Capital Metals (AIM:CMET) - Major Backing for Flagship High-Grade EMP in Sri Lanka, PFS by 2025

Company Interviews

Interview with Gregory Martyr, Executive Chairman of Capital Markets PLC

Our previous interview: https://www.cruxinvestor.com/posts/capital-metals-aimcmet-high-grade-long-life-mineral-sands-resource-5310

Recording date: 16th May 2024

Capital Metals (AIM:CMET) presents a compelling investment opportunity in the high-growth mineral sands sector. The company's flagship Eastern Minerals Project (EMP) boasts a large, high-grade resource in Sri Lanka with substantial expansion potential. With a strategic partnership with experienced developer Sheffield Resources and a clear path to production, Capital Metals is well-positioned to create significant value for shareholders.

The key attraction of Capital Metals is the quality and scale of the Eastern Minerals Project. EMP hosts a 17 million tonne JORC resource at a high grade, outcropping from surface along a 60km strike. Remarkably, the current resource only covers 10-20% of the company's total tenement holdings, highlighting the immense upside potential. Executive Chairman Gregory Martyr believes the resource could easily triple in size with further drilling, making it a district-scale mineral sands opportunity.

Capital Metals is fast-tracking EMP towards production, with a Pre-Feasibility Study (PFS) underway and targeted for completion in early 2025. The company aims to make a Final Investment Decision shortly after, putting it on track for first production in 2026 at an initial rate of 650ktpa. EMP benefits from a low cost, simple mining and processing route, with a plan to produce a heavy mineral concentrate from surface mining and mobile wet concentration plants.

The project is strategically located near the Oluvil Port in eastern Sri Lanka, providing a simple logistics pathway to market. While the port requires dredging to accommodate larger vessels, it provides a low-capex solution for the early years of operation. Capital Metals is also evaluating other potential logistics options as production grows, including access to larger ports by road or rail.

A significant recent development is the strategic partnership with ASX-listed mineral sands developer Sheffield Resources. Sheffield has taken a 10% stake in Capital Metals with an option to increase to 14%, and is in discussions to potentially fund 50% of the project capex to earn a 50% interest in EMP. Sheffield's involvement provides a strong endorsement of the project and adds significant mineral sands development expertise. It also opens up the potential for an accelerated development timeline and expanded production scenario.

The mineral sands market is experiencing strong tailwinds, driven by rising demand for titanium dioxide pigment, zircon and high-grade titanium feedstocks. With limited new supply in development globally, projects like EMP are well-positioned to benefit from the constructive commodity price outlook. Sri Lanka is a proven mineral sands mining jurisdiction, with several operations in production since the 1960s.

Capital Metals is led by a highly experienced management team with a strong track record in mineral sands development. Executive Chairman Greg Martyr has over 20 years of experience in the sector, including as CEO of Mineral Deposits Limited where he oversaw the development of the Sabodala gold mine in Senegal.

With a district-scale, high-grade mineral sands project, a strategic partnership with Sheffield Resources, and a clear path to production, Capital Metals presents a compelling investment opportunity. The company's current £18.8m market capitalization provides an attractive entry point, with significant potential for re-rate as it advances EMP through the development pipeline. For investors looking for exposure to the high-growth mineral sands thematic, Capital Metals is a company to watch closely.

View Capital Metals' company profile: https://www.cruxinvestor.com/companies/capital-metals

Sign up for Crux Investor: https://cruxinvestor.com