REG - Capital Metals PLC - Half-year Report
17/12/2024 10:00
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RNS Number : 4118Q Capital Metals PLC 17 December 2024
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE UK
VERSION OF THE MARKET ABUSE REGULATION NO 596/2014 WHICH IS PART OF ENGLISH
LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, AS AMENDED. ON
PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE, THIS
INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.
17 December 2024
Capital Metals plc
("Capital Metals" or the "Company")
Unaudited Interim Results for the Six Month Period Ended 30 September 2024
Capital Metals (AIM: CMET), a mineral sands company approaching mine
development stage at the high-grade Eastern Minerals Project in Sri Lanka (the
"Project"), announces its unaudited results for the six month period ended 30
September 2024 (the "Half Year").
Highlights:
· Company focus on reducing Stage 1 capex whilst expediting
cashflow has resulted in estimated capex falling by one-third to $20.9
million, with further optimisation opportunities identified for potential cost
reductions
o New approach fast-tracks production and enables Project to become
self-funding as quickly as practicable
o Initial production of Heavy Mineral Concentrate, based on projected
throughput rate of 550,000tpa, is forecast to be 125,000tpa, with upside from
expected higher grades in the initial mining area
o Targeting Final Investment Decision ("FID") in Q2 2025 in order to
commence construction, with an expected 9-12-month construction period until
first production
· Company in active dialogue with offtakers, vendor financiers, and
potential Sri Lankan project partners to finance the Project in a way that
minimises or eliminates the requirement for market equity
· Continued planning for a drilling programme expected to start
later this month focussing on resource growth and supporting design,
engineering and mine planning, while obtaining greater geological confidence
in the proposed mining areas
· Sheffield Resources Limited (ASX: SFX) Executive Chair, Bruce
Griffin, joined the Board as a Non-Executive Director in April 2024 following
the £1.25m strategic investment by Sheffield in March 2024
· Stuart Forrester, an experienced engineering professional with an
extensive background in mineral sands projects, was appointed as Chief
Operating Officer (non-Board position) in July 2024
· Deepened community engagement programme led by dedicated
personnel aimed at increasing understanding of the Project and undertaking
support initiatives
Greg Martyr, Executive Chairman, commented:
"The Company now has an approach that fast-tracks production, significantly
reduces initial capex, and enables the Project to become self-funding as
quickly as practicable. Based on the costs in the PEA, which we believe are
conservative, we are confident of achieving significant operating margins over
the life of the Project. Accordingly, we are targeting FID in Q2 2025 in order
to commence construction, with an expected 9-12-month construction period
until first production."
For further information, please contact:
Capital Metals plc Via Vigo Consulting
Greg Martyr (Executive Chairman)
Vigo Consulting (Investor Relations) +44 (0)20 7390 0234
Ben Simons / Peter Jacob/ Anna Stacey capitalmetals@vigoconsulting.com (mailto:capitalmetals@vigoconsulting.com)
SPARK Advisory Partners (Nominated Adviser) +44 (0)20 3368 3550
Neil Baldwin / James Keeshan/ Adam Dawes
Tavira Financial +44 (0)20 7100 5100
Jonathan Evans / Oliver Stansfield
About Capital Metals
Capital Metals is a UK company listed on the London Stock Exchange (AIM:
CMET). We are developing the Eastern Minerals Project in Sri Lanka,
approximately 220km east of Colombo, containing industrial minerals including
ilmenite, rutile, zircon, and garnet. The Project is one of the highest-grade
mineral sands projects globally, with potential for further grade and resource
expansion. In 2022, a third-party Preliminary Economic Assessment provided a
Project NPV of US$155-235m based on existing resources, with further
identified optimisation potential. We are committed to applying modern mining
practices and bringing significant positive benefits to Sri Lanka and the
local community. We expect over 300 direct new jobs to be created and over
US$130m in direct government royalties and taxes to be paid.
