LONDON - Capital Metals PLC (AIM: CMET), a mineral sands company progressing toward the development stage of its Eastern Minerals Project in Sri Lanka, announced a reduction in capital expenditures (capex) for stage 1 of production, according to a press release statement. The company has reduced the estimated capex from the previously projected $30 million to $20.9 million, which is approximately one-third of the initial estimate.
The cost reduction stems from process rationalization and optimization strategies, including the elimination of concentrate washing, which was deemed unnecessary after discussions with potential offtakers. The company has also transitioned to a truck and shovel mining approach, which avoids the need for more expensive in-pit mining units, and plans to utilize a pre-designed wet concentrator plant from Mineral Technologies.
Capital Metals is targeting an initial production of 125,000 tonnes per annum (tpa) of high-grade Heavy Mineral Concentrate (HMC) with a grade exceeding 95%. The company expects further upside following drilling that aims to increase resource estimates and provide greater geological certainty for the project.
To fund the reduced capex for stage 1, Capital Metals is engaged in funding discussions with offtakers, vendor financiers, and potential local Sri Lankan partners. This approach is anticipated to minimize or eliminate the need for equity financing from the market and expedite the project's cash flow.
The company is targeting a Final Investment Decision (FID) in Q2 2025, with construction expected to take 9-12 months before production commences. The revised plan also includes subsequent expansions of production capacity and product quality through incremental improvements.
In addition to the capex and production updates, Capital Metals has resumed drilling activities following the conclusion of Sri Lankan parliamentary elections and has entered into service agreements with Mineral Technologies and Access Group for support in engineering and design aspects of the project.
Greg Martyr, Executive Chairman of Capital Metals, expressed confidence in the project's funding, citing the high-grade nature of the resource, which allows for simpler mining and processing, leading to high plant recoveries and grades with a reduced environmental footprint. Martyr also highlighted the potential for positive economic impacts in Sri Lanka from new investment in projects that create jobs and generate foreign currency inflows.
The company's focus on optimizing costs and advancing discussions with financing parties is aimed at reaching FID and beginning construction to bring the Eastern Minerals Project into production.
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