Rio Tinto (ASX:RIO) will invest an additional A$18.5 million in Sovereign Metals Ltd (ASX:SVM, OTC:SVMLF, AIM:SVML), increasing its shareholding to 19.76%.
In a show of confidence. the major miner has exercised all of its 34,549,598 share options to acquire shares in Sovereign at A$0.535 per share for proceeds of A$18,484,035.
Sovereign will use the proceeds to continue advancing its Tier-1 Kasiya Rutile-Graphite Project in Malawi. This includes progressing the current optimisation study which is focused on the development of a world-class mine capable of supplying critical minerals to the titanium pigment, titanium metal and lithium-ion battery industries.
Under Sovereign’s agreement with Rio Tinto, the major continues to provide assistance and advice on technical and marketing aspects of Kasiya
“Significant critical minerals project”
“Rio Tinto’s further investment in Sovereign reaffirms Kasiya’s position as one of the most significant critical minerals projects globally,” said Sovereign chairman Ben Stoikovich.
“With Rio Tinto’s wealth of experience as one of the world’s largest and most accomplished global mining companies, Kasiya is well positioned to potentially become a market leader in low-CO2-footprint natural rutile and graphite.”
Sovereign managing director Frank Eagar added: “In collaboration with Rio Tinto, we have made significant progress in advancing Kasiya over the course of this year, including the successful launch of the pilot phase mining in May.
“We are excited about Rio Tinto’s further investment in Sovereign, which represents another significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite.”
Rio Tinto initially agreed to subscribe for and purchase 83,095,592 shares in Sovereign in July 2023, at A$0.486 per share for a total of A$40.4 million. Rio was also granted options to acquire 34,549,598 further shares within 12 months of the initial subscription, which have now been exercised.
The parties also entered into an investment agreement with a joint technical committee established between Sovereign and Rio Tinto to advance the development of Kasiya.