20-F: Critical Metals Boosts Tanbreez Stake Amidst Liquidity Concerns

Critical Metals Corp. announced an amendment to its Tanbreez acquisition agreement, increasing its potential ownership to 92.5% while reporting a reduced net loss and improved equity position for fiscal year 2025, despite ongoing liquidity concerns and internal control deficiencies.

Summary

• Critical Metals Corp. (CRML) reported a net loss after tax of $51.9 million for the year ended June 30, 2025, a significant reduction from the $139.4 million loss in the prior year.
• The company's total assets increased to $171.7 million as of June 30, 2025, up from $59.3 million in 2024, primarily driven by a substantial increase in investment in its joint venture.
• Total equity improved from a deficit of $11.1 million in 2024 to a positive $91.9 million in 2025, reflecting recent capital raises and reduced losses.
• CRML's cash and cash equivalents rose to $7.3 million as of June 30, 2025, compared to $1.3 million in the previous year.
• An amendment to the Heads of Agreement with Rimbal Pty Ltd, dated September 29, 2025, removes CRML's obligation to invest $10 million in the Tanbreez Project for the Stage 2 interest.
• Upon approval from the Greenlandic Mineral Resources Authority, CRML is now obligated to acquire the remaining 50.5% of Tanbreez shares (Stage 2 Interest) by issuing 14,500,000 CRML Ordinary Shares to Rimbal.
• The Tanbreez Project's Preliminary Economic Assessment (PEA), released March 31, 2025, projects a Net Present Value (NPV) of approximately $3 billion (pre-tax) and an Internal Rate of Return (IRR) of approximately 180%.
• A significant discovery of Gallium (147 ppm Ga2O3) was made in Area G of the Tanbreez Project, which the company plans to investigate as a viable by-product.
• CRML completed a private placement (PIPE Financing) on February 7, 2025, raising aggregate gross proceeds of $24.55 million through the issuance of 4,910,000 ordinary shares and 4,910,000 warrants.
• The company received a non-binding letter of interest from the U.S. Export-Import Bank on June 16, 2025, contemplating up to $120 million in funding for the Tanbreez Project.
• Six significant deficiencies in internal control over financial reporting were identified as of June 30, 2025, leading management to conclude that internal controls were not effective.
• Substantial doubt exists about the company's ability to continue as a going concern due to recurring operating losses, negative cash flows from operations, and a working capital deficit of $15.6 million (excluding liabilities settled in shares).

Sentiment

Score: 4

Explanation: While there are positive developments in project economics (Tanbreez PEA, Gallium discovery) and a significant reduction in net loss, the explicit 'going concern' warning, ineffective internal controls, and ongoing legal arbitration create substantial financial uncertainty and risk. The capital raises are positive but not yet sufficient to fully alleviate the going concern doubt, leading to a cautious outlook.

Positives

• Net loss after tax significantly reduced to $51.9 million in 2025 from $139.4 million in 2024.
• Total equity improved from a deficit of $11.1 million in 2024 to a positive $91.9 million in 2025.
• Cash and cash equivalents increased to $7.3 million in 2025 from $1.3 million in 2024.
• The HoA Amendment simplifies the acquisition of the Stage 2 Interest in Tanbreez by removing the $10 million exploration expenditure obligation.
• Tanbreez Project's PEA shows strong economic potential with an estimated NPV of ~$3 billion and an IRR of ~180%.
• Discovery of high-grade Gallium (147 ppm Ga2O3) at Tanbreez adds potential for a valuable by-product.
• Non-binding letter of intent from the U.S. Export-Import Bank for up to $120 million indicates potential significant funding for the Tanbreez Project.
• Entered into a non-binding letter of intent with Ucore Rare Metals Inc. for an offtake agreement for rare earth concentrate from Tanbreez.
• Strategic collaboration with Obeikan Investment Group to build and operate a lithium hydroxide plant in Saudi Arabia is expected to reduce costs for the Wolfsberg Project.
• The Tanbreez Project is positioned as a reliable Western world supplier of rare earths, benefiting from regulatory tailwinds and reducing dependence on China.

