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SCP Equity Research – Today’s Sovereign Metals Updated PFS a Significant Success
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Read the full note here: 250122-scp-svm-pfs
Sovereign Metals #SVML #SVM – Kasiya – Optimised PFS Results
Sovereign Metals Limited (ASX:SVM; AIM:SVML; OTCQX: SVMLF) (Sovereign or the Company) is
pleased to announce the results of an Optimised Pre-feasibility Study (OPFS) for its Kasiya RutileGraphite Project (Kasiya or the Project) undertaken following a strategic investment by Rio Tinto Mining and Exploration Limited (Rio Tinto) in 2023, which established a joint Technical Committee to advance the development of Kasiya.
Following input from various organisations, including world-class consultancies, the Company’s owner’s team, and subject matter experts from Rio Tinto, the OPFS has reconfirmed Kasiya as a leading global future supplier of strategic critical minerals outside of China.
The OPFS proposes a large-scale, long-life operation to deliver substantial volumes of natural rutile and graphite while generating significant returns.
Table 1 summarises the key findings from the OPFS and includes a comparison to the PreFeasibility Study (PFS) results released 16 months ago, in September 2023. It is important to note that the results for the 2023 PFS in Table 1 have not been updated or adjusted for inflation since their release in September 2023.
SUMMARY OF OPTIMISATIONS
The OPFS optimises seven key areas compared to the 2023 PFS as summarised below.
Mining Method
The PFS proposed a 25-year initial LOM based on a hydraulic mining process where slurry material would be screened and pumped overland to processing plants.
Based on findings from the mining trials undertaken as part of the Pilot Mining and Land Rehabilitation (Pilot Phase), the OPFS proposes a large-scale open-pit dry mining operation using draglines and trucking of material to the processing plants. The change in mining method has not changed the initial mine life of 25 years.
Operating Model
The 2023 PFS envisaged mining would take place on a contractor basis.
During the OPFS, Sovereign undertook a trade-off analysis between the following operating options:
• Fully owner-operated mine with draglines and trucks purchased by the owner
• Owner-operated mine with draglines and trucks leased by the owner
• Mining contractor operation using excavators and trucks
Due to the preference for draglines and maintaining flexibility, an owner-operated mine with leased equipment is selected as the preferred operating model.
Plant Configuration
Dry mining Kasiya means the material received at the plant is not pre-wet and pre scrubbed. Therefore, the OPFS proposes a process plant front end consisting of two scrubbers and two oversize screens per 12Mt plant. No further changes are proposed to the processing plant flowsheet.
Plant Location
Per the 2023 PFS, mining would commence in the southern area of the Kasiya deposit, ramping up to 12Mt per annum and then scaling up to 24Mt per annum in Year 5 by constructing a second plant module in the same area, reaching nameplate capacity by the end of the year.
In Year 10 of production, another new 12Mt per annum plant module would be built and commissioned in the northern area of Kasiya, supported by the relocation to the north of one of the southern plants to maintain a steady state of 24Mt per annum.
However, the OPFS has determined the most efficient plant locations to be an initial 12Mtpa South Kasiya plant followed by the construction of another 12Mtpa North Kasiya plant in year 5 of production, negating any relocation requirements in later years.
The OPFS maintains the ROM schedule with operations commencing with 12Mt per annum of throughput during the first four years of production (Stage 1) and expanding to 24Mt per annum in year 5, with full capacity reached by end of year 5 (Stage 2).
Tailings Management
Per the PFS, a conventional process would be used to produce rutile and graphite concentrate with tailings in separate sand and fines streams being pumped to a conventional TSF. Mined out pit areas would be backfilled as part of a rehabilitation process.
The OPFS proposes maximising backfilling of pits as undertaken during the Pilot Phase and the introduction of mud farming on the TSF to accelerate dewatering. This approach has reduced tailings volumes in the TSF by 44% from 187 Mm³ to 105 Mm³.
Mud farming is a technique used by Rio Tinto at operations such as its 100%-owned Weipa bauxite operations in Queensland, Australia, which has been in production since 1963 and produced 35.1Mt of bauxite in 2023.
Water Management
The PFS proposed that the primary water supply for the Kasiya mining complex would be created by building a dam and collecting run-off water from the greater catchment area. Following the introduction of dry mining and mud farming, the size of the water dam proposed in the PFS has been significantly reduced, with less process water required and more process water recovered.
The OPFS mining trials and material deposition tests indicated a water demand of 10.2 Mm³ per annum, almost a 40% decrease in water requirement from the PFS (16.7 Mm³). The effect on the raw water dam wall could be a reduction in volume from 0.79 Mm³ to 0.57 Mm³ and a reduction in dam wall height from 20 metres to 17 metres.
Power
The 2023 PFS envisaged a hybrid hydro-generated grid power plus solar power system solution.
The Malawi grid reliability has improved since completion of the PFS and is expected to further improve considerably with the commissioning of the country’s first HV transmission interconnector to Mozambique in Q2 2025.
This will provide the Project with sufficient power and therefore the OPFS proposes to connect the Project’s power system to the hydro-sourced grid network only. This mitigates any risks associated with commissioning a new solar power project and reducing the overall power tariff by eliminating the need for an Independent Power Producer as per the 2023 PFS.
OPTIMISATION MAINTAINS KASIYA’S GLOBAL LEADER POTENTIAL
Kasiya, located in central Malawi, is the world’s largest known natural rutile deposit and second largest flake graphite deposit.
Natural Rutile is the purest, highest-grade form of naturally occurring titanium feedstock.
Natural Graphite is required for various technological and industrial applications.
Both titanium and graphite have been designated “Critical Minerals” by the USA and the EU.
In December 2024, NATO designated both titanium and graphite as defence-critical, strategic minerals essential for the Allied defence industry.
Over the 25-year LOM, Kasiya is set to produce an average of 222kt of natural rutile and 233kt of natural flake graphite per annum. At steady state throughput of 24 million tonnes of ore per annum the Project is anticipated to produce approximately 246kt of natural rutile and 265kt of natural graphite per annum, positioning Sovereign as potentially the world’s largest producer of natural rutile and natural flake graphite.
Further, the depletion of rutile reserves at Lenoil Company Limited’s Area 1 Mine1 in the coming 2-3 years and the recent cessation of mining activities at Energy Fuels Inc.’s Kwale Operations2 in Kenya means that Sovereign could potentially become the world’s only primary natural rutile producer of scale (see Appendix 2).
The incremental cost of producing a tonne of graphite from Kasiya under the OPFS is US$241/t3. Based on public disclosures by listed graphite companies that have undertaken project studies up to a pre-feasibility stage or later, an incremental graphite cost of production of US$241/t would make Sovereign the world’s lowest-cost graphite producer outside of China (see Appendix 3).
The rutile-graphite-rich mineralisation will be extracted from surface and trucked to the process plant front end to scrub and screen ROM before it enters a Wet Concentration Plant (WCP) where a low-energy requirement, chemical-free process using gravity spirals produces a Heavy Mineral Concentrate (HMC). The HMC is transferred to the dry Mineral Separation Plant (MSP) where premium quality rutile (+95% TiO2) is produced via electrostatic and magnetic separation.
The high quality Kasiya rutile product will be amenable for use in high-end titanium products including aerospace and defence applications.
Graphite rich concentrate is collected from the gravity spirals and processed in a separate graphite flotation plant, producing a high purity, high crystallinity and high value coarse-flake graphite product.
1 In 2024, the previous owner of the Area 1 Mine, Sierra Rutile Limited, was acquired by Lenoil Company Limited, a private company based in Sierra Leone. 2 In 2024, the previous owner of the Kwale Operations, Base Resources Limited was acquired by Energy Fuels Inc., a US-based uranium and critical minerals company.
