Dr Julian Stephens of Sovereign Metals Limited (ASX:SVM, OTC:SVMLF, AIM:SVML) sat down with Proactive’s Andrew Scott yesterday to discuss the company's promising pre-feasibility study (PFS) for its Kasiya Rutile Graphite Project, which projects a mine life of 25 years. The PFS forecasts total revenue at US$16 billion and average annual EBITDA of US$415 million for the initial 25 years modelled.
“It will be the largest rutile producer in the world at about 220,000 tons a year of rutile, and one of the largest graphite producers in the world as well,” Stephens said.
Stephens revealed that the study has "produced a steady [outcome] with a very long mine life."
He highlighted that the study only utilises "about a third of the existing resource," indicating substantial room for expansion.
“We only converted about a third of the resource or about 30% to reserves for this study. The resource, as you know is huge and the biggest in the world at 1.8 billion tons. This study only uses about 540 million tonnes of that.
“So, there's plenty of additional resource there that we could convert to reserves in future to either increase production rates or increase the mine life to potentially 50 years or longer.
Regarding environmental considerations, the project will be a "very low carbon emitter," relying predominantly on green energy sources like solar and hydro power.
We're able to use green energy, renewable energy, solar and hydro power to power the majority of the operation. In terms of the environmental footprint, like most mineral sands mines we will be mining out these pits then backfilling, drying and rehabilitating them as we go and returning that land to farming or other uses.”
Read more about the PFS outcomes: Sovereign Metals pre-feasibility study confirms robust economics for low-carbon Kasiya Project in Malawi
Strong government support
The company enjoys "strong support from the Malawi government," which aligns with the country's ambitions to boost its mining industry.
“One of pillars of the Malawi government's economic wishes is to get the mining industry up and going in Malawi. There's a number of projects that are in development and we've seen really strong support from them. At the moment, they have just put together their own technical committee to help to permit these projects through to production.”
Well positioned
Moving forward, Sovereign will be working closely with Rio Tinto Ltd (ASX:RIO) to optimise recent results.
“We'll do an optimisation study taking into account all of the PFS results, and with our friends at Rio we will move into the definitive feasibility study.”
Elaborating on Sovereign’s strategic positioning in the commodities market, Stephens said: "It's a unique mix of commodities. In industrial minerals, we see an extreme supply deficit in rutile at the moment and that there are no operations on the horizon at the moment that will be able to fill that deficit.
“This project will be able to fill some of the deficit but not all of it. So, we're seeing really strong pricing in rutile at the moment.
“Iluka reported a recent shipment sold for around US$1,900 a ton. For reference, we're using under $1,500 average in our study.
“In terms of graphite that's predicted to go into supply deficit in 2024 due to the use of graphite in lithium ion battery anodes and obviously the growth of EVs and other uses of rechargeable batteries.”
The value
For prospective investors, Stephens underscores the Kasiya Project as a "deep value project”, that is anticipated to produce "over US$400 million a year for 25 years modelled and probably longer."
“It’s very cheap,” he said.