Mineral Sands Market

17 March 2021 

Capital Metals plc

("CMET" or the "Company")

Mineral Sands Market

Developing the Company's Eastern Minerals High Grade Mineral Sands Project in Sri Lanka

Highlights

·        Products focused on extremely large established markets with annual growth rates of between 4.3% and 8.6%, due mainly to urbanisation and industrialisation in emerging countries, as well as more innovative uses of the materials

·        Strong environmental credentials with comprehensive assessment completed, non-chemical processing, no toxic reagents and straightforward, continuous site rehabilitation

·        Current resource from over 1,600 holes drilled to date, means we have a Resource big enough for a mine today

·        85% of the Resource is classified in the higher level 'Measured' and 'Indicated' categories of the JORC code

·        Strong potential to increase the already very high grade (17.6% THM) Resource given only 10% of our initial permits have been drilled and drilling has only gone to an average depth of 3m - for example, two holes in 2018 showed 14m at 26.3% THM & 8m at 26.6% THM

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 mineral sands market and the Project.

Mineral Sands Market

Mineral sands products - ilmenite & rutile (together titanium dioxide minerals), zircon and garnet - are an integral part of everyday life.

The key end products in the mineral sands market are:

·      All paint used in the world - contains titanium dioxide (TiO2) found in ilmenite and rutile.

·      The world ceramics industry including materials required for housing and construction (bathrooms, tiling, kitchens) - require zircon.

·      Garnet - has a range of industrial applications in the abrasives markets, such as sand paper, sand blasting and cutting steel with water jets and significantly increasing use in metal fabrication.

These minerals are also used in many other areas, including high end titanium metal, industrial chemical applications and chemical industries. However, the paint (TiO2) and ceramic (zircon) industries are the main end users. It is anticipated that both of these industries will be well supported during all the global stimulus initiatives that are underway.

The global market for mineral sands has been growing steadily with solid price increases over the last 5 years.

The global paints and coatings market size was valued at USD 146.2 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 4.3% from 2020 to 2027. The market is expected to be driven by the increasing product consumption in the construction, automotive, and general industries application sectors. Rapid urbanization and industrialization in the emerging countries, such as India, China, and Southeast Asia, are anticipated to fuel the product demand in various applications.¹

The global ceramics market was valued at USD 229.1 billion in 2018 and is projected to grow at lucrative CAGR of 8.6% from 2019 to 2025. Increasing government spending on infrastructure and rising construction activities around the world are the key drivers for the market.²

The global abrasives market size is projected to grow from USD 46.4 billion in 2020 to USD 58.0 billion by 2025, at a CAGR of 4.5% from 2020 to 2025. The growth of this market is attributed to the growing automotive, metal fabrication, machinery, electronics, electrical, medical, and construction industries.³

The industry growth and pricing did pause in 2020 due to COVID-19, however the medium-term growth outlook is positive due to economic stimulus activity as well as decreasing supply from existing mines which may not be fully replaced by future projects. The interest CMET has received from potential buyers for its products supports this global outlook.

This supply issue is important as opening up new mines is not something that happens overnight. Years of time and effort including, drilling, test work, technical and ESG studies must be undertaken before a mining project can move into production.

Large High-Grade Resource with Significant Growth Potential

Over the last 5 years, CMET has privately advanced the Project to the state it is in today. Having already completed many of the required technical workstreams, management are now focused on getting the Project into production as soon as possible, placing CMET well along the Project development curve.

One of the primary workstreams for any mining project is the resource estimate which requires drilling. A significant drilling program has already taken place at the Project with over 1,600 holes drilled.

The drill results were used to estimate an initial resource of 17.2Mt of at 17.6% THM. This resource estimate makes the Project one of the highest-grade mineral sands' deposits in the world. The extensive drilling also means that 85% of the resource estimate was classified in the higher level measured and indicated categories of the JORC code.

A key benefit of mining high grade mineral sands is the potential for greatly improved economics as capital intensity is generally low. The mine size (and capex) is lower as you need to mine and process less material to produce the same amount of product. Our recent analysis of other deposits around the world shows that our project has one of the highest grades, being nearly 3 times the average grade of all the deposits of approximately 6% THM.

Whilst the current resource estimate is large enough to develop a mine, we are very excited about the potential to increase this resource. CMET's current resource estimate used shallow Auger drilling to an average depth of only 3m and most holes finished in mineralization. CMET's 2018 drill program (using its Sonic Drill rig) proved the mineralization continues at depth and produced some spectacular results including 14m at 26.3% THM & 8m at 26.6% THM. In addition, we have explored less than 10% of CMET's initial licenses (EL168 and EL199).

It is difficult to estimate the resource upside at the moment as there are many exploration opportunities to pursue, but CMET believes a multiple upgrade in resource tonnage is feasible.

Environmental, Social & Governance ("ESG") Credentials

CMET has been undertaking environmental assessments, planning and community consultation for over 6 years. The Project's Environmental Impact Assessment report is in the final stages of approval with the Sri Lankan authorities. 

It is proposed to extract the economic mineral sands using proven non-chemical processing methods with continuous rehabilitation of the mined areas. The environmental management when operational, benefits from the low levels of slimes (fine grained material) within the resource which simplifies the rehabilitation activities.

The Board members and management of CMET are very pleased about the potential of the Project as it enters its next phase of development and look forward to updating shareholders on our progress in the coming weeks and months.

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

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 soil, 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

Data Sources

¹  https://www.grandviewresearch.com/industry-analysis/paints-coatings-market

²  https://www.grandviewresearch.com/industry-analysis/ceramics-market

³   https://www.marketsandmarkets.com/Market-Reports/abrasives-market-16531756.html

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