At the release of copper project developer Critical Metals’ results for the financial year ended June 30, the company celebrated its transformation from an explorer to a fully-fledged copper producer in the Democratic Republic of Congo (DRC), with mining and processing operations having started at the Molulu project.

The project is forecast to generate positive operating cash flow in the fourth quarter.

As of the end of the company’s financial year, it employed 51 people in the DRC on a contractual basis, of which 49 were DRC citizens.

During the mining build-up, Critical Metals simplified its corporate structure and increased the company’s indirect holding in the Molulu copper project from 40% to 70%, providing shareholders with a greater percentage of any future cash flows.

Copper ore preproduction began in January with the goal of producing 10 000 t a month of oxide ore. Seasonal rains highlighted areas where more groundwork was needed to achieve this goal, such as road rehabilitation and the requirement to build a bridge across the river.

The period from January to May allowed the group to undertake detailed geophysics studies and ground surveys to better understand the Molulu lease property. On May 15, the group announced its decision to focus on the much higher-grade sulphide copper ore, which has the potential to increase profitability by orders of magnitude above mining the oxide zone only, following the discovery of an 8.3% copper sulphide ore sample.  

Also in May, Critical Metals' management chose to use the existing hired dozer and excavator that were located at Molulu to rehabilitate the road that connects the property to several ore buyers' processing plants. 

Critical Metals executive chairperson and CEO Russell Fryer said on November 3 that this decision saved shareholders more than $50 000 in external contractor costs.

The dozer has rehabilitated the entire road, and the bridge to allow large tipper trucks to use the road to supply ore to the selected buyers has been constructed, enabling the use of 40 t to 50 t tipper trucks. The decision to use 40 t to 50 t trucks instead of 25 t trucks was driven by the ability of delivering larger volumes of copper ore more efficiently, thereby reducing the wear on both the bridge and road, while reducing variable unit costs.

The Critical Metals board was fully aware of the potential for the Molulu project to become a significant copper producer in the DRC, Fryer said. The Molulu project met all the company’s investment criteria, including the potential of generating early cash flow for shareholders.  

“As the board is focused on cash flows to protect shareholders, subsequent to year-end, a copper ore offtake agreement was executed and after seven potential buyers had expressed interest in purchasing the Molulu copper ore. First ore has already been delivered to the buyer's plant and deliveries will continue for the remainder of the year,” Fryer explained.

The intention of adding a copper/cobalt processing facility had been well-signalled to market for about a year, he added. Post year-end, a transaction was announced to rent with the option to buy a previously operating copper cathode/cobalt hydroxide processing plant that is on care and maintenance. This transaction will hopefully allow the company’s group to capture greater margins from the Molulu ore.

In terms of funding, Critical Metals announced in May that it had raised £600 000 at 25p a share, a 4.2% premium to the closing price on May 30. Participants in the placing included well-known global mining investment bankers and five other long-term shareholders.

The company went on to raise a further £1.3-million at 25p a share through its shareholders. Additionally, post-period, the group announced that it had signed a $3-million non-dilutive debt facility with an international financial institution. These funds will be used to meet the group's aims of increasing production at the Molulu project, as well as funding any necessary due diligence on possible acquisitions by the group in the future.

“Looking forward to the coming year, I am greatly encouraged . . . The group will continue to optimise operations to increase the overall production of Molulu while advancing the growth goals of the group. Critical Metals will also work with the company’s geologists to produce a [Joint Ore Reserves Committee]-compliant mineral assessment of Molulu . . . I remain confident in the economic viability of Molulu, driven by strong fundamentals and increased demand for copper,” Fryer said.

In line with the company’s strategy, Critical Metals said it would continue to assess further acquisition opportunities when they arise, while expanding operations at Molulu.