3 Incremental cost of graphite production is calculated with the following costs attributed to rutile production: all mining costs, all G&A, all material handling costs except for graphitic fines reclamation and graphite concentrate transport, and approximately half of total processing costs. Incremental cost of graphite production therefore includes only those costs incurred on top of primary rutile production to produce an incremental tonne from the process plant and transport the graphite to market. Unit cost of rutile production under this scenario would be US$628/t (FOB Nacala)).
Kasiya’s graphite has been confirmed to produce outstanding anode materials suitable for battery production as well as demonstrating suitability for traditional industrial uses such as the production of refractory materials.
The Project has excellent surrounding infrastructure including sealed roads, a high quality rail line connecting to the deep-water port of Nacala on the Indian Ocean and hydro-sourced grid power.
For the duration of the operation, Kasiya’s highly sought-after rutile and graphite products will be railed directly from a purpose-built rail dry port at the mine site eastward via the Nacala Logistics Corridor (NLC) to the port of Nacala. The southern port of Beira, connecting Kasiya via the recently refurbished Sena Rail Line, offers a secondary export route.
Enquiries
Frank Eagar, Managing Director & CEO
South Africa / Malawi
+27 21 065 1890
Sapan Ghai, CCO
London
+44 207 478 3900
Link here to view full OPFS and Appendices
Stockbox Research Talks Picks for 2025 – #BKS #BBSN #CMET #COIN #EGT #EST #FCM #GSCU #GROC #MARU #MDH #NEO #ONDO #REE #SVML #ROME
Stockbox Research Talks Picks for 2025 – #BKS #BBSN #CMET #COIN #EGT #EST #FCM #GSCU #GROC #MARU #MDH #NEO #ONDO #REE #SVML #ROME
#SVML Sovereign Metals Ltd – TEST PIT REHAB UNDERWAY AFTER SUCCESSFUL BACKFILL
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Run of mine material placed back in test pit post successful mining trials |
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Rehabilitation of test pit area underway, remediating soils to support sustainable farming post-closure |
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Test pit mined, backfilled, rehabilitated and returned to farmers without loss of a single planting season |
Figure 1: Test pit backfilling
Sovereign Metals Limited (ASX:SVM; AIM:SVML; OTCQX: SVMLF) (Sovereign or the Company) is pleased to announce that the test pit mined during the Pilot Mining and Land Rehabilitation Program (Pilot Phase) at its Kasiya Rutile-Graphite Project (Kasiya or the Project) in Malawi has been successfully backfilled. This has allowed Sovereign to commence with on-site soil remediation and land rehabilitation activities, testing our proposed rehabilitation approach and demonstrating that the mined land can support sustainable farming post-closure.
Managing Director and CEO Frank Eagar commented: “The successful backfilling of the test pit has confirmed our understanding of the Kasiya orebody and provides valuable data for our Optimisation Study. Now we have moved on to rehabilitation, demonstrating to local communities how we will progressively mine, backfill and rehabilitate land during operations. This was an important objective of the Pilot Phase. The successful return of farmers to their land within such a short space of time and without missing a single planting season after mining and backfilling 170,000m3 will build on our positive community relationships. These farmers will be direct beneficiaries of our ongoing conservation farming initiatives to develop successful smallholder farmers.”
Backfill Program Successfully Complete
During the Pilot Phase mining trials, 170,000m3 was mined using a conventional excavator fleet. The fleet was used to place mined material back into the pit, filling the pit to the original ground level in less than two months and ahead of schedule.
Figures 2-5: Stages of test pit mining and backfilling
Test Pit Rehabilitation
The rehabilitation approach has been based on agronomic principles, including promoting sustainable farming practices and providing various end-land uses. Rehabilitation is underway through a five-step process:
Step 1: Introduce Lime
The land rehabilitation demonstration commenced with the application and incorporation of locally sourced dolomitic lime (calcium and calcium-magnesium-carbonate) to improve naturally low PH levels.
Step 2: Introduce Carbon and Basic Nutrients
Sovereign is augmenting the mined area with organic carbon and basic nutrients to support post-closure farming. The Company is testing the application of biochar (to provide carbon) and fertiliser (in the form of potash (MOP), phosphate (MAP) and a blend of nitrogen, potash, and sulphur (NPK) 15:23:16).
Step 3: Grading, Ripping and Discing
Lime, biochar, and fertiliser are incorporated into the soil through grading, ripping, and discing using graders and locally sourced farming equipment. This ensures the land is level and safe and that essential inputs are incorporated into the soil.
Step 4: Planting of Rehabilitation Crops
In December 2024 and January 2025, Sovereign has and will plant rehabilitation crops to maximise the benefit of the coming summer rainfall. Giant bamboo will be introduced in 4 by 8-metre blocks and will act as the primary crop to enhance carbon and bioactivity in the remediated soils. To return the land to farmers, maize and other cover crops will be intercropped between the giant bamboo in formalised farm blocks.
Step 5: Monitoring and Evaluation
Sovereign will monitor soil remediation, plant growth and crop yields. As part of stakeholder engagement, the Company will work with local farmers to improve results through conservation farming, composting operations, testing new seed varieties and establishing an indigenous, fruit and farming nursery. This will serve as a live demonstration of rehabilitation and timely return of land to pre-mining use.
Figure 6: Introduction of lime at the backfilled test pit
Figure 7: Farming equipment incorporating lime, biochar and fertiliser into the previously mined soil
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Enquires |
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Frank Eagar, Managing Director & CEO South Africa / Malawi +27 21 065 1890 |
Sapan Ghai, CCO London +44 207 478 3900 |
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Nominated Adviser on AIM and Joint Broker |
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SP Angel Corporate Finance LLP |
+44 20 3470 0470 |
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Ewan Leggat Charlie Bouverat |
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Joint Brokers |
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Stifel |
+44 20 7710 7600 |
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Varun Talwar |
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Ashton Clanfield |
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Berenberg |
+44 20 3207 7800 |
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Matthew Armitt |
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Jennifer Lee |
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Buchanan |
+ 44 20 7466 5000 |
Sovereign Metals #SVML – SCP Equity Research note
Link to full SCP Equity Research note here:
Today’s Kasiya graphite testwork demonstrates that Sovereign Metal’s (AIM: SVML, ASX: SVM) Kasiya’s coarse graphite product has the requisite characteristics for use in refractory applications. This includes low weight loss at temperature, low oxidation and high threshold temperature for oxidation, and low impurities. The PFS assumed one graphite product but today’s results indicate that course and fine flake products could be options, noting higher pricing for courser flake applications. Although Kasiya’s economics are driven by rutile, it will also be the largest graphite producer outside China per the PFS which gives the project strategic value in both titanium and graphite, and it’s graphite size distribution is attractively distributed across size fractions.
Today we maintain our BUY rating and our A$1.65/sh price target based on 0.6x NAV-10% and a LT US$1,400/t rutile and US$1,200/t graphite concentrate price
Sovereign Metals #SVML – Result of Annual General Meeting
The Annual General Meeting (AGM) of Sovereign Metals Limited (Company) (ASX:SVM; AIM:SVML; OTCQX: SVMLF) was held today, 22 November 2024, at 11.00am (AWST).
The resolutions voted on were in accordance with the Notice of AGM previously advised to shareholders. All resolutions were decided on and carried by way of poll.
In accordance with Section 251AA of the Corporations Act 2001 and ASX Listing Rule 3.13.2, the details of the poll and proxies received in respect of each resolution are set out below.
