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Sovereign Metals #SVML – Kasiya’s Natural Rutile to Significantly Reduce Pigment Industry Carbon Footprint
Sovereign Metals Limited (ASX:SVM; AIM:SVML) (Sovereign or the Company) is pleased to announce the results of an expanded Life Cycle Assessment Study (LCA or Study) assessing the Global Warming Potential (GWP) of natural rutile produced at the Company’s Kasiya Rutile Project (Kasiya) in Malawi.
Highlights
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– Industry defining independent Life Cycle Assessment Study shows the potential for Sovereign’s natural rutile to significantly reduce the carbon footprint of the titanium pigment industry |
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– Each tonne of natural rutile produced at Kasiya is expected to have a Global Warming Potential of only 0.1 tonnes CO2 eq., which equates to a 95% to 97% reduction in total greenhouse gas emissions (20 to 33 times less) compared to production of titania slag and synthetic rutile respectively – both of which are alternative titanium feedstocks produced by upgrading ilmenite via energy and carbon intensive processes |
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– Lowest Scope 3 emissions – Study further confirms producing titanium dioxide pigment in the EU from Sovereign’s natural rutile has the lowest global warming potential versus ilmenite-upgraded alternative feedstocks |
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– Paint produced from Sovereign’s natural rutile is estimated to have up to 35% lower carbon footprint than that produced from ilmenite-upgraded alternatives |
The Study concludes that Sovereign’s natural rutile product is expected to have substantially lower GWP (Scope 1, 2 and 3 scope emissions) when compared to other titanium feedstock alternatives produced by upgrading ilmenite (i.e., synthetic rutile and titania slag). Using natural rutile from Kasiya as titanium feedstock for the chloride pigment process would significantly reduce Scope 1, 2 and 3 greenhouse gas emissions. Titanium feedstock is a key component of various industrial and consumer products. Therefore, utilising natural rutile such as from Kasiya, as direct use titanium feedstock could hold the solution to developing low-carbon footprint products including low carbon paints.
Sovereign’s Managing Director, Julian Stephens commented: “We knew from the previous work done by Minviro that natural rutile has a lower carbon footprint than its upgraded substitutes produced from ilmenite. The expanded study now highlights the significant reduction in greenhouse gas emissions the titanium pigment industry could achieve by utilising natural rutile produced at Kasiya. This has direct economic benefits to end users in jurisdictions such as the EU, where industry pays for carbon dioxide emissions via the EU’s Emissions Trading System and the proposed Carbon Border Adjustment Mechanism.”
Sovereign’s Chair of the ESG Committee, Nigel Jones commented: “Since its discovery, the Kasiya rutile project has been designed to help decarbonise the myriad of uses of titanium pigment in industrial and consumer products. This LCA is another step towards providing a solution to an industry targeting material reduction in its global carbon footprint while wholly encompassing values of sustainability.”
ENQUIRIES
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Dr Julian Stephens (Perth) +61(8) 9322 6322 |
Sam Cordin (Perth) |
Sapan Ghai (London)
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Nominated Adviser on AIM |
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RFC Ambrian |
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Bhavesh Patel / Andrew Thomson |
+44 20 3440 6800 |
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Joint Brokers |
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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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Varun Talwar |
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Optiva Securities |
+44 20 3137 1902 |
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Daniel Ingrams |
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Mariela Jaho |
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Christian Dennis |
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LCA SUMMARY
The Company appointed Minviro Ltd (Minviro) to conduct a cradle-to-gate life cycle assessment on the production of natural rutile using methods and parameters in the 2021 initial Kasiya Scoping Study.
This expanded LCA builds on the Company’s LCA study completed last year which demonstrated the substantial environmental benefits possible by utilising natural rutile (TiO2) versus beneficiated high-grade titanium feedstocks made from the lower quality mineral ilmenite (~FeTiO3) such as synthetic rutile and titania slag, with this latest study extending the scope to include the positive environmental attributes of the Kasiya operation.
In assessing each GWP, Scope 1, 2 and 3 greenhouse gas emissions were included. The Greenhouse Gas Protocol supplies the world’s most widely used greenhouse gas (GHG) accounting standards and establishes comprehensive global standardised frameworks to measure and manage GHG emissions from private and public sector operations, value chains and mitigation actions. The Protocol identifies three “scopes” of GHG emissions which were included in this study.
