Capital Metals PLC (AIM:CMET) said it has restructured its Sri Lankan holding subsidiary, Damsila, in order to regain its industrial mining licenses (IMLs) in the country.
According to a statement, the mineral sands company has issued a 60% ownership stake in Damsila to a Sri Lankan national who has worked with the company since 2015.
The shareholder agreements governing Damsila provide protections to Capital Metals by requiring a 75% vote on all key decisions to be made by Damsila, it said.
Additionally, a secondary processing company is being formed which is allowed to be wholly owned by Capital Metals, enabling it to apply through the Board of Investment of Sri Lanka for benefits such as customs duty concessions.
Damsila and Redgate Lanka, a wholly owned subsidiary of Capital Metals, have also entered into a commercial offtake agreement which will be assigned to the processing company, enabling it to acquire all materials from Damsila after it has been mined and screened.
"While we were advised that our ownership structure was legally correct, the restructuring has been completed to satisfy the GSMB [ Sri Lanka's Geological Survey and Mines Bureau] 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 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.”
The company’s IMLs were suspended in early December amid disagreement with the Sri Lankan authorities over the company’s adherence to rules around domestic ownership.