Sovereign Metals Quarterly Report Analysis of Kasiya Rutile-Graphite Project

• Sovereign Metals' Optimised Prefeasibility Study (OPFS) confirms Kasiya's potential to become one of the world's largest and lowest-cost producers of natural rutile and graphite, with significant economic returns projected over a 25-year initial mine life.
• The company has successfully implemented and demonstrated land rehabilitation at its test pit site, with landowners able to plant crops without missing a planting season, highlighting the sustainability of the mining approach.
• Test work has validated that Kasiya graphite is suitable for over 94% of end-use markets including battery anodes, refractories, and expanded/expandable applications, significantly broadening its market potential.
• With an incremental production cost of US$241/t for graphite concentrate, Kasiya positions itself as the only advanced graphite project capable of competing with current Chinese production costs.
• The company raised A$40 million in March 2025, now holding over A$65 million in cash with no debt, sufficient to fund completion of the Definitive Feasibility Study (DFS) scheduled for Q4 2025.

Sovereign Metals Limited (ASX:SVM) is an Australian mining company focused on developing its flagship Kasiya Rutile-Graphite Project in Malawi. The company aims to become a significant producer of natural rutile (titanium dioxide) and natural flake graphite, both critical minerals with strategic importance in global supply chains.

Following a strategic investment by Rio Tinto in 2023, Sovereign is advancing the Kasiya Project through technical studies with oversight from a joint Sovereign-Rio Tinto Technical Committee. The company holds multiple exploration licenses in Malawi covering approximately 958km².

Optimised PFS Results Confirm Kasiya's Strategic Value

The January 2025 Optimised Prefeasibility Study (OPFS) has reaffirmed Kasiya's position as a leading future supplier of critical minerals outside China. Conducted with oversight from the joint Sovereign-Rio Tinto Technical Committee, the study demonstrates the project's potential to deliver substantial volumes of natural rutile and graphite while generating exceptional returns.

The OPFS proposes a large-scale operation with a 25-year initial mine life. Production will start with a 12 million tonnes per annum (Mtpa) throughput during the first four years, scaling up to 24Mtpa from year five. The project is expected to produce an average of 222,000 tonnes of rutile (95%+ TiO₂) and 233,000 tonnes of graphite (96% Total Graphitic Carbon) annually.

On the financial front, the OPFS projects total revenue of US$16.4 billion over the life of mine, with annual average revenue of US$640 million and EBITDA of US$409 million. The pre-tax Net Present Value (NPV8) is estimated at US$2.3 billion with an Internal Rate of Return (IRR) of 27%.

"The OPFS has reconfirmed Kasiya as a leading global future supplier of strategic critical minerals outside of China," said Frank Eagar, Managing Director & CEO of Sovereign Metals. "Following input from various organizations, including internationally recognised, independent consultancies, the Company's owner's team, and subject matter experts from Rio Tinto, we're confident in the project's ability to deliver substantial volumes of natural rutile and graphite while generating significant returns."

Key Optimisations Drive Improved Project Economics

The OPFS introduces several key optimisations compared to the 2023 PFS, enhancing project delivery, operational flexibility, and environmental and social outcomes:

• Mining Method: Based on findings from mining trials undertaken during the Pilot Phase, the OPFS proposes a large-scale open-pit dry mining operation using draglines and trucking material to processing plants, replacing the previously planned hydraulic mining process.

• Operating Model: After evaluating multiple options, an owner-operated mine with leased equipment has been selected as the preferred operating model, providing greater flexibility than the contractor-based approach originally envisaged.

• Plant Configuration and Location: The OPFS proposes a process plant front end consisting of two scrubbers and two oversize screens per 12Mt plant to accommodate dry mining. Plant locations have been optimized with an initial 12Mtpa South Kasiya plant followed by a 12Mtpa North Kasiya plant in year 5, eliminating any relocation requirements in later years.

• Tailings Management: The OPFS proposes maximizing backfilling of pits and introducing mud farming on the Tailings Storage Facility (TSF) to accelerate dewatering. This approach has reduced tailings volumes in the TSF by 44% from 187 Mm³ to 105 Mm³, leveraging techniques used by Rio Tinto at its Weipa bauxite operations in Australia.

• Water and Power Management: Following the introduction of dry mining and mud farming, the water demand has decreased by approximately 40% compared to the PFS. The power solution has been simplified to rely solely on Malawi's hydro-generated grid power, which is expected to improve considerably with the commissioning of the country's first HV transmission interconnector to Mozambique in Q2 2025.

