Sovereign Metals #SVML – Quarterly report for the period ended 30 June 2024

Sovereign Metals Limited (Company or Sovereign) (ASX:SVM & AIM:SVML) is pleased to provide its quarterly report for the period ended 30 June 2024.

Rio Tinto Invests Additional A$18.5m via Option Exercise

·     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%

·        Investment proceeds to be used to continue advancing the Kasiya Rutile-Graphite Project in Malawi

·        Rio Tinto’s further investment represents another significant step towards unlocking a major new supply of low-CO₂-footprint natural rutile and flake graphite. Under the Investment Agreement between Sovereign and Rio Tinto, Rio Tinto continues to provide assistance and advice on technical and marketing aspects of Kasiya

·        Following the additional A$18.5 million invested by Rio Tinto, Sovereign remains in strong financial position with cash at bank of approximately A$50.0 million and no debt

Mining Development Agreement signed by the Malawi Government

·     In July 2024, Sovereign notes that Mkango Resources Limited (Mkango) signed a Mining Development Agreement with the Malawi Government on terms similar to assumptions used in the Company’s Pre-Feasibility Study

·        Mkango announced that the Malawi Government would receive a 5% royalty of gross revenues and 10% non-diluting equity interest in the project, while Mkango will be exempt from customs and excise duties and pay a 30% corporate tax rate

Kasiya Optimisation Advances to Pilot Phase

·       During the quarter, Sovereign commenced a pilot mining and land rehabilitation program (Pilot Phase) at Kasiya as part of the ongoing PFS Optimisation Study

·       At the end of July 2024, the dry mining component of the Pilot Phase was successfully completed, confirming Kasiya can be efficiently mined using standard mobile excavators and trucks, demonstrating operational alternatives as part of ongoing PFS Optimisation Study

·        Test pit mined as planned and on schedule to a depth of 20 metres, excavating approximately 170,000 bench cubic metres

·        Empirical data generated from the Pilot Phase will assist towards determining optimal excavation, material handling, processing, backfilling and rehabilitation approaches

·       Demonstrates strong support for mining projects in Malawi with all required approvals and community permissions for the Pilot Phase obtained within three months

·       The test pit will be backfilled, and multiple rehabilitation strategies will be implemented to demonstrate successful restoration of agricultural land

·        Excavated material will be processed through cyclones on-site for tailings deposition testwork as well as at Sovereign’s laboratory in Malawi to generate additional bulk samples for graphite product qualification

Downstream Testwork Demonstrates High-Quality Graphite for Lithium-Ion Batteries

·     During the quarter, Spherical Purified Graphite (SPG) with world-leading specifications successfully produced from Kasiya demonstrating all required parameters within industry standards with spheronisation yields of up to 68% with further scope to optimise in future testwork

·        Kasiya’s spherical purified graphite (SPG) showed exceptionally low levels of residual impurities achieving a 99.99% loss-on-ignition (LOI)

·        Testwork was undertaken as part of the Company’s graphite strategy to qualify and commercialise graphite concentrate for use in the lithium-ion battery sector

Testwork Delivers Superior Quality, Low Impurity Graphite for Battery Anodes

·       During the quarter, graphite circuit feed prepared at Sovereign’s existing Lilongwe laboratory facility has produced high quality concentrates in benchtop and pilot-scale flotation and cleaning

·        Four independent laboratories all successfully produced high-grade graphite concentrate averaging over 97% Total Graphite Content (TGC) with flotation recoveries exceeding 90%

·        Flotation results demonstrated 1.44% TGC run-of-mine Kasiya ore upgrades to more than 55% TGC rougher concentrate without crushing or milling; process steps typically required for producing graphite concentrates from hard-rock deposits; contributing to the unique low cost characteristics of Kasiya’s saprolite hosted graphite

·       Graphite concentrates show exceptionally low levels of sulphur compared to typical hard-rock graphite peers – a key metric to qualify as active anode material for lithium-ion batteries

·       Results are part of ongoing testwork being undertaken as part of the Company’s graphite marketing and active anode qualification strategy, supervised by Dr Surinder Ghag

Commencement of Trading on OTCQX Markets

·      Subsequent to the quarter, Sovereign upgraded to the OTCQX Market, the top tier of the OTC Markets, providing access to a broader eligible U.S. investor base

·        OTCQX quotation follows increased U.S. investor and strategic interest in Sovereign and its Kasiya Rutile-Graphite Project in Malawi

Partnering with International Development Organisation in Malawi

·        During the quarter, Sovereign has entered into an MoU with The Palladium Group – a US-based international development entity operating in Malawi

·       Palladium implements several development projects, including the Feed the Future Malawi Growth Poles Project, which invests in local rural communities to advance sustainable, climate-smart, and inclusive wealth creation

·      Sovereign and Palladium will collaborate around Sovereign’s Kasiya Project to provide key agricultural inputs, training, technologies, and financing to develop and integrate smallholder farmers into the emerging high growth agriculture value chains

Classification 2.2: This announcement includes Inside Information

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