Visit our website:
www.capitalmetals.com (http://www.capitalmetals.com)
Follow us on social media:
X (formerly Twitter): @MetalsCapital (https://twitter.com/MetalsCapital)
LinkedIn: @Capital Metals plc (https://uk.linkedin.com/company/capitalmetals)
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present the half year report for the six month period ended 30
September 2024.
During the period, Sri Lankans peacefully went to the polls to elect a new
president from the National People's Power party, triggering a parliamentary
election two months later giving the NPP a clear mandate to govern, with the
capacity to take positive decisions to assist the economy, with new investment
in projects creating jobs and strong foreign currency inflows.
For Capital Metals, our major focus was on working diligently with consultants
across all aspects of Project delivery to arrive at a materially reduced capex
estimate for the first stage of production without compromising on throughput
to produce a high grade, very clean Heavy Mineral Concentrate ("HMC") which we
know will be well received by offtakers.
We have strengthened the team with key hires in Australia and Sri Lanka,
planned for a drilling programme to commence later this month, and deepened
our community engagement as we approach mine development.
Review of Activity
Project Advancement
During the Half Year, as Project funding talks ended with Sheffield Resources
Limited (ASX: SFX) ("Sheffield") and LB Group, the Company began establishing
a development plan which significantly reduces the circa $30 million Stage 1
capex from the May 2022 Preliminary Economic Assessment ("PEA"), whilst
expediting cashflow. Simply, our plan became to go it alone, retaining more
equity in the Project (which should also grow in terms of resource) and
getting to cash flow as fast as practicable. Leveraging updated knowledge and
implementing numerous process improvements since the PEA, the outcome of this
work was announced earlier this month when the Company was pleased to report
that the estimated capex has reduced to $20.9 million, with further
optimisation opportunities identified for potential cost reductions.
The process rationalisation studies initiated during the Half Year included:
eliminating the need to wash the concentrate (following numerous discussions
with potential offtakers) and reducing associated infrastructure at the port;
transitioning to truck and shovel mining to avoid costly in-pit mining units;
and utilising an off-the-shelf predesigned wet concentrator plant from Mineral
Technologies.
As a result, the initial production rate of HMC in Stage 1, based on the same
projected throughput rate in the PEA of 550,000 tonnes per annum ("tpa"), is
forecast to be 125,000 tpa, with upside based on expected higher grades in the
chosen initial mining area.
This strategy also supports incremental expansions of production capacity and
product quality through various plant value additions over time. Subsequent
phases incorporate incremental mining rates of up to 1.65 million tpa, and
potentially beyond, subject to expected increases in the resource; a magnetic
separation plant to produce final ilmenite and garnet products and zircon and
rutile in concentrate; and a non-magnetic separation plant in the final stage
to produce final zircon and rutile products in addition to the ilmenite and
garnet.
The Company has also been in active dialogue with offtakers, vendor
financiers, and potential Sri Lankan project partners to finance the Project
in a way that minimises or eliminates the requirement for the Company to raise
market equity for the funding task. This approach is also significantly less
time consuming than traditional project debt.
After the Half Year, we entered into service agreements with Mineral
Technologies, a leading mineral process solutions, services and equipment
specialist headquartered in Queensland, Australia, and Access Group, a Sri
Lanka-based engineering and construction firm. Both partners will support
different aspects of the engineering and design of the Project necessary to
reach a Final Investment Decision ("FID").
Mineral Technologies will focus on key technical aspects, with both companies
leveraging their expertise to develop capex requirements to support FID. It is
envisaged Mineral Technologies will become the supplier of a pre-designed Flex
Series plant for Stage 1. We will work with Access Group to build our
in-country capacity and capabilities, incorporating local skills and creating
jobs. In line with this approach, the teams are exploring options to fabricate
key equipment, including the structural framework for the spiral plant, in Sri
Lanka.
Drill Planning
During the Half Year we continued planning for a drill programme aimed at
increasing the resource, as well as helping with design, engineering and mine
planning, whilst obtaining greater geological confidence in the proposed
mining areas. The programme was delayed during the elections. We are now
mobilising the drilling rig and team to recommence drilling activities later
this month.
