Capital Metals (LSE:CMET) — Project Updates

0:01 Good morning, ladies and gentlemen, and welcome to the CAPITAL METALS PLC investor presentation. Questions are encouraged. They can be submitted at any time via the q and a tab that's just situated on the right hand corner of your screen. Please just simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and will publish those responses where it's appropriate to do so on the Investor Meet company platform. Before we begin, we would just like to submit the following poll. I would now like to hand you over to the team from CAPITAL METALS PLC. Greg, good morning, sir. Thank you, Jake. And hello. Good morning, good evening, good night for us, ladies and gentlemen. My name is Greg Maher, Executive Chairman of CAPITAL METALS with the Tepravan mineral sands project in the East Coast Of Sri Lanka.

0:49 And with me, I think a lot of you probably have met me before. Not many of you have met Stuart, our COO. So I would like to hand over to Stuart to introduce himself and just give you a bit of his background because you will be hearing more from Stuart. Yeah. Thanks, Greg, and hi, everyone. So just, yeah, a bit of background. I grew up in country Western Australia. So actually, our family farm was not far from Iluka's mineral sands mine in Eniaba. So whilst we didn't directly benefit from that mine, I could see the positive impacts of having a a mineral sands mine close to a community, so the jobs that it created and just the general support for that community.

1:34 So from there, that young boy went off to study engineering in Perth. First role was with Rio Tinto in Dampier in Western Australia, so iron ore. Worked my way from sort of engineering to projects into production, and I found a sort of passion in in production largely because it's working with a large number of people and at the heart of what the business does. From there, I went to join Iluka Resources and worked my way up to manage the world's largest zircon processing facilities, a mineral separation plant in in Geraldton for Iluka, sort of where I tested some of my leadership skills. Some of them didn't work and some did. From there, great opportunity with the family. Iluka moved me across to The United States where I was a country manager.

2:24 So looking after their Florida and Virginia operations. At that time, we're sort of moving into closure, so the role was mostly around environmental matters, reclamation, etcetera. From where from there, I went down to Georgia in The United States to be president of a privately owned mineral sands company called Southern Ionics. A great opportunity. Loved working for the owner of that company, and he he taught me primarily about just transparency. So that company had an an amazing reputation within the local community, and I think that was on the back of the transparency and the trust that we built with the with that community. After a couple of years there, we we turned that business around and sold it to the Chemours company. And with that, I was then managing their four mines and three processing facilities in Georgia and Florida.

3:16 Children reached an age where it was important around high school. We made the tough decision to leave The US, move back to Australia. And for a couple of years, I was investing on behalf of a high net worth American. And after a couple of years, had a couple of conversations with Greg and was very excited to join CAPITAL METALS and the opportunity, work on the opportunity we have in front of us. Thanks, Greg. Thanks, Stuart. So, yeah, as you can probably see, it was a bit of a no brainer to bring Stuart in. And, ever since he started, we've had, a lot of fun together, and and I think we've worked really well together. And I've really enjoyed it, and, and I'm really looking forward to capitalizing on what we have and and a lot of other opportunities that that we are seeing.

4:07 The usual disclaimer, I will definitely not be reading this tonight. So just a project overview. And so the the reason that we're giving this presentation is because we gave a project update on Monday, which I'm sure a lot of you have seen. And so, you know, you will know that this is one of the highest grades mineral sands projects in the world with 17.6%. We're 17,200,000 tons now. We we did a, we completed a drilling program through 2025 just on our initial mining area to give us more confidence in, in developing a mine plan for that area. And just in that area alone, we multiplied the resource by 15 times by by drilling beyond, below, sorry, the the water table and actually to the west.

4:58 So we're we're hoping to replicate that across the whole 60 kilometers of strike length, in stages as as we move through the the drilling campaign. So, you know, we this our initial mine life is ten years, but we we are very confident this is gonna be a long life operation. So what's, what we've been working very hard on is, I think probably the the one of the the the streams that, Stuart and I have, worked together and tic tac on the most is is working with the government. It's a new government. They came in in the end of twenty twenty four, and they came in on a, anti corruption platform, and they won with a landslide 75% majority.

5:44 And which we were very happy to to hear, and we're we're enjoying working with them, but there's a big learning curve. And, luckily, we're sort of at the head of the pack of the development projects in in Mineral Sands, and we've built close relationships with our partners, with the Ambien Group, and with our directors from that Ambien Group. So building strong relationships, but it's a it's a process that just takes time. In the meantime, everything that we're doing that is in our control, in particular, Stuart's control, and he will talk to this more, has been moving ahead, very nicely. And if we wanted to, we could actually start construction ourselves tomorrow, but there are two more approvals that we want.

