Sovereign Metals' June 2026 Quarterly Report: The Kasiya DFS & US-Focused Critical Minerals Strategy

• The Definitive Feasibility Study (DFS) for the Kasiya Critical Minerals Project confirms a pre-tax net present value at an 8% discount rate (NPV8%) of US$2.2 billion against capital expenditure to first production of US$727 million, an NPV8% to capex ratio of 3.0 times.
• Steady-state annual earnings before interest, tax, depreciation and amortisation (EBITDA) of US$476 million and pre-tax, unlevered free cash flow of US$452 million are forecast over an initial 25-year mine life, with total revenue of US$16.2 billion and potential for multi-generational extensions.
• Sovereign Metals Limited is prioritising a US-focused critical minerals strategy, advancing rutile and graphite offtake discussions toward binding agreements with Mitsui & Co., Ltd and Traxys North America LLC.
• Metallurgical testwork confirms monazite concentrate containing dysprosium, terbium and yttrium across 4 planned pits in the DFS mine plan, at Total Rare Earth Oxide (TREO) basket ratios approximately 7 times higher than the world's 5 largest rare earth producers.
• A second year of rehabilitation trials at the Pilot Mining site has produced a formal request from 28 local farmers for Sovereign to remain at the site and support a farming co-operative.

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).

Kasiya Definitive Feasibility Study Delivers Outstanding Results

Sovereign announced the results of the Definitive Feasibility Study (DFS) for Kasiya during the quarter ended June 30, 2026, building on the Optimised Pre-feasibility Study announced in January 2025, and empirical data from the Pilot Mining and Rehabilitation Program completed in 2024. On a steady-state, 100% project basis, the DFS confirms an initial life of mine (LOM) of 25 years across 536 million tonnes (Mt) of total ore mined. Plant throughput of 12 million tonnes per annum (Mtpa) from Year 1 to Year 4 steps up to 24 Mtpa from Year 5 to Year 25, supporting annual production of 222,000 tonnes per annum (ktpa) of rutile, at over 95% titanium dioxide, and 275 ktpa of graphite, at 96% total graphitic carbon (TGC). This positions Kasiya to become the world's largest producer of both natural rutile and natural flake graphite, 2 commodities designated as Critical Minerals by the United States and the European Union.

Key financial metrics from the DFS, on a steady-state basis, include:

• Total LOM revenue of US$16,210 million, with annual revenue of US$728 million.
• Annual earnings before interest, tax, depreciation and amortisation (EBITDA) of US$476 million and annual free cash flow, pre-tax and unlevered, of US$452 million.
• Pre-tax net present value at an 8% discount rate (NPV8%) of US$2,204 million and a pre-tax internal rate of return (IRR) of 23%
• Capital expenditure to first production of US$727 million, total LOM development capital expenditure of US$1,239 million and total LOM sustaining capital expenditure of US$431 million.
• Operating costs, free on board (FOB) Nacala, of US$450 per tonne of product.

The DFS confirms a dry mechanical mining method using draglines and 100 tonne rigid dump trucks, requiring no drilling, blasting, crushing or milling of the soft, free-dig saprolite orebody, a de-risking step from the hydro-mining method originally considered in the Pre-feasibility Study. The conventional Tailings Storage Facility has been eliminated in favour of hydraulic co-disposal backfilling of mined-out pits, reducing the mining footprint and supporting progressive rehabilitation. Processing is staged across 2 plants of 12 Mtpa each, the South Plant from Year 1 and the North Plant from Year 5, drawing power from Malawi's national hydropower grid via a 132 kilovolt (kV) line to the Nkhoma substation. Product will be railed from a purpose-built dry port along the Nacala Logistics Corridor to the Port of Nacala, at an estimated transport cost of US$117 per tonne, FOB Nacala. The DFS is aligned with International Finance Corporation (IFC) Performance Standards, with a comprehensive Environmental and Social Impact Assessment (ESIA) nearing completion; heavy rare earth potential was not included in the DFS, with evaluation of a monazite by-product continuing during the quarter.

Sovereign to Advance Kasiya with US-Focused Critical Minerals Strategy

With full responsibility for commercial, offtake and financing workstreams now with Sovereign, the Company is prioritising a US-focused critical minerals strategy, addressing gaps in secure, non-Chinese sources of titanium and graphite feedstock alongside the potential heavy rare earth by-product opportunity.

