Governance

The Company continues to be guided by the Quoted Companies Alliance Corporate Governance Code. The Company complies with all aspects of the QCA Code and completes periodic reviews of its charter in order to maintain the robustness of its governance systems.

The Company is committed to maintaining the highest standards in corporate governance throughout its operations and to ensure all of its practices are conducted transparently, ethically and efficiently. The Company believes scrutinising all aspects of its business and reflecting, analysing and improving its procedures will result in the continued success of the Company and deliver value to shareholders. Therefore, and in accordance with the AIM Rules for Companies (the “AIM Rules”), the Company has chosen to formalise its governance policies by complying with the UK’s Quoted Companies Alliance Corporate Governance Code 2018 (the “QCA Code”).

The Board currently consists of five Directors: the Executive Chairman, and four Non-Executive Directors (“NEDs”). The Board considers that appropriate oversight of the Company is provided by the currently constituted Board.

Corporate Governance Report

The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles:

Principle One
Business Model and Strategy

The business objective of the Group is to successfully evaluate, permit, finance and develop the Eastern Minerals Project in Sri Lanka into a profitable mining operation in a socially and environmentally responsible way. The Company’s business model and strategy are outlined in the strategic report.

Principle Two
Corporate Culture

The corporate culture of the Group is promoted throughout its employees and consultants and is underpinned by compliance with local regulations and the implementation and regular review and enforcement of various policies including a Share Dealing Policy and Code, Anti-Corruption and Anti-Bribery Policy, Matters Reserved for the Board, Code of Business Ethics, Whistle Blowing Policy, and Media and Communications Policy, so that all aspects of the Company are run in a robust and responsible way.

The Board is aware that the culture set by the Board will impact all aspects of the Group and the way that employees and consultants behave. The exploration, evaluation and development of mineral resources can have a significant impact and it is important that the communities view the Group’s activities positively. Therefore, the importance of sound ethical values and behaviours (as set by the Board, and monitored on a regular basis) is crucial to the ability of the Group to successfully achieve its corporate objectives.

Principle Three
Understanding Shareholder Needs and Expectations

The Board is committed to maintaining good communications and having constructive dialogue with its shareholders. Institutional shareholders and analysts have the opportunity to discuss issues and provide feedback at meetings with the Company. In addition, all shareholders are encouraged to attend the Company’s Annual General Meeting and any other General Meetings or events (whether in person or online) that are held throughout the year.

Investors also have access to current information on the Company website. The Company provides regulatory, financial and business news updates through the Regulatory News Service in accordance with the AIM Rules for Companies.

Principle Four
Considering Wider Stakeholder and Social and Environmental Responsibilities

The Board recognises that the long-term success of the Group is reliant upon the collective efforts of management, employees, consultants, suppliers, local communities, regulators, government and other stakeholders. The Board has put in place a range of processes and systems to ensure that there is close oversight of and contact with its key resources and relationships, including ongoing two-way communication, control and feedback processes to enable an appropriate and timely response. The Group’s engagement with its stakeholders, and the environmental, social and community initiatives undertaken during the Year, are described in the Strategic Report.

A detailed social impact assessment and public stakeholder consultation process was undertaken in support of the Group’s Industrial Mining Licence applications over the EL168 area, and a further Environmental Impact Assessment was submitted in respect of the EL199 area during the Year, which is subject to its own technical review and stakeholder consultation process. The Group maintains a dedicated in-country community engagement team and reports monthly to the Board on community and environmental performance against defined targets, including community interactions, field visits, complaints and community investment.

Stakeholder engagement in the Project area has been broadly supportive, and the Board recognises that maintaining that support is central to the Group’s social licence to operate. The Board monitors community feedback closely and responds through direct engagement, environmental education and the community investment programme.

Principle Five
Risk Management, Internal Controls and Assurance Activities

The Board regularly reviews the risks to which the Group is exposed and, through its meetings and regular reporting, seeks to ensure that these risks are managed and mitigated so far as is practicable, whilst recognising that its business opportunities carry an inherently high level of risk and that certain of the principal risks are outside the Group’s control. The Board receives monthly reporting from management on performance against defined targets covering health and safety, environment, community and stakeholder engagement, technical delivery, people and financial performance.

The principal risks and uncertainties facing the Group at this stage and in the foreseeable future are set out in the risk assessment matrix below, together with the Board’s assessment of the likelihood of each risk arising and the severity of its potential impact. This matrix is updated as changes arise in the nature of the risks or the controls implemented to mitigate them, and is reviewed by the Audit Committee, which reports to the Board on the risk register and on the effectiveness of the Group’s internal controls.

