Shares of Capital Metals have experienced a significant rise following a recent announcement. The company confirmed that it has received a favorable decision from a statutory appeal hearing. As a result, Sri Lanka’s Geological Survey and Mines Bureau (GSMB) has been ordered to reissue two industrial mining licenses for the Eastern Minerals project.
At 0819 GMT, shares were up 0.65 pence, representing a 14% increase and reaching 5.35 pence.
Overturning the Cancellation of Licenses
Capital Metals, an AIM-listed mining company, reported that the appeal hearing was launched against the cancellation of licenses 16236 and 16237. These licenses were initially issued in May by the GSMB. The hearing took place before the secretary to the Ministry of Environment.
After careful consideration of both written and oral submissions, the secretary deemed the cancellation of the licenses to be incorrect. Consequently, the reissuance of these licenses was ordered.
Clearing the Way for Future Agreements
This decision is seen as a significant milestone for Capital Metals as it paves the way for finalizing an offtake and financing agreement with LB Group. Earlier in May, the company revealed a memorandum of understanding with LB Group, outlining plans for a 50/50 joint venture to develop and operate Eastern Minerals. As part of this agreement, LB Group will fund the project’s initial costs, which amount to $81 million.
Executive Chairman Greg Martyr expressed his contentment with the recent developments, stating, “While the interference with the licenses has caused delays, we have managed to secure an offtake MoU with the world’s leading manufacturer of high-performance titanium dioxide pigments to support the project’s production. Additionally, we have witnessed continual improvements in the prices of our main products. This positive outcome will undoubtedly benefit all stakeholders.”
Previous Challenges Faced by the Company
It is important to note that Capital Metals’ Sri Lankan subsidiary, Damsila Exports, had previously come under investigation by the Sri Lankan government regarding its ownership structure. As a result, the company’s two industrial mining licenses were temporarily suspended. However, this recent decision to reinstate the licenses marks a turning point for the company.