LRA Assigns Initial Entity Rating to Ceylon Waste Management Refinery Limited

Ceylon Waste Management Refinery Limited ("the Company" or "CWMR") is the only precious metal refinery in Sri Lanka. It is a family owned business. CWMR extracts precious metals like gold, silver, platinum, palladium and copper through electronic waste (e-waste) re-cycling. It has a re-cycling refinery with a capacity of refining 1 ton of circuit boards per day with 99.99% purity. The refining operations commenced in September'23 and the refinery is currently operating at ~30% capacity. The Company has the capacity to extract 180g of gold, 60g of palladium, 1kg of silver and 250kg of copper from one ton of circuit boards. The Company foresees to expand its capacity by three times in a year. The Company's raw materials are locally sourced and circuit boards are mainly supplied by Ceylon Waste Management (CWM), an associate company with the same ownership. Availability of sufficient raw material is critical for the Company. The Company has not recorded any revenue and still awaits the necessary export licenses to sell its products overseas. The Company expects to export gold for the first time in April'24 and has projected sales of LKR ~1,073 mln. Although the Company has commenced operations, sustainability of production and achieving targeted sales remains to be seen. CWMR reported a loss of LKR~42 mln in 9MFY24 as compared to a loss of LKR~120 mln in FY23. Since CWMR has been operating with no revenue for the past few years, the margins remain persistently negative. The Company has high financial risk as it is majorly financed through external debt and has a very small equity base as reflected by its very high leveraging ~(98%) and debt to asset ratio ~(88%).
The rating is dependent on the management's ability to achieve sustainable production, obtain necessary certifications/accreditations, set revenue targets and meet other milestones. Overcoming bottlenecks to optimize production and uninterrupted availability of quality raw material are imperative. Meanwhile, strengthening management team and governance framework is critical. The rating is also kept on a "Watch" to monitor projected milestones.

About the Entity
Ceylon Waste Management Refinery Limited was established in 2016 with Board of Investment (BOI) approval. CWMR specializes in extracting precious metals from e-waste for global export. The Company holds environmental permits like the Environmental Protection License (EPL) and Scheduled Waste Management License, ensuring legal and responsible operations for safe disposal of hazardous e-waste. It is jointly owned by Mr. Sudesh Nandasiri and Mrs. Sewwandi Ranasinghe, who are the owners of Ceylon Waste Management as well. Five of the seven members on the board are Non-Executive Directors (NEDs), and they are all Independent (ID). Mrs. Sewwandi is an Executive Director, and Mr. Sudesh Nandasiri is the Managing Director and Chairman.