definition of JORC compliant resource of not less than 10.0 million tonnes containing not less than 100,000t of Li2

$4 million placement planned

As a condition to completion of the acquisition, Critical Resources will conduct a capital raising via a placement to professional and sophisticated investors at $0.029 per share to raise around $4 million. The company confirmed all directors will be participating in the raise.

Participants will receive one free attaching option for every three shares with an exercise price of $0.04 and expiring 3 December 2024.

The proceeds will fund

  • Halls Peak drilling: $1.5 million;
  • Mavis Lake Lithium acquisition, preliminary drilling, and associated costs: $2.15 million; and
  • Corporate and working capital: $0.350 million.

Sixty Two Capital Pty Ltd is the lead manager and on completion will be entitled to a capital raising fee of 6% of the total amount – and subject to shareholder approval, will be entitled to be granted 15,000,000 unlisted lead manager options with an exercise price of $0.04 and expiring 3 December 2024.

 

 

 

This article was developed in collaboration with Critical Resources Limited, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.