TIDMCMRS
RNS Number : 2629O
Critical Mineral Resources PLC
02 October 2023
2 October 2023
Critical Mineral Resources PLC
('CMR' or the 'Company')
Zagora Cobalt Project Agreement
Critical Mineral Resources plc ('CMR' or the 'Company), the
exploration and development company focused on clean energy metals,
is pleased to announce the signing of a binding heads of terms to
earn-in to the Zagora Cobalt Project ( 'Zagora' or the 'Project')
in Morocco.
Highlights
-- Binding heads of terms signed to earn-in to the Zagora Cobalt Project.
-- Cobalt mineralisation at surface with samples taken during
technical due diligence including G03 which assayed 1.15% Cobalt at
SGS-certified AFRILAB. This cobalt grade is equivalent to
approximately 6.5g/t gold or 4.7% copper at current metal prices.
The near-surface cobalt structure provides the potential for a
shallow discovery.
-- Strategic location in Morocco, approximately 90km south of
the Bou Azzer district where cobalt is mined by mid-sized miner
Managem Group that has agreements to supply cobalt to BMW Group and
Renault Group.
-- Bou Azzer's operations have operated since the late 1920's,
and there's pressure for new discoveries to help meet rising cobalt
demand. This dynamic, coupled with the demand for transparent and
sustainable battery raw materials supply chains and Morocco's
increasing position as a global battery materials supply chain hub,
will likely drive interest in all new Moroccan cobalt projects and
discoveries.
Project details
The Zagora Project is located approximately 25km southwest of
Zagora City and 90km south of the Bou Azzer mining district (Figure
1). A sealed road is being constructed through the property, and
this has reached a point approximately 10km to the northeast of the
Project's border. There is water on site due to the existence of
sedimentary rocks, mainly Cambrian aged sandstones (Figure 3).
Whilst it is too early to make confident statements about this
deposit's depth, geometry or size, the near-surface cobalt
mineralised structure that has been identified provides the
potential for a shallow discovery.
Transaction summary
CMR and its subsidiary Atlantic Research Minerals SARL ('ARM')
have signed a binding term sheet with the shareholders of S.A
Strategy SARL ('SAS'), the owner of the Zagora Cobalt Project, to
earn-in on delivery of certain milestones.
ARM will invest sufficient funds into the Project to produce a
JORC standard Scoping Study before progressing to a Pre-Feasibility
Study and Definitive Feasibility Study assuming positive results.
ARM's interest will start at 20-25% (subject to the Formal
Agreement) and increase on delivery of these project development
milestones. Earning 70% on delivery of a Definitive Feasibility
Study. The term sheet protects CMR should the Project be acquired
by a third party before CMR has produced a Scoping Study and
reached 50% ownership.
Figure 1: Map showing Zagora Cobalt Project licenses relative to
Bou Azzer area [Source: Company]
Global cobalt outlook
Demand for high-performance Nickel Manganese Cobalt (NMC)
batteries is expected to grow despite competing technologies
including Lithium Iron Phosphate (LFP). This is mainly due to the
rapid growth of electric vehicles and battery storage. These
drivers should ensure strong cobalt demand growth over 10 to 15
years. The International Energy Agency forecasts cobalt demand of
between 6 to 30 times higher in 2040 than 2020*, with the range
mainly depending on whether world leaders introduce sufficient
policies to meet the sustainable development goals of the Paris
Agreement i.e. a "well below 2degC global temperature rise" versus
pre-industrial levels (1850-1900).
* the IEA has two main scenarios (1) STEPS - Stated Policies
Scenario / the policies already announced (2) SDS - Sustainable
Development Scenario / what is required to keep temperature rise
below 2 degC
Morocco's cobalt opportunity and position as a battery materials
hub
Due to Morocco's stability and status as a favoured trading
partner of the EU and the US, there is extremely good demand for
Moroccan-produced exports including cobalt and soon battery
materials. Morocco's cobalt production is currently only being
mined in the Bou Azzer district, where Managem Group, a mid-scale
Moroccan mining group, operates a series of mature underground
mines from which BMW and Renault have supply agreements.
Accordingly, Managem Group is known to be rigorously exploring the
country to meet future demand.
Morocco has continued to gain significant recognition from
global organisations as a battery commodity and materials hub with,
in recent months, commitments from China's CNGR Advanced Material
Ltd to build a cathode materials plant in Morocco to supply the US
and European battery markets. As well as South Korea's LG Chem
committing to build a cathode materials plant in the country.
Charlie Long, Chief Executive Officer of CMR PLC, commented:
"We are pleased to have signed this binding heads of terms to
earn-in to the Zagora cobalt Project, which represents another
milestone in our Morrocan journey. This agreement strengthens our
position in the critical minerals sector. Morocco's cobalt industry
and associated demand dynamics, combined with its position as a
fast-growing battery materials hub, means there is clear demand for
new cobalt projects. The near surface mineralisation at Zagora is
exciting and the team will now progress with the development of the
Project, providing further updates in the near future."
Figure 2: Committed mine production and primary demand for
cobalt, 2020-2040 [Source: IEA 2023 ; License: CC BY 4.0 ; IEA
website address ]
Figure 3: Zagora Cobalt Project site showing water [Source:
Company]
Figure 4: Samples being taken near surface [Source: Company]
Global regulation and European Battery Passports
At the global level, the market for batteries is an increasingly
strategic space and protectionism, environmental (including low
carbon) and social regulation are the major themes. The European
Union has been at the forefront, and in recent years introduced
various related acts, regulation and directives. These include the
Ecodesign for Sustainable Products Regulation (ESPR, March 2022)
(2) the EU Corporate Sustainability Due Diligence Directive (EU
CSDDD, February 2022) (3) the EU Critical Raw Materials Act, and
(4) the Batteries and Waste Batteries Regulation - recently
announced on 10 July 2023.