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Enquiries |
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Dylan Browne, Company Secretary +61 8 9322 6322 |
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Resolution |
Number of Proxy Votes |
Number and Percentage of Votes cast on the Poll |
Voting Methodand Result |
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For |
Against |
Abstain |
Proxy’s Discretion |
For |
Against |
Abstain |
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1. Remuneration Report |
6,344,790 |
1,104,619 |
26,358,748 |
35,500 |
8,350,290 |
1,104,619 |
39,916,266 |
Carried on vote by poll |
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2. Re-election of Director – Mr Mark Pearce |
31,943,350 |
1,854,807 |
10,000 |
35,500 |
47,506,368 |
1,854,807 |
10,000 |
Carried on vote by poll |
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3. Re-election of Director – Mr Nigel Jones |
33,798,157 |
– |
10,000 |
35,500 |
49,361,175 |
– |
10,000 |
Carried on vote by poll |
Sovereign Metals #SVML – Positive Initial Test Results For Use of Kasiya Graphite In Refractories
Sovereign Metals Limited (ASX:SVM; AIM:SVML; OTCQX: SVMLF) (Sovereign or the Company) is pleased to announce that traditional market downstream testwork conducted at leading independent consultancy ProGraphite GmbH (ProGraphite) in Germany has delivered very positive initial test results. Preliminary tests confirm that graphite concentrate produced from the Company’s Kasiya Rutile-Graphite Project (Kasiya or the Project) in Malawi exhibits prerequisite characteristics required for graphite sales into the refractory materials sector.
Highlights:
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Testwork to confirm the suitability of Kasiya graphite for traditional applications is underway with an initial focus on the refractory materials sector |
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Refractory materials production accounts for 24% of global graphite demand and requires large flake graphite with high oxidation resistance |
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Initial independent tests confirm that Kasiya’s course flake (>180-micron) graphite concentrate exhibits high oxidation resistance |
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No oxidation below 400°C |
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Only 6.4% mass loss after 4 hours at 650°C |
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Very low oxidation rate of 1.6% per hour at 650°C |
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These initial results coincide with news that China plans further export restrictions of items used in civilian and military applications, including graphite and titanium alloys |
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Results will form the basis for ongoing and future discussions with potential traditional graphite off-takers; previous testwork has confirmed that Kasiya graphite can produce outstanding anode materials suitable for battery production |
Managing Director and CEO, Frank Eagar commented: “These initial test results for traditional graphite applications are very promising. High resistance to oxidation and low levels of sulphur are two key attributes required to produce a premium graphite product for traditional refractory and foundry applications. Combining these attributes with the > 50% large flakes of the Kasiya resource provides Sovereign with multiple marketing options.
Our evaluation of coarse Kasiya concentrate for traditional applications will continue in the coming months, complementing the optimisation work on the fine (<180 micron) fraction for anode materials1, where we have also had excellent initial results. We are very pleased that our testwork program continues highlighting Kasiya’s graphite’s premium quality.
Keeping in mind that graphite is a co-product for Kasiya, when combining these excellent results with one of the largest graphite resources globally, industry-low operating costs and lowest industry comparable greenhouse gas emissions, Kasiya presents significant advantages over its graphite peers as a long-term secure source of supply.”
Initial Test Results for Kasiya Graphite use in Refractory Materials
Flake graphite for refractory applications should have high oxidation resistance, low levels of impurities and low loss on ignition at moderate temperatures. Sample characterisation (see Table 1) showed high fixed carbon and low volatiles, confirming prior results regarding the purity of Kasiya flake graphite.
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Table 1: Coarse (>180-micron) Flake Characterisation |
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Loss on Ignition (LOI %) |
Moisture (%) |
Volatiles (%) |
Fixed Carbon (%) |
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97.5 |
0.11 |
0.29 |
97.1 |
Source: ProGraphite
The oxidation behaviour of Kasiya coarse flake (>180 microns) was assessed by a standard method known as Thermogravimetric Analysis (TGA). TGA measures the weight loss of a sample at a controlled rate of increasing temperatures, with each increase in temperature held for specified time intervals (to measure weight loss at constant temperature).
TGA performed by an independent laboratory on a sample of >180-micron (µm) concentrate demonstrated no mass loss below 400°C, including the one-hour hold at 400°C (see Figure 1). Minimal weight loss occurred in the ramp-up to 650°C, with only a 6.37% mass loss for the four-hour hold at 650°C, which equates to a very-low Oxidation Rate (OR) of 1.6% per hour.
Figure 1: TGA Analysis of >180 micron Kasiya Concentrate (furnace temperature profile: purple;
absolute weight loss: red; weight loss per minute: blue)
(Source: ProGraphite)
Oxidation resistance of graphite is a critical attribute for its use in refractory applications, where the refractory bricks are exposed to high furnace temperatures. Kasiya coarse flake also has very low levels of sulphur impurities (<0.02%), which is also advantageous for refractory applications.
Additional evaluation of Kasiya coarse flake for traditional and expandable applications is underway with results expected in the coming months.
This will complement the optimisation program for anode materials, generating the information required for offtake agreements for Kasiya graphite concentrate.
Graphite and Titanium Alloy Export Restrictions
On 16 November 2024, Japan-based Nikkei Asia correspondents reported that China plans to tighten export controls on key “dual-use” technologies and items, including graphite and titanium alloys, in December 2024. China’s Commerce Ministry had detailed specifications of technologies and items used in both civilian and military applications that would fall under the export controls with graphite on the list. Nikkei Asia was the first news company to announce China’s antimony export restrictions in August 2024.
On 20 October 2023, Reuters reported, effective 1 December 2023, that China would require export permits for some graphite products, including natural graphite and natural graphite products critical to EV production. China is the world’s top graphite producer and exporter. According to Benchmark Mineral Intelligence, currently 75% of the world’s flake graphite and 96% of spherical graphite (used in battery anodes) come from China.
The reported restrictions further highlight the globally and geopolitically strategic nature of the Company’s Kasiya Project, which aims to become the world’s largest producer of high-grade titanium feedstock in the form of rutile and natural flake graphite.
Industrial uses of Graphite
Traditional demand for natural graphite is primarily tied to the steel industry where it is used as a component in bricks that line both blast and electric arc furnaces (“refractories”) and as a liner for ladles and crucibles. In the automotive industry, it is used in brake linings, gaskets and clutch materials. Graphite also has many other industrial uses in lubricants, carbon brushes for electric motors, fire retardants, and insulation and reinforcement products.
Figure 2: Uses of Graphite (Source: European Advanced Carbon and Graphite Association)
Kasiya Graphite Flake Size Distribution Provides Optionality
The size of the flakes typically determines a graphite product’s use. Typically, large flake graphite is used in refractory applications, while smaller flake sizes are used in battery applications. Very small graphite flakes tend to have limited usefulness, mainly for lubricants.
The flake size distribution of Kasiya’s current graphite Mineral Reserve indicates that Kasiya’s graphite could be used for several applications. This provides the Company with optionality over offtake discussions and future supply chains to maximise revenues generated by Kasiya’s graphite co-product.
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Table 2: Flake Size Distribution |
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Flake Graphite Type |
Typical Use / Target Industry |
Flake Size |
2024 Price |
Sovereign Metals |
Syrah Resources* |
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Kasiya (PFS Stage) |
Balama* (In Production) |
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Super-Jumbo |
Aerospace, nuclear and other |
>500 |
1,841 |
29.8% |
8.5% |
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Jumbo |
Crucibles and foundry |
300-500 |
1,491 |
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Large |
Refractories and foundries |
180-300 |
1,191 |
27.1% |
12.0% |
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Medium |
Batteries and refractories |
105-180 |
1,115 |
23.9% |
34.0% |
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Small |
Batteries and niche products |
75-105 |
659 |
19.4% |
45.5% |
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Very Small |
Lubricants |
<75 |
609 |
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*Source: Fastmarkets; Syrah Resources Limited company disclosures: see ASX Announcement “Syrah Finalises Balama Graphite Feasibility Study and Declares Maiden Ore Reserve” here: https://announcements.asx.com.au/asxpdf/20150529/pdf/42yw7f27bc6j4d.pdf
Syrah Resources is the world’s largest listed graphite producer outside China.