Sovereign intends to progress existing rutile and graphite offtake arrangements, including those with Mitsui & Co., Ltd and Traxys North America LLC, from non-binding arrangements toward binding agreements, subject to negotiation. The Company will also deepen engagement with the US Government, major US companies, industry stakeholders and development finance institutions, and pursue partnerships and financing arrangements across US-allied economies, including Japan, the dominant supplier of titanium metal to the US. The Company's Collaboration Agreement with the IFC remains central to the Project's financing strategy.

Monazite Containing Critical Heavy Rare Earths Confirmed Across Multiple Pits

In May 2026, Sovereign announced heavy rare earth metallurgical testwork results at Kasiya, conducted on monazite concentrates recovered from 4 pits in the DFS mine plan, Babbler, Kingfisher, Sparrow and Mousebird, including pits scheduled for Year 1 production. The results confirm dysprosium, terbium and yttrium content in these early production pits, with average Total Rare Earth Oxide (TREO) basket ratios approximately 7 times higher than the world's 5 largest rare earth producers: 20.9% neodymium and praseodymium, 2.5% dysprosium and terbium combined, and 11.8% yttrium at Kasiya, against 19.4%, 0.4% and 1.7% respectively across the 5 largest producers. Content is highest near-surface, at 0 to 6 metres. Dysprosium and terbium are heavy magnet rare earths used in permanent magnets for defence systems, aerospace and electric drivetrains, and yttrium is critical for thermal barrier coatings, radar and laser systems, and semiconductor manufacturing.

On February 24, 2026, the US Assistant Secretary of War for Industrial Base Policy, Michael P. Cadenazzi Jr., testified before the Senate Armed Services Committee that China controls 95% of global heavy rare earth output, with the US importing almost 100% of what it uses, 90% of that from China, describing the situation as "a clear and present danger to our national security." The US is 100% reliant on imports for yttrium, and MP Materials Corp., America's only fully integrated rare earth producer, reports no measurable dysprosium, terbium or yttrium. Recent corporate activity has underlined the strategic value of non-Chinese supply, including USA Rare Earth, Inc.'s April 20, 2026 agreement to acquire Brazil's Serra Verde Group for approximately US$2.8 billion, and Energy Fuels Inc.'s January 20, 2026 acquisition of Australian Strategic Materials Limited for US$299 million. Sovereign notes its monazite concentrate contains all 4 magnetic rare earth elements, plus yttrium, at ratios consistent with or exceeding benchmark operations.

The monazite is recovered from the non-conductor tailings stream of the DFS flowsheet, material that would otherwise report to tailings. Recovery could potentially require no additional mining, no new primary processing circuits and no additional reagents, at near-zero incremental cost relative to the DFS base case, though further work is required on downstream separation costs and on the monazite's mineralogy and radioactive element handling requirements. Project Blue Group Limited (Project Blue), a critical minerals market intelligence specialist, forecasts a 2026 base case price of US$16,000 per tonne (high case US$19,000 per tonne) for a monazite concentrate consistent with Sovereign's testwork, against an April 2026 Shanghai Metals Market benchmark of approximately US$6,142 per tonne. Sovereign has not entered into any offtake or sales agreement for monazite concentrate, and realised prices will depend on commercial negotiation and market conditions at the time of any future sale.

Successful Rehabilitation Trials & Community Partnerships

In April 2026, Sovereign announced that the second year of rehabilitation trials at Kasiya was nearing completion ahead of the mid-2026 harvest in Malawi. The trials provide multi-year evidence of alignment with international rehabilitation, environmental and community good-practice standards, with empirical data feeding into the Mine Closure and Mine Rehabilitation Plans, components the Company describes as critical for project bankability.

The first year of trials delivered maize yields of 5.2 tonnes per hectare against a regional average of 1 tonne per hectare, around 5 times the regional average, and second-year yields are expected to reach that benchmark when harvested in mid-2026. The second year expanded into a diversified multi-cropping system combining maize with Giant Bamboo, winter beans, grass fodder and groundnuts.

After 2 years of collaboration, the 28 local farmers involved in the trials formally requested that Sovereign remain at the site and support them in establishing a farming co-operative, which the Company describes as a strong community endorsement and a central pillar of Kasiya's post-closure social transition strategy.

Next Steps

Sovereign has identified 2 priorities following the quarter: completion of a heavy rare earth concentrate technical-economic study, including a heavy rare earth mineral resource estimate; and advancing offtake discussions with counterparties including Mitsui & Co., Ltd and Traxys North America LLC towards binding definitive agreements.

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