Sovereign Metals' Hydraulic Mining Trial Commences, Rio Tinto Increases Stake to 19.9%

• Hydraulic mining trial begins at Sovereign Metals' Kasiya Rutile-Graphite Project, following successful dry mining trial last July 2024.
• The trial was conducted by Fraser Alexander and is expected to take three months, includes backfilling and rehabilitation testwork.
• Rio Tinto elected to increase shareholding to 19.9% with additional A$0.7 million investment for SVM, signalling confidence.
• SVM's Pilot Phase continues to progress under Sovereign-Rio Tinto Technical Committee oversight.
• The trial results will be crucial for ongoing the Kasiya Optimisation Study, which targets to compare dry-mining vs. hydraulic mining approaches.

In a significant development for the mining sector, Sovereign Metals Limited (ASX:SVM) has announced the commencement of a hydraulic mining trial at its Kasiya Rutile-Graphite Project in Malawi. This strategic move, coupled with an increased investment from mining giant Rio Tinto, signals a promising trajectory for the company and its flagship project.

Sovereign Metals is an ASX, AIM, and OTCQX-listed company focused on developing its Kasiya Rutile-Graphite Project in Malawi. The company aims to become a significant producer of natural rutile and graphite, two critical materials in high demand for their roles in sustainable technologies and industrial applications. With a substantial mineral resource estimate and ongoing optimization studies, Sovereign Metals is positioning itself as a key player in the global rutile and graphite markets.

Hydraulic Mining Trial: A Crucial Step Forward

The commencement of the hydraulic mining trial marks a pivotal moment in the ongoing Pilot Mining and Land Rehabilitation Program at Kasiya. This trial, following the successful completion of a dry mining trial in July 2024, is being conducted by Fraser Alexander, a global industry leader in hydraulic mining techniques.

Key aspects of the hydraulic mining trial include:

• Duration and Scope: The trial is expected to take approximately three months to complete. It encompasses not only the mining process but also crucial elements such as backfilling of the main trial pit, deposition, and rehabilitation testwork.
• Technical Setup: A temporary water storage pond, filled with six million liters of groundwater from eight on-site boreholes, has been constructed and sealed with natural clay. This water will be used during the trial and continuously recycled, demonstrating Sovereign's commitment to sustainable water management practices.
• Equipment and Process: The trial utilizes skid-mounted hydraulic mining equipment for ease of operation and mobility. A barge-mounted pump transports the slurry to a vibrating screen, simulating the planned operational process. The screen underflow is then processed through a stacker cyclone, replicating plant conditions where different fractions are produced as tailings.
• Focus on Rehabilitation: A key objective of the trial is to showcase successful land rehabilitation post-mining. Sovereign aims to restore land to conditions that match or surpass existing agricultural yields, a crucial aspect for community relations and environmental stewardship.

Managing Director and CEO Frank Eagar commented on the development:

"With valuable insights gained from the dry-mining approach at Kasiya, we are now entering the next phase, which includes the commencement of the hydraulic mining tests, processing and backfilling material, and progressing towards the rehabilitation phase, which we expect to take three months to complete."

The Significance of Hydraulic Mining for Kasiya

The decision to explore hydraulic mining at Kasiya is rooted in the project's unique geological characteristics:

• Orebody Suitability: Previous testwork suggests that the soft, friable nature of the Kasiya orebody should be suitable for hydraulic mining. This method could potentially offer efficiency and cost advantages over traditional dry mining techniques.
• Mineral Resource Characteristics: The saprolite-hosted mineralisation at Kasiya is predominantly homogenous, with consistent physical properties across the 1.8 billion tonne Mineral Resource Estimate. This consistency lends itself well to hydraulic mining methods.
• Processing Advantages: Data from the dry-mining trial has confirmed that no drilling, blasting, crushing, grinding, or milling is needed before stockpiling material for processing into rutile and graphite products. Hydraulic mining could further streamline this process.
• Environmental Considerations: The hydraulic mining approach, coupled with water recycling and land rehabilitation efforts, aligns with Sovereign's commitment to minimizing environmental impact and promoting sustainable mining practices.