The scopes of emissions for the mining industry can broadly be defined as:
Scope 1: Direct GHG emissions from operations (e.g., combustion of fuels in mining fleet i.e., bulldozers)
Scope 2: Indirect GHG emissions from consumption of purchased electricity, heat, or steam (e.g., emissions embodied in grid power)
Scope 3: Emissions created by end-users utilising its products (e.g., a chloride pigment plant using titanium feedstock to produce pigment, or a blast furnace using iron ore to make steel) and other indirect emissions that generally are out of control of the mining industry.
Rio Tinto plc and Rio Tinto Limited combined (Rio Tinto) have defined their emissions boundaries for their titanium dioxide business in their “Scope 1, 2 and 3 Emissions Calculation Methodology 2021” report.
In calculating Scope 1, 2 and 3 emissions, Rio Tinto treat emissions from mining, mineral processing, smelting and refining titanium dioxide feedstock as Scope 1 and 2 emissions. Rio Tinto’s Scope 3 emissions estimate incorporates the emissions associated with the conversion of titanium feedstocks to titanium dioxide pigment.
In the context of titanium feedstock for the chloride pigment process, the LCA Study similarly estimates Scope 3 emissions by accounting for the emissions associated with the production of titanium dioxide pigment from either direct use natural rutile or other high grade titanium feedstocks derived from upgrading ilmenite.
The Kasiya project is designed considering both the Equator Principles and Scope 1, 2 and 3 emissions under the Green House Gas protocol so that the design meets high standards for ESG from the outset. Access to hydro-generated grid power and solar system to be installed on site will ensure low carbon power supply for the project. The use of predominantly rail rather than road transport for products will also reduce the carbon footprint of the Kasiya project.
BENCHMARKING SOVEREIGN’S NATURAL RUTILE AGAINST ALTERNATIVES
The Study benchmarked the GWP of Sovereign’s 96% TiO2 natural rutile product versus alternative titanium feedstocks produced from upgrading ilmenite, namely:
· Titania slag (85% TiO2) produced from ilmenite via smelting in electric furnaces in South Africa; and
· Synthetic rutile (88-95% TiO2) produced from ilmenite via the Becher Process in Australia.
These alternatives were chosen as comparison points as they are two of the largest production routes for titanium feedstocks. South African titania slag operations account for a significant proportion of global titania slag production, and the majority of the synthetic rutile is produced via the Becher process.
Titanium Feedstock Production – Scope 1 & 2 Emissions
Natural rutile produced at Kasiya has a fraction of the GWP of the alternative feedstocks. The GWP for natural rutile concentrate from Kasiya (0.1 t CO2e per tonne) is significantly lower than producing titania slag in South Africa (2.0 t CO2e per tonne) and producing synthetic rutile via the Becher process in Australia (3.3 t CO2e per tonne).
The results comparing the three production routes can be seen in the full announcement on the Company’s website. The higher result for synthetic rutile is mainly due to the use of coal and other reagents for the upgrading of lower grade ilmenite to the final synthetic rutile feedstock product.
Titanium Dioxide Pigment Production Benchmarking – Scope 3 Emissions
Using Sovereign’s natural rutile as feedstock for producing titanium dioxide pigment via the well-established chloride route provides a lower GWP for the production of one tonne of titanium dioxide pigment compared to using either titania slag or synthetic rutile.
The pigment production was assumed to be located in the European Union. The transport of the feedstocks from the site of production to the titanium dioxide pigment production plant is included in the comparison. For Sovereign’s natural rutile, this was Kasiya; the production of synthetic rutile was assumed at a plant in Australia; the production of titania slag was assumed at a plant in South Africa.
Higher scope 3 GWP of the ilmenite derived titanium feedstocks led to higher results for the use of synthetic rutile or titania slag in producing pigment. Using Sovereign Metal’s natural rutile instead of the titania slag would give a scope 3 GWP reduction of 2.2 t CO2e per tonne of titanium dioxide pigment. Furthermore, using Sovereign’s natural rutile concentrate instead of the synthetic rutile would give a scope 3 GWP reduction of 3.7 t CO2e per tonne titanium dioxide pigment.