Graphite in Refractory Materials
Graphite additives are used to produce refractory materials for high-temperature environments, such as the linings for furnaces, kilns, incinerators and nuclear reactors. Graphite’s key properties for use in refractory applications are its resistance to oxidation, chemical inertness, and good thermal conductivity.
Specifically, graphite is used to increase the effectiveness of the final refractory product by:
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increasing thermal conductivity for efficient heat transfer, |
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decreasing thermal gradient between the hot and cold faces of the product, thereby reducing expansion, |
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increasing the resistance to thermal shock which would otherwise lead to cracking or breakage of the refractory, |
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low thermal expansion, reducing the ricks of structural damage, |
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repelling molten slag, |
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reducing wettability to molten metals so they do not affect the end product, and |
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increasing the working life of the product. |
1 Refer to Sovereign’s ASX Announcement “Downstream Testwork Demonstrates High Quality Graphite” dated 15 May 2024
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Enquires |
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Frank Eagar, Managing Director & CEO South Africa / Malawi +27 21 065 1890 |
Sapan Ghai, CCO London +44 207 478 3900 |
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Nominated Adviser on AIM and Joint Broker |
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SP Angel Corporate Finance LLP |
+44 20 3470 0470 |
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Ewan Leggat Charlie Bouverat |
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Joint Brokers |
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Stifel |
+44 20 7710 7600 |
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Varun Talwar |
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Ashton Clanfield |
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Berenberg |
+44 20 3207 7800 |
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Matthew Armitt |
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Jennifer Lee |
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Buchanan |
+ 44 20 7466 5000 |
Sovereign Metals #SVML – Mining Trials Conclude Successfully
Sovereign Metals Limited (ASX:SVM, AIM:SVML, OTCQX:SVMLF) (Sovereign or the Company) is pleased to announce that it has successfully completed the mining trials stage of its Pilot Mining and Land Rehabilitation Program (Pilot Phase) at the Kasiya Rutile-Graphite Project in Malawi (Kasiya).
Highlights:
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Test mining at Kasiya has successfully concluded following completion of hydraulic and dry mining trials |
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Mining trials have confirmed that soft, friable Kasiya orebody can be efficiently mined utilising various mining methods |
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Fraser Alexander, a global industry leader in hydraulic mining, conducted the trial which commenced in August |
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The dry mining trial confirmed Kasiya can be efficiently mined to depth using standard mobile excavators and trucks |
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The Pilot Phase program continues to progress with oversight from Sovereign-Rio Tinto Technical Committee with land rehabilitation now underway, including backfilling of the test pit |
Hydraulic mining trials at Kasiya were successfully concluded as part of the Kasiya Optimisation Study. Prior to the hydraulic mining trials, a dry mining trial successfully excavated a test pit to a depth of 20 metres. The mining trials confirm that the soft, friable Kasiya ore can be efficiently mined.
Managing Director and CEO, Frank Eagar commented: “I am pleased with the results of the mining trials at the test pit and now look forward to the rehabilitation demonstration stage, with backfilling of the pit already underway. Our findings from this Pilot Phase are constantly improving our understanding of Kasiya and how to optimise operations at this genuine Tier 1 project.”
Following the conclusion of mining trials, land rehabilitation demonstrations are now underway commencing with the backfilling of the test pit. The test pit, which was excavated using conventional dry mining techniques and a simple mobile excavator fleet, covered an area of 120 metres by 110 metres and was mined to a depth of 20 metres through the weathered ore at Kasiya. Mined material is being placed back into the pit and all areas will be graded. The backfilling stage is expected to conclude in December 2024.
As part of the Pilot Phase, the Company has constructed small rehabilitation demonstration pits that will be used to demonstrate multiple rehabilitation processes. Sovereign’s objective is to restore land after mining to conditions that achieve the same or better agricultural yields than prior to mining operations.
The Pilot Phase will demonstrate to local communities the successful rehabilitation of land for agricultural use post-mining. Results will also allow Sovereign to determine optimal approaches, providing critical information for Kasiya’s Environmental and Social Impact Assessment.
Sovereign remains focused on becoming a leading global supplier to the titanium and graphite industries. Kasiya is the world’s largest natural rutile deposit – the purest, highest-grade naturally occurring titanium feedstock – and the world’s second-largest flake graphite deposit – a battery mineral essential for the energy transition.
Figure 1: Hydraulic mining of Kasiya test pit
Figure 2: Water monitor demonstrating hydraulic mining of Kasiya material
Figures 3 & 4: Test pit during hydro-mining trials (above) and aerial view of test pit being backfilled
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Enquires |
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Frank Eagar, Managing Director & CEO South Africa / Malawi +27 21 065 1890 |
Sapan Ghai, CCO London +44 207 478 3900 |
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Nominated Adviser on AIM and Joint Broker |
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SP Angel Corporate Finance LLP |
+44 20 3470 0470 |
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Ewan Leggat Charlie Bouverat |
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Joint Brokers |
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Stifel |
+44 20 7710 7600 |
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Varun Talwar |
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Ashton Clanfield |
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Berenberg |
+44 20 3207 7800 |
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Matthew Armitt |
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Jennifer Lee |
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Buchanan |
+ 44 20 7466 5000 |
Forward Looking Statement
This release may include forward-looking statements, which may be identified by words such as “expects”, “anticipates”, “believes”, “projects”, “plans”, and similar expressions. These forward-looking statements are based on Sovereign’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Sovereign, which could cause actual results to differ materially from such statements. There can be no assurance that forward-looking statements will prove to be correct. Sovereign makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.
#SVML Sovereign Metals LTD – September 2024 Quarterly Report
SEPTEMBER 2024 QUARTERLY REPORT
Sovereign Metals Limited (ASX:SVM, AIM:SVML, OTCQX:SVMLF) (Sovereign or the Company) is pleased to provide its quarterly report for the period ended 30 September 2024.
