Sovereign Metals Secures A$40 Million Placement for Kasiya Rutile-Graphite Project Development

• Sovereign Metals Limited has secured firm commitments for an A$40 million placement at A$0.85 per share to fund development activities at its Kasiya Rutile-Graphite Project in Malawi.
• The placement received strong support from new and existing shareholders, including large global institutional investors, and was managed by Petra Capital as the lead bookrunner.
• Kasiya represents the world's largest known rutile resource (17.9Mt) and the second-largest known flake graphite resource (24.4Mt), with Rio Tinto holding a 19.9% strategic investment in Sovereign.
• The project's weathered geology provides competitive advantages including low-cost graphite production at US$241/t, significantly below the Chinese weighted average cost of US$257/t.
• Sovereign's graphite concentrate offers higher quality (96-98% carbon) and a superior flake size distribution (68% higher-value medium/large flakes) compared to peers, positioning it as potentially the largest and lowest-cost graphite producer globally.

Sovereign Metals is an ASX, AIM, and OTCQX-listed mining company focused on developing its flagship Kasiya Rutile-Graphite Project in Malawi. The company has positioned itself as a potential leader in the supply of natural rutile and graphite, with Kasiya representing both the world's largest known rutile resource and the second-largest known flake graphite resource. With strategic backing from Rio Tinto, which holds a 19.9% stake in the company, Sovereign is advancing toward the definitive feasibility study stage, expected in Q4 2025.

Sovereign Metals has announced it has received firm commitments to raise A$40 million which directed toward development activities at the company's Kasiya Rutile-Graphite Project in Malawi, including permitting, studies, general working capital, and other corporate purposes.

Details of the Placement

The A$40 million placement was strongly supported by both new and existing shareholders, including large global institutional investors. The issue price of A$0.85 per New Share represents a 12.8% discount to the last closing price of A$0.975 and an 8.1% discount to the 15-day volume weighted average price of A$0.925.

Petra Capital Pty Ltd acted as Sole Lead Manager and Sole Bookrunner for the transaction. Clients of Stifel Nicolaus Europe Limited, SCP Resource Finance LP, and Acova Capital Pty Ltd also participated in the placement.

According to the announcement, the placement is expected to settle on April 1, 2025, with the new shares to be issued on or about April 2, 2025.

World-Class Kasiya Project Overview

The Kasiya Rutile-Graphite Project represents a significant mineral resource with exceptional scale. According to the company's resource estimate, Kasiya hosts:

• 17.9 million tonnes of contained rutile, making it the world's largest known rutile resource
• 24.4 million tonnes of contained graphite, positioning it as the second-largest known flake graphite resource globally
• A current mineralised area spanning 201 km²

A key distinguishing feature of the project is its unusual combination of minerals, Kasiya is a primary rutile project - only known project where graphite is a by-product. This dual-commodity approach provides significant economic advantages, particularly for the graphite component, which benefits from shared processing costs with the primary rutile operation.

Geological & Processing Advantages

The presentation outlines several key competitive advantages stemming from Kasiya's unique geology. Unlike many graphite deposits, particularly those in the Northern Hemisphere, Kasiya's mineralization is hosted in weathered saprolite (soft, friable rock), rather than fresh, hard rock.

This weathered geology delivers multiple benefits:

• Simpler Processing: Less intensive processing preserves flake size, resulting in a higher proportion of valuable medium and coarse flakes while also yielding a higher %C concentrate, the company states. While most peer projects require drilling, blasting, crushing, and grinding before wet concentration, Kasiya's soft ore only requires load and haul, scrubbing, and wet concentration.
• Higher Product Quality: Kasiya produces graphite concentrates with 96-98% carbon content, compared to the industry typical 94-95%. The weathered ore also contains very low sulphur levels, which negatively impacts suitability for battery anode materials in other deposits.
• Superior Flake Size Distribution: Sovereign reports that 57% of its graphite consists of large to jumbo flakes (+80 mesh), compared to just 11% for Syrah Resources' Balama project or 35-37% for other major producers. Larger flake sizes command significantly higher prices in the market.

Economic Performance & Cost Position

The Optimised Pre-Feasibility Study (OPFS) completed in January 2025 demonstrated strong economic fundamentals:

• Pre-tax NPV (8%) of US$2.32 billion
• Internal Rate of Return (IRR) of 27%
• Average annual EBITDA of US$409 million
• EBITDA margin of 64%
• Initial capital expenditure of US$665 million

A standout metric is Kasiya's projected graphite production cost. The company reports an incremental cost of production for graphite of US$241/t, defined as the cost to produce and transport one tonne of graphite concentrate to port, calculated after deducting the portion of total production costs allocated to rutile.

This cost position is significant because it places Sovereign as potentially the lowest-cost graphite producer globally, undercutting even China's weighted average production cost of US$257/t. Most other international projects show production costs between US$400-800/t.

Global Graphite Market Context

To provide an important context about the global graphite market,explaining why Kasiya's cost position is strategically significant:

• Current global natural graphite demand is approximately 1.6 million tonnes per annum
• China dominates production, accounting for about 75% of global supply (~1.2 million tonnes per annum)
• The average Chinese production cost is US$257/t

The company notes that other companies need to go downstream to capture margin and make a return on investment, whereas Sovereign's low-cost position potentially allows it to compete directly with Chinese production on concentrate sales.

Downstream Applications & Market Opportunities

Testing has confirmed Kasiya's graphite is suitable for all major end-use markets, including lithium-ion batteries (63% of global natural graphite demand), refractory and foundry applications (26%), expanded graphite (5%), and other uses including carburization, friction products, and specialized applications (6%).

Recent testing by ProGraphite and Dorfner Anzaplan has validated the suitability of Kasiya's graphite for refractory applications, which typically command higher prices. The company notes that coarser flake graphite used in refractories achieved prices up to US$1,193/t in Q4 2024, compared to US$564/t for smaller flake graphite used in batteries.

Additional testing has demonstrated that Kasiya graphite can be processed into battery anode material with performance characteristics "comparable to or better than the global leading battery anode producer, China's BTR." Battery anode testing showed first-cycle efficiency of 94.2-95.8% and initial capacity of 362-364 mAh/g, meeting or exceeding industry benchmarks.

Conclusion

Sovereign Metals presents a compelling investment case as it advances the world-class Kasiya Rutile-Graphite Project. The recent A$40 million placement strengthens the company's financial position as it progresses toward definitive feasibility and development milestones. For investors, key considerations include:

• The project's dual-commodity nature as both the world's largest rutile resource and second-largest graphite resource
• Strategic backing from Rio Tinto, which holds a 19.9% stake in the company
• Potentially industry-leading cost position in graphite production at US$241/t
• Superior product quality with higher carbon content and better flake size distribution than peers
• Strong projected economics with US$2.32 billion NPV and 27% IRR

Project Timeline & Development Progress

Since Rio Tinto's strategic investment in 2023, Sovereign has made significant progress at Kasiya:

• Pilot Phase Completion: The company successfully conducted "mining, processing, deposition and rehabilitation field trials" on a 10-hectare site, processing 170,000m³ of material
• Optimised PFS Completion: The pre-feasibility study was "completed with input from Rio Tinto subject matter experts" and "overseen by Sovereign-Rio Tinto Technical Committee"
• Definitive Feasibility Study: Currently underway and expected to be completed in Q4 2025

As the company moves toward completing its definitive feasibility study in Q4 2025, the Kasiya project represents a significant potential new source of critical minerals for global markets, particularly as nations seek to secure supply chains for battery materials and high-quality industrial minerals outside of China.