Sovereign Metals Kasiya Pilot Phase: Enhancing Feasibility & Demonstrating Rehabilitation

• Sovereign Metals commences pilot mining and land rehabilitation program at Kasiya Rutile-Graphite Project in Malawi
• Pilot phase will optimize excavation, processing, tailings management and land rehabilitation approaches
• 150,000 BCM of ore to be excavated; processed on-site and at Sovereign's Malawi lab to generate bulk samples
• Successful permitting in 3 months demonstrates strong government support for Kasiya project
• Kasiya PFS shows potential for 222ktpa rutile and 244ktpa graphite production with compelling economics

About Sovereign Metals

Sovereign Metals Limited (ASX:SVM) is an Australia-based mining company focused on developing its flagship Kasiya Rutile-Graphite Project in Malawi. Kasiya is the world's largest natural rutile deposit and the second largest flake graphite deposit globally. The company aims to establish a low-carbon, sustainable operation to supply the high-demand natural rutile and graphite markets. With a strong management team and support from the Malawi government, Sovereign Metals is well-positioned to advance Kasiya through feasibility and towards production.

Pilot Mining Program

Sovereign Metals has initiated a pilot mining and land rehabilitation program at Kasiya as part of the project's ongoing Optimization Study. The pilot phase is designed to generate empirical data that will assist in determining optimal approaches to excavation, material handling, processing, backfilling and rehabilitation.

Over a three-month period, Sovereign plans to excavate approximately 150,000 bank cubic meters (BCM) of ore from a test pit using a combination of dry and hydraulic mining techniques. The excavated material will be processed on-site and at the company's laboratory facilities in Malawi, providing additional bulk samples for graphite product qualification with potential offtakers and end users.

Rehabilitation Demonstration

A key component of the pilot program is demonstrating successful restoration of agricultural land post-mining. The test pit will be backfilled and multiple rehabilitation strategies implemented, showcasing to local communities that mined land can be effectively rehabilitated for agricultural use. Eight small demonstration pits will be constructed to test various water storage, backfill, soil composition and revegetation approaches. Monitoring will assess vegetation growth and soil stability.

The pilot program and rehabilitation demonstrations are important for the Definitive Feasibility Study (DFS) and will help shorten the timeline to DFS completion once underway. Optimizing the designs for the tailings storage facility and overall site rehabilitation are critical workstreams.

Fast-Tracked Permitting

Sovereign received all required approvals and permissions for the pilot mining program from the Malawi environmental, water and mining authorities, as well as the local community, within just three months. This efficient permitting process is a testament to the strong support mining projects like Kasiya enjoy in Malawi. The company is committed to developing the project responsibly and sustainably in accordance with Malawian law and international best practices.

To facilitate the pilot phase, Sovereign is expanding its in-country processing capabilities with the installation of a commercial-scale spiral plant in Malawi. This will enable the production of additional rutile and graphite concentrates for product qualification and testing. Infrastructure to support the program includes water boreholes and storage, perimeter fencing, road improvements, temporary buildings and diesel power generation.

Compelling Project Economics

The 2023 Pre-Feasibility Study (PFS) demonstrated Kasiya's potential to become the world's largest natural rutile producer at 222,000 tonnes per annum and a globally significant natural graphite producer at 244,000 tonnes per annum. The study outlined a long-life, multi-generational operation generating over US$16 billion in revenue from an initial 25-year mine life.

The PFS delivered robust economics including a post-tax NPV8 of US$1.6 billion, an IRR of 28%, and average annual EBITDA of US$415 million. Both initial and sustaining capital costs are very low for a project of this scale, with the high-value rutile product driving strong margins.

Based on the large Indicated and Inferred Mineral Resource of 1.8 billion tonnes at 1.0% rutile and 1.4% graphite, there is significant potential to extend the mine life and expand production in the future. Over 90% of the 825km2 tenement package remains unexplored, providing substantial upside.

Sustainability Focus

Sovereign Metals is committed to the responsible and sustainable development of Kasiya. The project will play a key role in supplying the critical minerals necessary for decarbonization technologies like batteries, solar panels, wind turbines, and hydrogen electrolyzers. Natural rutile in particular is highly sought-after as a non-toxic, environmentally friendly source of titanium dioxide pigment.

The pilot phase and overall project are being advanced under Malawian law and in alignment with IFC Performance Standards to protect local communities and the natural environment. Demonstrating industry-leading ESG practices will position Kasiya favorably with global customers and capital providers increasingly focused on sustainability.

Experienced Team

Sovereign has assembled a strong owners' team to progress Kasiya through the study and permitting phases and into development. The board and management have extensive experience advancing African mining projects and a track record of delivering on commitments. The Malawi-based team has been instrumental in building trust with local stakeholders.

Key technical consultants for the Pre-Feasibility Study included Placer Consulting (geology and resources), DRA Global (mining, processing, infrastructure and cost estimation), ERM (environmental and social), Orelogy (mine optimization and design), and Knight Piésold (tailings and water management). A Tier 1 team will be assembled for the DFS.

De-Risking the Project

The pilot mining and rehabilitation program is an important step in further de-risking the Kasiya project. By optimizing the process flow sheet, generating bulk product samples, and demonstrating social license through progressive rehabilitation, Sovereign will enhance the robustness of the DFS and the attractiveness of Kasiya to strategic partners.

With the PFS now complete and pilot work underway, Sovereign is well-positioned to finalize offtake agreements and advance funding discussions to bring Kasiya into production. Strong demand growth is forecast for both natural rutile and flake graphite, driven by the shifting focus to sustainable supply chains. As the world's largest rutile deposit and a significant graphite resource, Kasiya is expected to attract premium valuations.

Conclusion

The initiation of pilot mining and land rehabilitation at the Kasiya Rutile-Graphite Project marks an exciting milestone for Sovereign Metals. The program will generate valuable data to optimize the process flow sheet and ESG performance to inform the upcoming Definitive Feasibility Study.

With a world-class mineral resource, compelling economics, and strong stakeholder support, Sovereign is well-placed to become a leading producer of two critical "green" minerals - natural rutile and graphite. The low-carbon, sustainable nature of the planned operation positions Kasiya favorably with customers and investors.

As Sovereign continues to systematically de-risk and advance the project, the company offers a unique investment opportunity in the critical minerals space. Shareholders can look forward to a steady stream of key value-driving catalysts over the coming months as Kasiya progresses through the study and permitting phases towards a development decision.