The Batteries and Waste Batteries Regulation is a milestone,
crytallizing the battery passport vision of the European Council.
It requires large European companies to adopt a battery passport
and due diligence policy throughout the supply chain, including at
the mine level.
As the German Battery Pass project states, the aim is to source
"indispensable raw material imports from like-minded countries in a
sustainable manner" and to ensure that batteries in the EU have
"world-leading standards with respect to climate footprint, social
and environmental sustainability".
This new regulation will advantage countries like Morocco that
have dominant renewable energy production and high environmental
and social standards.
Figure 5: EU battery passport regulation will require labelling
[Source: Company]
Morocco - a fast-growing battery commodities and materials
hub
Morocco is rapidly gaining recognition as a thriving battery
materials hub, making significant strides in the supply chain for
the clean energy revolution due to its position as a favoured
trading partner of both the US and European Union. Since Morocco is
a free trade partner of the US, its critical raw materials count
towards sourcing targets required for electric vehicles sold in
America to receive subsidies of up to $3,750 per car under the US
Inflation Reduction Act.
-- July 2020, BMW Group entered into a substantial supply
contract with Managem Group, with a contract value of approximately
EUR100 million over a five year term, from 2020 to 2025.
-- June 2022, Renault Group and Managem Group forged a
Memorandum of Understanding (MoU). This strategic agreement was
designed to support Renault's sustainable and responsible supply of
low-carbon cobalt sulphate from 2025 for seven years.
-- September 2023, Casablanca-based private capital fund Al
Mada, in partnership with CNGR Advanced Material Co. Ltd entered
into an agreement to establish an integrated battery material
facility in Moroco, producing 'zero waste, low carbon, and
recyclable battery materials.'
-- September 2023, LG Chem and Huayou Group signed a MOU to construct a 50,000-ton-per-year lithium-phosphate-iron plant in Morocco, with mass production set to begin in 2026. The LFP cathode materials produced will be supplied to the North American market.
-- Additionally, Glencore and Managem are exploring a
partnership to recycle cobalt, nickel, and lithium at Managem's CTT
Hydrometallurgical Refinery near Marrakech. This project is at the
feasibility study stage.
These collaborations exemplify Morocco's fast-growing position
as a leading battery commodities and materials hub recognised by
and supported by leading global automotive manufacturers,
speciality chemical groups, and mining groups.
Heads of terms
CMR and ARM have entered into a binding term sheet with the
owners of the SAS Project, outlining the conditions for CMR and
ARM's involvement in the Project based on specific milestones. ARM
and SAS have committed to finalising a Formal Agreement promptly,
following which ARM will receive between 20% to 25% ownership in
the Project, contingent on successful legal due diligence.
ARM will provide funding for the Project to complete a JORC
standard (or equivalent) Scoping Study, in exchange for a 50% stake
in the Project, representing an additional 30% or 25% of Zagora's
shares, depending on CMR's initial shareholding.
Upon ARM's acquisition of 50% of the Project shares, CMR will
issue US$250,000 worth of CMR shares to the shareholders of the
Project. ARM retains the option to purchase an additional 30% of
the Project's shares before the Scoping Study's completion through
a payment of US$1.0 million, divided between cash and CMR shares,
to the Project's shareholders.
ARM will continue to invest in the Project to facilitate the
production of a JORC standard Pre-Feasibility Study, in exchange
for an additional 10% ownership in Zagora. Once ARM receives 60% of
the Project shares, CMR will pay the Project's shareholders
US$500,000 in CMR shares and 3% of the Pre-Feasibility Study's
discounted cashflow model NPV(10) value in cash.
Further investment by ARM to support the development of a
Definitive Feasibility Study will result in ARM gaining an
additional 10% ownership in the Project. When ARM achieves 70%
ownership, CMR will compensate the Project's shareholders with 4.5%
of the Definitive Feasibility Study's discounted cashflow model
NPV(10) value, divided between cash and CMR shares.
The shareholders will retain a 3.0% Net Smelter Return ('NSR')
royalty, based on 90% cobalt payability, with a maximum cap of 5%
NSR royalty where payability is lower. ARM also has the option to
increase its shareholding from 70% to 85% through a payment of
US$2.5 million to the Project's shareholders.
For further information, please contact:
Critical Mineral Resources plc info@cmrplc.com
Charles Long, Chief Executive Officer
Novum Securities
Jon Belliss +44 (0) 20 7399 9425
---------------------
Hudson Sandler (Financial PR)
Charlie Jack +44 (0) 207 796 4133
---------------------
Notes To Editors
Critical Mineral Resources (CMR) plc is an exploration and
development company focused on developing assets that produce key
commodities essential for renewable energy, battery storage and
electrification to support the clean energy revolution. These
commodities are widely recognised as being at the start of a supply
and demand supercycle.
CMR is building a diversified portfolio of high-quality metals
exploration and development projects in Morocco, focusing on
copper, nickel, manganese, cobalt, and potentially rare earths. CMR
identified Morocco as an ideal mining-friendly jurisdiction that
meets its acquisition and operational criteria. The country is
perfectly located to supply raw materials to Europe and possesses
excellent prospective geology, infrastructure and attractive
permitting, tax and royalty conditions. In 2023, the Company
acquired an 80% stake in leading Moroccan exploration and
geological services company Atlantic Research Minerals SARL.
Since taking over the CMR in 2022, the current management has
completed a comprehensive strategic review and restructuring of the
business and implemented its clear strategy to maximise exploration
and resource development opportunities for the benefit of all
stakeholders. The Company is listed on the London Stock Exchange
(CMRS.L). More information regarding the Company can be found at
www.cmrplc.com
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