6:32 And one is we have two mining licenses now. We want one more mining license, and that is over an area. We initially applied for 47 hectares, but we know that it it probably goes a 150 hectares and beyond. And we think we'll probably be mining in that area for five years. So we wanna get that mining license and that will be enough mining licenses to justify that initial first stage CapEx. Hi, guys. If I may just jump back in there. We've just logged lost Greg. And the PEA back in 2022 of 3030%, and now we have a high level of confidence. And, also, I think there's competition, globally.

7:28 And, you know, there's now a mix of sort of Western and, you know, there are Chinese components to to the I think not the but it's it's just everyone's sharpening their pencil, I think, and and getting a lot smarter about the things that you can do. So we're very happy with with how that's been coming down. We're still saying our overall funding, task is about $25,000,000, and that includes a big campaign of drilling and includes contingency and obviously includes overheads. So yeah. But with the valuation we put out late last year, we're we're continuing to work on that valuation with the with the new CapEx. We probably won't come out with another one for a little while, probably closer towards the FID date.

8:18 And, but but, you know, I I can assure you things seem seem to be getting better, and not worse. So we're we're pretty heavy about the work that's being done there. So overall, I mean, this is a slide that hasn't really changed, but it's a we're about a seven 60 kilometer strike length, a 108 square kilometers of size. So it's a decent sized project. And, you know, we're gonna create a lot of jobs well over 300. And then if you think of the multiplier and the mining space is normally about five times, it's gonna it's a fairly remote area over there. There's you know, the competing land uses coconuts and peanut farmers. There's some tourism to the south, and but there are some large areas of of very un underutilized land.

9:13 And that the so as I mentioned, that drilling campaign we had back in last year, '20 first half of twenty five, big increase in the resource and we're hoping to continue that as we move through the the stage drilling campaign. And I'll hand this one over to Stuart because he loves this slide and Yeah. And find out why. But as you can see, we are an outlier, but I think this is one of the main reasons why he joined us because, as you'll hear, we're gonna make his life easier than what it was in his in his last role. Yep. Thanks, Greg. Yeah. Exactly why I joined the company, and you're right. Makes life so much easier. So some of you may have heard me put it in this context, but the four mines that I was managing in The United States had an average grade of less than 2%.

10:05 So when you consider that our average grade is 17.6%, it just means that you need to move about nine times less volume to produce the same quantity of heavy mineral concentrate. So, you know, in terms of mining, operational costs are particularly tied to every grain of sand that you have to move with your your transport mining cost. So if you're moving nine times less volume, then you have a significantly lower OpEx cost. With that, you're then feeding nine times less volume into the wet concentrator plant. So when you see images of our concentrator plant, it looks tiny, yet it can produce somewhere around a 120,000 tons per annum. And that's actually I'm only using it on day shift. So if anyone's seen the images of our plant, a 120,000 tons just on day shift. So what we'll look to do is bring on a second mining location to fill that wet concentrator plant and double our output production. But with a much smaller plant, it comes much lower CapEx.

11:15 And then when you're feeding the plant with a higher grade, you see higher recoveries and a higher output grade. So our recoveries sit over 98% for all of the available heavy minerals. And then another important point is when you're moving nine times less volume, your environmental footprint is significantly lower because you're moving across the the land at at at about a nine times slower rate. So, yeah, all very exciting, makes life much simpler in terms of producing a heavy mineral concentrate. Also with that is it's a very clean sand. It's a very small amount of slimes, almost negligible. So the wet concentrated plant does not need a slime's handling circuit, and there's also very little oversize in the material. So all in all, looking forward to being able to to mine this deposit.

12:08 Back to you, Greg. Thanks, Stuart. And these haven't changed since our last presentation, but I, you know, I think some of the key things you'll see in there that, you know, we've got an IRR of 73% and a base case NPV. That's based on the existing resource, 17,000,000 tons, not on the up upgraded drilling that we did. So we expect that to to increase substantially. Our mine life is nine years, but as I said, I you know, we expect this to be a thirty plus year mine life. So, you know, this is just a snapshot based on the job resource that we have today. So what's we touched on this before, but what's been happening in country since the new government was elected, and this is a photo of the the the minister the environment minister, mister Handanetti.

13:10 And he is driving this very hard, and he he wants to see and the government has chosen five key sectors in which they wanna generate foreign investment. And they have you know, the the country basically went broke during COVID, And so the new governments come in. They're under a moratorium from the IMF and and their creditors that that, is is due to be revisited in 2028. So they need to work pretty hard. Things are going pretty well in country. I think the growth forecasts are pretty good, and and the reception of the of the government has been great. Most people are saying that, you know, that they're very confident they're gonna be in for another five years after 2029, which is which is, you know, music to our ears, getting some stability, and getting some proper attention to transparency and accountability, which has been lacking in the country for probably thirty years before this.