Scope 3 emissions usually account for the highest proportion of greenhouse gases from the mining industry, with estimates as high as 95% of total mining sector emissions. The average scope 3 emissions of the five largest diversified miners are 26 times their scopes 1 and 2 emissions combined (source – company disclosures).
Paint Production Benchmarking
Minviro evaluated how using the different feedstocks affects the GWP of paint production. Using Sovereign’s natural rutile provides the lowest GWP, at 3.3 t CO2e per tonne of alkyd paint, which represents up to a 35% reduction in carbon footprint compared to paint produced from synthetic rutile.
SUMMARY OF HEADLINE GWP REDUCTIONS FROM USING NATURAL RUTILE
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Emission Category |
GWP |
Potential Emissions Reduction |
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Production of a tonne of natural rutile from Kasiya – Global Warming Potential |
0.1 t CO2e |
3.2 t CO2e 97% emissions reduction |
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Production of a tonne of titanium pigment using natural rutile from Kasiya – Scope 3 |
4.0 t CO2e |
3.7 t CO2e 48% emissions reduction |
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Production of a tonne of alkyd paint using titanium pigment produced from natural rutile |
3.3 t CO2e |
1.8 t CO2e 35% emissions reduction |
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.
Competent Persons Statement
The information in this announcement that relates to Sovereign’s Scoping Study at Kasiya is extracted from an announcement dated 16 December 2021 which is available to view at Sovereign’s website 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 announcement; b) all material assumptions and technical parameters underpinning the Production Target, and related forecast financial information derived from the Production Target included in the 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 Sovereign’s Mineral Resource Estimate is extracted from an announcement dated 16 December 2021 which is available to view at Sovereign’s website 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 announcement; b) all material assumptions included in the 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.
To view this announcement in full, including all illustrations and figures, please refer to www.sovereignmetals.com.au.
Sovereign Metals #SVML – Half-year Report
The Directors of Sovereign Metals Limited present their report on Sovereign Metals Limited (“Sovereign” or “the Company” or “Parent”) and the entities it controlled at the end of, or during, the half year ended 31 December 2021 (“Consolidated Entity” or “Group”).
Review of Operations:
Sovereign Metals Limited (ASX: SVM & AIM: SVML) is an ASX and AIM-listed company focussed on the exploration and development of its Kasiya rutile project (Kasiya) in Malawi.
Kasiya is a strategic and globally significant natural rutile deposit with substantial additional resource growth expected. Kasiya’s Mineral Resource Estimate is 605Mt at 0.98% rutile (0.7% cut-off, indicated + inferred).
Sovereign is aiming to develop an environmentally and socially sustainable large-scale operation to supply highly sought-after natural rutile and graphite to global markets. Kasiya has excellent surrounding infrastructure including bitumen roads, a high-quality rail line connecting to the deep-water port of Nacala on the Indian Ocean and hydro-sourced grid power.
Natural rutile is the purest, highest-grade natural form of titanium dioxide (TiO2) and is the preferred feedstock in manufacturing titanium pigment and producing titanium metal. The rutile market fundamentals are robust with current and forecast pricing remaining very strong. In 2021, the market has rebounded strongly with pigment plant utilisation rates returning to pre-pandemic levels. Major producers have noted that very strong demand in the welding market is outstripping supply.
Natural rutile supply is tight with limited new projects coming online in the short to medium term. A resurgence in demand for titanium pigment and from the welding sector combined with concurrent supply shortages has led the CIF China spot prices sharply upwards to over US$2,100 per tonne (Ruidow).
