Sovereign Metals #SVML – September 2023 Quarterly Report

Sovereign Metals Limited (Company or Sovereign) (ASX:SVM & AIM:SVML) is pleased to provide its quarterly report for the period ended 30 September 2023.

Pre-Feasibility Study confirms Kasiya’s market leading position in Two Critical Raw Materials

·        Natural Rutile – the highest-grade, purest, natural titanium feedstock

o   The world’s largest rutile deposit

o   Positioned to become the world’s largest rutile producer at 222kt per annum

o   Natural rutile facing major global supply deficit over the next 5 years

·        Natural Graphite – a key component of an electric vehicle (EV) battery

o   The world’s second largest flake graphite deposit

o   Potentially one of the world’s largest natural graphite producers outside of China at 244kt per annum

o   China recently announces graphite export restrictions at a time when the anode graphite market is moving into deficit with demand rapidly growing in the lithium-ion battery and EV sectors

·        Compelling project economics with significant upside potential:

o   Post-tax NPV₈ of US$1,605m and post-tax IRR of 28%

o   Average EBITDA of US$415m per annum

o   Initial Probable Ore Reserves declared of 538Mt, representing only 30% of the total Mineral Resource

o   Substantial production rate and mine life upside exists as the PFS modelling was limited to only 25 years

·        Forecast cash operating costs of US$404/t of product would position Kasiya as the lowest cost producer of rutile and graphite globally

Rio Tinto invests $40.6m to become a 15% Strategic Investor 

·        Rio Tinto made an investment of A$40.6 million in Sovereign resulting in an initial 15% shareholding plus options to increase their position to potentially 19.99%* within 12 months

·        Rio Tinto’s investment represents a significant step towards unlocking a major new supply of low-CO₂-footprint natural rutile and flake graphite

·        Under the Investment Agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of Kasiya including with respect to Sovereign’s graphite co-product, with a primary focus on spherical purified graphite for the lithium-ion battery anode market

·        The Company is formally establishing the Technical Committee with Rio Tinto following release of the PFS

·        Industry redefining best in class social & environmental advantages

o   Extremely low CO₂-footprint operation incorporating climate-smart attributes including hydro-mining with renewables power solution

o   Lifecycle CO₂ emissions expected to be lowest in class versus existing and planned operations and versus alternative synthetic products

o   Low-impact operation with mineralisation at surface, zero-strip ratio, low reagent usage, simple process flowsheet and progressive land rehabilitation

·        The Company advancing into an optimisation phase prior to moving to the Definitive Feasibility Study (DFS) with the Company’s strategic investor, Rio Tinto

Key Management Appointments to Drive Project Optimisation and Development at Kasiya

·        Appointment of experienced African based mining executive, Mr Frank Eagar, as the new Managing Director and CEO

·        Existing Managing Director Dr Julian Stephens has transitioned to Non-Executive Director

·        Key technical appointments of experienced African engineering, social and environmental teams to work on project optimisation and advancing the development of the Kasiya Project

Strong Support from the Government of Malawi:

·        Government of Malawi has applauded the timely investment by Rio Tinto and marked it as a milestone towards realising the country’s aspirations of growing the mining sector as a priority industry

·        PFS demonstrates Kasiya’s potential to provide significant socio-economic benefits for Malawi including fiscal returns, job creation, skills transfer and sustainable community development initiatives

·        With mining being one of the key pillars for growth under Malawi’s economic development strategy (Agriculture, Tourism, Mining – ATM Policy) and the potential for Kasiya to be a project of national significance, the Government has constituted an Inter-ministerial Project Development Committee to work alongside the Company to assist in the permitting process  

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