14:08 So what what are the key things that happened that we were very happy with is it the minds department, which is called the GSMB, that that got moved from the department of environment, the Ministry of Environment, Ministry of Industry. And, you know, when it we could tell that when it was in the the ministry of environment, a lot of people were confused inside the department as to whether their job was to stop mining or to to be proactive about mining. Whereas the industry, you know, they don't have that handbrake. The handbrake is obviously still there in terms of, you know, we need to comply with the with the environmental, restrictions and regulations, which for us, you know, is a is a no brainer. It's something that we're absolutely used to. Some in country, you know, probably not. But for us, it's, it's our bread and butter. We know that, you know, we'll never be able to get that license to operate unless we do it properly.

15:06 So that's that's been very positive to us. And then we've been waiting for this for a while, and it took a little bit longer than than we would have liked. But, you know, we we obviously like to move as fast as we can, and but we can't control exactly where the government goes other than continuing to lend a hand and give advice and and and educate where we can and and get with our partner, Ambien, and our directors. That is is that is a process that we're pretty happy with. So the first time since 1999, they came out with the new national minerals policy. It's a pretty nice fluffy I call it I call it a fluffy document. It says all the things that most most, modern, most of western governments would would say. It's all about responsible and sustainable mining. There is one key thing in there. It says that that the primary objective is for them to understand what resource wealth they have. They don't know they know that they have good mineral sands. They know they have good graphite.

16:07 They know they have good gems, but they actually don't really know the extent of it. So they can't do any forecasting. And so they're they're encouraging that to increase that understanding. Of course, that's great for us because we keep drilling and and keep showing them what they have. So that that was a key thing that was approved three weeks ago. Now what it's going to do is it's going to, unlock the the process to get the mining licenses the expiration of mining licenses back on track. They've basically been frozen until that that policy was approved. And now they're just they're just finalizing what they're calling a SOP, a standard operating procedure for for exploration and mining licenses.

16:53 And the other approve the other approval we need, I've I've seen there's a question in there, is we we need clarification on exactly what we're allowed to export. And we've been pushing to allow the export of a proportion of of, concentrates, a heavy mineral concentrate for a period. And then ultimately, we're we're going to separation. And so then we're just having a a debate with them. And and it's it's often in developing nations, you see this as a bit of a political term value addition. And so there's a there's that there's been an ongoing discussion. We've talked them down from a very high bar, I think. And and and we're continuing that process, and they keep actually asking our advice.

17:40 And so that's the other approval we need just to totally to fully understand exactly what we can do. At the moment, we are assuming success and that we'll be able to export a concentrate to a to an extent that that will we can go to FID and then commit to that capital expenditure. So where are we? We're basically at, the resource step six, resource expansion is not fully completed, but we've certainly been done enough to to know that, you know, we're gonna keep spending quite a lot of money actually on on drilling out the resource, to get that sort of thirty plus year mine life.

18:27 So we're given the delay in the in the mines policy, the minerals policy, which actually therefore delayed that SOP on the on the process for mining licenses and exploration licenses, we are now saying that we're we're hoping to get to final investment decision by the end of the first half, so end of q two. And, you know, we we push hard for that. The things that you'll see and as I've said, the things that are in our control are going well, and we could it's we we're pretty ready to to start if we had to, but we're just waiting on those final two approvals. And still a nine to twelve months construction, Yeah. It's it's a very simple process to to get to is that first stage, the wet concentrator plant. So nine months all going well, but we say nine to twelve, just to give ourselves a bit of leeway, but still in production in the first half of twenty twenty seven is the forecast.

19:28 And I will hand over to Stuart for the next few slides just to talk you through. I think some of you have heard me talk about it. Now you're gonna go the guy that is the is the real operator and builder. So, yeah, this slide, I think, has been in the deck for for some time. What's perhaps changed is the tonnages there. So in the first stage, the mining rate will be around 700,000 tons per annum, producing the 125,000 tons roughly of HMC per per annum that I mentioned before, and that'll be the stage one will be with a wet concentrated plant. And I'll show you some images shortly from the three d model that's been put together by Mineral Technologies. We'll then look to open up a second pit, as I mentioned, where we'll feed the wet concentrate of plant on night shift as well. So just staged approach into that as we upscale our operators and other people. And then what we'll look to do is open up a second mining area. So there's two logical four kilometer sections that have a low impact within our two exploration licenses. So we'll open up that second location, look to build a second wet concentrator plant.

