Sovereign Metals - Kasiya Stands Out as Sustainable Multi-Generational Outpost of Critical Mineral Supply

• Sovereign Metals is developing a large graphite and titanium deposit in Malawi called Kasiya.
• They are working with Rio Tinto, who has the option to operate the mine once a definitive feasibility study (DFS) is completed.
• The company expects to complete the DFS by mid-2025 and could then reach a final investment decision (FID) and begin construction.
• The project has the potential to produce large amounts of graphite and titanium at low costs and with a low carbon footprint.
• The government of Malawi is very supportive of developing the mining industry to boost economic growth and self-sufficiency.

About Sovereign Metals

Sovereign Metals, an Australian mining company dual-listed on the ASX and AIM, is advancing the massive Kasiya rutile and graphite deposit in Malawi towards production. With supportive economics and government policies, Sovereign aims to develop one of the world’s largest sources of these critical minerals essential for clean energy technologies and other vital manufacturing industries.

Interview with Chief Development Officer, Sapan Ghai

The Scale of Kasiya

“It’s the size of five Manhattan Islands to give them a context and that’s the mineralized zone...If we were to spend $600 million of capex, that would give us a nice $1.6 billion NPV,” said Chief Commercial Officer Sapan Ghai. He emphasised that Kasiya is far larger than most graphite and titanium projects globally, underpinning its potential to deliver substantial long-term production.

Over 25 years, Ghai estimates Kasiya could generate an annual EBITDA exceeding $400 million. Yet the company presently intends to develop only 30% of the deposit to avoid oversupplying the market and harming prices. “You don't want to drive the price down,” Ghai explained. “It’s a balance.” This staged approach points to Kasiya’s exceptionally long mine life spanning potentially 70+ years.

Costs, Margins & Financing

In addition to its sheer size, Kasiya’s other differentiating strengths are its low operating costs and high-profit margins. An initial pre-feasibility study calculated all-in-sustaining costs of just $487 per tonne of graphite and $313 per tonne of titanium dioxide from rutile.

With recent market prices above $1,400 per tonne for graphite and near $1,900 per tonne for rutile, Ghai noted Kasiya could generate a “67% EBITDA margin.” Moreover, as graphite represents a by-product credit that enhances project economics, Kasiya’s rutile titanium business alone makes it “eminently financeable,” Ghai stated.

Sovereign’s next steps are to complete further studies aimed at optimising these costs and margins. Rio Tinto’s involvement raises the likelihood of securing affordable construction financing, while the asset’s high margins provide downside protection for debt providers.

ESG & Strategic Importance

Ghai also highlighted Kasiya’s advantages from an environmental, social and governance (ESG) perspective. As an oxide deposit, Kasiya’s graphite and titanium can be extracted through simple washing rather than energy-intensive roasting or smelting. This results in a “very low CO2 footprint” for finished production.

Given the surging demand growth expected for graphite and titanium used in batteries, paints, metals and other essential applications, Kasiya’s green credentials and immense size are resonating strongly with investors. Its output could displace higher-cost Chinese supply as Western nations seek to onshore critical mineral production. With few other projects able to match Kasiya’s scale and quality, Ghai sees it emerging as a globally strategic source despite being located in a relatively underdeveloped mining jurisdiction.

Government Support in Malawi

While Malawi has not seen significant mining investment historically, the government aims to develop the industry as a pillar of economic growth. President Lazarus Chakwera himself has been personally advocating for Kasiya as part of this national diversification strategy.

“You know the commitment from the government to move Kasiya forward to help Sovereign and to help us all advance this project in the right way,” Ghai explained. With both parties strongly incentivised to succeed, Kasiya looks positioned as a positive example of mutual benefit between mining investors and host countries.

Path Towards Production

Ghai laid out an ambitious but achievable timeline for Kasiya to enter production by 2027. Work is already underway on additional studies required to support a definitive feasibility study (DFS), which could be completed around mid-2025. At that point, Sovereign will decide whether to bring Rio Tinto in as operator for the construction and operational phases. Either way, a final investment decision (FID) would likely follow in relatively short order after the DFS.

From FID, Ghai estimates roughly 2 years of construction activity to build the processing plant and associated infrastructure. With the economics and scale validated, political backing secured, and the technical plan being systematically de-risked, the first output from one of the most important new mines appears reasonably within sight.

Investment Thesis for Sovereign Metals

• World-class scale of 300mt resource with potential 70-year mine life signals strong growth runway
• Low $487/t graphite costs and $313/t titanium costs provide resilience against price volatility
• 67% EBITDA margins even at conservative $1,290/t graphite pricing
• Financing expected to be readily attainable given strong rutile economics and Rio Tinto’s likely involvement
• Compelling ESG profile with simple processing and low carbon intensity
• Government actively supporting the mining industry as a central pillar of economic expansion
• Clear pathway outlined to production, capable of being shortened under Rio Tinto’s guidance

Sovereign Metals offers a uniquely attractive investment opportunity through its giant Kasiya critical minerals project. Given its exceptional size, quality and economics underpinned by strategic partnerships and government backing, Kasiya appears on track to deliver robust returns for shareholders over its multi-decade lifespan. Attaining the first production within 5 years could prove a transformational catalyst for Sovereign Metals as it transitions towards becoming a world-leading graphite and titanium producer.