Capital Metals reports progress at Eastern Minerals Project

Capital Metals, a mineral sands company nearing the mine development stage for its high-grade Eastern Minerals Project in Sri Lanka, announced a number of significant updates on Monday.

The AIM-traded firm said the project holding company had received approval to benefit from board of investment (BOI) status, providing key financial and operational advantages, including customs-free imports, 100% accelerated depreciation for essential equipment, enhanced capital allowances, and protections against nationalisation.

It said the status also allowed for an increase in foreign ownership from 40% to 60%, while the economic interest remained fully retained by the company.

The company also said it had secured a crucial mining permit from the Coast Conservation and Coastal Resource Management Department (CCD) for an expanded initial mining area.

Other necessary approvals were progressing well, with the goal of commencing construction in the first half of 2025.

The Geological Survey and Mines Bureau (GSMB) had granted an extension to meet the conditions of outstanding industrial mining licence (IML) applications, with further IMLs expected to be approved for the entire 47 square kilometre EL168 northern area of the project.

Drilling preparations were nearly complete, with operations scheduled to begin around 12 August, following the arrival of the aircore rig and senior drilling manager.

Initial drilling would focus on a six square kilometre area of government land within the EL168 zone, moving southward as additional land access is granted.

Capital Metals said its chief operating officer Stuart Forrester had been actively engaged on-site and with local stakeholders, leading the development of the initial mine plan.

The plan would support upcoming equipment and vendor financing discussions.

It said it was also re-engaging with potential offtakers, both previous contacts and new ones introduced by Forrester, to secure project funding.

The project's products were expected to be highly marketable, with few impurities and a desirable blend of heavy mineral concentrate.

“The receipt of BOI status is the result of extensive collaboration over many months between the company, the BOI, and multiple government ministries,” said executive chairman Greg Martyr.

“It is further evidence of strong in-country support for both the company and our project.

“While it does not alter the company's ultimate economic value in the project, which remains practically 100%, there are a whole raft of fiscal and other advantages that will benefit the company in due course.”

Martyr said preparations both for the imminent drilling programme and the initial mine plan were advancing well, including obtaining relevant consents from environmental departments.

“We are working with the GSMB on the next batch of IML grants that will underpin the entire initial mine plan and getting ourselves into a position to engage in negotiations for equipment, vendor and offtake finance.”

At 1048 BST, shares in Capital Metals were down 0.32% at 1.74p.

Reporting by Josh White for Sharecast.com.