Negatives

• Substantial doubt exists about the company's ability to continue as a going concern due to recurring operating losses and negative cash flows.
• Net cash outflows from operating activities were $14.5 million for the year ended June 30, 2025.
• A working capital deficit (excluding liabilities settled in CRML shares) of $15.6 million as of June 30, 2025.
• Identified six significant deficiencies in internal control over financial reporting, leading to a conclusion that internal controls were not effective.
• Ongoing arbitration proceedings with GEM Investor seeking a cash payment of $3.5 million and $27.2 million in ordinary shares, plus interest, with an uncertain outcome.
• The advance payment of $15.0 million from BMW for the Wolfsberg Offtake Agreement is secured by a bank guarantee and not yet freely accessible by CRML.
• The company's long-term success depends on its ability to negotiate and enter into binding offtake or sales agreements, which may not occur on commercially viable terms.
• The recruitment of new management with U.S. public company experience has been delayed pending additional capital raising.

Risks

• Current liquidity resources raise substantial doubt about the ability to continue as a going concern unless additional capital is raised.
• No guarantees that the Tanbreez and Wolfsberg projects, currently at exploration and evaluation stages, will develop into operating mines or result in commercial extraction of mineral deposits.
• Long-term success depends on implementing business strategy, generating revenues, achieving profitability, and developing positive cash flows, which is uncertain.
• Inability to negotiate and enter into binding offtake or sales agreements on commercially viable terms could prevent revenue generation.
• Dependence on successful access to capital and financial markets; inability to access these markets may limit funding for operations and growth.
• The mining industry is capital intensive, and the company may be unable to fund capital requirements or meet contractual commitments.
• Future performance is difficult to evaluate due to limited operating history in the mining, energy, and battery metals sectors, with no revenues from mineral sales to date.
• Substantial dependence on the continued growth of demand for specialty magnets, advanced weapons systems, and the electric vehicle industry.
• Volatility of global markets for rare earth products, supply chain disruptions, and foreign government interventions could adversely affect demand and prices.
• Resource estimates may change significantly with new information, potentially leading to reductions in resources or alterations to future plans.
• Exposure to domestic and global competition from larger, more established mining companies with greater resources.
• Conflicts of interest may arise due to officers and directors being affiliated with entities engaged in similar business activities.
• Failure by management to manage growth properly could adversely affect business, operating results, and financial condition.
• Land reclamation and mine closure requirements may be burdensome and costly, potentially exceeding current estimates.
• No assurance that a definitive feasibility study for the Tanbreez Project will support economic viability or that assumptions will remain correct.
• Adverse global conditions, including macroeconomic slowdowns, recessions, and geopolitical instability, may negatively impact financial results.
• Exposure to force majeure events, including labor unrest, civil disorder, war, extreme weather, and epidemics.
• Requirements of being a U.S. public company may strain resources and divert management's attention, increasing legal, accounting, and compliance expenses.
• Failure to comply with applicable anti-corruption, anti-bribery, anti-money laundering, and similar laws could negatively impact reputation and results.
• Operations are subject to environmental, health, and safety regulations, which could impose additional costs and liabilities.
• Opposition from organizations that oppose mining may disrupt or delay projects.
• Possible litigation risks, including mining permit disputes, environmental claims, and occupational health and safety claims.
• Unauthorized access to, disclosure, or theft of personal information could harm reputation and lead to claims or litigation.
• Failure of information technology and data security infrastructure could adversely affect business and operations.
• Actual capital costs, operating costs, production, and economic returns may differ significantly from anticipated projections.
• The company is a controlled company under Nasdaq rules, qualifying for exemptions from certain corporate governance requirements, which may provide less protection to shareholders.
• No expectation of declaring dividends in the foreseeable future, requiring investors to rely on share price appreciation.
• No assurance of compliance with Nasdaq's continued listing standards.
• Low trading volume for ordinary shares may amplify stock price volatility.
• Exercise of warrants would increase the number of shares eligible for resale, resulting in dilution.
• Public Warrants may be redeemed prior to their exercise at a disadvantageous time, making them worthless.
• Sales of a substantial number of securities by securityholders could cause the share price to fall.
• Issuance of additional capital stock in the future may dilute current stockholders and negatively impact the market price.
• The IRS may assert that the company should be treated as a U.S. corporation for U.S. federal income tax purposes under Section 7874 of the Code.
• U.S. persons owning at least 10% of the stock may be subject to adverse U.S. federal income tax consequences if the company is a Controlled Foreign Corporation (CFC).
• U.S. investors may suffer adverse U.S. federal income tax consequences if the company is treated as a Passive Foreign Investment Company (PFIC).

