Capital Metals preparing to drill at Eastern Minerals Project

(Sharecast News) - Mineral sands developer Capital Metals updated the market on the high-grade Eastern Minerals Project in Sri Lanka on Wednesday, confirming that it had received all necessary consents to start a "significant" drilling programme. The AIM-traded firm said the project was designed to expand the resource base and confirm reserves in the initial mining area.

It said the primary objectives of the programme included extending the resource through deeper aircore drilling down to the alluvial basement and laterally to the west, beyond the current mineral resource estimate (MRE).

That, it said, would target palaeo-beach and dune formations on the coastal plain.

Additionally, the programme aimed to confirm resources and reserves to finalise mine design and production scheduling, with an initial focus on the first 12 months of production.

Capital Metals' minimum goal was to double the current resource volume.

The current project MRE stood at 17.2 million tonnes at 17.6% total heavy minerals (THM), positioning the deposit among the highest grades globally.

That estimate was based on pre-2016 hand auger drilling, which was limited to shallow depths due to groundwater interference.

Deeper mineralisation potential remained unexplored below the groundwater table and west of the foredune formation.

Previous deep sonic drilling in 2018 in the back-beach and foredunes at Komari, some of which extended beyond the existing resource, indicated significant mineralization with results such as 14 metres at 26.3% THM and eight metres at 26.6% THM.

The findings, along with analyses of other similar geological formations, suggested that substantial additional resources are likely to be identified through this new drilling programme.

Capital Metals said the drilling would incorporate a comprehensive quality assurance sampling programme, with samples being sent in batches to laboratories in Johannesburg for detailed analysis.

The initial visual results were expected to be reportable within the current quarter, with more detailed results to follow next quarter.

Additionally, Capital Metals said it was preparing a detailed submission on the feasibility of mining below the groundwater table, a common practice in beach mineral sands projects globally.

Discussions with relevant Sri Lankan authorities were progressing to advance that aspect of the project.

"We've glimpsed the upside potential from 2018 and 2021 drilling which produced grades above our current MRE," said executive chairman Greg Martyr.

"Multiples of the current MRE are possible when drilling to the alluvial basement with an average anticipated depth of 10 metres compared to the current average of 1.6 metres for the MRE.

"Material resource extension is also likely from drilling the whole marine sand package, inland of the beach and foredunes."

Martyr said the project economics estimated in the 2022 preliminary economic assessment had already demonstrated a high margin operation.

"We are very excited to finally be in a position to test the upside with a view to expanding the project's current 10-year mine life and throughput, with the subsequent result of materially enhancing the NPV of the project.

"I look forward to updating the market on these drill results and a subsequent resource upgrade."

At 1312 BST, shares in Capital Metals were down 2.65% at 1.66p.

Reporting by Josh White for Sharecast.com.