Board & Management Developments
In April 2024, we announced the appointment of Bruce Griffin as a
Non-Executive Director. Bruce is Executive Chair of Sheffield, a 10%
shareholder in Capital Metals since March 2024. He is well respected
throughout the global mineral sands industry and recently played a key role in
bringing Thunderbird in Western Australia, one of the largest and
highest-grade mineral sands discoveries in the last 30 years, into production.
This, coupled with his decades of experience within mineral sands and the
wider resources industries, will be valuable to Capital Metals as we advance
through FID into mine construction and introduce modern mining practices to
Sri Lanka's developing mineral sands sector.
In July 2024, Stuart Forrester, an experienced engineering professional with
an extensive background in mining, processing and project management, was
appointed as Chief Operating Officer (non-Board position). Stuart's experience
at every stage of the life cycle of mineral sands mines with the likes of
Illuka Resources and Chemours is already proving hugely valuable. Stuart is
well connected with the relevant service and equipment providers that we will
be working with to develop, and vendor finance, our staged approach to the
Project. He is a passionate team builder. He has spent considerable time with
us in Sri Lanka already, building out and getting to know the local team and
supporting community engagement. We are delighted to have him on board, and
Stuart is particularly excited about our 17.6% Total Heavy Mineral grade which
sets our project apart from typical 2-5% mineral sands projects, driving
increased value and efficiency.
Other new colleagues include Harsha Udawatta, Operations Manager, and
Jegatheeswary Gunasingam, Community Relations Manager who joined in Sri Lanka,
adding further skills to our growing in-country team to support the pathway to
production.
Outlook
The Company now has an approach that fast-tracks production, significantly
reduces initial capex, and enables the Project to become self-funding as
quickly as practicable. Based on the costs in the PEA, which we believe are
conservative, we are confident of achieving significant operating margins over
the life of the Project. Accordingly, we are targeting FID in Q2 2025 in order
to commence construction, with an expected 9-12-month construction period
until first production.
Greg Martyr
Executive Chairman
17 December 2024
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Notes 6 months to 30 September 2024 Unaudited 6 months to 30 September 2023 Unaudited
$ $
Continuing operations
Revenue - -
Administration expenses (454,492) (384,470)
Share based payments (4,631) (19,149)
Foreign exchange (871) (4,571)
Operating loss (459,994) (408,190)
Finance income 13,213 558
Loss before income tax (446,781) (407,632)
Income tax - -
Loss for the period (446,781) (407,632)
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translation differences 216,927 79,989
Total comprehensive loss for the period (229,854) (327,643)
Basic loss per share 5 (0.064)p (0.069)p
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at As at As at
30 September 2024 Unaudited 31 March 2024 Audited 30 September 2023 Unaudited
$ $ $
Notes
Non-Current Assets
Property, plant and equipment 20,561 21,589 22,569
Other loans 144,141 142,145 131,730
Intangible assets 6 5,708,492 5,332,471 4,707,101
5,873,194 5,496,205 4,861,400
Current Assets
Trade and other receivables 44,625 44,637 109,035
Cash and cash equivalents 2,427,569 3,087,329 501,225
2,472,194 3,131,966 610,260
Total Assets 8,345,388 8,628,171 5,471,660
Non-Current Liabilities
Trade and other payables 600,000 600,000 600,000
600,000 600,000 600,000
Current Liabilities
Trade and other payables 790,077 847,637 731,180
790,077 847,637 731,180
Total Liabilities 1,390,077 1,447,637 1,331,180