Highlights
Initial Scoping Study confirms Kasiya as a globally significant natural rutile project
· The initial Scoping Study confirmed a multi-decade operation providing a stable supply of highly sought-after rutile (TiO2) and graphite whilst contributing significantly to the economy of Malawi
· Kasiya is the largest undeveloped rutile deposit in the world and is highly strategic in a market characterised by extreme supply deficit. The Scoping Study demonstrated outstanding results including:
o a 12Mtpa operation producing 122kt rutile and 80kt graphite per annum over a 25 year mine life
o exceptional economics including a post-tax NPV8 of US$861m and post-tax IRR of 36%
o a large-scale operation with a low-cost profile resulting from the deposit’s near surface nature, grade and excellent existing infrastructure
o a low carbon operation with the project to be powered by 100% renewables (hydro and solar)
· The Project is positioned for substantial growth with the current life-of-mine inventory covering only 38% of the drill-defined mineralised footprint. Substantial additional resource growth is expected in early 2022 to enable the Study to be enhanced
· Sovereign is aiming to develop an environmentally and socially sustainable operation to supply natural rutile that can displace carbon, energy & waste intensive alternatives like synthetic rutile and titania slag
Offtake MOU For Premium Priced Rutile Sales to the Welding Sector
· Subsequent to the end of the period, the Company signed an MOU for supply of 25,000 tonnes of natural rutile per annum to Hascor, a market leading global processor and distributor of rutile products for the welding industry
· Pricing of rutile for welding generally attracts significant premiums to bulk rutile prices in the titanium pigment sector
Mineral Resource Estimate (MRE) upgrade to support Scoping Study
· The Company reported a MRE upgrade with over 50% now in the higher confidence Indicated category
· The MRE upgrade was underpinned by results from core drilling, which confirmed the thick, continuous and high-grade nature of the deposit
· The upgraded MRE contains ~3.1Mt of rutile in the Indicated category and ~2.8Mt of rutile in the Inferred category
Outstanding metallurgy
· Bulk scale metallurgy test-work demonstrated very high recoveries of premium quality rutile products and a high-grade, coarse flake graphite by-product
· World-class specification rutile products ranging from 95.0% to 97.2% TiO2 with low impurities and stand-out recoveries ranging from 100% to 94%
View the full report here
Sovereign Metals #SVML – Spectacular Rutile Drill Results See Mineralised Footprint Increase By 28%
Sovereign Metals Limited (ASX:SVM; AIM:SVML) (Sovereign or the Company) is pleased to report results from its H2 2021 drilling program at Kasiya-Nsaru, the Company’s flagship, very large, high-grade rutile deposit in Malawi.
The results, including numerous spectacular intercepts, will underpin the pending Mineral Resource Estimate (MRE) upgrade which is expected to significantly increase in both the Indicated and Inferred categories.
The most recent core and auger drilling has now expanded the total mineralised envelope to 165km2, up 28%. The previous MRE included just 49km2 of the mineralised envelope, hence significant resource tonnage growth can be expected.
Sovereign’s Managing Director Dr Julian Stephens commented : “The results of the latest drilling program have surpassed all of our expectations. Not only did we encounter the highest rutile grades to date, but the coalescing of the Kasiya and Nsaru deposits supports our belief that we have the single largest rutile deposit in the world on our hands. We are looking forward to announcing the updated Mineral Resource Estimate in the coming weeks.”
Spectacular Rutile Drill Results See Mineralised Footprint Increase By 28%
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Latest drill results increase the drill-defined rutile mineralised envelope by 28% to 165km2 |
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Kasiya and Nsaru deposits have now coalesced into the Kasiya-Nsaru rutile deposit – a single, very large, coherent, high-grade body of near surface rutile and graphite mineralisation |
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New drilling has encountered the highest-grade rutile results to date at Nsaru and at a new extension east of Kasiya. Highlights include: |
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11m @ 1.34% inc. 2m @ 3.00% rutile |
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12m @ 1.27% inc. 3m @ 2.16% rutile |
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8m @ 1.36% inc. 2m @ 2.66% rutile |
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7m @ 1.84% inc. 4m @ 2.71% rutile |
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12m @ 1.46% inc. 4m @ 2.42% rutile |
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13m @ 1.48% inc. 5m @ 2.23% rutile |
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Discovery of numerous extensions and new blocks of mineralisation expected to add substantially to upcoming Mineral Resource Estimate update |
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Results affirm the strategic and global significance of Kasiya as the largest undeveloped natural rutile project in the world and first major rutile discovery in over half a century |
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Updated Scoping Study underway focused on incorporating the growing resource base |
ENQUIRIES
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Dr Julian Stephens (Perth) +61(8) 9322 6322 |
Sam Cordin (Perth) |
Sapan Ghai (London)
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Nominated Adviser on AIM |
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RFC Ambrian |
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Bhavesh Patel / Andrew Thomson |
+44 20 3440 6800 |
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Joint Brokers |
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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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Varun Talwar |
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Optiva Securities |
+44 20 3137 1902 |
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Daniel Ingrams |
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Mariela Jaho |
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Christian Dennis |
KASIYA-NSARU
Sovereign now has a total of ~165km2 of drilled, high-grade rutile mineralisation with the latest results succeeding in joining Kasiya and Nsaru into a single deposit.
