REG - Capital Metals PLC - Update re Temporary Suspension of IMLs

Capital MetalsAnnouncement

26/04/2023 07:00

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RNS Number : 4313X  Capital Metals PLC  26 April 2023

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26 April 2023

 

Capital Metals plc

 

("Capital Metals", the "Company" or the "Group")

 

Update re Temporary Suspension of Industrial Mining Licences

 

Capital Metals (AIM: CMET), a mineral sands company approaching mine
development stage at the high-grade Eastern Minerals Project in Sri Lanka (the
"Project"), provides the following update regarding the temporary suspension
by the Geological Survey and Mines Bureau ("GSMB") of the Company's Industrial
Mining Licences ("IMLs") referred to in Company announcements dated 12
December 2022, 10 February 2023, and 20 February 2023.

 

As previously announced, despite obtaining legal advice from Sri Lankan
lawyers demonstrating that the ownership structure of the Company's Sri Lankan
subsidiary, Damsila Exports (Pvt) Limited ("Damsila"), which holds the IMLs,
complied with all relevant Sri Lankan laws, following engagement with the
GSMB, the Company expeditiously divested 60% of Damsila to a Sri Lankan
national.

 

Despite having received written evidence on several occasions from Damsila of
these changes in ownership structure having taken effect, the GSMB has neither
lifted the suspension of the IMLs nor provided an indication of when or on
what basis it will do so. Management continues to engage with GSMB officials
to seek to understand the department's reasoning; however, to date no
explanation for the continued unjust suspension has been forthcoming.

 

Accordingly, the Company, in consultation with its Sri Lankan and
international legal advisers, has formally written to the GSMB and various
high-level officials in Sri Lanka reminding the agency of the consequences of
its actions and reserving the Company's rights in relation to potential
illegal activities and potential breaches of international treaty obligations.
The Board's objective is to resolve the matter in a timely and amicable
manner; however, the Company has advised the GSMB that it is ready to pursue
all actions to protect the interests of its shareholders in the Company, which
has invested US$11 million in exploration and development of the Project
between 2017 and 2022.

 

Offtake Funding

 

The Company continues to have positive dialogue with a potential funding and
offtake partner which has made it clear to the Company that once the
suspension of the IMLs has been lifted it will seek to conclude long form
agreements expeditiously to fund the Project into production. Further updates
will be announced as this process progresses.

 

Greg Martyr, Chairman of Capital Metals, commented:

 

"We continue to seek to work with the GSMB to resolve this matter as
proactively as possible. We are encouraged by the support of many individuals
within the GSMB for our activities but remain concerned about certain
governance practices within that agency that are allowing the unwarranted and
prolonged suspension of the IMLs. We are also receiving strong support from
our approaches to high-level officials from the Sri Lankan and UK governments.
We are hopeful that logic will prevail within the GSMB to enable us to build
the Project which, with a capital cost of over US$80 million, will provide
significant benefits to Sri Lanka through much needed foreign investment,
increased employment opportunities and export revenues.

 

We are reassured by the progress of financing discussions for the Project
which we are confident could be concluded soon after the suspensions are
lifted."

 

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

 Capital Metals plc                           Via Vigo Consulting

 Michael Frayne (CEO)

 James Mahony (CFO)
 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 plc is a British company listed on the London Stock Exchange
and one of only a few foreign investors in Sri Lanka's mining industry. After
investing US$11 million in exploration and development activities including
detailed environmental assessments between 2017 and 2022, the Company's Sri
Lankan subsidiary, Damsila Exports (Pvt) Limited, was issued an initial two
licences in August 2022 to mine heavy mineral sands in the Eastern Province,
containing industrial minerals including ilmenite, rutile, zircon, and garnet.

 

 

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