Sovereign Metals Scoping Study Confirms Kasiya as Strategic Source of Critical Rare Earths

• Sovereign Metals' Scoping Study confirms a monazite Rare Earth Concentrate (REC) by-product opportunity at the Kasiya Project in Malawi, recovered from tailings streams already generated by the April 2026 Definitive Feasibility Study (DFS).
• The Base Case delivers a potential incremental pre-tax net present value at an 8% discount rate (NPV8%) of approximately US$722 million, an approximately 151% internal rate of return (IRR), approximately US$29 million of initial capital, and payback in approximately 1.5 years.
• A maiden Mineral Resource Estimate (MRE) of 524.4 million tons at 0.0132% monazite, classified as 74% Indicated, underpins the production profile without requiring any additional mining.
• The REC contains 5 of the 7 rare earths placed under Chinese export controls since April 2025, including dysprosium, terbium and yttrium, and remains viable even under US government floor-price scenarios.
• Sovereign has renamed the project the Kasiya Critical Minerals Project and will progress REC marketing, offtake discussions and a Pre-Feasibility Study (PFS) targeted for completion in 2027.

Company Overview

Sovereign Metals Limited (ASX: SVM | AIM: SVML | OTCQX: SVMLF) is the owner and operator of the Kasiya Critical Minerals Project in Malawi, positioned to supply natural rutile, natural graphite and a monazite Rare Earth Concentrate (REC) by-product into the United States (US) and allied supply chains. Kasiya provides exposure to 3 minerals designated as critical by the US: titanium (via natural rutile), graphite, and rare earths (via the REC by-product).

What Was Announced

Sovereign Metals has released the results of a Scoping Study assessing the incremental recovery of a monazite concentrate as a by-product of the Kasiya Project, concurrent with renaming the project the Kasiya Critical Minerals Project. The Study is incremental to the April 2026 Definitive Feasibility Study (DFS), which already defines Kasiya as a 25-year, 24 million-ton-per-annum (Mtpa) natural rutile and natural flake graphite operation with a pre-tax net present value at an 8% discount rate (NPV8%) of US$2.204 billion and a pre-tax internal rate of return (IRR) of 23.4%. The REC opportunity does not alter that production base: it recovers monazite from the non-conductor stream generated by the existing Mineral Separation Plant, requiring no additional mining, no new front-end processing, and no change to the DFS mine plan.

At steady state, the Study forecasts 2,626 tons per annum (tpa) of monazite Rare Earth Concentrate (REC) containing 1,485 tpa of total rare earth oxides (TREO), produced over a 23-year initial life of mine. The Study has been prepared to an accuracy of plus or minus 30%, in line with Scoping Study-level guidance, and is not sufficient on its own to support Ore Reserve estimation for the additional product.

Financial Outcomes

The Base Case shows an incremental pre-tax NPV8% of approximately US$722 million and a pre-tax IRR of approximately 151%, on incremental capital of approximately US$29 million to first production, with payback of approximately 1.5 years and an operating margin of approximately 90%. Incremental steady-state annual earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately US$84 million is forecast, alongside pre-tax, unlevered free cash flow of approximately US$1.8 billion over the life of mine. A Western Supply Case, reflecting higher payability for ex-China monazite concentrate supply, lifts the incremental NPV8% to US$883 million at a 172% IRR.

Sensitivity testing shows the project remains positive even with a 25% reduction in the REC basket price, generating a pre-tax NPV8 of US$521 million at a 122% IRR. A separate US Floor Price Case, applying the US$110 per kilogram (kg) neodymium and praseodymium floor established with MP Materials and repeated with Lynas and the first Western floor prices for dysprosium and terbium, still generates US$183 million of incremental pre-tax NPV8% at a 43% IRR. The Company states the breakeven REC basket price is approximately US$4,140 per ton, which would require an approximately 90% decline in forecast rare earth prices, against a current Shanghai Metals Market spot price of approximately US$6,400 per ton for approximately 55% monazite concentrate.

Resource, Product & Cost Structure

The maiden by-product Mineral Resource Estimate (MRE), constrained to the DFS open pits, totals 524.4 million tons at 0.0132% monazite, classified as 74% Indicated and 26% Inferred, and is supported by 3,250 magnetic heavy-mineral composites from 1,012 boreholes. The REC product specification targets 90% monazite concentrate containing 56.6% TREO, at an assumed 80% recovery through spiral gravity separation and flotation.

Because the REC is recovered entirely from streams the DFS already generates, incremental costs are low: approximately US$0.90/kg REC at the mine gate, rising to approximately US$1.39/kg free-on-board (FOB) Dar es Salaam and approximately US$3.68/kg cost, insurance and freight (CIF) to Houston, Texas, under the Base Case. Total incremental pre-production capital expenditure is estimated at US$57 million across capex to first production and expansion capex, with US$20 million of sustaining capital over the life of mine.

Strategic Importance to US & Allied Supply Chains

The REC contains dysprosium, terbium, yttrium, samarium, and gadolinium, 5 of the 7 rare earths placed under Chinese export controls since April 2025. Yttrium output of 193 tpa is equivalent to approximately 35% of average annual US consumption, which the release states is 100% import-reliant, while combined neodymium, praseodymium, dysprosium, and terbium output is framed as sufficient for magnets in roughly 7 million humanoid robots over the life of mine.

Chief Executive Officer and Managing Director of Sovereign Metals, Frank Eagar, said: 

"The Kasiya DFS already defines one of the world's largest natural rutile and flake graphite developments. This Study shows the same resource can potentially deliver rare earths and deliver them cheaply. For ~US$29 million of initial capital, using infrastructure the DFS has already designed and costed, we can potentially add ~US$722 million of pre-tax value at a ~151% rate of return, with payback in around 18 months."

Eagar added: 

"Kasiya can potentially provide the supply this effort requires: 5 of the 7 rare earths under Chinese export controls, for at least 23 years, from a project already at the definitive feasibility stage. And because rutile and graphite carry the cost base, our rare earths do not need high rare earth prices or floor prices to be viable."

Next Steps

Sovereign has outlined a work program covering variability testwork to confirm monazite recoveries and concentrate quality across the DFS mine schedule; product qualification through REC samples sent from its Lilongwe facilities to prospective customers; marketing and offtake discussions with Western processors and government procurement programs; integration of the rare earths opportunity into a Pre-Feasibility Study (PFS) targeted for completion in 2027; and assessment of potential Inferred Resource conversion and extension of the monazite MRE beyond the current 25-year DFS pits.

FAQs (AI-Generated)