Rutile mineralisation lies in laterally extensive, near surface, flat “blanket” style bodies in areas where the weathering profile is preserved and not significantly eroded. The Kasiya-Nsaru deposit is expansive with high-grade mineralisation commonly grading 1.2% to 2.0% rutile in the top 3-5m from surface. Moderate grade mineralisation generally grading 0.5% to 1.2% rutile commonly extends from 5m to end of hole where it remains open at depths >10m in numerous areas.
Kasiya-Nsaru is a strategic and globally significant natural rutile deposit with substantial additional resource growth expected. Kasiya’s current Mineral Resource Estimate is 605Mt at 0.98% rutile (0.7% cut-off, Indicated + Inferred, Table 1).
The core and auger drilling program at the Kasiya-Nsaru rutile deposit was completed from July to September 2021. This very large and expansive drilling program targeted significant MRE expansion as well as infill core drilling designed to bring known high-grade areas into the Indicated resource category. A total of 712 drill-holes for 6,832m are reported. Of these, 96 were core holes for 999m, and 616 are hand-auger holes for 5,833m.
SPECTACULAR RESULTS
Results from significant new extensions including the eastern portion of Kasiya as per below, with full results listed in Table 2:
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· 11m @ 1.34% inc. 2m @ 3.00% rutile · 8m @ 1.36% inc. 2m @ 2.66% rutile · 12m @ 1.46% inc. 3m @ 2.42% rutile |
· 12m @ 1.27% inc. 3m @ 2.16% rutile · 12m @ 1.26% inc. 5m @ 1.67% rutile · 12m @ 1.34% inc. 5m @ 1.65% rutile |
Results from 400m x 400m core and auger resource drilling at the large and high-grade Nsaru deposit including those listed below, with full results listed in Table 2:
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· 7m @ 1.84% inc. 4m @ 2.71% rutile · 12m @ 1.44% inc. 3m @ 2.47% rutile · 10m @ 1.28% inc. 2m @ 2.36% rutile · 13m @ 1.48% inc. 5m @ 2.23% rutile · 10m @ 1.49% inc. 4m @ 2.01% rutile · 10m @ 1.44% inc. 4m @ 2.01% rutile |
· 13m @ 1.29% inc. 4m @ 1.94% rutile · 12m @ 1.35% inc. 4m @ 1.90% rutile · 12m @ 1.38% inc. 6m @ 1.83% rutile · 13m @ 1.35% inc. 4m @ 1.81% rutile · 11m @ 1.35% inc. 4m @ 1.74% rutile · 9m @ 1.35% inc. 4m @ 1.71% rutile |
DRILLING RESULTS
The Kasiya and Nsaru rutile deposits have now coalesced into one very large, coherent, high-grade zone of near surface rutile and graphite mineralisation believed to be the single largest rutile deposit in the world.
The drilled mineralised footprint has now grown to 165km2, an increase overall of 28% from previously. Importantly, the drilling has also substantially increased the area of mineralisation drilled at 400 x 400m or greater density and thus it is expected that substantial tonnages will be able to be added in the upcoming MRE, due to be reported in the coming weeks. For reference, the previous MRE covered just 49km2 of the mineralised footprint.
Numerous new areas have also received drilling at 400 x 400m or greater density and are expected to be able to be incorporated into the upcoming the MRE upgrade.
In many of the high-grade zones identified by drilling rutile mineralisation persists and remains open at depth, at the limit of the current drilling. It is therefore considered likely that rutile mineralisation should occur down to approximately the base of the saprolite zone, which is estimated to lie at about 25m vertical depth. These deeper zones represent the key targets for the planned 2022 air-core drilling program.
Coarse flake graphite is present in all holes in broad association with rutile mineralisation. Graphite grades average about 1% TGC through the mineralised area.