Kasiya Graphite Suitable for Multiple High-Value Markets

Downstream testwork completed on graphite from Kasiya has confirmed its suitability for multiple high-value applications. Test results demonstrate that Kasiya graphite has the key characteristics required for:

1. Refractory applications - Utilizing its resistance to oxidation, chemical inertness, and good thermal conductivity
2. Expandable (fire retardant) and expanded applications - For use in gaskets, seals, and brake linings
3. Battery anode materials - Previously validated in 2024

Together, these market segments account for over 94% of the approximately 1.6 million tonnes per annum global demand for natural flake graphite, significantly broadening the market potential for Kasiya's graphite production.

With an incremental production cost of US$241/t under the OPFS, Kasiya positions itself as the only advanced graphite project capable of competing with current Chinese graphite production costs, which average US$257/t.

Financing Position

Several geotechnical drilling programs are currently underway at Kasiya as part of the Definitive Feasibility Study (DFS). The results will support infrastructure layout and engineering design for key project components including processing plant areas, the tailings storage facility, raw water storage dam, and other mining infrastructure.

In March 2025, Sovereign completed gross proceeds of A$40 million. Following this placement, the company has over A$65 million in cash and no debt, providing sufficient funding to complete the DFS.

Rio Tinto, which has invested A$60 million into Sovereign to fund completion of the DFS, did not participate in the placement as they believe the company has sufficient funds to complete the study. Rio Tinto's shareholding in Sovereign remains at approximately 119.4 million shares, representing 18.5% of the company following the placement.

Successful Land Rehabilitation

A significant milestone for the project has been the successful rehabilitation of land at the test pit site mined during the Pilot Mining and Land Rehabilitation Phase. Site backfill was completed and soil remediation work concluded in December 2024, with landowners accessing the site between December 2024 and January 2025 to plant and cultivate crops without missing a planting season.

The rehabilitation work demonstrates Sovereign's commitment to ensuring that all mined-out land is appropriately rehabilitated to support sustainable farming practices after closure. The soil remediation methods aim to revitalize the soils within a two-to-three-year timeframe, ensuring they can be sustainably farmed in the long term.

All soil remediation works and planting were done by hand with minimal mechanization, with local landowners employed to work with the company. This approach allowed landowners to directly experience and learn about the rehabilitation process on their land.

Strategic Timeline and Next Steps

The DFS remains on track for completion in Q4 2025. Upon announcement of the results, Rio Tinto will have up to 180 days to exercise its option to become the operator of the Kasiya Project and be granted exclusive marketing rights for 40% of Kasiya's annual production.

Over the coming months, Sovereign plans to:

1. Update the Mineral Resource Estimate following the 2024 infill drilling program
2. Continue graphite testwork and offtake discussions
3. Advance community and social development programs in Malawi
4. Provide regular updates on DFS progress

Investor Implications

For investors considering Sovereign Metals, the March 2025 quarterly report highlights several compelling aspects of the Kasiya Project:

• ‍Strategic Resource Position: With the OPFS confirming Kasiya's potential to become one of the world's largest natural rutile and graphite producers, the project represents a significant non-Chinese supply option for these critical minerals.‍
• Cost Competitiveness: The projected incremental cost of US$241/t for graphite production positions Kasiya at the lower end of the global cost curve, potentially enabling strong margins even in competitive market conditions.‍
• Environmental and Social License: The successful rehabilitation demonstration provides evidence of Sovereign's commitment to sustainable mining practices, potentially reducing permitting risks and enhancing community relations.‍
• Strong Financial Position: With over A$65 million in cash and no debt, the company is well-funded to complete the DFS without near-term financing pressures.‍
• Strategic Partnership: Rio Tinto's continued involvement provides technical expertise and potential future operational and marketing support, enhancing the project's development pathway.

The completion of the DFS in Q4 2025 represents the next major catalyst for the company, after which Rio Tinto's decision on whether to exercise its option to become the project operator will be a significant determining factor in Sovereign's future direction and valuation.

Sovereign Metals continues to advance its Kasiya Rutile-Graphite Project toward development, with the Optimised Prefeasibility Study confirming its potential as a globally significant supplier of critical minerals. The company's successful demonstration of rehabilitation techniques, validation of its graphite products for multiple high-value markets, and strong financial position provide a solid foundation for completing the Definitive Feasibility Study by Q4 2025.

For investors looking at Sovereign Metals, the company presents an opportunity to gain exposure to two critical minerals with growing global demand, backed by a strategic partnership with Rio Tinto and a project that appears well-positioned on the global cost curve. The upcoming DFS completion and subsequent Rio Tinto decision will be pivotal events in determining the project's path to development and the company's long-term value proposition.