TIDMCMET
Capital Metals PLC
26 April 2021
26 April 2021
Capital Metals plc
("CMET" or the "Company")
Resource Potential and Infrastructure
Capital Metals plc (AIM: CMET) is a natural resources company
focused 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
background information on the resource potential and robust
supporting infrastructure that underline the Project's long term
viability.
Highlights
-- The Project currently has a JORC Resource of 17.2 Mt with an
average grade of 17.6% Total Heavy Minerals ("THM"), an estimate
that makes it one of the highest-grade mineral sands' deposits in
the world.
-- The current Resource estimate is based on auger drilling that
has not penetrated more than three metres deep. Limited sonic
drilling so far undertaken offers compelling indication of deeper
mineralisation, including showings of 26.3% and 26.6% THM at
respective depths of 14 and 8 metres.
-- Further potential exists beyond the narrow coastal strip -
accounting for only 6% of the total Project area - that has been
the primary focus of drilling to date. Initial exploration suggests
potential for significant mineralisation further inland.
-- The Resource's expected high grade will reduce capital
expenditure - less material needs to be mined and processed to
access commercial minerals.
-- The Project is just 30 km drive along a network of sealed
roads from a commercial port, making possible the smooth transfer
of mined minerals for shipping to international markets.
The Current Resource
The Project's 84 km2 licence area on Sri Lanka's eastern
seaboard has a JORC Resource of 17.2 Mt with an average grade of
17.6% Total Heavy Minerals, an estimate making it one of the
highest-grade mineral sands' deposits in the world, with nearly
three times the average grade of comparable projects. 85% of the
Resource estimate is classified in the JORC code's higher level
Measured and Indicated categories.
Opportunities to Upgrade the Resource
Although the current estimate - based on 1,643 shallow auger
drill holes totalling 2,621 metres of drilling - is sufficient for
a mine, CMET believes compelling opportunities exist to
significantly upgrade the Resource.
The inherent physical limitations of auger drilling mean the
Project area has so far only been drilled to an average depth of
three metres. Exploratory sonic drilling undertaken by the Company
in 2018 indicated that mineralisation continues at deeper levels
across much of the Resource, results including holes recording
26.3% THM at a depth of 14 metres and 26.6% at eight metres. The
consistently high grades so far recorded suggest the Resource may
be free of the coatings on sand grains that make it harder for
standard equipment to efficiently recover valuable minerals, and to
rehabilitate the land after mining.
Further potential exists beyond the narrow coastal strip that
has been the primary focus of drilling to date, a 100 to 300 metre
wide north-south corridor running alongside the sea that accounts
for only 6% of the total Project area. The Project's bounds extend
up to two to three kilometres inland, covering terrain that may
encompass marine sediments.
The limited drilling as yet undertaken further inland suggests
significant mineralisation. This territory, a series of shallow
lagoons and estuarine habitats, is readily accessible to
environmentally sensitive drilling, with minimal need to disturb
vegetation prior to mining.
Plans for Future Exploration
After raising GBP2 million in January CMET is funded for various
drilling programmes that would explore more of the Project area,
and at greater depth.
The Company, having made applications for nine additional
exploration licenses covering a further 623 km2, is discussing
field access arrangements with local land owners and is undertaking
a development study and economic analysis - due for completion by
the end of H1 2020 - that will look ahead to a mining operation
targeting an estimated yearly production of 1.65 million tonnes
("Mt").
CMET anticipates the successful conclusion of the current
Environmental Impact Assessment, and the subsequent granting of an
Industrial Mining License that will allow the Company to conclude
ongoing discussions with potential offtake partners, and enter into
agreements involving a prepayment or financing arrangement. At this
point funding will also be sought for the estimated USD 35 million
cost of constructing onsite facilities capable of processing around
1.65Mt a year.
A wet concentrator plant will be used to separate the heavy
minerals from the silica sands, creating a Heavy Mineral
Concentrate ('HMC') that will be processed at a dry plant where the
zircon, garnet, rutile and ilmenite elements will be separated from
non-commercial silica sands. The expected high grade of the THM
would allow CMET to build a small and less expensive mine than
would otherwise be required, as less material would need to be
mined and processed to make the concentrate. Construction is
scheduled to begin in Q4 2021, with first production in H1
2022.
A Robust Infrastructure Already in Place
The Company expects to further reduce its capital expenditure by
taking advantage of the robust infrastructure already in place,
connecting the Project through a network of sealed roads to a
commercial port at Oluvil, just 30 kilometres north of the licence
area.
The Project is located in the Eastern Province of Sri Lanka,
approximately 220 kilometres east of the country's capital city
Colombo. It can be accessed from a network of existing sealed roads
that join with the national highway, ensuring smooth transfer of
mined HMC to the port.
Oluvil Port opened in 2013 as part of the Sri Lankan
government's ongoing programme to upgrade the country's
infrastructure. The port, which is currently being used by the
regional fishing industry, offers facilities and shipping capacity
- 8,000 to 10,000 tonnes to a depth of 11 metres - that easily
fulfil CMET's requirements. The port has all the essential
infrastructure to serve as a commercial harbour, being equipped
with grid power, scheme water, offices, workshops, storage
facilities, and residential quarters, and secure perimeter walls
and fencing.
The Company is in discussion with the Sri Lankan Port Authority
('SLPA') to use the port for its operations, where it intends to
construct a dry mineral separation plant to separate the HMC into
value added minerals before shipping. CMET has offered to assist
SLPA with any required dredging of accumulated sands resulting from
long shore drift for the benefit of all users of the port,
including commercial shipping and the local fishing industry.
For further information, please visit www.capitalmetals.com or
contact:
Capital Metals plc
Michael Frayne (CEO) +44 (0) 20 7317 6800
SPARK Advisory Partners (Nominated
Adviser)
Neil Baldwin / James Keeshan +44 (0) 20 3368 3554
WH Ireland Limited (Joint Broker)
Harry Ansell / Katy Mitchell +44 (0) 20 7220 1666
Brandon Hill Capital Limited
(Joint Broker)
Jonathan Evans / Oliver Stansfield +44 (0) 20 3463 5000
Glossary:
Auger Drilling: is done with a helical screw which is driven
into the ground with rotation; the earth is lifted up the borehole
by the blade of the screw. Used in s oil, soft unconsolidated
formations, or weak weathered rock
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
Sonic Drilling: an advanced form of drilling which employs the
use of high-frequency, resonant energy generated inside the Sonic
head to advance a core barrel or casing into subsurface
formations.
THM: Total Heavy Minerals
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