CONCLUSION
The significant 2021 H2 drilling program at Kasiya and Nsaru accomplished the following;
· Achieved a substantial 28% increase in the overall mineralised envelope to 165km2
· Brought a significant portion of the mineralised envelope to 400 x 400m drill spacing or greater density in order to be considered for the upcoming MRE update
· Identified numerous new areas of high-grade rutile mineralisation not previously known or not previously included in the prior MRE
The updated JORC MRE is due in the coming weeks and will serve as the basis for an updated Scoping Study targeted for completion in Q2 2022. This updated Study will build on the December 2021 Study, with the new MRE likely to allow higher grades to be mined, or increased production rates or increased mine life, or a combination.
Competent Persons Statement
The information in this report that relates to Exploration Results is based on information compiled by Mr Samuel Moyle, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Moyle is the Exploration Manager of Sovereign Metals Limited and a holder of ordinary shares and unlisted options in Sovereign Metals Limited. Mr Moyle has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Moyle consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
The information in this announcement that relates to Sovereign’s Mineral Resource Estimate is extracted from the ASX announcement dated 16 December 2021 which is available to view at Sovereign’s website 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 ASX announcement; b) all material assumptions included in the ASX 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 ASX announcement.
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Table 1: Kasiya Mineral Resource Estimate at 0.7% Rutile Cut-off |
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Mineral Resource Category |
Material Tonnes (millions) |
Rutile (%) |
Rutile Tonnes (millions) |
TGC (%) |
TGC Tonnes (millions) |
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Indicated |
304 |
1.02 |
3.1 |
1.31 |
4.0 |
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Inferred |
301 |
0.93 |
2.8 |
1.16 |
3.5 |
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Total |
605 |
0.98 |
5.9 |
1.24 |
7.5 |
Cut-off: 0.7% rutile, TGC = total graphitic carbon
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.
Qualified Person
Data disclosed in this press release have been reviewed and verified by Sovereign’s Qualified Person, Dr Julian Stephens, B.Sc (Hons), PhD, MAIG, Maning Director, for the purposes of the AIM Rules for Companies.
This Is Money – SMALL CAP SHARE IDEAS: Sovereign Metals owns potentially the largest rutile deposit in the world
In fact, it could have the largest rutile deposit anywhere in the world, if the results of ongoing exploration work go its way.
For anyone not familiar, rutile is a significant source of titanium, a metal widely used in aerospace, clean-tech and medical applications, but which is mainly an essential component in paint pigments.
You can get titanium from ilmenite too, and in some cases rutile and ilmenite are found together.
But the kicker is that it’s much more carbon and energy intensive to extract titanium from ilmenite than it is to extract it from rutile.
In other words, rutile is a big tick in the green energy box..
Link here to read the full This Is Money article
#SVML Sovereign Metals – Spott Equity Research Report
Today’s news that Sovereign has secured a 25ktpa (20% of total 122ktpa) premium priced offtake into the welding sector is a great positive as most rutile globally normally goes into pigment with a preference for >75µm material. Key here is that Sovereign’s rutile is among the coarsest globally with d50 of 118µm (~same as Rio / Tronox African ops and much larger than Australian developers), including 94% > 75um. With 28% <150µm, this is saleable into pigment but wouldn’t typically attract a premium—unlike today’s deal. Looking ahead, investors should see MRE coming close to doubling soon as Nsaru ‘next one’ sees maiden resource, followed by a scoping study update. Better still, Sovereign remains a massively high conviction ESG name here not the least given they have 80ktpa graphite byproduct to come. As such, we maintain our BUY rating and our A$1.40/sh PT based on a 0.5xNAV multiple for Kasiya. Our estimates for a fully-funded and fully-diluted NAV at first production of ~A$2.75/sh demonstrate the upside here. That this asset is so far ahead of not just low-value or politically difficult peers, as well as producing assets in Africa, adds a valuable M&A angle. The key to our investment thesis is that investors are exposed to resource growth while this is underway, starting with a 1H22 maiden Nsaru MRE and revised scoping study around mid year.
