REG - Capital Metals PLC - Update re Project Funding

Capital MetalsAnnouncement

14/05/2024 07:00

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RNS Number : 2562O  Capital Metals PLC  14 May 2024

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INFORMATION IS CONSIDERED TO BE IN THE PUBLIC DOMAIN.

 

14 May 2024

 

Capital Metals PLC

 

("Capital Metals" or the "Company")

 

Update re Project Funding

 

Co-exclusivity period ending; decision to proceed with Sheffield Resources

 

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 provide an update on the status of the
co-exclusivity period for either Sheffield Resources Limited (ASX: SFX)
("Sheffield") or LB Group (002601:SHENZHEN) to acquire up to a 50% interest in
the Project in consideration for contributing development capital by way of
joint venture project equity ("Project Funding").

 

Following a period of constructive engagement, the board has determined that
the preferred joint venture partner will be Sheffield. The co-exclusivity
period will end on 15 May 2024 and Sheffield will be provided with exclusivity
to conclude discussions and finalise the already-advanced legal documentation
by the end of May 2024. The board of Capital Metals' decision to proceed with
Sheffield was taken independently of Bruce Griffin, Sheffield's Executive
Chair who represents Sheffield on the board of Capital Metals as a
Non-Executive Director.

 

The Company will remain in discussions with LB Group regarding potential
offtake arrangements.

 

Capital Metals and Sheffield are well advanced in the legal documentation and
due diligence; however, the parties require a short period of time to finalise
the agreements ("Agreements"), which the parties are targeting for completion
at the end of May 2024.  It is currently envisaged that Sheffield's funding
would comprise two stages:

 

(i)            an amount of funding to be provided at the Project
level to fund the work programme to reach a Final Investment Decision ("FID")
to enable the commencement of construction; and

(ii)           the balance of funding to be contributed at the
Project level in stages to be agreed between the parties to fund the capital
cost of each agreed stage of production and processing capacity.  Further
work will be undertaken with Sheffield on the approach to the staging of the
Project and therefore the final capex requirements, which will be finalised
prior to the FID.

 

The effective disposal of up to 50% of the Company's interest in the Project
will be deemed to be a disposal resulting in a fundamental change of business
under the AIM Rules for Companies ("AIM Rules") and, as such, will be
conditional on the approval of the Company's shareholders in general meeting.
Following signing of conditional Agreements, a circular will be sent to
Capital Metals' shareholders together with a notice of general meeting.

 

Sheffield, as a substantial shareholder holding 10.00% of the issued share
capital of Capital Metals following the subscription announced on 15 March
2024, is deemed to be a "related party" under the AIM Rules. Therefore, under
AIM Rule 13, the independent directors of Capital Metals, having consulted
with its nominated adviser, would have to confirm that the terms of the
Agreements are fair and reasonable insofar as all shareholders are concerned
before they are entered into.

 

The Agreements will also include other customary conditions to completion,
including in respect of Sheffield's requirements under ASX Listing Rule 11.1
(if applicable), as well as confirmations being received from authorities in
Sri Lanka in relation to the proposals.

 

 

Greg Martyr, Executive Chairman of Capital Metals, commented:

 

"We are delighted to be moving ahead with Sheffield and expect to conclude a
funding deal that would make them a 50% partner in one of the world's highest
grade mineral sands deposits. Sheffield is already our largest shareholder
following its investment in March 2024 and would represent a well-respected
and experienced mineral sands group as a partner. Notably, Sheffield played a
key role in bringing Thunderbird, one of the largest and highest-grade mineral
sands discoveries in the last 30 years, in which it also holds a 50% interest,
into production in Western Australia earlier this year. We will naturally
remain in discussions with LB Group for potential offtake arrangements and I
would like to thank them for their involvement in this funding process."

 

Updated Corporate Presentation

 

Ahead of the Company's participation in the 121 Mining Investment event in
London this week, where Executive Chairman Greg Martyr will be speaking,
Capital Metals has published an updated Corporate Presentation to its website,
available here: www.capitalmetals.com/our-investor-relations/presentations/
(http://www.capitalmetals.com/our-investor-relations/presentations/) .

 

 For further information, please visit www.capitalmetals.com
(http://www.capitalmetals.com) or contact:

 Capital Metals plc                           Via Vigo Consulting

 Greg Martyr (Executive Chairman)
 Vigo Consulting (Investor Relations)         +44 (0)20 7390 0234

 Ben Simons / Peter Jacob                     capitalmetals@vigoconsulting.com (mailto:capitalmetals@vigoconsulting.com)
 SPARK Advisory Partners (Nominated Adviser)  +44 (0)20 3368 3550

 Neil Baldwin / James Keeshan / Adam Dawes
 Tavira Financial                             +44 (0)20 7100 5100

 Jonathan Evans / Oliver Stansfield

 

About Capital Metals

 

Capital Metals is a UK company listed on the London Stock Exchange (AIM:
CMET). We are developing the Eastern Minerals Project in Sri Lanka,
approximately 220km east of Colombo, containing industrial minerals including
ilmenite, rutile, zircon, and garnet. The Project is one of the highest-grade
mineral sands projects globally, with potential for further grade and resource
expansion. In 2022, a third-party Preliminary Economic Assessment provided a
Project NPV of US$155-235m based on existing resources, with further
identified optimisation potential. We are committed to applying modern mining
practices and bringing significant positive benefits to Sri Lanka and the
local community. We expect over 300 direct new jobs to be created and over
US$130m in direct government royalties and taxes to be paid.

 

Visit our website:

www.capitalmetals.com (http://www.capitalmetals.com)

 

Follow us on social media:

 

X (formerly Twitter): @MetalsCapital (https://twitter.com/MetalsCapital)

LinkedIn: @Capital Metals plc (https://uk.linkedin.com/company/capitalmetals)

 

About Sheffield Resources

 

Sheffield Resources is listed on the Australian Securities Exchange with a
market capitalisation of approximately A$218 million. Sheffield recently
commissioned its flagship A$484 million Thunderbird Mineral Sands Project.
Thunderbird is a 50/50 joint venture between Sheffield and Yansteel and is one
of the largest and highest-grade mineral sands discoveries in the last 30
years. Thunderbird has recently achieved practical completion and made its
maiden shipment of product in January 2024.

 

In February 2023, Sheffield executed a binding agreement with an option to
acquire up to 20% of Rio Grande Mineração S/A, which owns and operates the
South Atlantic Project in Southeast Brazil.

 

For more information on Sheffield Resources, visit
www.sheffieldresources.com.au (http://www.sheffieldresources.com.au) .

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