HIGHLIGHTS DURING AND SUBSEQUENT TO THE QUARTER
Rio Tinto Invests Additional A$19m Increasing Shareholding to 19.9%
· In July 2024, Rio Tinto invested a further A$18.5 million via the exercise of options to increase its shareholding in Sovereign to 19.76%
· In September 2024, Rio Tinto made an additional investment of A$0.7 million to increase its shareholding to 19.9% pursuant to Rio Tinto’s first right of refusal on equity issues up to a maximum of 19.9%
Sovereign Presents at Minerals Security Partnership Event During UN General Assembly
· In September 2024, Sovereign presented at the inaugural 2024 MSP Finance Meeting during the UN General Assembly in New York following an invitation from the U.S. Department of State and SAFE Center for Critical Minerals
· Panel discussion titled “Mining Titans and New Horizons” took place between Rio Tinto CEO, Mr Jakob Stausholm, and Sovereign Chair, Mr Ben Stoikovich
Spiral Plant Successfully Installed for Graphite Offtake Discussions
· Industrial scale spiral concentrator plant successfully installed and commissioned at Sovereign’s expanded laboratory and testing facility in Lilongwe, Malawi
· Graphite pre-concentrate from spiral plant will facilitate ongoing testwork and offtake discussions with lithium-ion battery makers and traditional graphite markets
Hydraulic Mining Trial Commenced Following Successful Dry Mining Trial
· In July 2024, dry mining trial confirms Kasiya can be efficiently mined using standard mobile excavators and trucks, demonstrating operational alternatives
· In August 2024, hydraulic mining trial commenced at Kasiya Pilot Site test pit as part of ongoing PFS Optimisation Study
Outstanding Battery Anode Material Produced from Kasiya Graphite
· Very high quality Coated Spherical Purified Graphite (CSPG) anode material produced from Kasiya graphite concentrate with performance characteristics comparable to highest quality natural graphite battery material produced by dominant Chinese anode manufacturers
· Outstanding results are attributed to unique geological setting of highly weathered Kasiya orebody compared to fresh rock hosted graphite deposits including very low levels of sulphur and other impurities
Infill Drilling Program to Upgrade Kasiya Resource
· During the quarter, Sovereign undertook an infill drilling program designed to upgrade Kasiya’s Mineral Resource Estimate (MRE) and facilitate conversion of Ore Reserves from Probable to Proven category for upcoming study phase
· Program focused on southern Kasiya, which is the area intended to supply ore feed for first eight years of production; all planned drilling was completed subsequent to the quarter
Corporate Update
· Following increased U.S. investor and strategic interest in Kasiya, Sovereign commenced trading on OTCQX Market in the quarter providing access to broader eligible U.S. investor base
· Following the additional A$19 million invested by Rio Tinto, Sovereign remains in a strong financial position with cash at bank of approximately A$41 million and no debt
Classification 2.2: This announcement includes Inside Information
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Enquires |
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Frank Eagar, Managing Director & CEO South Africa / Malawi +27 21 065 1890 |
Sapan Ghai, CCO London +44 207 478 3900 |
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Nominated Adviser on AIM and Joint Broker |
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SP Angel Corporate Finance LLP |
+44 20 3470 0470 |
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Ewan Leggat Charlie Bouverat |
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Joint Brokers |
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Stifel |
+44 20 7710 7600 |
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Varun Talwar |
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Ashton Clanfield |
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Berenberg |
+44 20 3207 7800 |
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Matthew Armitt |
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Jennifer Lee |
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Buchanan |
+ 44 20 7466 5000 |
Rio Tinto Invests Additional A$19 million Increasing Shareholding to 19.9%
In July 2024, Rio Tinto Mining and Exploration Limited (Rio Tinto) exercised all its share options for proceeds of A$18.5 million (before costs) to increase its shareholding in Sovereign to 19.76%.
In September 2024 and following the exercise of its options, Rio Tinto made an additional investment of A$0.7 million in Sovereign increasing its shareholding in Sovereign to 19.9%. Pursuant to the Investment Agreement between Rio Tinto and Sovereign, Rio Tinto has a first right of refusal on equity issues up to 19.9%
The Company will use the proceeds from Rio Tinto’s additional strategic investments to continue advancing Sovereign’s Tier 1 Kasiya Rutile-Graphite Project (Kasiya or the Project) in Malawi. This includes progressing the current PFS Optimisation Study for Kasiya which is focused on the development of a world-class mine capable of supplying critical minerals to the titanium pigment, titanium metal and lithium-ion battery industries. Under the Investment Agreement between Sovereign and Rio Tinto, Rio Tinto continues to provide assistance and advice on technical and marketing aspects of Kasiya.
Sovereign Presents at Minerals Security Partnership Event During UN General Assembly
In September 2024, Sovereign was invited to and participated in a panel discussion at the inaugural 2024 MINVEST / Minerals Security Partnership (MSP) Finance Meeting (Meeting) in New York, U.S., during the United Nations General Assembly (UNGA).
The panel titled “Mining Titans and New Horizons” was moderated by Dr Zainab Usman, Senior Fellow and Director, Carnegie Endowment for International Peace and participants were Mr Jakob Stausholm, CEO, Rio Tinto, and Mr Ben Stoikovich, Chair, Sovereign.
The discussion highlighted factors that attract major mining companies and investment, exploring how initiatives like the MSP can support investment flow into resource-rich countries, while spurring economic development.
Speaking at the Meeting on its importance, U.S. Deputy Secretary of State, The Hon. Kurt Campbell, commented: “If we are going to be successful ultimately not only in the clean energy revolution but generally in technology, it will be because of this pursuit.”
Figure 1 (Left to Right): Dr Zainab Usman, Senior Fellow and Director, Carnegie Endowment for International Peace, Rio Tinto CEO Jakob Stausholm, Sovereign Chair Mr Ben Stoikovich at the MSP Finance Meeting in New York
Sovereign attended the Meeting following an invitation to present, alongside Rio Tinto CEO Mr Jakob Stausholm, by the Minerals Investment Network for Vital Energy Security and Transition (MINVEST), a public-private partnership between the U.S. Department of State and SAFE Center for Critical Minerals. The Meeting took place during UNGA in New York, presenting an opportunity for convergence of several MSP government officials, as well as representatives from their development finance institutions, and export credit agencies.
About the MSP
In June 2022, the U.S. Government and key partner countries announced the establishment of the MSP – a collaboration of 14 countries and the EU to catalyse public and private investment in responsible critical minerals supply chains globally.
About MINVEST
MINVEST is a public-private partnership between the U.S. Department of State and The Center for Critical Minerals Strategy (SAFE) to promote public-private dialogue and spur investment in strategic mining, processing, and recycling opportunities that adhere to high environmental, social, and governance standards.
Spiral Plant Successfully Installed for Graphite Offtake Discussions
During the quarter, the Company successfully installed and commissioned an industrial-scale spiral concentrator plant at the Company’s laboratory and testing facility in Lilongwe, Malawi. The plant enables Sovereign to process material from the test pit mined as part of the ongoing Pilot Mining and Land Rehabilitation (Pilot Phase) at Kasiya.
Figure 2: Spiral Plant installed at Sovereign’s Lilongwe facility
The spiral plant will prepare a graphite gravity concentrate from the Pilot Phase test pit’s run of mine at a bulk scale. The concentrate will then be sent to specialised laboratories where flotation, purification, spheronisation and coating testwork for the battery anode segment in line with Sovereign’s strategy to commercialise Kasiya’s graphite by-product. Graphite concentrate will also be provided to traditional industrial graphite users, including refractories and foundries, expandable graphite, graphite foil, brake lining pads, and lubrication.
Hydraulic Mining Trial Commenced Following Successful Dry Mining Trial
In July 2024, Sovereign announced that as part of the Pilot Phase, the dry mining trial concluded with a test pit successfully excavated at the Pilot site. The test pit covered the planned area of 120 metres by 110 metres and was excavated to a depth of 20 metres through the weathered ore at Kasiya. The dry mining trial confirmed that Kasiya ore can be efficiently mined using conventional dry-mining techniques and a simple mobile excavator fleet. The dry mining fleet consisted of four excavators, 20 trucks and a support fleet including two bulldozers and a motor grader. Approximately 170,000 bench cubic metres of material was dry mined during the trial. Steady-state operations envisage 24 million tonnes of material being mined annually.
The saprolite-hosted mineralisation at Kasiya is largely homogenous and has relatively consistent physical properties throughout the 1.8 billion tonnes MRE that is reported in accordance with JORC (2012). Data collected from the pilot phase confirmed that no drilling, blasting, crushing, grinding or milling will be required prior to stockpiling material for processing into rutile and graphite products; an indication of potentially lower mining costs and a lower carbon footprint comparable to hard rock deposits.
Figure 3: Kasiya Pilot Phase Test Pit mined to 20 metres depth
Figure 4: Kasiya mining and front-end processing vs. hard rock peers
Subsequently, in August 2024, the Company commenced a hydraulic mining trial at the test pit. The temporary water storage pond, constructed and sealed with natural clay from excavated material, was filled with six million litres of groundwater, predominantly from eight water boreholes on site.
This water was used during the hydraulic mining trial and continuously recycled from the constructed holding cells, where sand and fine fractions are stored respectively prior to the planned deposition and rehabilitation testwork.
