Sovereign Metals Launches Infill Drilling Program to Bolster Kasiya's World-Class Resource

• Sovereign Metals commences infill drilling at Kasiya Rutile-Graphite Project in Malawi.
• The program targets upgrade of Indicated to Measured resources and provide ore feed for first 8 years of production.
• The drilling design was made in collaboration with Rio Tinto-Sovereign Technical Committee.
• The comprehensive drilling approach includes aircore, hand auger, and push tube/diamond core methods.
• Resource upgrade expected in early 2025, potentially converting Probable to Proven reserves.

Sovereign Metals Limited (ASX:SVM) is an Australian-based mining company focused on developing its flagship Kasiya Rutile-Graphite Project in Malawi. The company is positioned at the forefront of the critical minerals sector, with Kasiya recognized as the world's largest rutile deposit and second-largest flake graphite deposit. Sovereign Metals is committed to responsible resource development and aims to contribute significantly to the global supply of these essential materials.

In a significant move to advance its world-class Kasiya Rutile-Graphite Project, Sovereign Metals Limited has announced the commencement of a strategic infill drilling program. This initiative marks a crucial step in the company's journey towards production and underscores its commitment to enhancing the project's already impressive resource base.

Infill Drilling Program: A Strategic Approach to Resource Upgrade

Located in Malawi, the Kasiya Project stands as a testament to Sovereign Metals' strategic foresight in the critical minerals sector. As the world's largest rutile deposit and second-largest flake graphite deposit, Kasiya is positioned to play a pivotal role in meeting the growing global demand for these essential materials. The project's significance is amplified by the increasing focus on sustainable and responsibly sourced minerals, particularly in light of the global push towards clean energy technologies and advanced materials.

The newly announced infill drilling program is meticulously designed to target the southern part of the Kasiya deposit, specifically focusing on areas slated for the first eight years of production. This strategic approach aims to upgrade a significant portion of the current Mineral Resource Estimate (MRE) from the Indicated to the Measured category under the JORC (2012) Code.

Key aspects of the drilling program include:

1. Comprehensive Drilling Techniques:
   • Over 250 aircore holes, totaling more than 5,000 meters with an average depth of 20 meters
   • More than 250 hand auger holes, covering over 750 meters with an average depth of 3 meters
   • 30 push tube / diamond core holes for geotechnical analysis and verification sampling
   • Several 3-meter-deep pits for detailed rutile grade information and additional geotechnical data
2. Optimized Drilling Pattern:
   • An offset 200x200 meter program resulting in an average drill spacing of 142 meters
   • Designed to allow analysis of geology and grade continuity in both orthogonal and diagonal directions
3. Rigorous Sample Analysis:
   • All samples to be assayed for both rutile and graphite at offsite laboratories in South Africa
4. Collaborative Approach:
   • Program design overseen by the Rio Tinto-Sovereign Technical Committee, leveraging expertise from both entities

The significance of this drilling program cannot be overstated. By targeting the upgrade of resources from Indicated to Measured, Sovereign Metals is laying the groundwork for potentially converting Ore Reserves from the Probable to Proven category. This move is critical for de-risking the project and enhancing investor confidence as the company moves closer to production.

Current Resource and Reserve Status

To fully appreciate the impact of the planned drilling program, it's essential to understand the current status of Kasiya's resources and reserves:

Mineral Resource Estimate (at 0.7% rutile cut-off grade):

• Indicated: 1,200 Mt at 1.0% rutile (12.2 Mt contained) and 1.5% graphite (18.0 Mt contained)
• Inferred: 609 Mt at 0.9% rutile (5.7 Mt contained) and 1.1% graphite (6.5 Mt contained)
• Total: 1,809 Mt at 1.0% rutile (17.9 Mt contained) and 1.4% graphite (24.4 Mt contained)

Ore Reserve:

• Probable: 538 Mt at 1.03% rutile (5.5 Mt contained) and 1.66% graphite (8.9 Mt contained)

These figures underscore Kasiya's status as a world-class deposit, with significant potential for further optimization through the current drilling program.

Timeline and Expected Outcomes

Sovereign Metals has set an ambitious yet achievable timeline for this critical phase of development.

