#SVML Sovereign Metals LTD – March 2023 Quarterly Report

Indicated Resource Increased by over 80% 

·        Kasiya’s Indicated Resource now stands at 1.2 Billion tonnes at 1.0% rutile and 1.5% graphite with over 66% of tonnes now in the Indicated category.

·        Updated Mineral Resource Estimate (MRE) moves over 0.5 Billion tonnes from Inferred to Indicated – an increase of 81% to the Indicated category.

·        The updated MRE will underpin the mining inventory and mine plan for the forthcoming PFS.

Kasiya’s Graphite Global Warming Potential to be Amongst the Lowest in the World 

·        Independent benchmarking indicates Sovereign’s graphite co-product from Kasiya has the lowest GWP compared with currently known and planned future natural graphite projects.

·        Global warming potential (GWP) of producing one tonne of flake graphite concentrate at Kasiya estimated to be 0.2 tonnes of CO₂ equivalent emissions (CO₂e):

o   3x less polluting than proposed Tanzanian natural graphite production from hard rock sources.

o   6x less polluting than current Chinese natural graphite production which accounts for up to 80% of current global graphite supply.

Kasiya Rutile Project PFS in advanced stages

·        Sovereign is in the advanced stages of the Pre-Feasibility Study (PFS) for the Kasiya Rutile Project (Kasiya), a potential industry-leading major source of critical raw materials from Malawi.

·        The PFS will build on the Expanded Scoping Study (ESS) which confirmed Kasiya as one of the world’s largest and potentially lowest cost producers of natural rutile and natural graphite with a carbon-footprint substantially lower than other current and planned producers.

·        The PFS is progressing well and is expected to be completed in the coming months.

Sovereign Demerges Standalone Graphite Projects

·        Sovereign has demerged its standalone Graphite Projects (Nanzeka, Malingunde, Duwi and Mabuwa Projects) into NGX Limited effective from 27 March 2023.

·        The Demerger allows Sovereign and the existing management team to focus on its flagship Kasiya Project while retaining extensive exposure to graphite through the Kasiya co-product.

Classification: 3.1 Additional regulated information required to be disclosed under the laws of a Member State

ENQUIRIES

Kasiya, located in central Malawi, is the largest natural rutile deposit and one of the largest flake graphite deposits in the world. Sovereign is aiming to develop an environmentally and sustainable operation to supply highly sought-after natural rutile and graphite to global markets.

The ESS confirmed Kasiya as potentially one of the world’s largest and lowest cost producers of natural rutile and natural graphite with a carbon-footprint substantially lower than other existing and planned operations.

The Company is in the advanced stages of the PFS for Kasiya which will build on the on the ESS, with significant advancements made throughout the quarter. The Company expects to announce the outcomes of the PFS in the coming months.

In April 2023, Sovereign announced the updated MRE for its world-class Kasiya rutile-graphite deposit in Malawi. The updated MRE resulted in over 0.5 Billion tonnes converting from Inferred to Indicated, an 81% increase in the Indicated category. Kasiya now contains 1.2Bt @ 1.0% rutile and 1.5% graphite in the Indicated category and a total MRE of 1.8Bt @ 1.0% rutile and 1.4% graphite.

Kasiya remains the world’s largest natural rutile deposit and one of the largest flake graphite deposits.

The updated MRE has further defined broad and contiguous zones of high-grade rutile and graphite which occur across a very large area of over 201km². Rutile mineralisation is concentrated in laterally extensive, near surface, flat “blanket” style bodies in areas where the weathering profile is preserved and not significantly eroded. Graphite is depleted near surface with grades improving at depths generally >4m to the base of the saprolite zone which averages about 22m.

Sovereign’s 2022 drill program at Kasiya used push tube (PT) core holes to in-fill and convert Inferred mineralisation into the Indicated category. The consistency and robustness of the geology allowed for an efficient conversion of this previously Inferred material on a near-identical one-for-one basis to the Indicated category.

A total of 66% of the MRE now reports to the Indicated category @ 1.0% rutile and 1.5% TGC – up from 33% previously. Overall, the new Indicated components show coherent, broad bodies of mineralisation that have coalesced well, particularly in the southern parts of the MRE.

Further advancement in this MRE update was the application of air-core (AC) drilling to define the depth of mineralisation in a number of selected higher-grade areas. As expected, this drilling shows that high-grade rutile and graphite mineralisation extends to the base of the soft saprolite unit terminating on the saprock basement averaging about 22m depth. This deeper AC drilling targeted early-scheduled mining pits mainly in the southern areas of the MRE footprint.

A number of higher-grade graphite zones at depth were identified which are generally associated with higher grade rutile at surface. Some of these zones have graphite grades at depths >6m in the 4% to 8% TGC range and represent significant contained coarse flake graphite tonnages.

The highlighted cut-off of 0.7% rutile presents 1.8 billion tonnes at a rutile grade of 1.0%. (Table 2). The overall recovered rutile equivalent grade for the MRE at the global 0.7% cut-off is 1.65% RutEq*.

* RutEq. Formula: Rutile Grade x Recovery (98%) x Rutile Price (US$1,308/t) + Graphite Grade x Recovery (62%) x Graphite Price (US$1,085/t) / Rutile Price (US$1,308/t). All assumptions are taken from the Expanded Scoping Study (ESS) released June 2022

Sovereign combined results of internal company analysis, supplemented with an independent benchmarking study by UK-based consultancy Minviro Ltd (Minviro) which compared the global warming potential (GWP) of producing natural flake graphite from the Kasiya against relevant current and future natural graphite projects.

The GWP of producing one tonne of flake graphite concentrate at Kasiya estimated to be 0.2 tonnes of CO₂ equivalent emissions (CO₂e). Kasiya has the lowest GWP compared with currently known and planned future natural graphite projects:

·       Up to 60% lower than currently reported GWP of graphite producers and developers, including suppliers to Tesla Inc.

·       3x less polluting than proposed Tanzanian natural graphite production from hard rock sources.

·       6x less polluting than current Chinese natural graphite production which accounts for up to 80% of current global graphite supply.

The cradle-to-gate life cycle assessment (LCA) was carried out by Minviro comparing current natural graphite production from China which produces almost 80% of the world’s natural graphite, and proposed near-term production from Tanzania, which offers a regional benchmark against Kasiya in Malawi. The LCA study followed ISO 14067:2008 guidelines and was critically reviewed by a panel of three independent experts.

A number of graphite producers and explorers/developers have conducted their own LCAs, with conclusions of a select number being made public. Kasiya’s graphite product currently has the lowest GWP of publicly reported current and future potential graphite production.

The benchmarking study found that the total GWP of 0.2 tonnes CO₂e per tonne of natural flake graphite concentrate produced at Kasiya is significantly lower than the total GWP per tonne produced in Heilongjiang Province, China (1.2 tonnes CO₂e) and the total GWP per tonne produced in Tanzania (0.6 tonnes CO₂e).

Why is Kasiya’s Graphite able to achieve such a low carbon-footprint?

The GWP for Kasiya’s flake graphite product was based on the ESS. The significantly lower GWP for Kasiya graphite is due to the fact that it is hosted in soft, friable saprolite material which will be mined via hydro methods (high pressure water monitors) powered by predominantly renewable energy sources – hydro power from the Malawi grid and on-site solar power. This is opposed to the production in Heilongjiang Province, China where hard-rock ore requires drilling, blasting, excavation, trucking, crushing, and grinding – overall high CO₂e activities.

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