20:38 From there, we'll then look at magnetic separation as the first stage of the mineral separation plant. What we can we can achieve a final product ilmenite from two stages of dry magnetic separation in the test work that we've done with mineral technologies. We're just exploring that further at the moment. And then, potentially, we're looking at producing a final product like Garnet as well. I see that there's a a good market opportunity in The Middle East and India and and other locations. And some of the high grade Garnet deposits in the world are are dropping off, so potentially an opportunity there for us. The next day and so at that point, we'd be producing in rutile in concentrate and a zircon in concentrate. The rutile will be close to final product, And then what we can look to do is produce that final product rutile, and then potentially put in the wet circuit to be able to produce a final product, zircon on the electro extra electrostatics, etcetera.

21:41 So the image you're seeing there is from the three d model, and there's another image of that in the next slide also. But just in terms of engineering studies, so we now have a fixed lump sum price for Mineral Technologies for the design, procurement, and supply of all of the major equipment. So the major equipment includes the feeder unit, the screener, the flex series spiral plant, water tanks, etcetera, as per the image that you're seeing there. So that's reduced our risk significantly, and and with that, we've also been able to reduce the CapEx number down. Access engineering, so they're an in country, one of the big three in Sri Lanka in terms of engineering firms. So they've been working with us from the start and learning all about mineral sands, mineral technologies, been providing excellent support to their engineering team.

22:32 So we've been refining their work. Their scope of works is primarily around civil works and then the construction of the plant. We've also been working both with access and another group just on the site access, so the the transport route into the site and also where our warehouse will be for storage of the heavy mineral concentrate as we load that into containers for likely transport initially to Colombo via containers. Finished the hydrogeology study and that leads into our ability to draw water from from the area. The environmental impact assessment has us drawing from seawater and putting in an RO plan, but I saw an opportunity there to decrease both our operating and CapEx costs with what on my view is a a lesser impact on the environment. So we're about to submit an application for a change in our where we draw the water from for the project.

23:32 So all that all that work has resulted in a reduced CapEx from 20,900,000 to 17,700,000. As Greg pointed out before, there's some working capital requirements and OPEX costs as we laid into construction that sort of take the total funding to around that 25,000,000. Still working both with our in house engineers and developing their skill sets, but also with mineral technologies on the mine plan and and particularly in the initial mining area and also on the back of the the most recent drilling. And we have kicked off just really early concept studies around the mineral separation plant and pleased with the work that Mineral Technologies are doing to, you know, how can we reduce costs and achieve the product suite that we're looking to to get out of this deposit. So all in all, all the engineering work's progressing well.

24:26 So another this is a rendered image from the three d model. So again, plant looks tiny, but its output capacity is is large in comparison to some of the other mines around the world. Looking at about a 175 ton per hour, we've tested the plant at 200 tons per hour as well. In case the grade's a bit lower, we can feed it with a higher input to achieve the same output. Looking at excavator or loader feeding into tractor trailer arrangement, which is common in Sri Lanka and the the method used at Lanka Mineral Sands, which is the only operating mine in Sri Lanka, mineral sands mine in Sri Lanka. I mentioned before, clean sand that we're feeding in. The test work said that we only need a two stage spiral circuit. We decided to put in a third stage for robustness.

25:16 It wasn't at a large cost, just ensures that we achieve the recoveries that we set out to achieve and the 90% heavy mineral grade in the heavy mineral concentrate. And I mentioned before, super high recoveries above 98% for the valuable heavy mineral that we're we're looking for. So the CRC, it had been a bit of a grind in terms of getting to where we want to and and developing the skill sets, but we now have a a formalized plan that we're working towards, which I appreciate the image is not great there and you can't see some of the detail, but we're working towards that now. So we're building the infrastructure in terms of site offices, the research center that will go there, and then the the areas where we'll be working on the native plans, conducting research, and in preparation for for future mining. So this is just the first of many CRCs that we'll be building. The next one will be likely in the initial mining area and close to that initial operation.

26:21 So working with an expert in Sri Lanka and really pleased that we just added environmental specialist who is not far from the the mining area, native Tamil. So she'll be working with doctor Saranjan on the the CRC. But, yeah, making good progress there now after a bit of a grind for the last nine months. Again, this is an old slide so it would be familiar to most of you, but the majority of our deposit is an ilmenite. It's a clean clean product. Likewise with the zircon, the rutile is very clean and about a 966% t I two that we'll see from there. And the garnet, we've had an industry independent expert test that garnet and has a very high hardness factor.

27:12 So we we view that we'll attract premium prices for our course garnet. In terms of expected sales mix around 40% for the ilmenite, 28% for the zircon, 19 rutile, and 12% for the garnet on the back of what we think will be high prices for a quality garnet. Greg touched on this before, so we were super excited to be able to get into our initial mining area and conduct some drilling on the back of what was a relatively shallow resource. We had an average depth of about 1.6 meters. And for those who are not familiar with our previous drilling program, it was all done by hand auger. So the hand auger drilling is limited to the water table, so the maximum depth we were seeing was about 3.5 meters.