• Commencement of drilling: August 2024
• Expected completion of drilling and analysis: Early 2025
• Anticipated resource upgrade announcement: Early 2025

The company expects that the results of this program will lead to a significant upgrade in the resource classification, particularly in the areas targeted for initial production. This upgrade is crucial for project financing and development decisions, as it provides a higher level of confidence in the resource base upon which the project's economics are built.

Implications for Project Development

The strategic importance of this drilling program extends beyond mere resource classification. It has far-reaching implications for the overall development of the Kasiya Project:

• Enhanced Project Economics: By focusing on the areas planned for the first eight years of production, Sovereign Metals is prioritizing the most immediate and impactful zones of the deposit. This approach could potentially lead to improved project economics in the critical early years of operation.
• De-risking the Project: Upgrading resources to the Measured category and potentially reserves to the Proven category significantly de-risks the project. This is crucial for attracting project financing and strategic partners.
• Optimized Mine Planning: The detailed information gathered from this program will enable more precise mine planning and scheduling, potentially leading to operational efficiencies and cost savings.
• Strengthened Market Position: As the world's largest rutile deposit, any enhancement to Kasiya's resource base further cements Sovereign Metals' position as a key player in the global rutile market.
• Alignment with Strategic Partnership: The involvement of the Rio Tinto-Sovereign Technical Committee in the program design highlights the strength of the strategic partnership with Rio Tinto, bringing world-class expertise to the project.

Market Dynamics and Future Outlook

The timing of Sovereign Metals' drilling program aligns well with broader market trends in the critical minerals sector:

• Growing Demand for Rutile: As a high-grade titanium dioxide mineral, rutile is increasingly sought after in various industries, including pigments, welding, and aerospace. The drive towards more environmentally friendly production methods further enhances rutile's appeal.
• Graphite's Role in the Green Economy: The concurrent focus on graphite positions Kasiya to capitalize on the surging demand driven by electric vehicle batteries and energy storage systems.
• Supply Chain Security: With growing concerns about supply chain resilience, particularly for critical minerals, Kasiya's development is strategically important for diversifying global supply sources.
• ESG Considerations: The project's location in Malawi and Sovereign Metals' commitment to responsible development align well with increasing investor focus on environmental, social, and governance (ESG) factors.

Corporate Developments and Incentive Structures

In addition to the drilling program announcement, Sovereign Metals has also disclosed plans for issuing performance rights to directors and key employees, subject to shareholder approval. This incentive structure is tied to key project milestones:

• Tranche 1: Linked to the Definitive Feasibility Study (DFS) milestone, expiring October 31, 2025
• Tranche 2: Tied to the grant of Mining Licence, expiring March 31, 2026
• Tranche 3: Connected to the Final Investment Decision, expiring June 30, 2026

This alignment of management incentives with critical project development stages demonstrates the company's commitment to progressing Kasiya towards production and creating shareholder value.

Conclusion for Investors

For investors looking at Sovereign Metals, the commencement of this strategic drilling program represents a significant milestone in the company's journey. It underscores management's focus on de-risking and advancing the Kasiya Project, which already stands as a world-class asset in the critical minerals sector.

Key investment considerations include:

• World-Class Asset: Kasiya's status as the largest rutile deposit globally provides a unique investment opportunity in a critical mineral with growing demand.
• Strategic Partnerships: The collaboration with Rio Tinto brings invaluable expertise and potential pathways for project development and offtake agreements.
• Resource Upside: The current drilling program has the potential to significantly enhance the project's already impressive resource base.
• Market Timing: With increasing focus on supply chain security and critical minerals, Sovereign Metals is well-positioned to capitalize on favorable market dynamics.
• ESG Credentials: The company's commitment to responsible development in Malawi aligns with growing investor focus on sustainable and ethical resource projects.
• Clear Development Pathway: The structured approach to project advancement, from resource drilling to DFS and beyond, provides visibility on the path to production.

While all resource development projects carry inherent risks, Sovereign Metals' strategic approach to advancing Kasiya, coupled with the project's world-class credentials, presents a compelling case for investors seeking exposure to the critical minerals sector. As the company progresses through this crucial drilling phase and towards key development milestones, it remains a noteworthy prospect for those looking to participate in the future of sustainable mineral production.