Sovereign Metals - Exploiting World's Largest Rutile Deposit

Sovereign Metals Ltd. is an Australian exploration and development company focused on the advancement of its high-grade rutile project in Malawi, namely the Kasiya rutile project. The project comprises the Kasiya and Nsaru rutile deposits. The company believes that the Kasiya rutile project holds the potential to be the largest rutile deposit in the world.

Matthew Gordon spoke with Sapan Ghai, the Chief Commercial Officer of Sovereign Metals (ASX: SVM) to discuss the company’s operations, the Rutile sector and the company’s planned future activities. 

Company Overview

Titanium Dioxide has historically been mined mainly in the form of ilmenite, which is a mineral form of titanium consisting of between 40% - 60% titanium dioxide. Rutile is also a mineral form of titanium but consists of more than 95% of titanium dioxide. The global titanium dioxide market comprises approximately 8 million tons of titanium dioxide and is worth USD$ 15 billion dollars The market consists of 6.5 million tons of ilmenite and only 0.5 million tons of rutile.

Sovereign Metals Ltd. was listed on the AIM stock exchange in December 2021, with the intention of the listing to position the company for the next phase of its growth. The company believes that the AIM listing will raise the company’s profile in the northern hemisphere and facilitate the participation of European investors in the growth of the company.

The company recently published drill results from the exploration drilling conducted at the Kasiya and Nsaru deposits of the project. The drill results have resulted in the merging of both the deposits which will add to the company’s upcoming mineral resource estimate as well as be incorporated into a new scoping study, which is currently underway.

Management

The company is led by Julian Stephens, who serves as the CEO of Sovereign Metals Ltd. Stephens has spent the last 12 years of his career undertaking exploration initiatives in Malawi. Stephens has more than 20 years of experience including serving on company management boards as well as in various executive management and senior operational and economic geology research roles for a variety of companies. He is a Geologist by training and holds a PhD he received from James Cook University in Queensland

Ben Stoikovich serves as the chairman of the company’s board. Stoikovich is currently the Chief Executive Officer (CEO) of Prairie Mining Limited and previously served as a director for the mining and metals corporate finance division of Standard Chartered Bank in London. He holds extensive experience in developing African mining projects and is also the co-discoverer of the Kasiya rutile deposit, with Julian Stephens.

Sapan Ghai is the Chief Commercial Officer (CCO) of the company and is an investment banker by background. Ghai spent the initial years of his career in emerging markets as well as commodities-focused roles, which provided him with insight into mergers and acquisitions as well as dealings in the African mining space, his experience also includes equity financing agreements.

Paul Marcos is the Head of Development for Sovereign Metals Ltd. Marcos has over 27 years of experience in mineral sands projects including consulting, engineering and forming part of the operations team.  He has spent time in Kenya and Madagascar as metallurgical and processing superintendent of project development for Base Resources Limited, which includes experience in the creation of pre-feasibility studies, definitive feasibility studies and engineering design studies.

Sam Cordin, is in charge of Corporate Development and started his career as a Chartered Accountant at a large international accounting firm. Cordin has been involved with the management of various ASX and AIM-listed exploration and development companies, most recently being Salt Lake Potash Limited.

Dylan Browne rounds out the team as Company Secretary. Browne is a Chartered Accountant (CA) and Associate Member of the Governance Institute of Australia. He currently serves as the Company Secretary for various ASX and European listed companies operating in the resources sector.

The management team is tasked with advancing the company’s Kasiya rutile project.

What is Rutile?

The global titanium dioxide sector is primarily comprised of rutile and ilmenite which are both forms of titanium dioxide (TiO2). Ilmenite is the mineral form of titanium dioxide that is most commonly found and mined globally. Ilmenite comprises approximately 80% of the global titanium dioxide market. The global titanium dioxide market is valued at approximately USD$ 15 billion.

Ilmenite consists of approximately 40% to 60% titanium dioxide and has an average spot price ranging between USD$ 200 and USD$ 400 per ton. Rutile consists of up to 95% titanium dioxide and comprises approximately 6% only of the global titanium dioxide market. The spot price of rutile is approximately USD$ 1,400 per ton, with the mineral most commonly mined as a byproduct at ilmenite operations.

The most dominant supplier of Rutile globally is Iluka Resources, an Australian-based resources company. Iluka Resources produces approximately 150,000 tons of rutile per annum.  The second-largest producer of rutile, Base Resources, produces rutile as a by-product at its ilmenite operations.