Figure 5: Hydraulic mined material (slurry) flowing freely to the collection point in the bottom of the sump
Outstanding Battery Anode Material Produced from Kasiya Graphite
In September 2024, Sovereign announced an update on the downstream testwork conducted at leading independent consultancy ProGraphite GmbH (ProGraphite) in Germany.
The test work program demonstrated that CSPG produced from Kasiya natural flake graphite has performance characteristics comparable to the leading Chinese natural graphite anode materials manufacturers such as BTR New Material Group (BTR). Electrochemical testing of the CSPG samples at a leading German institute achieved first cycle efficiencies (FCE) of 94.2% to 95.8%, with results above 95% a key specification for highest quality natural graphite anode materials under the Chinese standard.
Following spheronisation and purification testwork which produced spherical graphite with very high purities of 99.99%, the purified spherical graphite (PSG) samples were pitch coated and carbonised to produce CSPG.
The coating process produced CSPG with very low BET (low specific surface area) specific surface area of 2.0m2/g and lower and high tap densities of 1.11-1.18g/cm3 (Table 1). A low specific surface area is required for anode materials to minimise the loss of lithium in forming a secondary protective coating on the anode material known as the Solid Electrolyte Interphase (SEI). The pitch coating process also assists in increasing the density of the anode material as measured by the tap density – a higher density assists in storing more electrical energy in the lithium-ion battery.
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Table 1: CSPG Results |
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CSPG Sample |
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Sample |
Units |
1 |
2 |
3 |
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D10 |
µm |
11.05 |
11.08 |
14.86 |
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D50 |
µm |
17.46 |
17.27 |
23.71 |
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D90 |
µm |
26.75 |
27.5 |
36.72 |
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Tap Density |
g/cm3 |
1.11 |
1.12 |
1.18 |
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BET (low specific surface area) |
m2/g |
1.6 |
2.0 |
1.4 |
Electrochemical testing of the CSPG samples at a leading German institute achieved FCE of 94.2% to 95.8%, with results above 95% a key specification for highest quality natural graphite anode materials under the Chinese standard. A very high FCE minimises lithium losses in the initial formation cycles of a lithium-ion battery, supporting battery life. Kasiya CSPG also met the criteria for an initial discharge capacity of more than 360mAh/g (ampere-hours per gram) for highest quality anode materials, with initial capacities of 362-366mAh/g. These results will be used to fast-track discussions with potential offtakers.
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Table 2: Electrochemical Results – China CSPG Standard |
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CSPG Sample |
China Standard GB/T-24533-2019
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1 |
2 |
3 |
Grade I |
Grade II |
Grade III |
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First Cycle Efficiency |
% |
95.8 |
94.2 |
95.8 |
≥95 |
≥93 |
≥91 |
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Initial Capacity |
mAh/g |
362 |
364 |
366 |
≥360 |
≥360 |
≥345 |
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Furthermore, the testwork demonstrated that CSPG produced from Kasiya natural flake graphite has initial performance characteristics comparable to the leading Chinese natural graphite anode materials manufacturers such as BTR. BTR has a 20-year track record in the production of lithium-ion battery anode materials, is a dominant player in the market and has recently concluded anode material offtake agreements with global automotive companies including Ford. BTR’s highest specification CSPG materials, that have low swelling, long cycle life, good processability and outstanding electrochemical performance include their GSN17 and LSG17 products (with D50 of 17.0+/- 1.5μm).
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Table 3: Electrochemical Results – BTR CSPG products |
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CSPG Sample |
BTR3
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1 |
2 |
GSN 17 |
LSG 17 |
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First Cycle Efficiency |
% |
95.8 |
94.2 |
≥95 |
≥94 |
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Initial Capacity |
mAh/g |
362 |
364 |
≥360 |
≥355 |
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D50 |
μm |
17.5 |
17.3 |
17.0+/- 1.5 |
17.0+/- 1.5 |
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Infill Drilling Program to Upgrade Kasiya Resource
An infill drilling program to infill the southern part of Kasiya commenced during the quarter and was completed in October 2024. The drilling was focused on the designated pits proposed to provide ore feed in the first eight years of the Project’s production schedule. Ore Reserves in these areas are expected to convert from the Probable to Proven category with an upgrade of the current MRE from Indicated to the Measured category under the JORC (2012) Code. Offsite laboratories in South Africa and Australia will assay all samples for rutile and graphite. The drilling program’s results and subsequent Resource upgrade are expected in early 2025. Kasiya is already the world’s largest rutile deposit and second-largest flake graphite deposit, with over 66% of the current MRE in the Indicated category.
An offset 200×200 metre program was designed, resulting in an average drill spacing of 142 metres. The offset spacing had the advantage of allowing analysis of geology and grade continuity in both orthogonal and diagonal directions.
The drilling program consisted of:
1. 281 aircore holes drilled over 5,607m, with an average depth of 20 metres
2. 309 hand auger holes drilled over 1,280m, with an average depth of 4 metres
3. 30 push tube and diamond core holes drilled over 663m, providing samples for verification twinning and geotechnical sampling with an average depth of 22 metres
The current MRE identifies broad and continuous high-grade rutile and graphite zones, extending over a vast area of more than 201 km². Rutile mineralisation is concentrated in laterally extensive, near-surface, flat “blanket” deposits in areas where the weathering profile remains intact and largely uneroded. Graphite is largely depleted near the surface, with grades generally improving at depths greater than 4 metres, down to the base of the saprolite zone, which averages around 22 metres.
Corporate Update
During the quarter, Sovereign’s shares commenced trading on the OTCQX® Best Market (OTCQX) under the ticker symbol SVMLF. The OTCQX is the highest market tier of OTC Markets on which over 12,000 U.S. and global securities trade. Sovereign previously traded on the OTC Pink Market and has been upgraded to the OTCQX as it meets high financial standards, follows best-practice corporate governance and has demonstrated compliance with applicable securities laws. Trading on OTCQX began on 5 July 2024 and will enhance the visibility and accessibility of Sovereign to U.S. investors.
Next Steps
Sovereign is currently conducting a PFS Optimisation Study, including the Pilot Phase, prior to advancing to the DFS. The Company aims to become the world’s largest, lowest cost and lowest-emissions producer of two critical minerals – titanium (rutile) and graphite. The Company plans to update the market on the progress of the following in coming months.
· Ongoing progression of the Pilot Phase, including:
o Completion of hydraulic mining trials;
o preparation of additional bulk samples for product qualification; and
o backfilling of test pits and soil rehabilitation.
· Further graphite testwork results as the Company continues to advance the qualification of its graphite product for the lithium-ion battery and traditional graphite sectors;
· Progress on the optimisation work streams alongside Rio Tinto via the project Technical Committee;
· MRE upgrade in early 2025; and
· Additional community and social development programs.
Competent Person Statement
The information in this announcement that relates to the Exploration Results is extracted from announcements dated 8 May 2024, 15 May 2024 and 4 September 2024, which are available to view at www.sovereignmetals.com.au. Sovereign confirms that a) it is not aware of any new information or data that materially affects the information included in the original announcement; b) all material assumptions included in the original announcement continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings are presented in this report have not been materially changed from the announcement.
The information in this announcement that relates to the Mineral Resource Estimate is extracted from Sovereign’s 2024 Annual Report and is based on, and fairly represents information compiled by Mr Richard Stockwell, a Competent Person, who is a fellow of the Australian Institute of Geoscientists (AIG). Mr Stockwell is a principal of Placer Consulting Pty Ltd, an independent consulting company. Sovereign confirms that a) it is not aware of any new information or data that materially affects the information included in the original announcement; b) all material assumptions included in the 2024 Annual Report continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings are presented in 2024 Annual Report have not been materially changed from the disclosure in the 2024 Annual Report.
