Capital Metals (LON: CMET) shares are up 19% today. That’s 350% in the last month therefore, which is pretty good. The background here is an interesting heavy mineral sands operation in Sri Lanka. Except that’s not quite it. What killed the value at Capital was a “reluctance” in the bureaucracy to issue all of the final documentation and so on. The assumption was that there was someone with their hand out, possibly even outright bribery.
So, we’ve had this recently at Capital Metals: “Capital Metals (LON: CMET) shares are up 14% this morning in London. CMET shares have risen on the news that the assumed to be corrupt Minister in Sri Lanka has just been fired. What’s going to be interesting here is seeing whether this does actually solve the problem or not. For it’s possible that there was just the one bad egg in the basket. Or, obviously enough, it is also possible that the system more generally has problems with the rule of law. We might be about to find out.
It’s worth noting that there really are parts of the world that still operate to a different ethical standard than we might think righteous. We've made comments about West Africa here often enough with respect to Atlantic Lithium, Leo Lithium and Kodal Minerals for example.It’s possible to get shocked and upset about this but the rational investor will simply include it all in calculations about value. “
Capital Metals share price from Google Finance
Which leads to the last news release: “Capital Metals (AIM: CMET), a mineral sands company approaching mine development stage at the high-grade Eastern Minerals Project in Sri Lanka (the "Project"), notes a Gazette notification issued in Sri Lanka announcing that the Ministerial Portfolio of Environment, which includes responsibility for the Geological Survey and Mines Bureau, is being brought under the purview of President Ranil Wickremesinghe.” This is not absolute proof that the problem is over - there are countries where even politicians that exalted are still corrupt. But it is an indication that the whole problem is being taken seriously - something which is value additive for Capital Metals, of course.