28:03 And with that, because a lot of the drilling had ended in high grade, the cutoff grade that we were using was 5% which is not typical for mineral sands mine and typically moving more around the two or even 1% cut off grades depending on your overall economics. So with the drilling that we're able to complete to depth, were seeing and you can see it in the little the bottom of that slide there, but we were seeing really super high grades above 50% at depth ten, twelve meters. We were getting to depths of 15 meters. So when you both change the cutoff grade down to 2% and you include that additional resource at depth and also inland from where our initial mining area was, whilst it would see a decrease in the grade down to 5.5%, it's a 15 times increase in our resource in that initial mining area. So if you think about the multiplier effect on 17,200,000 tonnes for our total resource, very significant means a long life mine here at really high grade. So even if you drop to a 2% cut off grade and had an average grade of 5.5%, that's still higher than a large number of mines, mineral sands mines around the world.

29:22 And here's just a visual of the drilling and the grades that we were seeing. So the ocean side is on the right hand side there where you're seeing the label section three and two. Our drilling extended further inland than what we've done before, so to the left hand side of the slide. It was 400 by 40 meters to start with and then we did some infill drilling in that initial mining area to help with our mine plan and development of the mining blocks. And then the colors, the pink, the purple there is where the really high grade is and then tapering off as you move inland. And then if you look at the bottom of those colored sections, you'll see some red and that's the resource that's sitting at depth that we will look to target with the hydrogeology study work that we've done recently to support the dredging future dredging operations.

30:17 Community. Have a wonderful community team. They've been working really hard. The primary focus for them is on education. So helping people in the area to understand what mining is all about. It's not familiar to a lot of the community. So a lot of visuals and explanations just about what we intend to do, how we'll manage reclamation, how we can potentially improve the environment in the area. I love it when I get out to the community area. Friendly people. Wish I could spend more time there. I simply do love it. Great people. Looking forward to be able to create a large number of jobs, and the first stage alone will create about a 100 jobs in the area, and with the total project with the MSP, about 300 local jobs.

31:07 Current financial model indicates around 200,000,000 of royalties and taxes going back into the country, And, of course, the the impact on that local community there will be will be significant in terms of not only the people working directly for us, but for the small businesses, etcetera, supporting us. Yep. So, again, wonderful work. We feel the community support growing, and I think they're looking forward to us getting into operation. Back to you, Greg. Well well well done on that. That's been something certainly ever since you joined. A big focus over the last two years, and I think we've turned it around. And, whilst a lot were indifferent, now I think, you know, we've somebody said, I think we're about 75% of support.

31:58 And, you know, that's that's very, very compelling. So it's still in a way to go, but I I think that's just been, you know, really hats off to you and the team there. It's been a great effort. So the you know, just quickly on the on the team, this has got the board with, you'll see Aravinda de Silva, and he's sort of a a co investor within he he owns a third of the Ambien who is our shareholder. They own 12.1%, as is Sebastian. He's one of the the founders of ACP, is another third owner of Ambien. And, there was a question about their overall ownership.

32:43 So their direct interest is about 12, and they have brought in, you know, friends that, I I it's roughly about 20%, that that are friends. You know, technically, you would say not acting in concert. But there was a question about that 30% threshold. We're obviously conscious of it, but, you know, we're nowhere near it. And next year, if you do the the the operational team? Yeah. So in terms of the local team, I'll start with the the couple that we've added. So I spoke briefly before before about Celosia who's joined us. So only about thirty minutes north of the initial mining area, comes with environmental expertise, has joined us as our environmental specialist and has previously worked with the road development authority.

33:39 She she knows the community. She's connected with the community. And her focus will be about 50% on education and working with the community initially. And then her other focus will be on the CRC and then starting to build out the environmental management plan on the back of the EIA. In terms of finance, we added a financial controller. So Kishan Kumar joined us. He's added excellent expertise to our team. He's building out our policies, procedures, etcetera, as we work towards the future operations and had he has had his head deep into our financial model in recent weeks. Harsher, he's really been that key to the community aspect that I spoke about before.

34:26 He's former navy. He has a great deal of respect in the area. He's been able to establish really strong connections with with everyone really in the area from from schools to teachers to politicians, etcetera. So yeah. Thanks to Harsh for, yeah, for his tremendous effort in that that local area. Now Lucia was a consultant for for a period of time. He's now permanent with us five days a week, looks after all of our people function. And then Arangir is our country manager. He's extremely well supported respected not only in Colombia, but also in our side area. Has a wonderful array of connections, and, yeah, wonderful to have him and the team.