The information in this announcement that relates to Ore Reserves is extracted from Sovereign’s 2024 Annual Report. Sovereign confirms that: a) it is not aware of any new information or data that materially affects the information included in the original announcement; b) all material assumptions included in the 2024 Annual Report continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings are presented in 2024 Annual Report have not been materially changed from the disclosure in the 2024 Annual Report.
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Ore Reserve for the Kasiya Deposit |
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Classification |
Tonnes |
Rutile Grade |
Contained Rutile |
Graphite Grade (TGC) (%) |
Contained Graphite |
RutEq. Grade* |
|
|
Proved |
– |
– |
– |
– |
– |
– |
|
|
Probable |
538 |
1.03% |
5.5 |
1.66% |
8.9 |
2.00% |
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Total |
538 |
1.03% |
5.5 |
1.66% |
8.9 |
2.00% |
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* RutEq. Formula: Rutile Grade x Recovery (100%) x Rutile Price (US$1,484/t) + Graphite Grade x Recovery (67.5%) x Graphite Price (US$1,290/t) / Rutile Price (US$1,484/t). All assumptions are from the Kasiya PFS ** Any minor summation inconsistencies are due to rounding
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Kasiya Total Indicated + Inferred Mineral Resource Estimate at 0.7% rutile cut-off grade |
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Classification |
Resource |
Rutile Grade |
Contained Rutile |
Graphite Grade (TGC) (%) |
Contained Graphite |
|
Indicated |
1,200 |
1.0% |
12.2 |
1.5% |
18.0 |
|
Inferred |
609 |
0.9% |
5.7 |
1.1% |
6.5 |
|
Total |
1,809 |
1.0% |
17.9 |
1.4% |
24.4 |
Forward Looking Statement
This release may include forward-looking statements, which may be identified by words such as “expects”, “anticipates”, “believes”, “projects”, “plans”, and similar expressions. These forward-looking statements are based on Sovereign’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Sovereign, which could cause actual results to differ materially from such statements. There can be no assurance that forward-looking statements will prove to be correct. Sovereign makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 (‘MAR’). Upon the publication of this announcement via Regulatory Information Service (‘RIS’), this inside information is now considered to be in the public domain.
APPENDIX 1: SUMMARY OF MINING TENEMENTS
As at 30 September 2024, the Company had an interest in the following tenements:
|
Licence |
Holding Entity |
Interest |
Type |
Licence Renewal Date |
Expiry Term Date1 |
Licence Area (km2) |
Status |
|
EL0609 |
MML |
100% |
Exploration |
25/09/2026 |
25/09/2028 |
219.5 |
Granted |
|
EL0582 |
SSL |
100% |
Exploration |
15/09/2025 |
15/09/2027 |
141.3 |
Granted |
|
EL0492 |
SSL |
100% |
Exploration |
29/01/2025 |
29/01/2025 |
454.9 |
Granted |
|
EL0528 |
SSL |
100% |
Exploration |
27/11/2025 |
27/11/2025 |
16.2 |
Granted |
|
EL0545 |
SSL |
100% |
Exploration |
12/05/2026 |
12/05/2026 |
24.2 |
Granted |
|
EL0561 |
SSL |
100% |
Exploration |
15/09/2025 |
15/09/2027 |
61.9 |
Granted |
|
EL0657 |
SSL |
100% |
Exploration |
3/10/2025 |
3/10/2029 |
2.3 |
Granted |
|
EL0710 |
SSL |
100% |
Exploration |
1/02/2027 |
1/02/2031 |
38.4 |
Granted |
Notes:
SSL: Sovereign Services Limited, MML: McCourt Mining Limited
1 An exploration licence (EL) covering a preliminary period in accordance with the Malawi Mines and Minerals Act (No 8. Of 2019) (2019 Mines Act) is granted for a period not exceeding three (3) years. Thereafter two successive periods of renewal may be granted, but each must not exceed two (2) years. This means that an EL has a potential life span of seven (7) years. ELs that have come to the end of their term can be converted by the EL holder into a retention licence (RL) for a term of up to 5 years subject to meeting certain criteria. On 28 June 2024, the Mines and Minerals Act (2023) (New Act) was gazetted and came into force. As previously disclosed, The New Act introduces amendments to improve transparency and governance of the mining industry in Malawi. Sovereign notes the following updates in the New Act which may affect the Company going forward: (i) ELs will now be granted for an initial period of 5 years with the ability to extend by 3 years on two occasions (total 11 years); (ii) the Malawian Government maintains a right to free equity ownership for large-scale mining licences but the New Act has removed the automatic free government equity ownership with the right to be a negotiation matter; and (iii) A new Mining and Regulatory Authority will be responsible for implementing the objectives of the New Act.
APPENDIX 2: RELATED PARTY PAYMENTS
During the quarter ended 30 September 2024, the Company made payments of A$310,000 to related parties and their associates. These payments relate to existing remuneration arrangements (executive salaries, director fees, superannuation and bonuses (A$212,000)) and provision of serviced office facilities, company secretarial services and administration services (A$98,000).
APPENDIX 3: MINING EXPLORATION EXPENDITURES
During the quarter, the Company made the following payments in relation to mining exploration activities:
|
Activity |
A$’000 |
|
Optimisation, Pilot Phase, Reserve/Resource Estimation |
4,245 |
|
Drilling related |
602 |
|
Assaying and Metallurgical Test-work |
310 |
|
ESG related |
905 |
|
Malawi Operations – Site Office, Personnel, Field Supplies, Equipment, Vehicles and Travel |
1,684 |
|
Total as reported in Appendix 5B |
7,746 |
There were no mining or production activities and expenses incurred during the quarter ended 30 September 2024.
