Sovereign Metals Recovers Monazite from Kasiya DFS Pits with TREO Basket Richer than Major Producers

Sovereign Metals (ASX: SVM | AIM: SVML | OTCQX: SVMLF) has released results from metallurgical testwork confirming the recovery of monazite concentrate from four pits in the Kasiya Definitive Feasibility Study (DFS) mine plan. The results establish that Kasiya's Total Rare Earth Oxide (TREO) basket carries heavy rare earth ratios approximately 7 times higher than those of the world's five largest rare earth producers. Monazite recovery can be achieved as a by-product of the existing processing flowsheet, with no changes to the mine plan or primary processing infrastructure required.

Company Overview

Sovereign Metals is an Australian mineral development company advancing the Kasiya Rutile-Graphite Project in Malawi, which hosts the world's largest natural rutile deposit and the second-largest natural flake graphite deposit globally. The project has completed a DFS, returning a pre-tax net present value at an 8% discount rate (NPV8%) of US$2.2 billion, with Rio Tinto holding an 18.5% equity stake and a production marketing option. Metallurgical testwork has confirmed the potential for monazite concentrate recovery as a by-product of the existing processing flowsheet, representing a third revenue stream from heavy rare-earth elements.

Metallurgical Results - DFS Pit Sampling

Testwork was conducted on monazite concentrates recovered from four pits within the Kasiya DFS mine plan: Babbler, Kingfisher, Sparrow, and Mousebird. All four pits are included in the mine schedule, and certain pits are designated for Year 1 production.

Average TREO basket composition across the four pits is 20.9% Neodymium-Praseodymium, 2.5% Dysprosium-Terbium, and 11.8% Yttrium. The near-surface horizon from 0 to 6 metres averages 19.3% Neodymium-Praseodymium, 2.9% Dysprosium-Terbium, and 15.4% Yttrium, with peak ratios of 3.1% Dysprosium-Terbium and 17.2% Yttrium recorded within this zone. The deeper horizon from 6 metres and below averages 21.6% Neodymium-Praseodymium, 2.3% Dysprosium-Terbium, and 10.3% Yttrium.

Babbler pit bulk samples were extracted using a 700mm spiral auger; samples from Kingfisher, Sparrow, and Mousebird were composited from twin pit samples representing the 0 to 6 metre Ferruginous Pedolith and Mottled Clay units, together with Air Core samples representing the deeper Pallid Saprolite and Saprolite units. Bulk composite samples ranging from 200 kg to 1,000 kg were processed through a Wilfley wet table to produce Heavy Mineral Concentrate, then treated through a Corona Stat electrostatic separator and subsequent magnetic separation to isolate the final monazite concentrate. Analysis was conducted using X-ray fluorescence and Inductively Coupled Plasma methods. Uranium levels in the Kasiya monazite samples range from 5,482 parts per million to 8,143 parts per million; Thorium levels range from 15,854 parts per million to 18,417 parts per million.

TREO Basket Composition vs. Global Producers

Kasiya's Dysprosium-Terbium and Yttrium ratios within the TREO basket are approximately seven times higher than those reported by the world's five largest rare earth producers. Those producers average 0.4% Dysprosium-Terbium and 1.7% Yttrium in their TREO baskets, compared with Kasiya's averages of 2.5% Dysprosium-Terbium and 11.8% Yttrium.

The monazite recoverable from the current DFS tailings stream contains all four magnetic rare earth elements (Neodymium, Praseodymium, Dysprosium, and Terbium) as well as Yttrium.

Strategic Importance of Heavy Rare Earths

Dysprosium and Terbium are essential inputs for high-temperature permanent magnets used in defence systems, precision weapons, aerospace applications, and next-generation electric drivetrains. Yttrium is critical for aerospace thermal barrier coatings, radar and laser systems, high-performance alloys, and semiconductor manufacturing.

China controls 95% of global heavy rare earth output. The US imports almost 100% of its heavy rare earth requirements, with 90% sourced from China, and is fully reliant on imports for its Yttrium supply. China introduced export controls on Dysprosium, Terbium, and Yttrium in April 2025 and, in January 2026, strengthened export controls on dual-use items directed at Japan. Japan remains approximately 60% dependent on Chinese rare earth imports overall and approaches 100% dependence for heavy rare earths.

US Assistant Secretary of War for Industrial Base Policy Michael P. Cadenazzi Jr. testified before the Senate Armed Services Committee in February 2026 that heavy rare earth supply chain risk is "a clear and present danger to our national security." MP Materials Corp., America's only fully integrated rare earth producer, reports no measurable Dysprosium, Terbium, or Yttrium production.

Western Supply-Chain Decoupling

Two recent government-backed transactions confirm that state capital is being deployed to establish a heavy-rare-earth supply outside China. In April 2026, USA Rare Earth, Inc. agreed to acquire Serra Verde Group for approximately US$2.8 billion, backed by a 15-year, 100% US Government offtake agreement with price floors of US$110/kg for each of Neodymium and Praseodymium, US$575/kg for Dysprosium, and US$2,050/kg for Terbium. Serra Verde had previously secured a US$565 million mine development finance package from the US International Development Finance Corporation.

In January 2026, Energy Fuels Inc. announced the acquisition of Australian Strategic Materials Limited for US$299 million, with the stated aim of becoming the largest fully integrated producer of REE materials outside of China.

By-Product Recovery & Incremental Cost

Monazite concentrates are recovered from the non-conductor tailings stream of the DFS flowsheet, material that would otherwise report to tailings under the base case. This recovery pathway requires no additional mining, no new primary processing circuits, no parallel rare-earth processing plant, and no additional reagents. Monazite concentrate recovery is therefore potentially achievable at near-zero incremental cost relative to the DFS base case, representing a potential third revenue stream for the project.

The project currently holds a pre-tax NPV8 of US$2.2 billion. Further work is required to assess the capital and operating costs of downstream product separation and refining, along with mineralogy, liberation, and handling requirements for the uranium and thorium present in the monazite concentrate.

Independent Price Forecast

Project Blue Group Limited prepared an independent price forecast for a monazite concentrate containing 60% TREO, with deductions applied for commercial discounts, downstream processing, and transportation to Japan. Under a base case applying a 60% payability factor, the analysis yields a Mixed Rare Earth Compound (MREC) value of US$39.49/kg and a resulting monazite concentrate value of US$16,000 per tonne. A high case applying a 70% payability factor returns an MREC value of US$46.07/kg and a monazite concentrate value of US$19,000 per tonne.

The Shanghai Metals Market benchmark spot price for monazite concentrate of equivalent grade (54% to 55% TREO) stood at US$6,142 per tonne in April 2026. Sovereign Metals has not entered into any offtake or sales agreement for monazite concentrate.

Next Steps

Sovereign's near-term programme comprises detailed mineralogical characterisation, including assessment of liberation, grain size, and uranium and thorium deportment. Additional metallurgical testwork for downstream processing and characterisation of grades, recoveries, and marketable volumes is also planned.

A study is planned to assess the potential economic uplift from incorporating monazite as a bolt-on to the existing DFS flowsheet. The company will continue engagement with potential offtake partners and government stakeholders regarding the heavy rare earth opportunity.

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