Net Assets 6,955,311 7,180,534 4,140,480
Capital and Reserves Attributable to
Equity Holders of the Company
Share capital 6,455,344 6,455,344 6,278,412
Share premium 54,923,341 54,923,341 49,767,108
Capital contribution and contingent shares 3,218,750 3,218,750 3,218,750
Other reserves (42,022,458) (42,290,269) (40,046,992)
Retained losses (15,499,523) (15,052,742) (14,968,789)
Non-controlling interest (120,143) (73,890) (108,009)
Total Equity 6,955,311 7,180,534 4,140,480
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Attributable to owners of the Parent
Note Share capital Share premium Capital contribution and contingent shares Other reserves Retained losses Total equity Non-controlling interest Total equity
$ $ $ $ $ $ $ $
Balance as at 1 April 2023 6,062,403 48,946,676 3,218,750 (39,136,359) (15,570,928) 3,520,542 (103,430) 3,417,112
Loss for the period - - - - (407,632) (407,632) - (407,632)
Other comprehensive income for the period - - - 79,989 - 79,989 - 79,989
Total comprehensive loss for the period - - - 79,989 (407,632) (327,643) - (327,643)
Shares issued 216,009 864,036 - - - 1,080,045 - 1,080,045
Cost of capital - (43,604) - - - (43,604) - (43,604)
Grant of options & warrants - - - 19,149 - 19,149 - 19,149
Cancelled options - - - (1,009,771) 1,009,771 - - -
Foreign exchange movements on NCI - - - - - - (4,579) (4,579)
Total transactions with owners, recognised in equity 216,009 820,432 - (990,622) 1,009,771 1,055,590 (4,579) 1,051,011
Balance as at 30 September 2023 6,278,412 49,767,108 3,218,750 (40,046,992) (14,968,789) 4,248,489 (108,009) 4,140,480
Balance as at 1 April 2024 6,455,344 54,923,341 3,218,750 (42,290,269) (15,052,742) 7,254,424 (73,890) 7,180,534
Loss for the period - - - - (446,781) (446,781) - (446,781)
Other comprehensive loss for the period - - - 216,927 - 216,927 - 216,927
Total comprehensive loss for the period - - - 216,927 (446,781) (229,854) - (229,854)
Grant of options - - - 4,631 - 4,631 - 4,631
Foreign exchange movements on NCI - - - 46,253 - 46,253 (46,253) -
Total transactions with owners, recognised in equity - - - 50,884 - 50,884 (46,253) 4,631
Balance as at 30 September 2024 6,455,344 54,923,341 3,218,750 (42,022,458) (15,499,523) 7,075,454 (120,143) 6,955,311
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
6 months to 30 September 2024 6 months to 30 September 2023
Unaudited Unaudited
$ $
Notes
Cash flows from operating activities
Loss before taxation (446,781) (407,632)
Adjustments for:
Share based payments 4,631 19,149
Depreciation 3,564 3,782
Interest income (13,157) (470)
(Increase)/decrease in trade and other receivables 7,585 (73,063)
(Decrease) in trade and other payables (65,186) (110,713)
Foreign exchange (8,842) 3,221
Net cash used in operations (518,186) (565,726)
Cash flows from investing activities
Purchase of property, plant and equipment (2,336) (262)
Disposal of property, plant and equipment - 423
Exploration and evaluation activities 6 (340,449) (183,438)
Interest received 13,157 470
Net cash used in investing activities (329,628) (182,807)
Cash flows from financing activities
Proceeds from share issues - 1,080,045
Cost of share issues - (43,604)
Net cash generated from financing activities - 1,036,441
Net increase/(decrease) in cash and cash equivalents (847,814) 287,908
Exchange differences on cash 188,054 (2,896)
Cash and cash equivalents at beginning of period 3,087,329 216,213
Cash and cash equivalents at end of period 2,427,569 501,225
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. General Information
Capital Metals plc is a mineral exploration company with its shares admitted
to trading on the AIM Market of the London Stock Exchange.
The Company is domiciled in the United Kingdom and incorporated and registered
in England and Wales, with registration number 05555087. The Company's
registered office is 6 Heddon Street, London, W1B 4BT.
