Update re Temporary Suspension of IMLs
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30 May 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").
As previously announced, Capital Metals has informed the GSMB that the Company has reserved all rights, including under international law, in relation to potential illegal activities by the GSMB and potential breaches of international treaty obligations, pursuant to which the Company has issued a Notice of Dispute*. The latest action of the GSMB has been to send the Company a notice of cancellation of the IMLs, purportedly due to failure to comply with certain licence conditions, being primarily a lack of mining and associated activities. This is despite the GSMB's instructions when suspending the IMLs (announced on 12 December 2022) to "stop all mining and transport activities with immediate effect."
The Board is consulting with its international and local legal advisers but considers the reasons for the notice of cancellation to be devoid of merit and standing in contradiction to previous instructions issued by the GSMB.
The Group will follow the appeal procedure in accordance with Sri Lanka's Mines and Minerals Act which stipulates that a cancellation shall not take effect unless and until an appeal has been disallowed.
Greg Martyr, Chairman of Capital Metals, commented:
"We believe the notice of cancellation of the IMLs is a desperate act of a small number of individuals within the GSMB and, given what is at stake, will be overturned when common sense prevails.
First the GSMB instructed the Company to cease activities on the licences while it investigated the ownership structure of the licence-holding subsidiary as it pertained to the level of foreign ownership. Now, absurdly, the GSMB is attempting to cancel the IMLs due to failure to undertake activities which it prevented the Company from undertaking. As such, we believe the purported non-compliance with licence conditions will not stand up to scrutiny when due process is followed.
Through the LB Group MoU announced earlier this month, the Project is now potentially funded and ready to go. We are confident that the interests of the country and the rule of law will soon outweigh the follies of one or two individuals within the GSMB. We are working diligently to accelerate that outcome while positioning the Company to pursue all actions to protect the interests of its shareholders should the need arise."
*Notice of Dispute under the 1980 Agreement between the Government of the United Kingdom and Northern Ireland and the Government of the Democratic Socialist Republic of Sri Lanka for the Promotion and Protection of Investments.
For further information, please visit www.capitalmetals.com or contact:
Capital Metals plc
Michael Frayne (CEO)
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 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.