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9 June 2023
Capital Metals plc
("Capital Metals", the "Company" or the "Group")
Update re Temporary Suspension of Industrial Mining Licences:
Sri Lankan Committee on Public Enterprises Appoints Independent Legal Adviser to Investigate Misappropriation in the GSMB
Capital Metals (AIM: CMET), a mineral sands company approaching mine development stage at the high-grade Eastern Minerals Project in Sri Lanka (the "Project"), notes reports in the Sri Lankan media regarding the appointment by the Committee on Public Enterprises ("COPE") in Sri Lanka of an independent legal officer to investigate misappropriation within the Geological Survey and Mines Bureau ("GSMB"). COPE is a parliamentary committee established by the Sri Lankan parliament to ensure the compliance of financial discipline in public corporations and other semi-governmental bodies in which the Government of Sri Lanka has a financial stake.
At a recent COPE meeting held on 6 June 2023, the chairman of the GSMB was summoned to attend in order to answer questions regarding the practices and improprieties of the GSMB. It was revealed that applications pertaining to mining and exploration activities have been incorrectly directed to the Minister of the Environment for approval in order to facilitate the issuance of licences. Discussing matters unrelated to Capital Metals' licences, the chairman of COPE stated:
"…there is no provision in the Mines & Minerals Act that applications should be directed to the Minister for his approval ... and as such, the GSMB chairman appears to have acted according to his own whims and fancies and not in accordance with the Act. Thus, it is apparent that the licences have been issued in an illegal manner and the chairman has violated the mandate."
Following the meeting, a local media publication, the Colombo Page reported:
"…there was evidence to show that issued licences had been arbitrarily cancelled without any methodology and this was indicative of malpractice and possibly fraud."
Capital Metals now understands from media reports that COPE has appointed a sub-committee to review the processes within the GSMB and ensure procedural propriety. An independent legal officer will have specific responsibility to investigate any misappropriation within the GSMB.
Greg Martyr, Chairman of Capital Metals, commented:
"We are pleased to see the questionable governance practices of the GSMB are beginning to be exposed. Our complaints and lobbying efforts in Sri Lanka appear to be having a positive impact. COPE has highlighted that the GSMB chairman appears to have acted on his own accord with an inappropriate direct line for approvals from the Minister of the Environment, and Capital Metals has witnessed this first hand with the illegal suspension and purported cancellation of our mining licences.
We regard this public exposure of the chairman of the GSMB, which has been covered extensively in local Sri Lankan press, as a positive step towards removing bad actors, implementing governance reforms and by extension resolving our licence issues. We will continue with our extensive lobbying and legal actions with a view to resolving our issues amicably with the GSMB, but we will not rest until our legal rights have been fully restored."
For further information, please visit www.capitalmetals.com or contact:
Capital Metals plc Greg Martyr (Chairman) Michael Frayne (CEO)
| Via Vigo Consulting |
Vigo Consulting (Investor Relations) Ben Simons / Peter Jacob | +44 (0)20 7390 0234 capitalmetals@vigoconsulting.com |
SPARK Advisory Partners (Nominated Adviser) Neil Baldwin / James Keeshan | +44 (0)20 3368 3554 |
Tavira Financial 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.