Sovereign Metals' World-Class Deposit in Malawi Poised to Supply Critical Minerals for the EV Revolution

Sovereign Metals Limited (ASX:SVM) is an Australian exploration company focused on developing its world-class rutile and graphite deposit at Kasiya in Malawi. With rutile in short supply globally and graphite demand surging for EV batteries, Sovereign Metals is positioned to become a major supplier of these critical minerals.

About Sovereign Metals

Sovereign Metals has been operating in Malawi since 2012, originally exploring for graphite. In 2016, the company discovered the enormous rutile deposit at Kasiya, which also contains high-quality graphite. With a large global resource and near-surface mineralization, Kasiya has the potential to be a very low-cost supplier of rutile and graphite.

Sovereign Metals is currently undertaking a Pre-Feasibility Study on Kasiya, targeting production in 2026. The company has an offtake MOU with Mitsui and is in discussions with potential strategic partners to assist in funding and developing this world-scale project.

Interview with Chief Commercial Officer, Sapan Ghai

Exceptional Economics at Kasiya

In a 2022 scoping study, Sovereign Metals outlined exceptional economics for a 25+ year initial life of mine at Kasiya producing 250,000 tons per year of rutile and 150,000 tons per year of graphite. With an estimated capital cost of only $397 million, the project generates a Net Present Value of $1.5 billion at an impressive 36% IRR.

The deposit is so large that this production scenario only utilizes 30% of the current mineral resource, providing immense upside potential. Kasiya can support a multi-generational, very low-cost operation, underpinning outstanding economic returns.

Rutile Market Set for Supply Shortage

Rutile is a high-grade natural form of titanium dioxide, commanding significant price premiums over lower-grade ilmenite and upgraded slag. Over 90% of rutile is used to produce titanium pigment, a bright white pigment essential for the manufacture of high-quality paints and plastics. Rutile is also utilized to produce titanium metal, an incredibly strong but lightweight metal used extensively in aerospace applications.

Global rutile supply has fallen short of demand for several years, with forecast shortages exceeding 250,000 tons per year by 2025. Very few new projects are in the pipeline and rutile demand is projected to increase substantially. The rutile market is tightening further in 2022 with lower output from major producers like Iluka, Sierra Rutile and Base Resources.

With its enormous rutile resource, low cost profile and outstanding product quality, Kasiya is ideally positioned to help close the widening supply gap. Sovereign Metals anticipates strong demand for its rutile production over the coming decade.

Graphite for the EV Revolution

In addition to rutile, Kasiya contains substantial quantities of high-quality flake graphite. This graphite has excellent properties for use as an anode material in lithium-ion batteries, providing superb conductivity and allowing for extended battery life.

With global EV sales rising exponentially, graphite demand is forecast to surge 500% by 2030. Currently, China controls over 80% of natural graphite supply and 60% of anode production. Automakers face serious risks relying on a single country for such a critical mineral.

Testwork on Kasiya graphite shows its electrochemical performance matches the high-quality graphite from Sovereign's Malingunde project. Having confirmed this key attribute, Sovereign Metals is moving rapidly to position itself as a strategic supplier of natural graphite anode material outside China.

Major Milestones Ahead

Several key milestones lie ahead for Sovereign Metals in 2022 and 2023:

• Completion of the Pre-Feasibility Study on Kasiya by Q3 2022
• Further offtake agreements and strategic partnerships
• Additional testwork on battery-grade graphite
• Pilot plant and early works programs
• Progression to a full Definitive Feasibility Study

With its exceptional size and scale, outstanding economics and tier 1 location, Kasiya is slated to become one of the world's premier suppliers of rutile and graphite. Sovereign Metals represents a unique investment opportunity in the critical minerals space.

Conclusion

The Kasiya project provides Sovereign Metals tremendous leverage to the irrepressible demand growth for rutile and graphite. As the EV revolution accelerates, the economics of this deposit will continue improving.

For investors, Sovereign Metals offers exceptional exposure to critical minerals and battery materials, underpinned by world-class assets. With near-term catalysts on the horizon, Sovereign Metals is primed for re-rating as Kasiya advances towards development.