Capital Metals
Primary ticker: AIM:CMET
Stage of development: Exploration, Development
Primary mineral: Mineral Sands
Project to promote: Eastern Minerals Project
Project location: Sri Lanka
Website: capitalmetals.com
Corporate presentation: Click here
Capital Metals is a UK company listed on the London Stock Exchange (AIM: CMET). The company is developing the Eastern Minerals Project in Sri Lanka, approximately 220km east of Colombo, containing industrial minerals including ilmenite, rutile, zircon, and garnet. The project is one of the highest-grade mineral sands projects globally, with anticipated further grade and resource expansion.
In 2022, a third-party Preliminary Economic Assessment provided a project NPV of US$155-235m based on existing resources only, with further identified optimisation potential.
The company is committed to applying modern mining practices and bringing significant positive benefits to Sri Lanka and the local community. It expects over 300 direct new jobs to be created and over US$130m in direct government royalties and taxes to be paid.
In March 2024, the company announced it had granted Sheffield Resources (ASX: SFX) co-exclusivity with LB Group (002601:SHENZHEN) for either party to conclude a transaction to provide funding to support the development of the project into production in exchange for up to a 50% interest in the project.
Cash: GBP2.5 million
Debt: NIL
Major Shareholders:
Sheffield Resources Limited – 10%
Bart Properties Pty Limited – 9.5%
Brent Holdings Limited – 8%
Roman Resource Management Pty Limited – 4.7%
Spreadex Limited – 4.5%
Management Ownership – 10%
Financials
Management Profile
Gregory Martyr – Executive Chairman
Mr Martyr is an experienced resource industry banker, advisor and corporate executive. He has over 30 years’ experience in resources investment banking and corporate finance, as well as the management of international mining companies. He is also on the board of Euro Manganese Inc. From 2011 to 2016, Mr Martyr was a Managing Director with Standard Chartered Bank ultimately as the Global Head of Advisory, Mining and Metals. From 2005 until its 2011 acquisition by Standard Chartered Bank, he was a partner with Gryphon Partners, a boutique resource advisory firm and from 1994 to 2003, he was employed in several executive roles by Normandy Mining Ltd., including President, Americas. Prior to that he held positions with Deutsche Bank and Morgan Grenfell. Mr Martyr obtained a Bachelor of Economics and a Bachelor of Laws from the University of Sydney, Australia.
What is your rationale for taking part in 121 Mining Investment?
Market support – company is trading at a 90% discount to Base Case NPV on existing resource only
What recent news would you like to highlight to investors attending?
2 April 2024 – Appointment of Bruce Griffin (Sheffield Resources) as NED
21 March 2024 – Project Development Updates
15 March 2024 – Strategic Investment & Project Funding Updates
5 January 2024 – Update re Offtake MoU
What are your key goals for the next 3, 6 and 12 months?
3 months:
Conclude Project Funding transaction
Additional progress of Project licensing and pre-construction activities
6 months:
Advance steps to commence construction activities
Conclude drilling programme to increase resource confidence to underpin a minimum of the first 12 months of operation and add additional resources
12 months:
Construction activities well advanced
What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?
Slowing in the rate of improvement of the economy and the increasing governance initiatives in Sri Lanka
What do you think makes your company such a compelling investment?
Project NPV8 (post tax) Base Case of $155m and Upside Case of $235m equate to 36p and 54p per share respectively against a current share price of 4.3p.
Execution of JV with LB Group or Sheffield Resources, both well-known and highly capable potential partners, will largely derisk the project.
17.2Mt resource at 17.6% Total Heavy Minerals with significant additional upside.
Project grades among highest globally with potential for extensive undrilled lateral and depth extension.
What are the top 3 key investor takeaways?
88% discount to project Base Case NPV.
Co-exclusive talks with two industrial groups for funding to take project into production.
Resource is among the highest grade globally, with significant upside potential.