Rio Tinto Increases Stake

In a significant development that underscores the potential of the Kasiya project, Rio Tinto has elected to increase its shareholding in Sovereign Metals to 19.9%. This decision comes through an additional investment of A$690,000 following Rio Tinto's previous investments in the company.

The timeline of Rio Tinto's investment in Sovereign Metals:

• July 17, 2023: Initial investment of $40.4 million through the issue of shares and unlisted options.
• July 3, 2024: Exercise of options, raising an additional $18.5 million.
• August 28, 2024: Announcement of the decision to invest an additional A$690,360 to increase shareholding to 19.9%.

This series of investments by one of the world's largest mining companies sends a strong signal to the market about the potential of Sovereign Metals and the Kasiya project. It also provides Sovereign with additional capital to advance its development plans and optimization studies.

The Kasiya Rutile-Graphite Project

The Kasiya project stands out for several reasons. The project boasts a Mineral Resource Estimate of 1.8 billion tonnes, with 1.0% rutile and 1.4% graphite grades. Being high-demand materials, rutile and graphite are both critical with thegrowing demand in various industries, including sustainable technologies, aerospace, and advanced manufacturing. The saprolite-hosted mineralisation at Kasiya allows for potentially low-cost extraction methods, as demonstrated by the ongoing mining trials. With a strategic location situated in Malawi, the project benefits from stable governance and proximity to key transportation routes for export.

Optimization Study & Future Prospects

The hydraulic mining trial is a crucial component of the ongoing Kasiya Optimisation Study. This study aims to refine the project's operational parameters and economic potential. Key aspects include:

• Mining Method Comparison: The study will analyze the efficacy and cost-effectiveness of dry-mining versus hydraulic mining approaches.
• Processing Optimization: Results from the trial will inform decisions on the most efficient methods for separating and processing rutile and graphite from the ore.
• Environmental Management: The study includes a focus on water management, tailings disposal, and land rehabilitation techniques.
• Economic Assessment: The optimisation study will provide updated projections on the project's economic viability and potential returns.

The Role of the Sovereign-Rio Tinto Technical Committee

The Pilot Phase, including the hydraulic mining trial, is progressing under the oversight of the Sovereign-Rio Tinto Technical Committee. This collaboration brings together Sovereign's project-specific expertise with Rio Tinto's global mining experience, potentially accelerating the development timeline and optimizing project outcomes.

Conclusion: Implications for Investors

For investors considering Sovereign Metals, the commencement of the hydraulic mining trial and Rio Tinto's increased investment present compelling reasons for optimism:

• Project Advancement: The ongoing trials and optimization studies demonstrate Sovereign's commitment to de-risking and enhancing the Kasiya project.
• Strategic Partnership: Rio Tinto's growing stake in the company provides not only capital but also validates the project's potential and may offer future operational and marketing advantages.
• Market Positioning: As the demand for rutile and graphite continues to grow, particularly in green technologies, Sovereign is positioning itself as a potentially significant supplier in these markets.
• Environmental, Social, and Governance (ESG) Focus: The company's emphasis on sustainable mining practices and land rehabilitation aligns with growing investor preferences for responsible resource development.
• Potential for Value Creation: As the Kasiya project progresses through various development stages, there is potential for significant value creation, especially if the optimization studies yield favorable results.

In conclusion, Sovereign Metals' progress at the Kasiya Rutile-Graphite Project, as evidenced by the commencement of the hydraulic mining trial and Rio Tinto's increased investment, presents an intriguing opportunity for investors interested in the critical minerals sector. As the company continues to advance its flagship project, it bears watching for those seeking exposure to the growing markets for rutile and graphite, two materials crucial for a sustainable technological future.