Sovereign Metals Limited (ASX:SVM, OTC:SVMLF, AIM:SVML) is well advanced with its pre-feasibility study (PFS) and mineral resource update for the Kasiya Rutile Project in Malawi, according to RaaS Advisory.
RaaS noted that Sovereign has the potential to move lower on the industry cost curve, delivering stronger margins and NPV.
The PFS will extend the previous expanded scoping study (ESS) which estimated that the project could deliver an after-tax net present value (NPV) of US$1.54 billion with average annual underlying earnings (EBITDA) running at US$323 million.
The following is an extract from RaaS Advisory’s note on Sovereign:
Sovereign Metals Ltd (Sovereign Metals Limited (ASX:SVM, OTC:SVMLF, AIM:SVML)) is an ASX-listed company focused on developing the world’s largest known natural rutile deposit and second largest flake graphite deposit in Malawi in south-east Africa. The company is well advanced with its pre-feasibility study and mineral resource update for the Kasiya rutile project and expects to complete this in coming months. In March 2023, Sovereign Metals demerged its other graphite projects into a new unlisted public vehicle, NGX Ltd, via an in-specie distribution to shareholders, in order to concentrate on developing Kasiya. The company is of the view that Kasiya is poised to be the next material source of two critical minerals; natural rutile and graphite. Natural rutile is the preferred feedstock for the titanium dioxide industry currently constrained by lack of supply and facing the closure of two major western mines in the near term. Kasiya’s graphite, a low-cost co-product is highly crystalline and high purity, which are both critical features for use in lithium-ion battery anodes.
Project description
Sovereign Metals is developing the Kasiya rutile project in Malawi in south-east Africa. The Indicated Resource stands at 1.2bn tonnes grading 1.0% rutile and 1.5% graphite following a recently updated Mineral Resource Estimate (announced April 5) which increased the Indicated Resource by 81%. The project’s MRE (1.8bn tonnes at 1.0% rutile and 1.4% graphite) now has more than 66% in the Indicated category following the recently completed infill drilling programme. The project has been confirmed as one of the world’s largest and lowest cost producers of natural rutile and natural graphite by independent UK-based consultancy Minviro after comparing Kasiya’s GWP of producing natural flake graphite against relevant current and future natural graphite projects. Kasiya’s mineralisation presents in a laterally extensive, near surface, flat “blanket” style, with widespread, high-grade mineralisation from surface to 25m, with higher grades up to 2.0% rutile in the top three-to-five metres.
Aiming for a definitive feasibility study by end of CY2024
Sovereign Metals is currently conducting its PFS which it expects to complete in the coming months. The PFS will extend the previous expanded scoping study (ESS) which estimated that the project could deliver an after-tax net present value (NPV) of US$1.54bn with average annual EBITDA running at US$323mn. The ESS looked at a two-staged development with stage one contemplating 12Mtpa ore processed in the first five years and stage two increasing annual production to 24Mt from years five to 25, delivering 265Kt rutile and 170Kt graphite a year. Sovereign Metals has already secured offtake agreements with Japan’s Mitsui & Co, US-based Chemours Company, and USheadquartered Hascor International Group respectively, for 30,000 tonnes, 20,000 tonnes, and 25,000 tonnes of rutile a year. The company expects to make additional announcements over the next 12 months and anticipates completing the environmental and project permitting by the end of CY2024, in tandem with the Definitive Feasibility Study which will commence in H2 CY2023.
Well positioned to deliver critical minerals at a critical time
Sourcing critical minerals has become a priority for governments in the current uncertain geo-political environment. Natural rutile, the purest natural form of titanium, is in particular demand for producing titanium metal for the aerospace and defence sectors, and with its substantially lower carbon footprint than other manufactured sources of Ti02 meets the decarbonisation requirements for corporates and governments. Kasiya’s graphite co-product which offers significant cost and environmental advantages to the project.