Statutory Appeal Hearing Decision
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.
19 October 2023
Capital Metals plc
("Capital Metals" or the "Company")
Statutory Appeal Hearing Decision
GSMB Ordered to Reissue the 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"), is pleased to announce it has received a favourable decision from the statutory appeal hearing (the "Statutory Appeal") against the notice of cancellation of Industrial Mining Licences 16236 and 16237 (the "IMLs") which was issued in May 2023 by the Geological Survey and Mines Bureau (the "GSMB").
The Statutory Appeal was heard before the Secretary to the Ministry of Environment (the "Secretary") on 27 September 2023. Having considered the written and oral submissions, the Secretary determined that the cancellation of the IMLs was not correct and ordered the GSMB to reissue the IMLs to the Company's Sri Lankan subsidiary, Damsila Exports (Pvt) Limited (the "Decision").
In his Decision, the Secretary criticised the conduct of the GSMB noting that it had violated certain provisions within the Mines and Minerals Act in its suspension and cancellation of the IMLs. The Secretary stated:
"Therefore, at a time when the country is moving towards sustainable development, although the government institutions should encourage investors to create such large-scale projects and support the country to earn foreign exchange, it appears that [the GSMB] have not done so. I would like to emphasize that the GSMB should act transparently and with a good understanding of good governance principles while working as a government agency."
This clears the path for the Company to work towards finalising an offtake and financing agreement with LB Group (002601:SHENZHEN; Market Cap: US$6.4 billion) further to the previously announced Memorandum of Understanding ("MoU") announced on 9 May 2023.
Greg Martyr, Executive Chairman, commented:
"We are delighted that the Secretary has ordered the reissuance of the IMLs enabling us to now fast-track the development of the Project. This follows almost a year of legal and lobbying efforts to enable us to get the Project back on track.
The Eastern Minerals Project will be a first-of-a-kind for Sri Lanka, comprising modern mining practices, in-country value addition, knowledge and skills transfer, regional infrastructure improvements, and substantial foreign exchange income for the country.
While the interference with the IMLs has cost us the best part of a year, we have in that time secured an offtake MoU with the world's number one manufacturer of high-performance titanium dioxide pigments to fund the Project into production and seen continued improvements in the prices of our main products. This will benefit all stakeholders.
We expect to be extremely busy in re-engaging with LB Group, accelerating the satisfaction of the conditions required to meet the numerous outstanding mining applications as well as the reissued IMLs, commencing work on the Environmental Impact Assessment for the southern part of the Project in EL199, securing port access at Oluvil, and building out the team. It will be a pleasant change to be working on these value adding initiatives rather than fighting against the injustice we suffered at the hands of a few over the last 12 months.
We look forward to working with the GSMB, which has been given clear instructions from the Secretary and is now under the purview of President Ranil Wickremesinghe, as well as the Board of Investment, which has an increased role in the appraisal of and recommendation for the approval of mineral licences following the recently announced procedural changes.
I would like to thank our team, particularly in Sri Lanka, for their unstinting efforts towards securing this outcome. This is a good decision for Capital Metals and for Sri Lanka."
For further information, please visit www.capitalmetals.com or contact:
Capital Metals plc
Greg Martyr (Executive Chairman)
Via Vigo Consulting
Vigo Consulting (Investor Relations)
Ben Simons / Peter Jacob
+44 (0)20 7390 0234
SPARK Advisory Partners (Nominated Adviser)
Neil Baldwin / James Keeshan
+44 (0)20 3368 3554
Jonathan Evans / Oliver Stansfield
+44 (0)20 7100 5100
About Capital Metals
Capital Metals plc is a British company listed on the AIM segment of the London Stock Exchange and one of only a few foreign investors in Sri Lanka's mining industry. Following 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.