35:13 And Richard Stockwell, he's based here in Perth, but supports us from a a resource geology perspective. Yes. So quick just a quick, snapshot of the of the corporate view of the company. Current market cap's around $25,000,000. That compares to our base case of a 180,000,000. So, you know, that is a massive upside. And, of course, we don't expect to be trading at our at our NPV until such time as we're closer to to production. But, as you can see, I mean, I think that base case is about 27 p and the was about 40 p. It's on the slide earlier. So, yeah, huge amount of upside, and that's that's still based on the the previous or the or the historic resource.

36:05 490,000,000 shares. And as I said, major shareholder, Ambien Capital, and the others are long term supporters, high high net worths. But we're increasingly seeing institutional interest in the stock. And, some of that has come through the the Ambien Group. There's some European investors that have come on board as well. So, yeah, I, we're in a in a much stronger position than we were certainly two years ago. So just, you know, summarizing the company, the the grade is we you know, in the mining space, grade is king. And and we are, you know, right up there in terms of grade. When when your cutoff grade is is higher than probably the global average grade, that is very special.

36:53 And we see it throughout the country, actually. And and as you know, we're we're the one of the most advanced and probably the most advanced, development company in the mineral sand space in the country. We're actually you know, others have been following us and and waiting for us to to push through with all the regulators. And we're starting to see some m and a opportunities. I think I've spoken about that before. We need to stay focused, but we we definitely think there is a great consolidation play. We know, and and it's it's it's pretty public, that they will run a process to to looking for a partner for the government owned land and mineral sands. And we think we're very well positioned that particularly with our partners and and that network. So we're looking forward to that coming out this year.

37:40 We're well funded now and and our funding sources are as strong as they've been. So we're very confident that we can we can fund that that 25,000,000 that we're saying we need for that stage one. And, you know, we're hoping that that we don't need any more equity. But of course, if the markets are right and the price is right, you know, we would we would certainly be open to it. It's a it's a very simple operation, and this is off the shelf equipment. Very clean very clean product, very clean resource. So, know, it's it's about as easy as it gets certainly for the first stage of of our of our project. And, you know, Stuart, as you've seen, very passionate about the environment and the community, and I and I I think we're very well placed.

38:32 I think we have that social license to get into construction that is crucial for every mining project. And I think that that wraps it up. So, Jack, I think if we if you're happy for we start jumping into the Q and A? Absolutely. Greg Stewart, if I may just jump back in there. Thank you very much indeed for your presentation this morning. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab that's situated on the right hand corner of your screen. But just while the team take a few moments to review those questions that have been submitted already, just like to remind you that a recording of this presentation along with a copy of the slides and the published Q and A can all be accessed via your investor dashboards. Guys, as you can see that we have received a number of questions, and thank you to all of those on the call for taking the time to submit their questions.

39:21 But Greg Stewart, if I may just hand back to you to address those questions where appropriate. And if I pick up from you at the end, that would be great. Thank you. Yeah. Thanks, Jake. So the the you you would have had sure touch on the on the potential for dredging. Technically, the moment, our EIA still says that we we can't mind blow the water table, But we have been, doing a lot of work with in particular with the mines department, the GSMB. And we have have our hydrologists on board to be able to support that. And we feel that that is moving definitely in the right direction. We don't feel it's something that we should absolutely push right now, and our intention is in that mining area, where there is one that initial mining area, which could go to sort of 200 hectares as we'd we would build a sample dredge pit, and we would show them how it works. But it it's not gonna be it's not, available to dredging across the whole deposit, but there are big pockets where we could really reduce the cost by bringing dredging in, and and we're pretty confident that will happen. But, technically, no. We can't do it yet.

40:29 I touched on the the ambient percentage in the 30%. I think I answered the approvals question. The transport question. So it's a good question. Right? Oliver Port for us, I've I've been saying this for a while, is not an option, because it needs to be dredged. But there is more there's increasing activity up there. A few people looking at it. There's potentially grant funding. We're not gonna fund that all ourselves. What we've done is we've probably assumed the the worst case option and and said we will track containers, at to Colombo. But, as I said, there's lots of lots of things happening. When once once we get into you know, we get permitted, I think others will be permitted. And so there'll be an interesting play. And so there's big ports in Trincomalee, which is about, 200 k's to the North and Hebantota to the South.

41:30 The and Hebantota is increasingly getting containers. So as I said, we've assumed the worst, but there will be, I think, a lot more optionality as, as the industry opens up. And in particular, you know, Lanko Minerals and Sands comes out, we can get a hold of that because that's North of Trinconley. So when will the big drilling campaign start? Where so as as I think I said earlier that the mines department was a little bit frozen as they were they were, the minerals policy was evolving. And with that now out, we're hoping that that's gonna be unlocked and that, we will start to be able to move that drilling if we didn't. And also, you know, the as I said, the primary objective of the minerals policy is for the country to understand what their resource is. So we've had, you know, having the right conversations with the right people. So that funding a big chunk of that difference between the CAPITAL PLC 17.725 is is a drilling budget.

