Capital Metals PLC Update re Temporary Suspension of IMLs (4148Q)
20 Fevereiro 2023 - 4:00AM
UK Regulatory
TIDMCMET
RNS Number : 4148Q
Capital Metals PLC
20 February 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.
20 February 2023
Capital Metals plc
("Capital Metals", the "Company" or the "Group")
Update re Temporary Suspension of Industrial Mining Licences;
Group Restructuring
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 update
regarding the temporary suspension of the Company's Industrial
Mining Licences ("IML") announced on 12 December 2022.
As notified on 10 February 2023, following receipt of the notice
from Sri Lanka's Geological Survey and Mines Bureau ("GSMB") to the
Company's Sri Lankan IML-holding subsidiary Damsila Exports Pvt
Limited ("Damsila"), the Company has been in frequent and
productive dialogue with senior GSMB and other officials in Colombo
seeking to resolve concerns around the ownership structure of
Damsila. While the Company's legal position remains that the
ownership structure conformed with the relevant requirements, the
Board's objective has been to derive a pragmatic solution to
satisfy the GSMB that the spirit of the law requiring local
ownership of mining and primary processing activities is reflected.
This has resulted in a restructuring of the Group (the
"Restructuring") as set out below.
Under the Restructuring, an effective 60 percent of the
ownership of Damsila has been issued to a Sri Lankan national who
is known to, and who has worked with, the Company since 2015. The
shareholder agreements governing Damsila provide protections to the
Company principally by requiring a 75 percent vote on all key
decisions to be made by Damsila. A new secondary processing company
("ProcessCo") is in the process of being formed as a Section 17
Board of Investment of Sri Lanka ("BOI") company which is allowed
to be wholly foreign owned by Capital Metals, enabling it to apply
through the BOI for such benefits as customs duty concessions,
accelerated depreciation, and protection from nationalisation
enshrined in the constitution. Damsila and a wholly owned
subsidiary of the Company, Redgate Lanka (Pvt) Limited ("Redgate"),
have entered into an exclusive commercial offtake agreement which
will be assigned by Redgate to ProcessCo as soon as ProcessCo is
formed according to the BOI process. The offtake agreement will
enable ProcessCo to acquire all material from Damsila after it has
been mined and screened, whereby it will then undertake secondary
processing to produce various Heavy Mineral Sands products. The
agreement runs for the life of the Project. As the Company will
continue to fund the capital and operations of the Project, the
Restructuring has been completed without materially impacting the
Company's economic value in the Project.
The Company has provided evidence to the GSMB of the
Restructuring having taken place and requested that the temporary
suspension of the IMLs be lifted by the GSMB as soon as possible.
The Company will provide further updates as required.
Michael Frayne, Chief Executive Officer, commented:
" While we were advised that our ownership structure was legally
correct, the Restructuring has been completed to satisfy the GSMB
that the spirit of the law is reflected in our ownership structure,
whilst ensuring the Company retains the vast majority of the
economic value in the Project. We look forward to having the
temporary suspension lifted and to the completion of our advanced
negotiations with prospective local strategic partners and offtake
partners, which have continued positively."
Additional Information Related to the Restructuring
Damsila currently has 26,354,812 shares in issue. The
Restructuring involves Damsila issuing 39,548,694 new shares to
Keynes Investment (Pvt) Limited ("Keynes"), which is 99.98% owned
by a Sri Lankan national, Mr Dinal Peiris, who is well known to the
Company, with the remaining 0.02% owned by an existing Capital
Metals shareholder, giving Keynes a 60.01 percent interest in
Damsila and the Sri Lankan national an effective 60.0 percent of
Damsila. The consideration for the above issue of ordinary shares
in Damsila to Keynes is 1 Sri Lankan rupee per share (equivalent to
US$108,353 at 365 SLR: 1 USD).
As at 31 March 2022, Damsila recorded a loss of US$151,000 on
turnover of US$0. At that date its net assets amounted to
US$480,000 (including intercompany debt owed to the Group of
US$604,000). As at 30 September 2022, the net asset value of
Damsila was US$363,000 (unaudited).
For further information, please visit www.capitalmetals.com or
contact:
Capital Metals plc Via Vigo Consulting
Michael Frayne (CEO)
James Mahony (CFO)
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
Market Abuse Regulation (MAR) Disclosure
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Regulation (EU) No 596/2014 until the release of this
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