Opportunities

The Board considers the opportunities available to the Group alongside these risks. These include the potential to grow the mineral resource materially beyond the initial mining area, the mineralisation identified below the water table, the scope for downstream value addition currently being assessed through the Mineral Separation Plant concept studies, and the potential for consolidation within Sri Lanka’s mineral sands sector.

Internal controls and assurance

The Board is responsible for the Group’s system of internal control and for reviewing its effectiveness. The system is designed to manage rather than eliminate the risk of failure to achieve business objectives, and can provide only reasonable, and not absolute, assurance against material misstatement or loss. Key elements include Board approval of the annual budget and of expenditure outside it, defined authorisation limits, segregation of duties within the finance function, monthly management reporting of actual performance against budget, and Board review of the Group’s cash position and cash flow forecasts at each meeting. Given the current size of the Group and the scale of its activities, the Board does not consider that an internal audit function is necessary at this stage. This position is reviewed annually by the Audit Committee and will be reconsidered as the Group progresses towards development and production.

Climate-related risk

Given the small scale of its current operations, the Group has the opportunity to embed climate-related risk management into its internal control systems from the outset. The Board recognises that the Project is exposed to physical climate risk, given its coastal location, and to transition risk arising from evolving regulatory expectations, including in relation to in-country processing and energy use. These risks are monitored by the Board and will be formally incorporated into the risk assessment matrix as operations scale up, at which point the identification, assessment and effective management of climate-related risks and opportunities will be actively discussed at Board and management meetings.

Principle Six
A Well-Functioning Board of Directors

The Board’s role is to agree the Company’s long-term direction and strategy and monitor achievement of key milestones against its business objectives. The Board meets formally at regular intervals for these purposes and holds additional meetings when necessary to transact other business. The Board receives reports for consideration on all significant strategic, operational and financial matters.

During the year, the Board was comprised of an Executive Chairman (Greg Martyr) and five NEDs (James Leahy, Teh Kwan Wey, Bruce Griffin, who resigned on 6 February 2026, and Aravinda De Silva and Savanth Sebastian, who were both appointed during the year on 4 August 2025). Each member of the Board is committed to spending sufficient time to enable them to carry out their duties as a Director. The Board meets regularly throughout the year as deemed appropriate formally and informally, in person and by telephone. No single director is dominant in the decision-making process.

The Company constantly keeps under review the constitution of the Board and may seek to add more members as required as the Company grows and develops. Biographies for each member of the Board is provided on the Company’s website, and which demonstrate the wide range of skills and expertise that the Board holds as a collective to execute the Company’s strategy.

The Board is supported by the Company’s senior leadership team. During the year the Company appointed Anthony Eastman as Chief Financial Officer, and Orana Corporate LLP as Company Secretary, adding significant financial and governance expertise as the Company transitions towards development. The Chief Financial Officer and Company Secretary attend Board meetings, and the Company also continued to build its senior team in Sri Lanka during the year, adding further finance, environmental and government-relations expertise.

The Board considers James Leahy and Teh Kwan Wey to be independent of management and free from any business or other relationship which could materially interfere with the exercise of their independent judgement. The independent directors are not part of the Company’s executive team or involved in day-to-day operations, with their core duties including providing oversight, challenging executive decisions, and ensuring transparency.

The Board has implemented an effective committee structure to assist in the discharge of its responsibilities. All committees of the Board have written terms of reference dealing with their authority and duties. The Company Secretary acts as secretary to each of these committees.

Principle Seven
Maintenance of Governance Structures and Appropriate Skills, Experience and Capabilities of the Directors

The Board considers the current balance of sector, financial and public market skills and experience which it embodies is appropriate for the size and stage of development of the Company and that the Board, supported by the Chief Operating Officer and the Chief Financial Officer, has the skills and requisite experience necessary to execute the Company’s strategy and business plan whilst also enabling each Director to discharge their fiduciary duties effectively. Biographies for each member of the Board are provided on the Company’s website.

All Directors, through their involvement in other listed companies as well as the Company, including attendance at seminars, forums and industry events and through their memberships of various professional bodies, keep their skill sets up to date. External advisers are engaged in Sri Lanka to advise on regulatory issues as they arise.

The Board reviews annually, and when required, the appropriateness of its mix of skills and experience to ensure that it meets the changing needs of the Company.

The Company has an outsourced Company Secretary function based in the UK who assists the Board in preparing for and running effective Board meetings, including the timely dissemination of appropriate information. The Company Secretary provides advice and guidance to the extent required by the Board on the legal and regulatory environment.

