Sovereign Metals Unlocks Major New Supply of Low-Carbon Critical Minerals with Robust Kasiya PFS

About Sovereign Metals

Sovereign Metals Ltd (ASX: SVM) is an exploration company focused on discovering and developing major sources of environmentally responsible critical minerals to support the global transition to renewable energy. The company’s flagship asset is the Kasiya Rutile-Graphite Project in Malawi, which is poised to become a major producer of natural rutile and flake graphite. Sovereign Metals also holds a diversified portfolio of two other large-scale rutile-graphite projects in Malawi, the Duwi and Nsaru Projects. Malawi hosts world-class geology, an established mining industry and offers a highly prospective yet under-explored exploration environment. The company is committed to operating ethically and responsibly to generate sustainable benefit for all stakeholders. Sovereign Metals is headquartered in Perth, Australia and listed on the Australian Securities Exchange (ASX) and AIM market in London.

Kasiya Pre-Feasibility Study Highlights

The recently completed Pre-Feasibility Study (PFS) has confirmed Kasiya as potentially a globally significant, major critical minerals project. The study forecasts Kasiya producing substantial volumes of premium natural rutile and flake graphite over an initial 25-year mine life, generating outstanding financial returns with low costs, low carbon footprint and industry-leading ESG credentials.

Key outcomes of the study:

• Forecast average annual production of 222,000 tonnes of natural rutile and 244,000 tonnes of natural flake graphite over initial 25-year life of mine
• Positioned to be among world’s largest natural rutile and natural graphite producers
• US$1.6 billion NPV, US$415 million average annual EBITDA, 28% IRR
• Extremely low operating costs of US$404/tonne FOB
• Capital costs to first production: US$597 million
• Highly compelling project economics resilient to cost inflation or commodity price volatility
• Payback period of only 4.3 years from start of production
• Significant opportunity for production expansion and extended mine life utilising just 30% of current mineral resources
• Low-carbon footprint with renewable power, zero waste mining and existing rail solution for export
• Strong ESG credentials including industry-leading CO2 emissions, progressive rehabilitation and social programs

Kasiya’s Tier-1 Deposit Endowment

The Kasiya Rutile-Graphite Project hosts the world’s largest rutile deposit and the second largest flake graphite deposit globally. The current indicated and inferred mineral resource estimate stands at 1.2 billion tonnes at 1% rutile and 1.5% graphite.

However, the PFS production targets and financial analysis only assume development of 30% of the current mineral resource footprint. This leaves outstanding potential to significantly expand production volumes and extend the modelled 25-year mine life.

The deposit’s vast scale, exceptional grades and advantageous geology translate into a multi-generational, world-class critical minerals project. Kasiya offers the potential to be the largest global primary producer of natural rutile and one of the largest natural graphite operations.

Both minerals have been designated as ‘critical’ by the US, EU and other major economies due to their essential applications and heavily China-dominated supply chains. Kasiya can provide reliable alternative supply chains for these key decarbonisation minerals.

Compelling Project Economics

Kasiya demonstrates exceptional financial returns over the 25 years modelled in the PFS. At a rutile price of US$1,484 per tonne and graphite basket price of US$1,290 per tonne, the after-tax NPV is US$1.6 billion with IRR of 28%.

Average annual EBITDA is forecast at US$415 million and payback is achieved in only 4.3 years from production start. The PFS applies conservative commodity pricing based on independent market assessments. Current spot rutile pricing is approximately US$1,700 to US$1,900 per tonne.

The project’s low operating costs underpin the robust economics. At US$404 per tonne of product FOB, Kasiya is poised to be the world’s lowest cost graphite producer and among the lowest cost rutile operations globally.

This is driven by the high-grade mineralization occurring near surface, favorable geology, zero strip ratio, excellent infrastructure and renewable hybrid power solution. Kasiya’s revenue to operating cost ratio of 2.8x positions it in the top quartile of mineral sands projects globally.

The capital cost estimate is appropriate for the long-life, large-scale development planned at Kasiya including upfront investment in infrastructure to support the multi-stage expansion. The estimate incorporates a 17% contingency allowance.