Future Outlook

The company aims to complete a Definitive Feasibility Study (DFS) for the Tanbreez Project by the end of 2025 and for the Wolfsberg Project within 8-10 months of finance availability. Spodumene production at Wolfsberg is targeted for 2028 or 2029, subject to funding and approvals. CRML plans to continue exploring and developing its critical metals assets, seeking to acquire strategic and complementary operations, and leveraging regulatory tailwinds in Europe and North America to become a sustainable, cost-effective, and strategic minerals supplier. The company expects capital and operating expenditures to increase significantly with ongoing activities and public company operations.

Management Comments

• Tony Sage, CEO and Executive Chairman, certified that the annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made not misleading, and that financial statements fairly present the financial condition, results of operations, and cash flows.
• Sergey Savchenko, CFO, certified the accuracy and fair presentation of the financial statements and other financial information in the report.
• Management believes it is reasonably foreseeable that the Group will continue as a going concern, based on successful PIPE raising, continued pursuit of funding options, and ability to defer exploration expenditures.

Industry Context

Critical Metals Corp. operates within the highly competitive and capital-intensive mining exploration and evaluation industry, focusing on heavy rare earth elements (HREEs) and lithium, which are critical inputs for next-generation technologies like electric vehicles and defense applications. The company positions itself to benefit from robust regulatory tailwinds in Europe and North America aimed at establishing Western-aligned supply chains to reduce dependence on China, which currently dominates over 90% of the world's rare earth assets. The market for these technologies is rapidly evolving and subject to external factors such as commodity price volatility, supply chain disruptions, environmental impacts, and geopolitical instability.

Comparison to Industry Standards

• The Tanbreez Project is believed to be unique due to its significant size and high HREE asset mix (greater than 27% HREEs), contrasting with competitors who primarily target light rare earth elements (LREEs) which carry a much lower value.
• The Wolfsberg Project's proximity to planned giga factories and a strong local workforce in Europe positions it favorably to deliver lithium products to the growing European lithium battery and EV industry, aiming to improve continuity of supply and reduce dependence on Chinese manufacturers.
• The company's low uranium and thorium levels at Tanbreez (10-20 ppm uranium, not exceeding 100 ppm thorium) are notable, potentially making it more environmentally and politically viable compared to other major REE deposits that face nuclear regulatory issues.

Management Changes

Corporate Governance

Legal Proceedings

• The company is currently involved in arbitration proceedings with the Gem Global Yield LLC SCS (GEM Investor) initiated in March 2025. The GEM Investor is seeking a cash payment of $3,500,000 and an amount of ordinary shares having a value equal to $27,200,000, plus interest, under the GEM Agreements. The company has denied these allegations and filed counterclaims. The outcome of this arbitration is uncertain, and a negative outcome could result in substantial payments or the issuance of a material amount of ordinary shares.

