23 November 2021 

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.

Capital Metals plc

("CMET" or the "Company")

Approval - Environmental Impact Assessment

Capital Metals plc (AIM:CMET), a natural resources company focused on the development of the Eastern Minerals Project located in the Eastern Province in Sri Lanka ("the Project"), one of the highest-grade mineral sands projects globally, is pleased to announce the approval of its Environmental Impact Assessment ("EIA").

The Coast Conservation and Coastal Resources Management Department in Sri Lanka ("CCD") has advised the EIA process is complete and issued a development activity permit to one of CMET's subsidiary companies in Sri Lanka, Damsila Export (Pvt) Limited which covers the northern half of the Project ("the Permit").  The completion of the EIA is required by the Geographical Survey and Mines Bureau of Sri Lanka ("GSMB") in order to issue the Industrial Mining License ("First IML") for the Project. The Permit is the standard form development permit issued by the CCD and will be reviewed annually by the CCD to ensure ongoing compliance with the Project's environmental obligations.

Capital Metals is committed to applying best practice in its mining operations, including continuous post mining rehabilitation. The proposed method of cell mining aims to ensure a minimal active footprint and prompt rehabilitation of the mined areas. Planned operations will have appropriate buffer and exclusion zones identified as a result of the EIA study, which went through a stringent public and governmental review process. 

The Company is already working with the local communities to improve the quality of their lives through various programs and believes it is crucial to ensure employees and the people of the Eastern Province participate in the long-term success of the Project.

In addition to ongoing work streams, the Company can now actively advance third-party offtake discussions, engineering design and project finance plans. As a result of the grant of the EIA, the Company has revised its expected timelines as follows:

·      First IML Application¹ - discussions with the GSMB will now be focussed on obtaining the Company's First IML targeted for Q1 2022

·     Drilling on license area EL 199 - as announced on 5 October 2021, work was completed on the infill and step out drilling programme and the drill samples are currently being analysed with initial results expected in January 2022

·     Development Plan - update on the Project's development and economics will be completed by IHC Mining, a leading heavy minerals consultancy firm, with the results expected in 8-10 weeks' time

·      Commence construction for Stage 1 Heavy Minerals Concentrate - H1 2022

·      Start commercial production for Stage 1 Heavy Minerals Concentrate - H2 2022

Progress on the above workstreams and the achievement of these further milestones will be announced.

Michael Frayne, CEO, commented:

"We are delighted to have received the approval for the EIA and are very grateful for all of the work undertaken by our Sri Lankan team and consultants.  The granting of the EIA is a considerable milestone for the Company and demonstrates the Sri Lankan authorities' support for the Project and should enable us to meet our target of commencing commercial production in less than 12 months' time.

We would like to thank the Sri Lankan government authorities who supported us in getting the EIA approval despite stringent lock downs and restrictions on the movement of people as a result of COVID-19 over the last 18 months.

The timing of this milestone could not be better given the recent strengthening of mineral sands pricing and a positive medium-term outlook due to economic stimulus activity as well as decreasing supply from some large existing mines."

For further information, please visit www.capitalmetals.com or contact: 

Glossary

¹ First IML Application means the first IML application submitted by Damsila Exports (Private) Limited (Company subsidiary) to the GSMB on 28 April 2014