20th Feb 2023 18:02
(Alliance News) - Capital Metals PLC on Monday said it transferred a 60% equity stake in its subsidiary Damsila Exports Pvt Ltd to a Sri Lankan national associated with the company since 2015, in a bid to satisfy the Sri Lankan Geological Survey & Mines Bureau.
This followed the GSMB temporarily suspending the industrial mining licences of the mineral sands company's approaching mine development stage at the Eastern minerals project in Sri Lanka, as announced in mid-December.
Capital Metals said earlier in February that it intended to restructure the ownership structure of Damsila in a bid to resolve GSMB's concerns and have the suspensions lifted.
Shares in Capital Metals plunged 8.9% to 4.10 pence each in London at Monday closing.
It said Damsila's shareholder agreements provide protections to the company, principally by requiring a 75% vote on all key decisions to be made by Damsila, while a new secondary processing company called ProcessCo is in the process of being formed, which will be owned by Capital Metals.
Capital Metals said the restructuring has been completed without materially impacting the company's economic value in the Eastern project, as it will continue to fund its capital and operations of the project.
It added it has provided evidence to GSMB of the restructuring having taken place, thus requesting the lifting of the temporary suspensions "as soon as possible".
"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," said Chief Executive Officer Michael Frayne.
"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."
By Greg Rosenvinge, Alliance News reporter
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