The project’s outstanding financial metrics provide resilience against inflationary pressures in development costs observed over the past 12-24 months. Cost inflation does impact project returns, however the compelling baseline economics insulate Kasiya from these global cost escalations.

Sustainable Development Solution

Kasiya will be developed to meet and exceed international ESG standards and represents a highly sustainable mining project. Natural rutile and natural graphite offer substantial carbon footprint advantages over synthetic alternatives or minerals sourced from hard rock deposits.

The deposit’s location and geology lend themselves to a low-impact mining method. The friable, near-surface saprolite ore is perfectly suited to extraction via hydro-mining rather than conventional open-pit methods. This efficient technique utilises high-pressure water jets rather than drilling/blasting or truck/shovel fleets.

Tailings material can be safely deposited into exhausted mining voids and progressive rehabilitation undertaken as the mine advances through each area. This avoids extensive surface disturbance and facilitates swift rehabilitation back to agricultural use after mining ceases in a zone.

An integrated hybrid renewable power solution has been designed including solar, battery storage and connection to Malawi’s dominantly hydro-powered grid. This will supply 100% of the project’s electricity requirements while maintaining low-carbon credentials.

Kasiya’s premium natural rutile product will have 6 to 11 times lower CO2 emissions compared to commonly used titanium feedstocks of titania slag and synthetic rutile. The natural graphite product is forecast to have the lowest carbon footprint globally for natural graphite projects.

Mined products will be exported out of the nearby deep-water Nacala Port via an existing rail line, avoiding transport by diesel-powered road haulage.

Sovereign Metals is committed to upholding strict environmental controls and global best practices in community engagement. The company has appointed specialist consultants to lead the environmental and social impact assessment and permitting processes.

World-Class Location

Malawi is considered one of Africa’s most stable and productive mining jurisdictions. The country has a +70-year history of mining operations including cement, coal and other minerals.

Kasiya lies only 50 kilometres from the national capital Lilongwe which provides an exceptional source of skilled professionals, tradespeople and business services.

The project area boasts high-quality infrastructure including sealed roads, rail network and grid power. The established Nacala rail line and deep-water port provide cost-efficient access to global markets.

Sovereign Metals has received strong support from the Malawian Government which has publicly applauded the planned development and job creation at Kasiya. A government technical committee has been formed to assist with permitting and approvals.

The Way Forward

With the robust outcomes from this Pre-Feasibility Study, Sovereign Metals is now proceeding into an optimisation phase as the next step towards a full definitive feasibility study.

The company’s new strategic partner Rio Tinto will provide input and guidance during this optimisation work under a technical collaboration agreement. Sovereign anticipates benefitting from Rio Tinto's substantial technical and marketing expertise in the metals and mining sector.

Ongoing workstreams will focus on opportunities to enhance project efficiencies, reduce costs and risks, optimise the execution strategy and ensure Kasiya meets leading ESG standards.

Further environmental and social impact assessment studies will be progressed over the coming 12 months in support of permitting and approvals.

Conclusion for Investors

Sovereign Metals offers investors exposure to a potential tier-1, world-scale critical minerals project on the cusp of development. The Kasiya PFS has confirmed the project’s credentials as a long-life, low-cost producer of two essential decarbonisation commodities in rutile and graphite.

Kasiya’s financial metrics are exceptional on both an absolute and relative basis - underpinned by low opex, compelling project economics and significant expansion potential beyond the initial 25-year outlook.

The association with leading global mining company Rio Tinto provides third-party validation of Kasiya’s potential. Rio Tinto’s involvement will be invaluable during the next project phases.

Sovereign Metals is led by a high calibre board and management who have successfully discovered and advanced the Kasiya deposits into a development-ready project. The company is well-funded with a strong shareholder register to steer Kasiya towards production.

As the world pursues its net zero emissions targets over coming decades, Kasiya can provide sustainably produced critical mineral supply chains to support this transition. Exposure to battery and electrification megatrends positions Sovereign Metals at the forefront of this multi-decade growth narrative.