Capital Metals PLC on Tuesday said it has signed a deal to create a joint venture to fund the development of its Eastern Minerals project in Sri Lanka.

Capital Metals shares rose 67% to 4.60 pence each in London on Tuesday morning.

The Sri Lanka-focused mineral sands company said the deal is with LB Group Ltd, which it describes as ‘the world’s leading manufacturer of high-performance titanium dioxide pigments and sponge’.

The company said it will form a 50/50 joint venture with LB, for the development and operation of its project, with LB to provide $81 million to fund the project in line with the preliminary economic assessment, with any further expansion to be carried out on a 50/50 basis.

The firm said LB will guarantee 100% of the off take of heavy mineral concentrate and ilmenite for the whole life of the project. The current deal is non-binding, but gives LB exclusivity until July 31.

Capital Metals said it expects to begin receiving profits as soon as shipments begin, which could be within a year of the commencement of construction. The company hopes to achieve a mining rate of 1.65 million tonnes per year.

Chair Greg Martyr said: ‘We are delighted to have signed an MoU with LB Group, the world’s leading titanium dioxide pigment manufacturer. This follows several months of discussions and due diligence by LB Group. If concluded, this agreement will not only fund the Project into production but will also see Capital Metals benefitting from its share of free cash flow from the very first shipment.’

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