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26 June 2024

Capital Metals PLC

("Capital Metals" or the "Company")

Update re Project Funding

Capital Metals (AIM: CMET), a mineral sands company approaching mine development stage at the high-grade Eastern Minerals Project in Sri Lanka (the "Project"), has been informed by Sheffield Resources Limited (ASX: SFX) ("Sheffield") that it has placed on hold its transaction with Capital Metals to acquire a 50% interest in the Project. Capital Metals understands that Sheffield is seeking to maintain and reserve its balance sheet in favour of the Thunderbird Mineral Sands Mine in Western Australia ("Thunderbird") as Sheffield reallocates cash to support its primary asset at this time. Capital Metals remains in constructive dialogue with Sheffield, which is also a substantial and supportive shareholder of the Company.

Whilst discussions with Sheffield and LB Group were ongoing, the Company also continued to study alternative funding options via equipment vendor finance and offtake finance, which are not dilutive to equity. Given the productive nature of these discussions and Capital Metals' healthy cash resources, the Company intends to develop the Project in a way that retains 100% equity in the Project. To further aid the development, the Company has also been in positive discussions with highly qualified individuals to run the development and operations of the Project.

The Company is therefore moving ahead with its low-cost drilling programme targeting substantial near-term resource tonnage and grade upside which the Directors believe should significantly increase the Net Present Value of the Project. A further operational update on drilling will be provided in due course.

Capital Metals will also continue discussions with parties who have previously expressed interest, including LB Group and Sheffield, should its cash position improve, but only if there is sufficient certainty that a transaction would be concluded that is incremental to the value of proceeding independently while retaining 100% equity in the Project.

Greg Martyr, Executive Chairman of Capital Metals, commented:

"Sheffield's decision to place this transaction on hold is a function of its internal issues and not a reflection of the Project. Sheffield's share price has fallen by almost 40% in the past month and it has reported additional costs at Thunderbird meaning it has less capacity to spend cash on growth projects. I am confident that with some key personnel hires, Capital Metals is more than capable of advancing its Project independently, with the benefit of a larger resource being targeted through the imminent drilling programme and a supportive framework in Sri Lanka. The value for shareholders of proceeding independently could, in the Board's opinion, be significantly more rewarding for shareholders."

Bruce Griffin, CEO of Sheffield and Non-Executive Director of Capital Metals, commented:

"In light of our company's commitments at Thunderbird and a challenging stock market environment, we did not consider this an appropriate time to make additional capital commitments outside of Thunderbird. Sheffield's decision has nothing to do with the Project. We remain a supportive shareholder in Capital Metals and are hopeful with time that we can assist with and participate in the growth of the Project."

 For further information, please visit www.capitalmetals.com or contact:

About Capital Metals

Capital Metals is a UK company listed on the London Stock Exchange (AIM: CMET). We are developing the Eastern Minerals Project in Sri Lanka, approximately 220km east of Colombo, containing industrial minerals including ilmenite, rutile, zircon, and garnet. The Project is one of the highest-grade mineral sands projects globally, with potential for further grade and resource expansion. In 2022, a third-party Preliminary Economic Assessment provided a Project NPV of US$155-235m based on existing resources, with further identified optimisation potential. We are committed to applying modern mining practices and bringing significant positive benefits to Sri Lanka and the local community. We expect over 300 direct new jobs to be created and over US$130m in direct government royalties and taxes to be paid.

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www.capitalmetals.com

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