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity |
||
|
Sovereign Metals Limited |
||
ABN |
|
Quarter ended (“current quarter”) |
|
71 120 833 427 |
30 September 2024 |
|
Consolidated statement of cash flows |
Current quarter |
Year to date |
|
|
1. |
Cash flows from operating activities |
– |
– |
|
1.1 |
Receipts from customers |
||
|
1.2 |
Payments for |
(7,746) |
(7,746) |
|
(a) exploration & evaluation |
|||
|
(b) development |
– |
– |
|
|
(c) production |
– |
– |
|
|
(d) staff costs |
(276) |
(276) |
|
|
(e) administration and corporate costs |
(644) |
(644) |
|
|
1.3 |
Dividends received (see note 3) |
– |
– |
|
1.4 |
Interest received |
381 |
381 |
|
1.5 |
Interest and other costs of finance paid |
– |
– |
|
1.6 |
Income taxes paid |
– |
– |
|
1.7 |
Government grants and tax incentives |
– |
– |
|
1.8 |
Other – Business Development |
(489) |
(489) |
|
1.9 |
Net cash from / (used in) operating activities |
(8,774) |
(8,774) |
|
2. |
Cash flows from investing activities |
– |
– |
|
2.1 |
Payments to acquire or for: |
||
|
(a) entities |
|||
|
(b) tenements |
– |
– |
|
|
(c) property, plant and equipment |
(736) |
(736) |
|
|
(d) exploration & evaluation |
– |
– |
|
|
(e) investments |
– |
– |
|
|
(f) other non-current assets |
– |
– |
|
|
2.2 |
Proceeds from the disposal of: |
– |
– |
|
(a) entities |
|||
|
(b) tenements |
– |
– |
|
|
(c) property, plant and equipment |
– |
– |
|
|
(d) investments |
– |
– |
|
|
(e) other non-current assets |
– |
– |
|
|
2.3 |
Cash flows from loans to other entities |
– |
– |
|
2.4 |
Dividends received (see note 3) |
– |
– |
|
2.5 |
Other (provide details if material) |
– |
– |
|
2.6 |
Net cash from / (used in) investing activities |
(736) |
(736) |
|
3. |
Cash flows from financing activities |
19,174 |
19,174 |
|
3.1 |
Proceeds from issues of equity securities (excluding convertible debt securities) |
||
|
3.2 |
Proceeds from issue of convertible debt securities |
– |
– |
|
3.3 |
Proceeds from exercise of options |
– |
– |
|
3.4 |
Transaction costs related to issues of equity securities or convertible debt securities |
(37) |
(37) |
|
3.5 |
Proceeds from borrowings |
– |
– |
|
3.6 |
Repayment of borrowings |
– |
– |
|
3.7 |
Transaction costs related to loans and borrowings |
– |
– |
|
3.8 |
Dividends paid |
– |
– |
|
3.9 |
Other (provide details if material) |
– |
– |
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3.10 |
Net cash from / (used in) financing activities |
19,137 |
19,137 |
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4. |
Net increase / (decrease) in cash and cash equivalents for the period |
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4.1 |
Cash and cash equivalents at beginning of period |
31,562 |
31,562 |
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4.2 |
Net cash from / (used in) operating activities (item 1.9 above) |
(8,774) |
(8,774) |
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4.3 |
Net cash from / (used in) investing activities (item 2.6 above) |
(736) |
(736) |
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4.4 |
Net cash from / (used in) financing activities (item 3.10 above) |
19,137 |
19,137 |
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4.5 |
Effect of movement in exchange rates on cash held |
4 |
4 |
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4.6 |
Cash and cash equivalents at end of period |
41,193 |
41,193 |
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5. |
Reconciliation of cash and cash equivalents
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Current quarter |
Previous quarter |
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5.1 |
Bank balances |
4,153 |
253 |
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5.2 |
Call deposits |
37,040 |
31,309 |
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5.3 |
Bank overdrafts |
– |
– |
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5.4 |
Other (provide details) |
– |
– |
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5.5 |
Cash and cash equivalents at end of quarter (should equal item 4.6 above) |
41,193 |
31,562 |
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6. |
Payments to related parties of the entity and their associates |
Current quarter |
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6.1 |
Aggregate amount of payments to related parties and their associates included in item 1 |
(310) |
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6.2 |
Aggregate amount of payments to related parties and their associates included in item 2 |
– |
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Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments. |
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7. |
Financing facilities
|
Total facility amount at quarter end |
Amount drawn at quarter end |
|
7.1 |
Loan facilities |
– |
– |
|
7.2 |
Credit standby arrangements |
– |
– |
|
7.3 |
Other (please specify) |
– |
– |
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7.4 |
Total financing facilities |
– |
– |
|
|
|||
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7.5 |
Unused financing facilities available at quarter end |
– |
|
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7.6 |
Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well. |
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8. |
Estimated cash available for future operating activities |
$A’000 |
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8.1 |
Net cash from / (used in) operating activities (item 1.9) |
(8,774) |
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8.2 |
(Payments for exploration & evaluation classified as investing activities) (item 2.1(d)) |
– |
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8.3 |
Total relevant outgoings (item 8.1 + item 8.2) |
(8,774) |
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8.4 |
Cash and cash equivalents at quarter end (item 4.6) |
41,193 |
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8.5 |
Unused finance facilities available at quarter end (item 7.5) |
– |
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8.6 |
Total available funding (item 8.4 + item 8.5) |
41,193 |
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8.7 |
Estimated quarters of funding available (item 8.6 divided by item 8.3) |
5 |
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Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7. |
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8.8 |
If item 8.7 is less than 2 quarters, please provide answers to the following questions: |
|
|
8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not? |
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Answer: Not applicable |
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8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful? |
||
|
Answer: Not applicable |
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|
8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis? |
||
|
Answer: Not applicable |
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Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered. |
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Compliance statement
1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Date: 30 October 2024
Authorised by: Company Secretary
(Name of body or officer authorising release – see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [name of board committee – eg Audit and Risk Committee]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.
5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.
#SVML Sovereign Metals – INFILL DRILLING PROGRAM COMPLETE
· Infill drilling program designed to upgrade Kasiya’s Mineral Resource Estimate and convert Ore Reserves from Probable to Proven category now complete
· Total of 281 holes drilled over 5,607 metres using aircore drilling supported by 339 hand auger, push tube and diamond core drill holes over 1,940 metres
· Program focused on southern Kasiya, which is the area intended to supply ore feed for first eight years of production
· All drill samples will have both rutile and graphite assayed by offsite laboratories in South Africa and Australia
· Results of drilling program and Resource upgrade anticipated in early 2025
Sovereign Metals Limited (ASX:SVM, AIM:SVML, OTCQX:SVMLF) (Sovereign or the Company) is pleased to announce that it has completed an infill drilling program at its Kasiya Rutile-Graphite Project (Kasiya or Project) to support ongoing technical studies.
Aircore drilling, supported by hand auger, push tube and diamond core drilling, has now been completed in the southern part of Kasiya. The drilling was focused on the designated pits proposed to provide ore feed in the first eight years of the Project’s production schedule. Ore Reserves in these areas are expected to convert from the Probable to Proven category with an upgrade of the current Mineral Resource Estimate (MRE) from Indicated to the Measured category under the JORC (2012) Code.
Managing Director and CEO Frank Eagar commented: “Completing the infill drilling program on schedule will assist us in upgrading our Mineral Resource Estimate and will feed into our future technical studies as part of ongoing pre-development activities at the Kasiya Project being overseen by the Sovereign-Rio Tinto Technical Committee.”
Offsite laboratories in South Africa and Australia will assay all samples for rutile and graphite. The drilling program’s results and subsequent Resource upgrade are expected in early 2025.
Kasiya is already the world’s largest rutile deposit and second-largest flake graphite deposit, with over 66% of the current MRE in the Indicated category.
Infill Drilling Program Overview
An offset 200×200 metre program was designed (see Figure 1), resulting in an average drill spacing of 142 metres. The offset spacing had the advantage of allowing analysis of geology and grade continuity in both orthogonal and diagonal directions.
The drilling program consisted of:
1. 281 aircore holes drilled over 5,607m, with an average depth of 20 metres
2. 309 hand auger holes drilled over 1,280m, with an average depth of 4 metres
3. 30 push tube and diamond core holes drilled over 663m, providing samples for verification twinning and geotechnical sampling with an average depth of 22 metres
The current MRE identifies broad and continuous high-grade rutile and graphite zones, extending over a vast area of more than 201 km². Rutile mineralisation is concentrated in laterally extensive, near-surface, flat “blanket” deposits in areas where the weathering profile remains intact and largely uneroded. Graphite is largely depleted near the surface, with grades generally improving at depths greater than 4 metres, down to the base of the saprolite zone, which averages around 22 metres.
Figure 1: Plan view of aircore MRE infill drilling program
Figure 2: Plan view of push tube / diamond drill MRE twin and geotechnical holes
Figure 3: Air Core site at Kasiya, with sample collection and logging
Figure 4: Commencement of a new hole using aircore drilling
Figure 5: Push tube / diamond core site setup at Kasiya
Figure 6: Push tube / diamond core showing stainless Shelby tubes for geotechnical samples and PVC casing for collection of push tube samples in foreground
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Enquires |
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Frank Eagar, Managing Director & CEO South Africa / Malawi +27 21 065 1890 |
Sapan Ghai, CCO London +44 207 478 3900 |
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Nominated Adviser on AIM and Joint Broker |
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SP Angel Corporate Finance LLP |
+44 20 3470 0470 |
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Ewan Leggat Charlie Bouverat |
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Joint Brokers |
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Stifel |
+44 20 7710 7600 |
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Varun Talwar |
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Ashton Clanfield |
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Berenberg |
+44 20 3207 7800 |
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Matthew Armitt |
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Jennifer Lee |
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Buchanan |
+ 44 20 7466 5000 |