Sovereign Metals' Low-Carbon Rutile & Critical Minerals Potential from the Kasiya Project

About Sovereign Metals

Sovereign Metals is an Australian mineral exploration company focused on discovering and developing critical mineral deposits in Malawi, Africa. The company’s flagship project is the Kasiya Rutile-Graphite Project, located in Malawi. Sovereign Metals is dual-listed on the Australian Securities Exchange (ASX: SVM) and London Stock Exchange’s AIM market (AIM: SVML). The company has a current market capitalization of A$225 million.

Sovereign Metals’ main shareholders include major mining company Rio Tinto with a 15% stake, asset management firm Sprott with 8%, company directors with 7%, along with other institutional and high net worth investors. The company has a strong cash position of around A$46 million.

Kasiya Rutile-Graphite Project

Sovereign Metals’ flagship project is the Kasiya deposit in Malawi, which is shaping up to be one of the world’s largest natural rutile and graphite deposits. The project is unique with its large-scale coincident rutile and graphite mineralization, poised to produce both critical minerals.

The recently completed Pre-Feasibility Study (PFS) outlines an initial 25-year life of mine producing an average of 222,000 tonnes per annum (tpa) of rutile and 244,000 tpa of graphite. Kasiya’s total mineral resource stands at a substantial 1.8 billion tonnes at 1.0% rutile and 1.4% graphite. The project’s ore reserves amount to 538 million tonnes at 1.0% rutile and 1.7% graphite.

The PFS demonstrates exceptional economic returns for this large-scale, long-life mining operation. Kasiya is projected to generate total life-of-mine revenues of US$16 billion, with an average annual EBITDA of US$415 million and EBITDA margin of 64%. The after-tax NPV is US$1.6 billion with an IRR of 28%.

Lowest Cost Producer

Kasiya is poised to be the world’s lowest cost producer for both natural rutile and natural flake graphite. The PFS puts Kasiya’s average operating costs at US$404 per tonne free-on-board Nacala, benefitting from simple low-cost mining and processing.

With rutile, Kasiya’s costs are 50% lower than existing major producers like Sierra Rutile and Base Resources. For graphite, Kasiya’s operating costs are 25% below the weighted average costs of its peer group. This demonstrates Kasiya’s unique advantage of leveraging substantial synergistic benefits from the simultaneous production of rutile and graphite.

Critical Minerals Rutile and Graphite

The mineral rutile is composed of over 95% titanium dioxide and is the preferred feedstock for producing titanium metal and pigment. It is recognized as a critical mineral in the United States and Europe given its diverse applications across aerospace, medical, defense, and other high-tech manufacturing industries.

Graphite is crucial for the burgeoning lithium-ion battery sector to meet the fast-growing electric vehicle and clean energy storage demands. Graphite anodes account for 10-15% of the mass of a lithium-ion battery. Both the US and EU have designated graphite as a critical mineral to ensure supply resilience as they transition towards renewable energy.

Robust Demand Growth

Global demand for natural rutile is forecast to rise significantly over the next decade, with an anticipated supply deficit of 376,000 tpa by 2027. Meanwhile, graphite demand from the battery sector alone is expected to grow 230% by 2030. This market backdrop positions Kasiya strongly given its scale, low costs and long mine life.

Carbon Footprint

Kasiya is designed to be a low carbon footprint producer of rutile and graphite. The renewable energy solution with solar, hydro and battery storage results in net zero carbon emissions from its grid electricity use. Kasiya’s emission intensity is estimated at 0.1 tonnes CO2 equivalent per tonne of rutile, substantially lower than titanium feedstock alternatives like titanium slag (3.3 tonnes) and ilmenite (2.0 tonnes). For graphite, Kasiya’s figure of 0.2 tonnes CO2e per tonne also compares favorably versus synthetic graphite at 1.2-2.2 tonnes CO2e.

Next Steps

Sovereign Metals is progressing on an optimization phase ahead of a Definitive Feasibility Study. Key focus areas include further graphite product development and qualification, particulary to supply the lithium-ion battery market. This will leverage technical collaboration with strategic investor Rio Tinto. Meanwhile, the company continues to work closely with the Malawian government to expedite permitting approvals.

The Investment Thesis for Sovereign Metals

• World-class asset: Kasiya will be a top 10 global producer of natural rutile, supplying around 5% of the world market. The deposit contains a huge rutile Ore Reserve sufficient for a multi-decade operation.
• Unique rutile: Kasiya's rutile is exceptionally high grade at 1.01% with very low levels of impurities, making it ideal for pigment and titanium metal applications. This sets it apart from most rutile deposits globally.
• Critical minerals: Rutile and graphite are vital to clean energy, decarbonization and high-tech industries. Kasiya can supply these key minerals to support the global energy transition and technology growth.
• Strong economics: The PFS demonstrates outstanding financial metrics including IRR of 36.8%, NPV10 of US$2.6 billion and LOM revenue of US$16 billion. Kasiya will generate substantial earnings and cashflow.
• Clear growth strategy: The staged 12-24Mtpa development provides a low risk pathway to production. Expanding in year 11 doubles annual output and leverage Kasiya's full potential.
• Supportive government: Malawi has been proactive in supporting Kasiya's development. An inter-ministerial committee will assist Sovereign through the permitting process.
• Backing of tier-one partner: Rio Tinto's investment and option to become Kasiya's operator provides third-party validation. Rio Tinto can assist with production expertise and project financing.
• Strong leadership: Sovereign has an experienced board and management team with track records of discovery, development and financing projects in Africa.
• Tight capital structure: With A$45.9 million cash, no debt and key shareholder Rio Tinto, Sovereign has a solid platform to progress Kasiya's development.

Conclusion

With two major critical mineral projects rapidly advancing in a supportive jurisdiction, Sovereign Metals offers investors an opportunity to capitalize on the growing market for rutile, graphite and other technology metals.

Backed by mining major Rio Tinto and boasting outstanding economics, Sovereign's flagship Kasiya rutile project is on track to become a top 10 global supplier of natural rutile. Meanwhile, drilling underway at Malingunde could establish another substantial graphite resource.

As the world moves to decarbonize energy and transport, demand for critical minerals like rutile and graphite is forecast to surge. Sovereign is primed to take advantage as a potential major new producer.

With its tier-one assets, clear growth strategy, supportive partners and proven team, Sovereign Metals has strong investment credentials. The company offers exposure to critical minerals essential for the global transition to clean energy and technology.