Sovereign Metals Limited (ASX:SVM, OTC:SVMLF, AIM:SVML) shares shot up 26% in Monday morning’s deals after Rio Tinto (ASX:RIO) was revealed as its new strategic investors, pumping in some A$40.4mln to help fund the Kasiya rutile-graphite project in Malawi.
Rio takes a 15% stake in the AIM and ASX quoted small-cap as a result of the investment, plus options to increase its interest to 19.99% within 12 months.
The investment represents a significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite, Sovereign said in a stock market statement.
Rio is also expected to assist in the technical and marketing aspects of Kasiya, Sovereign added.
"This landmark agreement with Rio Tinto, one of the world's largest and most accomplished global mining companies, is confirmation of Kasiya's place as one of the most significant critical mineral discoveries in recent times,” Sovereign chair Ben Stoikovich said.
“The experience and expertise that Rio Tinto brings will truly set Kasiya apart as a potentially globally significant supply of two critical minerals and take us all a step closer to supply chain decarbonisation and achieving net-zero.”
In London, Sovereign shares gained 6.1p or 26.52% to 29.10p.
Earlier, on the ASX, the company’s primary listing saw the shares rise just over 7% to A$0.53, valuing the company at A$247mln.