Related Party Transactions

• Critical Metals Corp. owes European Lithium Ltd (its parent entity) $5,854,852 as of June 30, 2025, for working capital advances and reimbursement of transaction expenses. These funds are repayable on demand.
• Okewood Pty Ltd, an entity related to Tony Sage (CEO and Executive Chairman), provided an interest-free loan of US$4.5 million to Rimbal Pty Ltd, the vendor in the Tanbreez acquisition.
• Bellatrix Corporate Pty Ltd, a related party to the previous interim CFO Ms. Melissa Chapman, was issued 100,000 shares for accounting services provided up to December 31, 2024.
• Tony Sage was issued 500,000 shares as a bonus payment for services provided, which vested immediately on February 26, 2025.
• Skylong Asset Limited was issued 350,365 shares for legal services related to the Obeikan transaction on June 6, 2025.

Stakeholder Impact

• **Shareholders**: Face potential dilution from future equity issuances and warrant exercises. The 'going concern' doubt and internal control deficiencies could negatively impact share price and investor confidence. The outcome of the GEM arbitration could also significantly affect shareholder value.
• **Employees**: The company's ability to attract and retain skilled personnel is crucial for growth, and delays in recruitment due to capital raising could impact operations. Health and safety risks are inherent in mining operations.
• **Customers (e.g., BMW, Ucore)**: Offtake agreements are critical for future revenue. Delays in project development or failure to meet product specifications could impact these relationships and the company's ability to deliver.
• **Suppliers/Creditors**: The working capital deficit and going concern doubt indicate potential risks for timely payment to suppliers and creditors, although related party funding provides some support.
• **Local Communities (Greenland, Austria)**: Project development is dependent on maintaining productive relationships with local communities and stakeholders, including addressing environmental and social impact concerns. Protests or opposition could disrupt operations.

Next Steps

• Complete the Definitive Feasibility Study (DFS) for the Tanbreez Project by the end of 2025.
• Submit exploitation and closure plans for the Tanbreez Project to the Greenland government by the end of 2025.
• Provide financial security and a company guarantee for the Tanbreez Project by June 30, 2026.
• Commence mineral exploitation at the Tanbreez Project by the end of 2028.
• Complete a Definitive Feasibility Study (DFS) for spodumene production at the Wolfsberg Project, expected 8-10 months after finance availability.
• Aim to commence spodumene production at the Wolfsberg Project in 2028 or 2029, subject to funding and relevant approvals.
• Continue efforts to remedy conditions that raise substantial doubt about the company's ability to continue as a going concern, including raising additional capital.
• Investigate the mineralogy of gallium in the Tanbreez Project and assess its potential as a viable by-product, with confirming assay results expected in October 2025.
• Establish and integrate processes for assessing, identifying, and managing material cybersecurity risks into the overall risk management system.

Key Dates

Recommendation

Critical Metals Corp. presents a mixed bag of significant potential and substantial risks. The Tanbreez Project's impressive PEA, high HREE content, and strategic positioning as a Western-aligned supplier, coupled with the US Ex-Im Bank's letter of interest, offer strong long-term upside. The reduction in net loss and improved equity position are also positive indicators. However, the explicit 'going concern' warning, persistent negative operating cash flows, a working capital deficit, and identified 'ineffective' internal controls highlight severe operational and financial vulnerabilities. The ongoing GEM arbitration adds further uncertainty. While the strategic assets and recent capital raises provide a glimmer of hope, the fundamental financial health and governance issues warrant extreme caution. A 'hold' recommendation is appropriate, suggesting current investors maintain their position to monitor the resolution of the going concern issue and internal control deficiencies, as well as progress on project financing and development, before considering further investment. New investors should await clearer signs of financial stability and operational execution.

Keywords

Rare Earth Elements, Lithium, Critical Minerals, Mining Exploration, Greenland, Austria, Tanbreez Project, Wolfsberg Project, Heavy Rare Earths, Gallium, SEC Filing, Financial Results, Capital Raise, Corporate Governance, Risk Management, Project Development, Offtake Agreements, ESG, Supply Chain