Premium pricing offtake to welding supply company secured for 25ktpa (20% of total 122ktpa)
Sovereign has signed a Memorandum of Understanding (MoU) for offtake of 25,000tpa of natural rutile (vs. high CO2 synthetic rutile converted from ilmenite by the likes of Rio) to Hascor International Group™, a globally leading distributor to the welding industry. Rutile for the welding industry typically attracts a premium to pigment sales. Sovereign notes bagged rutile’s sales are expected to be priced at a US$500- 600/tonne premium over the bulk market in 2022, leading price growth due to limited alternatives within the welding end-use sector.
Why we like Sovereign Metals
1. Existing 605Mt @ 0.98% rutile comes from just 49km2 of Kasiya
2. Kasiya drilling over 89km2 plus 40km2 at Nsaru points to >1Bt global potential
3. Pure rutile + graphite credits lowers CO2 and adds EV credits addressing ESG agenda
4. On hydropower, hydro mineable, on modern rail to deep-water port with allocation
5. PFS-level Malingunde graphite project adds diversification and second pillar to value
Catalysts
1. 1Q22: Nsaru MRE
2. Mid 2022: Expanded PEA to including Nsaru
3. 2022: Ore to pigment CO2 study
Research
Brock Salier (London) M: +44 7400 666 913 bsalier@sprott.com
Justin Chan (London) M: +44 7554 784 688 jchan@sprott.com
Brandon Gaspar (Toronto) M: +1 437 533 3142 bgaspar@sprott.com
Eleanor Magdzinski (Toronto) M: +1 705 669 7456 emagdzinski@sprott.com
#SVML Sovereign Metals – Sovereign Signs Offtake MOU
SOVEREIGN SIGNS OFFTAKE MOU FOR PREMIUM PRICED RUTILE SALES TO THE WELDING SECTOR
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MoU signed for supply of 25,000 tonnes of natural rutile per annum to Hascor, a market leading global processor and distributor of rutile products for the welding industry |
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Pricing of rutile for welding generally attracts significant premiums to bulk rutile prices in the titanium pigment sector |
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Hascor to provide Sovereign with strategic advice on marketing and product development |
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Kasiya continues to attract significant offtaker interest as the largest undeveloped natural rutile project in the world and first major rutile discovery in over half a century |
Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or Sovereign) is pleased to announce that it has entered into a non-binding Memorandum of Understanding (MoU) with Hascor International Group™ (Hascor) for potential supply of 25,000 tonnes of natural rutile per annum from the Company’s Kasiya Rutile Project (Kasiya) in Malawi to Hascor’s processing plants and clients across five continents.
The MoU contemplates a supply agreement to cover an initial five-year period from commencement of nameplate production for potential 25,000 tonnes per annum of natural rutile to Hascor and their existing clients. Volumes may be varied up or down by mutual agreement. Pricing at commencement will reference market prices to the welding sector subject to agreed price variations through the supply term.
Hascor is a multinational ferroalloy and metal powder supplier. The group is a key processor and global distributor of natural rutile products for the welding industry with production and distribution centres across five continents.
This maiden MoU is part of Sovereign’s product marketing strategy as the demand and pricing for natural rutile are both very strong as the global structural deficit in supply continues to widen. The premium chemical parameters of Kasiya’s natural rutile produced indicates the product is suitable for all major end-use markets including welding, TiO2 pigment feedstock and titanium metal.
Sovereign’s Managing Director Dr Julian Stephens commented: “We are very excited to have signed this MoU with a major rutile supplier like Hascor about a future offtake agreement and to provide input on marketing for our premium rutile products from Kasiya. Hascor is a market leader in natural rutile product development and distribution for the welding industry across five continents. The offtake MoU with Hascor points to the quality and strategic nature of our world-class Kasiya Rutile Project.”
The MoU is non-exclusive and non-binding and remains subject to negotiation and execution of a definitive agreement to give effect to the MoU. The MoU will expire on 31 December 2023 but can be extended by agreement by both parties should a definitive agreement not have been reached by that time.
ENQUIRIES
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Dr Julian Stephens (Perth) +61(8) 9322 6322 |
Sam Cordin (Perth) |
Sapan Ghai (London)
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Nominated Adviser on AIM |
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RFC Ambrian |
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Bhavesh Patel / Andrew Thomson |
+44 20 3440 6800 |
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Joint Brokers |
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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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Varun Talwar |
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Optiva Securities |
+44 20 3137 1902 |
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Daniel Ingrams |
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Mariela Jaho |
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Christian Dennis |
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