REG - Capital Metals PLC - Offtake MoU Signed

Capital MetalsAnnouncement

09/05/2023 07:15

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RNS Number : 6712Y  Capital Metals PLC  09 May 2023

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.

 

9 May 2023

 

Capital Metals plc

 

("Capital Metals" or the "Company")

 

Offtake MoU Signed

 

Agreement with world's No. 1 manufacturer of high-performance titanium dioxide
pigments to fund the Eastern Minerals Project into production

 

Capital Metals (AIM: CMET), a mineral sands company approaching mine
development stage at the high-grade Eastern Minerals Project in Sri Lanka (the
"Project"), is pleased to announce that the Company has signed a Memorandum of
Understanding ("MoU") with LB Group (https://www.lomonbillions.global/)
(002601:SHENZHEN; Market Cap: US$5.9 billion), the world's leading
manufacturer of high-performance titanium dioxide pigments and sponge, to fund
the Project into production.

 

MoU Highlights

 

 *     LB Group is seeking to invest in overseas assets to provide ilmenite feedstock
       for its pigment and sponge operations in China.
 *     Parties to form a 50/50 Joint Venture across all Capital Metals’ interests
       in the Project for the development and operation of the Project (the
       “JV”).
 *     LB Group to fully fund the Project as defined by the IHC Mining independent
       Development Study Report and Preliminary Economic Assessment announced in May
       2022 (“PEA"), which is estimated to cost US$81 million. The JV will fund any
       expansion of the Project beyond the PEA parameters on a 50/50 basis.
 *     All funding to be by way of equity on a staged basis to achieve 1.65 million
       tonnes per annum mining rate capacity and processing to final products, with
       LB Group able to apply its share of profits towards its funding commitment
       until the agreed capacity is achieved.
 *     Capital Metals to start earning its share of JV profits as soon as shipments
       begin, which could be within 12 months of the start of construction.
 *     LB Group will guarantee 100% of the offtake of heavy mineral concentrate and
       ilmenite for the entire project life at prevailing international prices at the
       time of sale – other products to be marketed by the JV to third parties.
 *     LB Group has conducted significant due diligence on the Project with only
       confirmatory due diligence remaining.
 *     The Project will be managed by a standalone management team reporting to the
       JV board.
 *     The MoU is non-binding however it provides LB Group with exclusivity until 31
       July 2023 to negotiate a definitive JV agreement, unless extended by mutual
       agreement.
 *     Completion of the JV agreement is expected to require approval of Capital
       Metals’ shareholders in a general meeting. Further detailed terms of the
       proposed JV investment and offtake agreement by LB Group will be notified at
       the time of signing.

Greg Martyr, Chairman of Capital Metals, commented:

 

"We are delighted to have signed an MoU with LB Group, the world's leading
titanium dioxide pigment manufacturer. This follows several months of
discussions and due diligence by LB Group. If concluded, this agreement will
not only fund the Project into production but will also see Capital Metals
benefitting from its share of free cash flow from the very first shipment.

 

This Project will be a first of a kind for Sri Lanka with modern mining
practices, knowledge transfer, and significant export income generation.
Subject to the lifting of the temporary suspension by the Geological Survey
and Mines Bureau of the Company's Industrial Mining Licences, we look forward
to working with LB Group to conclude long form agreements expeditiously and
thereafter on the construction, mining, processing, and continued exploration
of the Project."

 

Capital Metals is being advised by Bruce Griffin of Farview Solutions Limited
on the potential transaction with LB Group.

 

For further information, please visit www.capitalmetals.com
(http://www.capitalmetals.com) or contact:

 Capital Metals plc                           Via Vigo Consulting

 Greg Martyr (Chairman)

 Michael Frayne (CEO)
 Vigo Consulting (Investor Relations)         +44 (0)20 7390 0234

 Ben Simons / Peter Jacob                     capitalmetals@vigoconsulting.com (mailto:capitalmetals@vigoconsulting.com)
 SPARK Advisory Partners (Nominated Adviser)  +44 (0)20 3368 3554

 Neil Baldwin / James Keeshan
 Tavira Financial                             +44 (0)20 7100 5100

 Jonathan Evans / Oliver Stansfield

 

About Capital Metals

Capital Metals is developing the Eastern Minerals Project in Sri Lanka,
approximately 220km east of Colombo. The Project is one of the highest-grade
mineral sands projects globally, with a current JORC Resource of 17.2Mt with
an average grade of 17.6% Total Heavy Minerals, and potential for significant
resource extension. In May 2022, an independent Development Study and
Preliminary Economic Assessment (the "Study") was completed by IHC Mining, a
leading independent global mining services group with specialist expertise in
developing mineral sands projects. The Study calculated a net present value
for the Project of US$155-235M based on existing resources, and forecasted
US$645M of revenue and net operating cashflows of US$391M, with potential for
further optimisation of the Project economics.

Capital Metals' goal is to become a high margin producer of mineral sands for
the international market, with a commitment to applying modern international
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$100M in direct government royalties and taxes to be paid.

 

About LB Group

LB Group is the world's No. 1 manufacturer of high-performance titanium
dioxide (TiO2) pigments. The group has an annual production capacity of 1.5
million tonnes of titanium dioxide pigment and 50,000 tonnes of titanium
sponge.  In addition, LB Group has a number of its existing mining operations
supplying ilmenite, rutile and zircon minerals and is the largest consumer of
ilmenite globally.

LB Group has over 30 years of TiO2 pigment manufacturing experience and
supplies a wide range of TiO2 pigments for all major applications using the
sulfate process and the chloride process. LB Group's high performance TiO2
products are key ingredients used to produce a wide range of products
worldwide including paints, plastics, inks, and paper, including its
BILLIONS™ TiO2 pigment brands which are established worldwide.

 

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