Sovereign Metals Ltd. has noted that the global rutile market is slowly shrinking, with the market projected to be depleted by the year 2030. The downward trajectory of the market can be accredited to declining grades as well as old mines and no notable new rutile discoveries. The Kasiya rutile project of the company however is one of the most recent rutile discoveries in the world and may act as the remedy for the dwindling global rutile market.

The Kasiya rutile project

The Kasiya rutile project of Sovereign Metals Ltd. is one of the largest rutile deposits in the world; it has a land package of  2,698 km2 and is located in Malawi. The project boasts a mineral resource estimate (MRE) of 3.1 Mt of rutile in the indicated category and 2.8 Mt of rutile in the inferred category.

The project operation is envisioned to consist of hydro mining, a wet mineral concentration plant, mineral separation and product stockpiling. The products will then be transported via truck and rail transportation to be shipped to the global market. The Project infrastructure includes bitumen roads as well as a rail line connecting to the deep-water of Nacala on the Indian Ocean.

The project's power consumption is approximately 14 MW  and due to the low power requirements, the company has initiated discussions with an independent solar power provider for the construction of a solar farm right next to the project. The water requirements of the envisioned hydro mining will be met by a water retention dam that will be filled up in the rainy season of Malawi and will be sufficiently sized to provide water for its hydro mining operation in the country’s dry season.

The company completed a scoping study of the Kasiya rutile project in December 2021, which developed the concept of a multi-decade mine providing a stable supply of rutile and graphite to the global market whilst contributing to the economy of Malawi. The scoping study has highlights including a 25-year life of mine (LOM), an annual throughput of 12  million tons, an annual production of 122,000 tons of rutile and an annual production of 80,000 tons of graphite.

The scoping study also shows an NPV8% of USD$ 861 million, an initial capital cost (CAPEX) of USD$ 332 million, annual revenue of USD$ 251 million and total revenue over the life of mine of approximately USD$ 6.3 billion. The project further has an internal rate of return (IRR) of 36%, earnings before interest, taxes, depreciation, and amortisation (EBITDA) of USD$ 161 million and a payback period of approximately 2.5 years.

Listing on the AIM stock exchange

Sovereign Metals Ltd. announced in December 2021 that its share would be traded on the Alternative Investment Market (AIM) Stock Exchange as well as on the ASX stock exchange. The AIM listing, according to the company, attempts to further raise the company’s profile in the northern hemisphere as well as facilitate the participation of the UK and other European investors in the growth of the company. The AIM listing process was completed by RFC Ambrian Limited which will serve as the company’s nominated adviser, together with the company’s appointed broker Optiva Securities.

Sovereign Metals Ltd. states that the AIM listing became necessary when it started to notice a migration of stock from the Australian stock exchanges into the German, North American and UK stock exchanges. It also noticed that it was beginning to be compared to peers listed on the AIM stock exchange. The company’s announcement that it would be listed on the AIM stock exchange occurred a few days before the publishing of the scoping study for the Kasiya rutile project.

Future

Sovereign Metals Ltd. plans to publish an updated scoping study in the first half of 2022. The updated scoping study will be based on the company’s updated mineral resource estimate. The company further plans to commence a pre-feasibility study as well as initiate the process of Environmental and Social Impact Assessment (ESIA) surveys at the project. The surveys will be required for any ESG study the company may have planned for the future or any that are necessary to advance the project. The company will also continue with its exploration initiatives.

Sovereign Metals Ltd. further plans on continuing with the establishment of offtake agreements regarding rutile to the global market. The company is able to boast, in the potential offtake agreement discussions, that it can supply high-quality titanium dioxide (rutile) to the global market and produce 2.8 tons of Co2 per ton of titanium dioxide less than the traditional process of refining ilmenite to higher qualities.

Sovereign Metals sits with an undiluted market capitalisation of AUD$ 322 million (approximately £175 million) and a cash position of AUD$ 6.5 million, with 441,089,255 shares on issue and 10,875,000 unlisted options.

The company plans to keep the market up to date with its newest developments as they occur, with it planning on issuing weekly announcements regarding not only drill results and mineralisation updates, but also any memorandums of understanding (MOUs) signed as well as carbon footprint analyses conducted.

Sovereign Metals Ltd. believes that through its advancement initiatives and its constant communication with the market, the market will better understand the Kasiya rutile project and in turn recognise (and value) the company accordingly.  

To find out more, go to the West Vault Mining website