Sovereign Metals Advances US-Focused Strategy for Kasiya & Continues as Operator as Rio Tinto Collaboration Concludes

• Rio Tinto Mining and Exploration Limited has notified Sovereign Metals Limited that it will not exercise its option to become the operator of the Kasiya Rutile-Graphite Project in Malawi; Sovereign will continue as the operator.
• Rio Tinto advised that its decision reflects a change in corporate strategy and a strategic review of its Iron and Titanium business, consistent with its publicly outlined focus on iron ore, copper, aluminium and lithium, and does not reflect any change in Kasiya's fundamentals, economics or strategic importance
• Certain Rio Tinto rights under the Investment Agreement have lapsed, including its right to market 40% of annual production and its pre-emptive right over any third-party offer to acquire an interest in the Project; Rio Tinto retains an approximate 18.2% shareholding in Sovereign. 
• The Kasiya Definitive Feasibility Study (DFS), completed with technical input from Rio Tinto, remains the basis for the Project's fundamentals following this change.
• Sovereign will prioritise a US-focused strategy for Kasiya, advancing rutile and graphite offtake discussions toward binding agreements with Mitsui & Co., Ltd. and Traxys North America, alongside continued engagement with the US Government on the heavy rare earth co-product opportunity.

Company Overview

Sovereign Metals Limited (ASX: SVM | AIM: SVML | OTCQX: SVMLF) is the owner and operator of the Kasiya Rutile-Graphite Project in Malawi, positioned to supply natural rutile and natural graphite into the United States (US) and allied supply chains. Kasiya provides exposure to 3 minerals designated as critical by the US: titanium (via natural rutile), graphite, and heavy rare earths (via a Heavy Rare Earth Concentrate by-product). Rio Tinto has invested over A$60 million in the Project since 2023 and continues to hold an approximate 18.2% shareholding in the Company. Sovereign also holds a Collaboration Agreement with the International Finance Corporation (IFC), a member of the World Bank Group.

Rio Tinto Concludes Operatorship Collaboration

Sovereign Metals has confirmed that, under the terms of its Investment Agreement with Rio Tinto, Rio Tinto has notified the Company that it will not exercise its option to become the operator of Kasiya. Accordingly, Sovereign will continue as operator and advance the Project directly. Rio Tinto advised that its decision reflects its change in corporate strategy and its strategic review of its Iron and Titanium business, consistent with its publicly outlined focus on iron ore, copper, aluminium and lithium, and does not reflect any change in the fundamentals, economics or strategic importance of the Project, as set out in the Kasiya Definitive Feasibility Study (DFS), which was completed with technical input from Rio Tinto. 

As a result, certain Rio Tinto rights under the Investment Agreement, including its operatorship, product marketing rights, and consent and pre-emption rights, have ceased to apply. Rio Tinto continues to hold an approximate 18.2% shareholding in Sovereign, along with a right to appoint a nominee director while holding at least 15%, and a right to be notified of future equity issues while holding at least 10%.

Chairman of Sovereign Metals, Ben Stoikovich, acknowledged Rio Tinto's role in advancing the Project and looked ahead to the Company's next phase:

"As the Sovereign-Rio Tinto collaboration concludes, we would like to acknowledge and thank Rio Tinto for its significant contribution to the advancement of Kasiya. Since 2023, Rio Tinto has invested over A$60 million in the Project and has provided valuable technical input through its participation on the Sovereign-Rio Tinto Technical Committee. This expertise has contributed to the successful delivery of the unique Pilot Mining and Rehabilitation program, which generated real-world operating and mining data that was incorporated into the tier-1 DFS completed earlier this year.”

Stoikovich added:

“Sovereign looks forward to Rio Tinto continuing as a supportive shareholder as it builds on this important period of technical and operational progress, with the Company now well positioned to prioritise a US-focused critical minerals strategy, positioning Kasiya as a secure, non-Chinese source of titanium feedstock and natural graphite for the US and allied supply chains."

A US-Focused Critical Minerals Strategy

Sovereign can now advance its commercial workstreams for Kasiya directly. The Company intends to prioritise a US-focused strategy for the Project, addressing gaps in secure, non-Chinese sources of critical minerals feedstock. Since completion of the DFS, Sovereign has deepened its engagement with the US Government, major US companies and industry stakeholders, and will continue this engagement, focusing its offtake and partnership efforts where Kasiya's strategic value is greatest.

Kasiya provides exposure to 3 minerals designated critical by the US: titanium via natural rutile, graphite, and heavy rare earths via a Heavy Rare Earth Concentrate by-product, each feeding US and allied supply chains, including Japan, which is the dominant supplier of titanium metal to the US.

Sovereign's existing Collaboration Agreement with the IFC, a member of the World Bank Group of which the US Government is the single largest shareholder, positions the Company to advance a development financing strategy for Kasiya alongside a globally recognised development finance partner, drawing on its engagement with the IFC and with development finance and export credit institutions across US and allied economies. Sovereign thanked Rio Tinto for its investment, funding and technical contribution, which the Company said have been instrumental in advancing Kasiya to a world-class DFS.

Next Steps

Sovereign will advance rutile and graphite offtake discussions toward binding agreements with existing Memorandum of Understanding (MOU) counterparties Mitsui and Traxys, as well as other strategic US and US-allied counterparties, subject to negotiation. The Company will also continue its engagement with potential offtake partners and US Government stakeholders regarding the heavy rare earth co-product opportunity.

Sovereign intends to progress its financing workstreams directly, drawing on its Collaboration Agreement with the IFC and its engagement with development finance and export credit institutions across US and allied economies.

The Company will continue deepening its engagement with the US Government and industry stakeholders as it positions Kasiya as a secure, non-Chinese source of titanium feedstock and natural graphite for the US and allied supply chains.

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