2. Basis of Preparation
The condensed consolidated interim financial statements have been prepared in
accordance with the requirements of the AIM Rules for Companies. As permitted,
the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in
preparing this interim financial information. The condensed interim financial
statements should be read in conjunction with the annual financial statements
for the year ended 31 March 2024, which have been prepared in accordance with
UK adopted international accounting standards.
The interim financial information set out above does not constitute statutory
accounts within the meaning of the Companies Act 2006. It has been prepared on
a going concern basis in accordance with the recognition and measurement
criteria of UK adopted international accounting standards.
Statutory financial statements for the year ended 31 March 2024 were approved
by the Board of Directors on 4 September 2024 and delivered to the Registrar
of Companies. The report of the auditors on those financial statements was
unqualified in relation to the Company's ability to continue as a going
concern. The condensed interim financial statements are unaudited and have not
been reviewed by the Company's auditor.
Going concern
These financial statements have been prepared on the going concern basis.
Given the Group's current cash position and its demonstrated ability to raise
capital, the Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future. Thus, they continue to adopt the going concern basis of accounting
preparing the condensed interim financial statements for the period ended 30
September 2024.
The factors that were extant at 31 March 2024 are still relevant to this
report and as such reference should be made to the going concern note and
disclosures in the 2024 Annual Report and Financial Statements ("2024 Annual
Report").
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business.
The key risks that could affect the Company's medium term performance and the
factors that mitigate those risks have not substantially changed from those
set out in the 2024 Annual Report, a copy of which is available on the
Company's website: www.capitalmetals.com (http://www.capitalmetals.com) . The
key financial risks are foreign currency risk, liquidity risk, credit risk,
market risk and fair value estimation.
Critical accounting estimates
The preparation of condensed interim financial statements requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities at the end of the reporting period. Significant items subject
to such estimates are set out in Note 2 the 2024 Annual Report. The nature and
amounts of such estimates have not changed significantly during the interim
period.
3. Accounting Policies
Except as described below, the same accounting policies, presentation and
methods of computation have been followed in these condensed interim financial
statements as were applied in the preparation of the Company's annual
financial statements for the year ended 31 March 2024.
3.1 Changes in accounting policy and disclosures
(a) New and amended standards adopted by the Group and Company
A number of new and amended standards and interpretations issued by the
International Accounting Standards Board (IASB) have become effective for the
first time for financial periods beginning on (or after) 1 April 2024 and have
been applied by the Company and Group in these interim financial statements.
None of these new and amended standards and interpretations had a significant
effect on the Company or Group because they are either not relevant to the
Company or Group's activities or require accounting which is consistent with
the Company or Group's current accounting policies.
(b) New standards, amendments and Interpretations in issue but not yet
effective or not yet endorsed and not early adopted
There are a number of standards, amendments to standards, and interpretations
which have been issued by the IASB that are effective in future accounting
periods, and which have not been adopted early.
4. Dividends
No dividend has been declared or paid by the Company during the six months
ended 30 September 2024 (six months ended 30 September 2023: $nil).
5. Earnings per Share
The calculation of earnings per share is based on a retained loss of $446,781
for the six months ended 30 September 2024 (six months ended 30 September
2023: loss $407,632) and the weighted average number of shares in issue in the
period ended 30 September 2024 of 701,083,711 (six months ended 30 September
2023: 587,667,812).
No diluted earnings per share is presented for the six months ended 30
September 2024 or six months ended 30 September 2023 as the effect on the
exercise of share options would be to decrease the loss per share.
6. Intangible fixed assets
The movement in capitalised exploration and evaluation costs during the period
was as follows:
Exploration & Evaluation at Cost and Net Book Value $
Balance as at 1 April 2024 5,332,471
Additions 340,449
Foreign exchange 35,572
As at 30 September 2024 5,708,492
7. Events after the balance sheet date
There have been no significant events after the balance sheet date.
8. Approval of interim financial statements
The Condensed interim financial statements were approved by the Board of
Directors on 17 December 2024.
9. Availability of interim financial statements
Copies of these interim financial statements are available from the Capital
Metals website at www.capitalmetals.com.
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