42:33 And we also we have, you know, enough in our resources to get to FID and do some more drilling. So that it's a stage thing, and and we're prioritizing what we need to do to get to FID. I think we've been given enough encouragement that, we will definitely be spending more money on it. So, Nicholas, is the current stage one development plan assuming export of heavy minerals? Yes. It is. And, you know, we we're accelerating work on an MSP, so we will we'll definitely be building an MSP, certainly the magnetic side of it. But, yeah, our our preference in that funding package we talked about was was just for the wet concentrator plant for and not for an MSP. So, Joe, see, long question.

43:26 Thank you for your nice words. Alright. The additional mining license and export clarification, the only approvals remaining for FID can be taken. Yeah. Joe, they I'd let let's call them the key approvals. There are small approvals that are associated with it, but, they're they're the ones that that we are focusing totally on and and none of the others, we we think are going to hold us up. The the which we actually need is we need to get land access. Right? So that we are in discussions about land access on that initial mining area. And that's part and parcel of the of getting the mining license. So I'd say, you know, that is that's packaged up with that mining license. Do we expect project, stage one to be funded primarily through debt and and strategic partners?

44:20 So I think I've mentioned that before that that we're hoping not to have to come out to the equity markets. And so it's a combination of corporate debt out of Sri Lanka is our preference. And we have backup discussions, with some credit funders, and with with off takers that are prepared to provide prepay facilities. So they'll provide an amount upfront. We'll give them exclusivity for a couple of years. And so we get a prepay that that we can access on on FID. So it's a there are lots of lots of balls in the air and and not relying on any any any, you know, sort of final package or any, you know, we're just keeping flexibility, I think we're doing well on our on our preferred cases, corporate debt, a a prepay, and and minimal equity.

45:11 I mean, it's interesting, you know, but certainly with our our presence in country and and our sort of leadership position and our partner, we're getting a lot of interest from investors. So and they're seeing that the mining space is opening up. So, which is which is very reassuring. But, yeah, I you know, hopefully, we can keep them dry for consolidation opportunities. I think we've touched on the the line below the water table. Market cap and NPV is US dollar. We all we think in US dollars only in relation to this project. Yes. It's con confusing. Stuart and I, Aussies, and we're listed in London. But, yes, we think we think in US dollars out. You know, our commodities are denominated in US dollars, and and our costs would would largely be US dollars other than the local costs, which are which are very encouraging.

46:21 Now that the fluffy mineral policy has been approved, is that the GSMB, they can agree to approval on a case by case basis? Yes. It it is largely. You know, what we've been told is the GSMB are going to be the primary adviser on on what the value addition hurdle is. And Stuart had a very good conversation with the guy that's the most responsible for it. And in fact, he's been asking for Stuart's advice on it, and, and we we have been helping him with that on a regular basis. Are we is CAPITAL METALS being used as a precedent by the GSMB? That's an interesting question. We see ourselves as a precedent, and, you know, we're more than happy to to push the barrow and and and lead the pack, as I said before. So, yeah, I think the answer to that is yes.

47:22 Whilst it's appreciated that we need to walk before we run, when do you consider a second plant operation could be set up? Yeah. It's a it's a good question. I'm gonna I'm gonna touch on that and then pass on to Stuart because we've built a model. So we we basically have three stages of capacity increase that's that's, in the model. And but I you know, current thinking is we we'll do stage one, and then, hopefully, we'll just jump straight to stage three. And that's on just the mining capacity, but then there is the processing capacity. So I'll probably let Stuart touch on that because there are, you know, there's there's quite a, you know, quite a few scenarios that we can run, particularly if we throw dredging in.

48:10 Yeah. So the, yeah, the financial model we built allows us to run multiple scenarios in terms of what's the base case and and the NPV that you you're currently seeing. It's on the assumption that we build that first mining pit with the wet concentrator plant running it on day shift only just to to get into a sort of steady state. Soon after that, we can add on that second mining pit to feed the wet concentrator plant twenty four hours a day. And that comes at a really low CAPITAL METALS because you've already got the wet concentrator plant, makes up a majority of that seven, eight million that you already see. So all you need to do is add on some extra piping for for the TALES to go back to that second pit. So really low CapEx to get into twenty four hour operation on that WCP.

49:02 And then what we'd look to do is replicate that operation, although that would depend on where we're sitting at with dredging as things progress. So it may be that the first stage moves to a different location and we move into dredging in in a location that's suitable. But in terms of the model, it assumes that we replicate that first stage of mining and and build a second location, which would come at a lower cost and all funded through cash flows because you've done all the engineering work and you're just replicating it. And then in terms of the mineral separation plan, we start with that magnetic separation as stage one producing an ilmenite and what I believe will produce a a final product garnet. Also, rather than a rather than a concentrate garnet that we're selling then to someone else, we'll potentially look to sell to end customers.

