TIDMCMET
RNS Number : 6387H
Capital Metals PLC
31 July 2023
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31 July 2023
Capital Metals plc
("Capital Metals" or the "Company")
Lobbying, Legal & Project Development 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 on the
Company's response to the temporary suspension of Industrial Mining
Licences 16236 and 16237 (the "IMLs") and on Project development
activities.
Update re Temporary Suspension of IMLs
Lobbying actions
In response to the illegal temporary suspension by the
Geological Survey and Mines Bureau ("GSMB") of the IMLs announced
on 12 December 2022, and subsequent notice of cancellation (under
appeal) announced on 30 May 2023, the Company has been engaged in
extensive lobbying actions, with Greg Martyr, Executive Chairman of
the Company having been recently in Colombo, including at the
highest level of the Sri Lankan Government, with a view to
resolving its issues amicably with the GSMB.
The Board notes that its complaints and lobbying efforts in Sri
Lanka appear to be having a positive impact, with the conduct of
the chairman of the GSMB and Minister of Environment coming under
intense scrutiny from the C ommittee on Public Enterprises ("COPE")
in Sri Lanka which has appointed an independent sub-committee to
investigate misappropriation, as has been widely reported in Sri
Lankan media. Following several recent meetings in Colombo, the
Board is encouraged by the ongoing exposure of issues within the
GSMB and believes it may at some point lead to the implementation
of reforms in the mineral licensing process for foreign
investors.
Legal actions - international
As previously announced, in order to protect shareholders'
interests in the event that an amicable resolution cannot be
reached, the Board has in parallel been taking all necessary legal
steps both locally and internationally to protect the Company's
legal rights.
Capital Metals has instructed international law firm Boies
Schiller Flexner ("BSF") to analyse and advise on the GSMB's
conduct in the context of Sri Lanka's international treaty
obligations. BSF is a disputes-only law firm founded in 1997 by
famed U.S. lawyers David Boies and Jonathan Schiller and has
offices in the U.S., London, and Milan. Leading BSF's team for
Capital Metals are Timothy L. Foden, a specialist in mining
disputes, and London partner David Hunt. Mr Foden recently acted
for subsidiaries of Indiana Resources (ASX: IDA) in its US $109
million victory over the Government of Tanzania .
Capital Metals, with the assistance of BSF, has formally issued
a Notice of Dispute 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") arising from investments made in Sri Lanka
by Capital Metals between 2017 and 2022.
Legal actions - local
On 27 July 2023, Capital Metals, through its Sri Lankan
subsidiary, Damsila Exports (Private) Limited ("Damsila"),
instituted legal proceedings in the Court of Appeal of the
Democratic Socialist Republic of Sri Lanka ("Court"), seeking the
intervention of the Court in respect of the notice of cancellation
of the IMLs issued to Damsila by the GSMB, amongst other attempts
made by the GSMB to frustrate Damsila's right to conduct industrial
mining in the areas specified in the two previously granted IMLs as
well as seven other IML applications, all included in the northern
Exploration Licence 168 area of the Project. Damsila is asking the
Court, inter alia, to quash any decisions to temporarily suspend
and cancel the IMLs and prevent the Respondents (as listed below)
from issuing to a third-party licences which impinge upon the
IMLs.
Damsila has named Mr Naseer Ahamed, the Minister of Environment,
Dr Anil Jasinghe, the Secretary to the Ministry of the Environment,
the GSMB, and the Board of Management of the GSMB as respondents to
the said legal proceedings (the "Respondents"), who will be called
upon to explain their conduct before two Honourable Judges of the
Court during the course of the proceedings.
Project Development Update
In parallel with the Company's efforts to reinstate its rights
in the northern part of the Project area, Capital Metals is pleased
to advise that it will be commencing an Environmental Impact
Assessment ("EIA") over its Exploration Licence ("EL") 199 in the
southern area of the Project, which is not subject to the illegal
actions of the GSMB. EL199 holds approximately 60% of the total
mineral sands resource of the Project stretching over 26 km from
Panama in the south to Komari in the north.
Subsequent to the recent receipt of the Terms of Reference for
the EIA from the Department of Coast Conservation and Coastal
Resource Management, which will oversee the approval of the EIA, as
it did with the EIA completed for the EL168 northern area, the
Board has approved a budget for the commencement of the EIA which
will also enable the short term identification of further areas
over which to apply for industrial mining licences. The Company is
targeting completion of the EIA, and submission of industrial
mining licence applications, before the end of this year.
At the Company's EL430 area to the north of EL168 (which was
granted in March 2022 and is therefore not currently included in
the Project resource estimate), a recent programme of 116 hand
auger drill holes was completed in the Oluvil Port area which is
covered by the licence with samples currently being prepared for
assay. This drilling activity will also assist with the Company's
understanding of the requirements to remove sand from the port's
mouth to enable it to become operational again. The Company plans
to build its processing facilities at the port and utilise the port
for transhipment of end-products.
Greg Martyr, Executive Chairman, commented:
"We believe the net is closing in on the small number of
individuals within the GSMB and Government who are frankly out of
control and whom we believe are seeking to illegally hand the
Company's rights to favoured third parties. This is evident in the
COPE investigation, the widespread media reports, and the local
intelligence that I received during my recent visit to Sri Lanka,
including that procedural reforms for mineral licensing may be on
the horizon. We are continuing our efforts to accelerate that
outcome while simultaneously protecting the interests of
shareholders through local writs and international arbitration.
We are pleased that in parallel with these actions, we are now
advancing development activities with the commissioning of the EIA
which will lead to applications for industrial mining licences at
EL199 in the southern area of the Project, which holds the majority
of the total mineral sands resource of the Project and is not
subject to the illegal activities of the GSMB."
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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