Capital Metals Regulatory News (CMET)

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.

3 February 2021 

Capital Metals plc

("CMET" or the "Company")

Corporate and Operational Update

Capital Metals plc (AIM: CMET) is a natural resources company focussed on the development of the Eastern Minerals Project in Sri Lanka ("the Project"), one of the highest grade mineral sands projects globally. The Company is pleased to provide the following corporate and operational update.

Highlights:

· Successful relisting of CMET following the acquisition of Capital Metals Limited ("CML") and the Project

· Oversubscribed £2 million fundraising to advance the development of the Project through the permitting process towards the grant of an Industrial Mining Licence ("IML")

· Advancement of the permitting process following the release of the Environmental Impact Assessment ("EIA") for public comment - final permitting and grant of the IML is anticipated in time for our target of first production in H1 2022

· Renewal of the southern exploration licence EL199

· Accelerating community relations and exploration programmes

· Commencing independent project economic evaluation

· Continued positive outlook for mineral sands commodities

Successful relisting following the completion of the acquisition of the Project and £2 million fundraising

The Company is now funded to advance the next stage of development of the Project which includes the finalisation of the EIA and final permitting and grant of the IML.

Our local ESG team has accelerated its continuing efforts on our community and government engagement programmes, raising awareness of our Project, as well as the benefits to Sri Lanka and the local Project areas, which have been particularly impacted by COVID-19.

The Company has submitted new drilling programmes to the GSMB to further explore our Project area. Less than 5% of the Project area has been drilled to date and the JORC Resource is from surface to a depth of 3m. Previous exploration work has shown continuation beyond 3m and also returned grades in excess of 26% THM. Accordingly, the Company expects to be able to upgrade the size of the resource in due course.

Given the very high grades and simplicity of processing, no blasting or chemicals are required, operating costs for development are expected to be low, whilst existing infrastructure, including a newly constructed port 32km away, is expected to ensure the capex for development of the Project is relatively low.

Advancement of the Permitting and Licencing Processes

The Project has undergone extensive work over the last few years and permitting is at an advanced stage with the EIA now completed and released for public comment. Based on detailed interaction with the relevant Sri Lankan authorities, the Company can then finalise the EIA after the public comment period enabling the IML to be issued thereafter.

The Company is also pleased to report that it has, as expected, now been granted a further 2-year extension of its exploration licence EL-199 which covers the southern portion of the Project. This ensures continuity of tenure over the entire Project in the medium term and enables us to move ahead with our exploration programmes in the licence area.

Upon the issuance of the IML, the Company will look to conclude ongoing discussions with potential offtake partners as well as placing orders for long lead processing equipment. The Company envisages healthy demand for its product, which will primarily consist of Ilmenite, Rutile, Zircon and Garnet. Any offtake agreements are expected to provide some form of prepayment or financing initiatives, thereby mitigating any amounts required to be sourced by the Company to bring the Project into production.

Construction is targeted to commence in Q4 2021, with first production in H1 2022.

Independent Project economic evaluation

The Company has commenced work on an updated and independent development study and economic analysis which is due to be completed by the end of H1 2021. The study will be based on all technical work completed to date including an estimated 1.65 million tonne per annum mining operation and capital expenditure of US$35-40 million.

Outlook for Mineral Sands

2020 was a strong year for commodity prices including mineral sands. The latest data suggests prices are tightening with premium Zircon trading at around US$1,450- $1,500 per tonne (from a recent low of US$1,430 per tonne) and Rutile US$1,130 per tonne (from a recent low of US$1,090 per tonne). Ilmenite prices have also shown improvement in the past year. Mineral sands are used in the housing sector, white goods and for industrial production and are therefore leveraged to improvement in the economic cycle, which is expected to continue over the next few years.

Michael Frayne, CEO, commented:

"We are delighted to have hit the ground running in 2021 with the acquisition of the Eastern Minerals Project and the oversubscribed placing of £2 million. The Company is now in a strong position to deliver on its key objectives of working with the community and the government to obtain final permitting approvals for the Project that will lead to the grant of a mining licence and subsequent engagement with potential offtake partners and industrial end users before first production within 12-18 months.

The Eastern Minerals Project is one of the highest grade and economically robust minerals sands deposits in the world. With the completion of the transaction enabling the acceleration of our project development strategy, including further exploration, and improving sentiment in the sector and demand for mineral sands, we look forward to unlocking significant value for our shareholders"

For further information, please visit www.capitalmetals.com or contact: 

Glossary:

GSMB - The Geographical Survey and Mines Bureau of Sri Lanka under the Mines and Minerals Act of Sri Lanka

JORC - the JORC Code provides minimum standards for public reporting to ensure that investors and their advisers have all the information they would reasonably require for forming a reliable opinion on the results and estimates being reported. The current version is dated 2012

THM - Total Heavy Minerals