TIDMCMET
RNS Number : 1870O
Capital Metals PLC
29 September 2023
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.
29 September 2023
Capital Metals plc
("Capital Metals" or the "Company")
AGM Statement
Project Development & Legal Updates
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 updates, ahead
of today's Annual General Meeting, on Project development
activities and the Company's actions to resolve the illegal
suspension of Industrial Mining Licences 16236 and 16237 (the
"IMLs").
Project Development Update
Procedural reforms
The Company is pleased to note that a Sri Lankan government
cabinet paper setting out a change in mineral licensing procedures
was approved in late July 2023. Pursuant to this new policy, the
Company understands that the Board of Investment of Sri Lanka (the
"BOI"), the investment promotion agency, will now be involved in
the appraisal of and recommendation for the approval of mineral
licences while the GSMB will have a continuing role in managing
licences. The Sri Lankan authorities have not yet issued a policy
statement confirming such policy changes; however, the Company has
been informed by the BOI that it has started acting based on the
approved cabinet paper and is developing procedures whereby the BOI
will impose time limits on the receipt of approvals required from
the GSMB. The Company is in the final stages of establishing a BOI
company which will hold all its interests in Sri Lanka and will be
afforded the direct protections against nationalisation under the
Constitution of Sri Lanka as well as other fiscal incentives.
Environmental Impact Assessment ("EIA") - EL199
The Company is in the advanced stages of preparing to carry out
the EIA according to the terms of reference issued by the CCD but
will delay the commencement of the study until the Company receives
clarity on the IML situation.
Other Project updates
The Company is currently refining the minimum areas of ground
required to cover the Project resource in the EL168 tenement area
and ensure that land access applications can be completed in a more
efficient manner. It is anticipated as a result that the Company
will be able to relinquish ground that is not required and
therefore reduce costs.
Update re Suspension of IMLs
Legal actions: Court of Appeal
The first hearing in the proceedings issued by the Company in
the Court of Appeal of the Democratic Socialist Republic of Sri
Lanka was held on 29 August 2023. The Board has been encouraged by
the cooperative approach to the proceedings demonstrated by the
attorneys from the Attorney General's department acting for the
Respondents (as listed in the Company's 31 July 2023 announcement)
(the "Respondents' Attorneys").
The Respondents' Attorneys requested that further proceedings be
deferred until after the Company's statutory appeal before the
Secretary of the Ministry of Environment (the "Secretary") against
the notice of cancellation of the IMLs issued by Geological Survey
and Mines Bureau (the "GSMB") (as announced on 12 December 2022)
has taken place. While there can be no certainty as to the outcome
of the statutory appeal hearing, the request for deferment until
after the statutory appeal hearing decision gave the Board cause
for some optimism around its outcome.
The Respondents' Attorneys also provided assurances to the
Company that the GSMB will provide guidance on any outstanding
matters in connection of the Company's multiple pending
applications for additional Industrial Mining Licences related to
the Project. The Respondents' Attorneys also confirmed that the
areas covered by Exploration Licence 168 shall be protected during
the proceedings and not be awarded to any third party thereby
safeguarding the Company's rights. In recent discussions with the
Department of Coast Conservation and Coastal Resource Management
("CCD") the CCD also confirmed that, as the Company has completed
the Environmental Impact Assessment over the relevant area, no
third party can obtain a mining licence over the same area.
Legal actions: statutory appeal
The statutory appeal hearing before the Secretary was held on 27
September 2023, with a new independent legal officer, who had been
appointed pursuant to the Committee on Public Enterprises' inquiry
into the conduct of the GSMB, actively assisting the Secretary.
The Company's Country Manager and legal counsel made submissions
in the capacity of the appellant; while the Chairman, Director
General, and other senior officers of the GSMB and legal counsel
appeared for the respondent. The Director General of the GSMB
refused to speak despite all the correspondence regarding the
temporary suspension and notice of cancellation of the IMLs coming
from him. This was noted by the Secretary.
The Board is confident of a positive outcome from the hearing in
due course; however, should a definitive positive outcome not be
forthcoming from the statutory appeal, the Company can refer the
matter to the Supreme Court of Sri Lanka in addition to continuing
the Court of Appeal proceedings.
Legal actions - international
Preparatory work is ongoing with Boies Schiller Flexner to
pursue a claim against the Government of Sri Lanka under the
Bilateral Investment Treaty agreement between the Government of the
United Kingdom and Northern Ireland and the Government of Sri Lanka
for the promotion and protection of investments (the "BIT"). The
next stage is to secure the support of a litigation fund to advance
the BIT claim should it be necessary.
Greg Martyr, Executive Chairman, commented:
"Through a combination of procedural reforms and public
inquiries, it is pleasing to see the ability to abuse authority and
frustrate the mineral licensing process is gradually ebbing away
from officials in the GSMB. This can only be a good thing for the
country and our situation.
We have a good relationship with the BOI and earlier this month
I held encouraging meetings in Sri Lanka with the department who
acknowledged our long-term commitment to the Project and the
country, and recognised the benefits that will flow from
much-needed foreign direct investment, taxes, royalties,
employment, and knowledge transfer. We look forward to working much
closer with the BOI in the development of the Project.
The legal proceedings in which we have participated to date have
been conducted in a professional manner with the cooperation of the
senior Sri Lankan authorities involved. This reinforces our view
that the suspension of the Company's IMLs is the work of a minority
of bad actors and is not supported by the state. It is
disappointing that the Chairman of the GSMB appears still to be
pursuing his own agenda, which is clearly not aligned with the
state, but we remain confident that the rule of law will prevail.
We are working towards that outcome while positioning the Company
to seek recourse under the BIT should it be necessary to resort to
international arbitration.
In the meantime, the Company is closely monitoring costs to
ensure we have sufficient funds to cover overheads while keeping
any ground activity to a minimum until we get a positive response
on the IMLs."
For further information, please visit 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
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 AIM
segment of 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.
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