49:55 And then the second stage of the MSP is the Rutile product and the Zircon product, but we'll continue to assess those as you were saying. They make up a lower percentage, but a high value portion of the project. So we'll we'll assess that as things progress, but that's what the model assumes currently. Yeah. There's a question on Lanka Minerals. Would would m and a be mainly debt funded? It's too early to tell. You know, they're they're looking at joint ventures, so we don't know whether they're prepared to give up 51 or whether they wanna keep 51%, and we don't know whether it's gonna be a farm in or not. So we're we're expecting they could come out anytime now, But and it and it'll you know, it could be a a two, three month process. That's something we need to get ready for, but it's too early to say what the funding mix will be. But we do we have been getting, potential partners prepped for it, And and there's quite a lot of interest, you know, as I said before, as as people are saying that the mining industry is opening up in country. So I'm confident that we will have flexibility on on that front.

51:17 Yeah. The question on, you know, how strong is the 30% not in favor? I didn't say they were not in favor. I just it it's actually something that the team has observed and and even some politicians have observed and mentioned to us that, they can see that it's in their interest to support us as a project because the community support is so strong. And and they've they've even suggested, you know, don't worry about the rest because, you know, a lot of that what you'll get with your continuing education process and and demonstrating that the jobs are are real. So, yeah, it's a no. And it's definitely not a Manor Island situation. That's that's a very different situation. That's there's there's some NGO activity there.

52:06 They do not have the team, at almost at all. And our site team is about 13 people at the moment, you know, with strong focus. And then for a lot of them, their focus is only the community. So, you know, we are we're we're out there. We're transparent. We have offices an office there that's open for for q and a, and we're looking for feedback. We have Facebook. We're open to, any sort of questions. So it's a very, different situation to to META and and TSL. But we know those guys, and, you know, we we we wish them best and think they'll probably get there in the long run. But, no. We are very different to that. So as we move from explorer to developer and therefore, we significantly reduce that, we have buyout target given the disconnect between NPV and market cap. Absolutely.

53:06 That's that's what you wanna be. Right? So you but you wanna be in control of your register, so that so nobody can pick you up in in that, you know, whilst you bridge that gap, and that's what we've got. You know? I I think we've got, with that with our local partner and with our shareholder base. And my background is in m and a, so I'm I'm very confident we're not gonna be picked up cheaply, but, you know, nice problem to have if somebody wants to. I don't know if you've been monitoring it, Stuart, but I think we've probably covered most of the questions. Yeah. I think we've covered every everything there. A lot of questions around the dredging, and as Greg put it, we've had some really positive conversations with the government. They'll be they were very impressed with the extent of our hydrogeology study that we completed that you both used in country expertise, but also expertise from Australia. So I think we're in a good position there to put our case forward, albeit it's not our focus right now.

54:08 Our focus is on that stage one. So thank you, everybody. Jake, I think you wanted to say a few words, and then we'll we'll sign off. Yeah. Absolutely, guys. Thank you very much indeed for being so generous of your time then addressing all of those questions that came in this morning. And of course, if there are any further questions, we'll make those available to you after the presentation. But apart from that really, Greg, perhaps before really just looking to redirect those on the call to provide you with their feedback, which I know is particularly important to yourself and the company. If I could please just ask you for a few closing comments just to wrap up with, that'd be great. Yeah. Thank you. Thank you, Jake, and thank you, everybody, for attending. And, you know, we were very excited to put out that update, and we we we really feel the momentum is on our side at the moment and that we are having the right conversations and we have the right partner and that we're we're we're going to get there. So, you know, some things we can't control.

55:09 The things we're controlling, we're very happy with that and the things that we're is not that we've not totally in our control. We're doing our best and are very confident that we're we're gonna get there. So, you know, watch this space. You know, we're still confident and pushing hard to get to that construction decision by the end of end of June and be in production in the first half of twenty twenty seven. And bridging that that m and a gap in value so that, you know, that share price will follow. And I and I'm quite sure that when you see those two approvals come in, that we will definitely have a big kick. But we you know, I think that the market's saying that that this is something special, and, you know, we know it's special. And, and, like, we're we're just hoping we keep ticking the boxes, and, and the market will follow.

55:59 Thank you again. That's great. Greg Stewart, thank you once again for updating investors this morning. Could I please ask investors not to close this session as you will now be automatically redirected to provide your feedback? On behalf of the management team of CAPITAL METALS PLC, we would like to thank you for attending today's presentation. That now concludes today's session. So good morning to you all.