The Board is responsible for setting the vision and strategy for the Company to deliver value to the Company’s shareholders by effectively putting in place its business model. The roles and responsibility of the (non-board) Chief Operating Officer, Executive Chairman, (non-board) Chief Financial Officer and other Directors are laid out below:

• The Chief Operating Officer’s primary responsibilities are to: implement the Company’s strategy in consultation with the Executive Chairman and the Board; take responsibility for the Company’s projects in Sri Lanka; implement the decisions of the Board; monitor, review and manage key risks; and communicate with external audiences such as investors, analysts and media.
• The Executive Chairman’s primary responsibilities are to: lead the Board and ensure the effective working of the Board; in consultation with the Board, ensure good corporate governance and set clear expectations with regards to the Company culture, values and behaviour; set the Board’s agenda and ensure that all Directors are encouraged to participate fully in the decision-making process of the Board; and take responsibility for relationships with the Company’s professional advisers and major shareholders.
• The Chief Financial Officer’s primary responsibilities are to: oversee internal/external financial reporting; ensure compliance with financial regulations; track cashflow; financial planning; and communicate risk issues to the Board.
• The Company’s NEDs participate in all Board level decisions and play a particular role in the determination and articulation of strategy. The Company’s NEDs provide oversight and scrutiny of the performance of the Executive Directors, whilst both constructively challenging and inspiring them, thereby ensuring the business develops, communicates and executes the agreed strategy and operates within the risk management framework.
• The Company Secretary is responsible for ensuring that Board procedures are followed, and applicable rules and regulations are complied with.

The whole Board is responsible for the appointment of all additional and replacement Executive and Non-Executive Directors.

The Board is supported by the audit and remuneration committees as described below. Given the size of the Company and size of the Board it is not deemed necessary at this stage to include a separate audit committee report and remuneration committee report (with such report being put to an advisory vote at the AGM per Principle 9). This is not compliant with the QCA Code; however details of the audit and remuneration committees’ work in the year are detailed below. Notwithstanding, the committees met once and twice, respectively, during the year.

Audit Committee

The Audit Committee comprises Teh Kwan Wey (Chair), James Leahy, and Savanth Sebastian.

The Audit Committee reviews reports from management and from PKF Littlejohn LLP, the Company’s auditor, relating to the interim and annual accounts and to the system of internal financial control.

The Audit Committee is responsible for assisting the Board’s oversight of the integrity of the financial statements and other financial reporting, the independence and performance of PKF Littlejohn LLP, the regulation and risk profile of the Company and the review and approval of any related party transactions. The Audit Committee may hold private sessions with PKF Littlejohn LLP without management present. Further, the Audit Committee is responsible for making recommendations to the Board on the appointment of PKF Littlejohn LLP and the audit fee and reviews reports from management and PKF Littlejohn LLP on the financial accounts and internal control systems used throughout the Company.

The Audit Committee is responsible for ensuring that the Company’s financial performance is properly monitored, controlled and reported. The Audit Committee intends to meet at least twice a year to ensure that the audit of the financial statements is conducted appropriately and that the financial statements give a true and fair position of the group. However, the committee only met once during the year due to the limited number of contentious audit matters. The Audit Committee is responsible for the scope and effectiveness of the external audit and compliance by the Company with statutory and other regulatory requirements.

The Audit Committee:

• monitors in discussion with PKF Littlejohn LLP the integrity of the financial statements of the Company, any formal announcements relating to the Company’s financial performance and reviews significant financial reporting judgments contained in them;
• reviews the Company’s internal financial controls and reviews the Company’s internal control and risk management systems;
• considers annually whether there is a need for an internal audit function and makes a recommendation to the Board;
• makes recommendations to the Board for it to put to the shareholders for their approval in the general meeting, in relation to the appointment, re-appointment and removal of PKF Littlejohn LLP and to approve the remuneration and terms of engagement of PKF Littlejohn LLP;
• reviews and monitors PKF Littlejohn LLP’s independence and objectivity and the effectiveness of the audit process, taking into consideration relevant professional and regulatory requirements;
• develops and implements policy on the engagement of PKF Littlejohn LLP to supply non-audit services, taking into account relevant external guidance regarding the provision of non-audit services by PKF Littlejohn LLP; and
  reports to the Board, identifying any matters in respect of which it considers that action or improvement is needed and making recommendations as to the steps to be taken.
• PKF Littlejohn LLP were appointed as the Group’s external auditor in the year ended 31 March 2023.

The Audit Committee also reviews arrangements by which the staff of the Company and the Company may, in confidence, raise concerns about possible improprieties in matters of financial reporting or other matters and ensure that arrangements are in place for the proportionate and independent investigation of such matters with appropriate follow-up action.

