Having announced its intention to acquire all of the issued shares and listed options of ASX-listed European Lithium on April 27, Nasdaq-listed Critical Metals Corporation has now executed a binding scheme implementation deed comprising two interdependent schemes of arrangement.
Critical Metals CEO and chairperson Tony Sage says the market reaction to the deal has been positive and he deems the executing of a binding definitive agreement an important milestone.
The deal will see ownership of the Tanbreez rare earths project, in Greenland, being consolidated under a single legal owner, given that European Lithium owns the remaining 7.5% ownership of the project.
“This is a logical transaction that has a strong strategic rationale and offers clear, material benefits to Critical Metals shareholders. I am delighted to see Tanbreez’s ownership consolidated under a single legal owner and for Critical Metals to be very well-funded so that Tanbreez can be rapidly advanced into a strong rare earth market for the benefit of shareholders and other stakeholders.”
Sage is confident that, upon completion of this transaction, Critical Metals will be uniquely positioned as a leading heavy rare earths developer that benefits from owning 100% of the highly strategic Tanbreez project, as well as having a peer-group-leading, strong balance sheet, a diversified global shareholder base and a highly liquid stock on the Nasdaq in the US.
Notably, European Lithium currently owns 45-million shares of Critical Metals, which represents 31% of its outstanding share capital. After the deal, Critical Metals will minimise these cross-holding shares to reduce shareholder dilution resulting from the transaction.
European Lithium has a cash balance of about A$306-million, or $219-million, while Critical Metals has a cash balance of about $124-million. This ensures a robust balance sheet to accelerate the development of Tanbreez in what is currently a strong rare earths market that requires new sources of heavy rare earth elements.
European Lithium shareholders will receive 0.035 shares of Critical Metals for each European Lithium share held.
The companies expect the transaction to be completed in the second half of the year.