LONDON: Capital Metals, the company behind the Eastern Minerals Project in Sri Lanka, has announced a strategic partnership with Sheffield Resources Limited.

Sheffield, co-owner of the Thunderbird mineral sands mine, has acquired a 10% stake in Capital Metals and has been granted an option to increase its interest to 50% through project funding.

The deal includes a subscription for new shares at a premium and the possibility for Sheffield to appoint a nominee director to Capital Metals’ board.

The funding arrangement, which is not contingent on the project’s development decision, will be finalized after due diligence and shareholder approval.

Discussions with LB Group continue, offering them a similar funding opportunity under co-exclusivity terms. The completion of any transaction remains uncertain until definitive agreements are reached.

Greg Martyr, Executive Chairman of Capital Metals, commented: “I am delighted to welcome Sheffield as a material and strategic investor in the Company. In addition to injecting capital, they bring world-class industry expertise in the development of mineral sands projects as evidenced at Thunderbird in Western Australia.

Their acquisition of a 10% stake in the Company and interest in potentially earning 50% at the project level by contributing Project Funding to support the operations into production and cashflow is a reflection of the quality of the Project.

At the same time, we remain in regular and constructive dialogue with LB Group which has continued to express its interest in partnering in the Project as per the terms of the MoU.

Today’s announcement with Sheffield is significant as we now have two well capitalised and specialist industrial groups expressing an interest in supporting the Project into production. The Project has highly attractive economics with post tax NPVs based on the 2022 Preliminary Economic Assessment* ranging from US$155-235 million, capex of US$81 million and Base Case total revenues of US$645 million over an initial 10-year Project life (with clear optimisation potential and further resource growth).

In the context of our current market capitalisation (being approximately £10 million), with a post-Subscription cash balance of approximately £2.5 million, we are now both well-funded and in the best position to unlock material shareholder value by closing Project funding with either Sheffield or LB Group. I look forward to providing further updates as appropriate.”

Bruce Griffin, CEO of Sheffield, commented: “Our decision to make an initial strategic investment in Capital Metals, potentially ahead of a larger project level investment to support the Project into production, is in keeping with Sheffield’s stated objectives of building a portfolio of mineral sands production and development assets. I have followed the Project for some time, including site visits, and consider the Eastern Minerals Project to be one of best high grade mineral sands deposits globally.”