Remuneration Committee

The Remuneration Committee comprises James Leahy (Chair), Teh Kwan Wey, and Aravinda De Silva.

The Remuneration Committee is responsible for considering all material elements of remuneration policy, the remuneration and incentivisation of Executive Directors and senior management (as appropriate) and to make recommendations to the Board on the framework for executive remuneration and its cost. The role of the Remuneration Committee is to keep under review the Company’s remuneration policies to ensure that the Company attracts, retains and motivates the most qualified talent who will contribute to the long-term success of the Company. The Remuneration Committee also reviews the performance of the Executive Chairman and sets the scale and structure of his remuneration, including the implementation of any bonus arrangements, with due regard to the interests of shareholders.

The Remuneration Committee is also responsible for reviewing the terms of granting options by the Company, in particular, the price per share and the application of the performance standards which may apply to any grant, ensuring in determining such remuneration packages and arrangements, due regard is given to any relevant legal requirements, the provisions and recommendations in the AIM Rules and The QCA Code.

The Remuneration Committee:

• determines and agrees with the Board the framework or broad policy for the remuneration of the Executive Chairman;
• determines targets for any performance-related pay schemes operated by the Company;
• ensures that contractual terms on termination and any payments made are fair to the individual, the Company, that failure is not rewarded and that the duty to mitigate loss is fully recognised;
• determines the total individual remuneration package of the Executive Chairman, including bonuses, incentive payments and share options;
• is aware of and advises on any major changes in employees’ benefit structures throughout the Company;
• ensures that provisions regarding disclosure, including pensions, as set out in the (Directors’ Remuneration Policy and Directors’ Remuneration Report) Regulations 2019, are fulfilled; and
• is exclusively responsible for establishing the selection criteria, selecting, appointing and setting the terms of reference for any remuneration consultants who advise the Remuneration Committee.

Principle Eight
Evaluation of Board Performance

Review of the Group’s progress against the long-term strategy and aims of the business provides a means to measure the effectiveness of the Board. This progress is reviewed in Board meetings held periodically throughout the year which reflects the Group’s size and complexity at this stage of the Group’s growth. An externally facilitated board review has not yet taken place as it is not deemed an appropriate use of resources at this stage in the Company’s growth, but the Board remains open to it at the appropriate time in the future.

The Group conducts periodic reviews of its Board succession planning protocols which includes an assessment of the number of Board members and relative experience of each Board member vis-à-vis the Company’s requirements given its stage of development, with the goal of always having in place an adequate and sufficiently experienced Board. The Directors develop their experience and skills via ongoing professional development and Group-mandated training programmes for anti-bribery and corruption and matters relating to criminal finances.

Principle Nine
Establishing a Remuneration Policy supportive of long-term value creation and the Company’s purpose, strategy and culture

As detailed under Principle 7, the Remuneration Committee is responsible for considering all material elements of the remuneration policy to ensure it is transparent, fair and understandable to shareholders whilst reflecting the Company’s values and strategic goals, the remuneration and incentivisation of the Executive Chairman and senior management (as appropriate) and to make recommendations to the Board on the framework for executive remuneration and its cost.

The Remuneration Committee reviews the Company’s remuneration policies to ensure that the Company attracts, retains and motivates the most qualified talent who will contribute to the long-term success of the Company whilst being proportionate and justifiable. The Remuneration Committee also reviews the performance of the Executive Chairman and sets the scale and structure of his remuneration, including the implementation of any bonus arrangements, with due regard to the interests of shareholders.

Given the Company’s size, the Board does not intend to undertake an advisory vote on remuneration policy at the upcoming AGM; however, it remains committed to maintaining transparent dialogue with shareholders on all material remuneration matters. This represents a departure from the QCA Code, which the Board considers proportionate at the Company’s current stage of development.

Principle Ten
Shareholder Communication

The Board is committed to maintaining good communication and having constructive dialogue with its shareholders. The Company has close ongoing relationships with key private shareholder, analysts and brokers, providing the opportunity to discuss issues and provide feedback at meetings with the Company.

The Company also provides regular updates on the progress of the Company, detailing recent business and strategy developments, in news releases which is available on the Company’s website. The Company’s financial reports can also be found on its website.

All shareholders are encouraged to attend the Company’s Annual General Meeting and any general meetings held by the Company. The Company has elected to host its AGMs in London. The Directors believe hosting the AGM in London will enhance engagement with the Company’s shareholders by making the meeting more accessible. The Board is always open to receiving feedback from shareholders. Communications should be directed to info@capitalmetals.com

The Company also participates in various investor events including conferences and presentation evenings, at which shareholders can meet with management in person to answer queries, provide information on current developments and to take into consideration shareholder views and suggestions.