Critical One Energy outlines proposed C$425M Howells Lake funding and offtake
A binding MOU includes a conditional share investment and proposed construction debt for an antimony project that has no mineral resource.
Theo Marchetti
Critical One Energy Inc. CNSXCRTL OTCMKTSCTLOF FRA4EF, which trades on the Canadian Securities Exchange, signed a binding MOU outlining proposed Howells Lake funding of up to C$425 million, it said Thursday. The Ontario antimony project would supply an offtake covering up to 150 million pounds of future production.
The Oct. 29 release identifies Solar International Core Canada (SICC) as the investor and offtake partner. The package proposes a C$15 million share investment and C$10 million to fund Critical One's carried equity interest in a planned Ontario processing facility.
The largest component in the Oct. 29 announcement is a potential construction debt facility of up to C$400 million. SICC must use commercially reasonable efforts to provide an indicative term sheet within 90 days of signing; financing would become available after the studies, permits and approvals preceding a construction decision.
Critical One's CNSXCRTL shares closed at C$0.81 at 4:00 p.m. EDT on Oct. 28, according to Google Finance, before the announcement. The proposed subscription price represents a 48 per cent premium to that close, according to the company.
Share Investment Remains Conditional
Under the Oct. 29 terms, SICC would subscribe for 12.5 million common shares at C$1.20 each, without warrants. Critical One says the investment would give SICC a 12 per cent interest on a fully diluted basis.
SICC has agreed to a 12-month voluntary lock-up and may nominate one director. Completion of the equity investment remains subject to due diligence and Canadian Securities Exchange acceptance.
The company's Oct. 29 announcement says the separate C$10 million commitment would fund its carried equity interest in the processing facility. Critical One would participate both as a future feedstock supplier and as an equity partner in the plant.
"Being positioned as a strategic co-development partner, with returns from processing as well as mining, elevates Critical One's growth strategy," executive chairman and chief executive Duane Parnham said in the release.
Offtake Depends On Future Production
The exclusive offtake rights cover purchases at international benchmark prices. The proposed 150 million pounds is a ceiling on future purchases; Howells Lake has no mineral resource compliant with NI 43-101, and the company cautions that production is not guaranteed.
Critical One is an exploration company advancing Howells Lake in northwestern Ontario, in the homelands of the Eabametoong First Nation. Its announcement describes a funded, Micon-recommended 20,000-metre drilling program designed to develop a maiden resource estimate for the East Zone.
Other North American developers are seeking support for antimony and tungsten projects. Perpetua Resources Corp. TSEPPTA NASDAQPPTA announced on Oct. 26 an award of up to US$40 million for tungsten exploration and testing at Stibnite in Idaho, where it is also developing antimony resources. Perpetua must match the Army contribution, and subsequent phases require approval.
Read more: Perpetua Resources wins up to US$40M Army award for tungsten exploration
The Oct. 29 announcement provides a 90-day due-diligence period for the equity investment. SICC shall use commercially reasonable efforts to provide an indicative debt term sheet within 90 days of signing the MOU. These steps would establish whether the share investment can proceed and what construction financing could be offered.
