Malawi Energy Expansion Secures Power for Sovereign Metals' Kasiya Project

• Sovereign Metals has entered into a non-binding Memorandum of Understanding with Electricity Supply Corporation of Malawi (ESCOM) to secure long-term electricity supply for its Kasiya Rutile-Graphite Project, establishing a framework for 60MW hydropower supply through connection to the Nkhoma Substation.
• The World Bank has approved a US$350 million grant to support Malawi's Mpatamanga Hydropower Storage Project (MHSP), which will add 358MW of generation capacity to the national grid by 2030, significantly enhancing the country's electricity infrastructure.
• The Kasiya project is positioned to become the world's largest producer of natural rutile and natural flake graphite, with power demand scaling from 30MW in Stage 1 to 60MW at steady-state production in Year 6 of operation.
• MHSP development involves major international partners including Electricité de France (EDF), British International Investment, Norfund, and TotalEnergies, representing substantial foreign direct investment in Malawi's energy sector.
• The power supply agreement represents a critical milestone for Sovereign's Definitive Feasibility Study due in Q4 2025, with the MOU establishing the groundwork for definitive Project Implementation and Power Supply Agreements.

Sovereign Metals Limited (ASX:SVM) operates the Kasiya Rutile-Graphite Project in Malawi, which is set to produce an average of 222kt of natural rutile and 233kt of natural flake graphite per annum over its planned 25-year life of mine. The company is advancing toward commercial production of critical minerals essential for various industrial applications, positioning itself as a significant player in the global rutile and graphite markets.

Strategic Power Supply Framework

The MOU with ESCOM establishes the foundation for Sovereign's long-term power requirements, addressing one of the most critical infrastructure needs for the Kasiya project. The agreement outlines a strategic development workplan to supply 60MW of hydropower for steady-state operations, representing a substantial portion of Malawi's current 351MW total installed capacity.

In the news release, Managing Director & CEO Frank Eagar emphasized the significance of this development:

"The signing of the MOU ensures we have a workplan to secure access to a renewable, hydro-based power supply for Kasiya. The future development of the Mpatamanga Hydro Project - expected to commence operations in 2030 - will further enhance the stability and capacity of Malawi's electricity network."

The power supply infrastructure requires construction of a 132kV overhead transmission line connecting the Kasiya site to the Nkhoma substation, approximately 97km away. Nkhoma has been identified as the optimal connection point based on power reliability, technical feasibility, and environmental and social considerations.

World Bank's Transformative Infrastructure Investment

The World Bank's approval of US$350 million for the MHSP represents a game-changing investment in Malawi's energy infrastructure. This large-scale project aims to transform the country's energy landscape and economic development trajectory, with the facility designed to generate clean energy and store power for supply during peak demand hours.

Nathan Belete, World Bank Division Director for Malawi, Tanzania, Zambia and Zimbabwe, highlighted the project's broader economic impact:

"This new hydropower project is a game-changer for Malawi, capable of catalyzing transformative change in productive economic sectors such as mining, agribusiness and tourism. As the country works on driving its economic development agenda, this new source of clean and reliable energy will help drive business growth, create jobs, and improve the lives of millions of Malawians."

The MHSP involves a consortium of international partners, with the Malawian Government selecting strategic sponsors in September 2022. The consortium includes Electricité de France (EDF) and SN Malawi BV, owned by British International Investment plc, Norfund, and TotalEnergies SE. Upon completion, the US$1.5 billion MHSP will deliver 358MW of additional generation capacity to Malawi's electricity grid.

International Development Finance Involvement

The involvement of major international development finance institutions demonstrates strong institutional confidence in Malawi's energy sector development. The World Bank Group's commitment extends beyond MHSP to include several other large energy projects, reflecting systematic support for the sector as an economic growth enabler.

CEO Frank Eagar noted the broader investment context:

"This also reflects ongoing foreign direct investment in Malawi's infrastructure by the World Bank, IFC, and leading global energy companies such as EDF and TotalEnergies."

Other World Bank investments in Malawi include the Emergency Power Restoration Project focused on rehabilitating the Kapichira power station, the Mozambique-Malawi Regional Interconnector Project, and the recently approved Accelerating Sustainable and Clean Energy Access Transformation (ASCENT) project aimed at improving electricity connections for the Malawian population.

Technical Infrastructure & Project Timeline

The technical specifications for Kasiya's power supply involve sophisticated infrastructure development. During Stage 1, the project's power demand will amount to 30MW, scaling to 60MW at steady-state production in Year 6 of operation. This represents approximately 17% of Malawi's current total installed capacity, underscoring the project's significance within the national energy context.

The transmission infrastructure includes construction of a 132kV overhead power line and installation of a 132/33kV Kasiya bulk intake substation. The MOU framework encompasses both a Project Implementation Agreement for construction and installation of transmission infrastructure, and a Power Supply Agreement for bulk power supply from Malawi's national grid.

Resource Foundation & Production Outlook

Sovereign's Kasiya project sits on substantial mineral resources, with Probable Ore Reserves of 538 million tonnes containing 5.5 million tonnes of rutile and 8.9 million tonnes of graphite. The Total Indicated and Inferred Mineral Resource Estimate at 0.7% rutile cut-off grade encompasses 1,809 million tonnes containing 17.9 million tonnes of rutile and 24.4 million tonnes of graphite.

At steady-state production, Sovereign is positioned to potentially become the world's largest producer of natural rutile and natural flake graphite, with significant implications for global supply chains of these critical minerals. The project's scale and longevity provide a stable foundation for the substantial infrastructure investments required for power supply development.

This timeline aligns with Sovereign's Definitive Feasibility Study due in Q4 2025, positioning the company to advance toward final investment decisions with critical infrastructure components secured. The MOU represents a key milestone in the project's development pathway toward commercial production.

Investment Implications

For investors evaluating Sovereign Metals, the power supply MOU represents significant de-risking of a critical project component. The alignment with World Bank-supported national infrastructure development provides additional confidence in long-term energy security for the Kasiya project.

The convergence of Sovereign's project timeline with major national infrastructure development creates favorable conditions for project advancement. The involvement of established international partners in Malawi's energy sector development, combined with substantial World Bank financing, demonstrates institutional confidence in the country's investment environment.

The technical and commercial framework established through the ESCOM MOU, supported by expanding national grid capacity through MHSP, positions Sovereign to advance toward production of globally significant quantities of critical minerals. This infrastructure foundation, combined with the project's substantial resource base and strategic positioning in essential mineral markets, presents compelling fundamentals for investors focused on critical minerals exposure with robust infrastructure backing.