Sovereign Metals advances world-class Kasiya rutile-graphite project

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By Colin Hay - 
Sovereign Metals ASX SVM world-class Kasiya rutile graphite project Rio Tinto 2023 PFS

Sovereign Metals (ASX: SVM) has completed a company-changing quarter with major breakthroughs in its progression of the world-class Kasiya project in Malawi.

The company’s two headline achievements in the reporting period included completing a pre-feasibility study (PFS) which confirmed Kasiya’s market leading potential for producing two highly sought after critical metals and receiving a $40.6 million strategic investment by Rio Tinto (ASX: RIO) to advance the project.

To further help drive Kasiya towards development, Sovereign has also completed key management appointments and earned the support of the local Malawi government.

PFS confirms a very robust project

The Kasiya pre-feasibility study unveiled robust economic results with a post-tax net present value of $2.5 billion and post-tax internal rate of return of 28%.

The study was based on a model which estimated the project can initially generate over $25 billion in revenue and provide an average annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $652 million per annum.

The study also confirmed Kasiya as a potential major critical minerals project with the largest natural rutile deposit and second largest flake graphite deposit in the world.

World leading rutile producer

Kasiya has been identified as having the potential to become the world’s largest rutile producer at 222,000 tonnes per annum and one of the world’s largest natural graphite producers outside of China at 244,000 tonnes per annum based on an initial 25 year life-of-mine.

Notably, the PFS model for the project was based on initial estimated probable ore reserves of 538 million tonnes, which represents only 30% of the project’s current total mineral resource.

Kasiya has also been forecast to achieve significantly low operating costs through its deposit size and grade, zero strip ratio from surface, location and excellent existing operational infrastructure.

The project is strategically located in close proximity to Malawi’s capital city Lilongwe, providing access to a skilled workforce and industrial services.

Products will be exported to global markets via the deep water port of Nacala along the existing Nacala Logistics Rail Corridor.

Rio Tinto investment

Sovereign attracted global attention when Rio Tinto jumped onto the Kasiya bandwagon when it subscribed for $40.6 million in Sovereign shares.

The subscription also included Rio Tinto being granted options to potentially increase its interest in Sovereign up to 19.99%

Rio Tinto will also provide support on technical and marketing aspects of Kasiya including Sovereign’s graphite co-product plans, with a primary focus on spherical purified graphite for the lithium-ion battery anode market.

There is also an option for Rio Tinto to potentially support Sovereign’s project financing arrangements in order to put in place an acceptable mine construction funding package.

Key management appointments

In other development news, Sovereign has made important management appointments with the naming of Frank Eagar as managing director and chief executive officer.

Mr Eagar has over 20 years’ experience in the financing, permitting, development and operation of mining projects with a strong focus in southern Africa.

He has previously held a number of senior executive positions in the resources sector, more recently with African mining focused private equity firm AMED Funds, which included acting as chief financial officer for AMED’s controlled company, Central Copper Resources.

Mr Eagar joined Sovereign in December 2022 as general manager in Malawi, where he has already expanded the team with a focus on Malawian nationals, developed strong relationships with government and demonstrated a clear understanding of the Kasiya project and its development landscape.

Sovereign also made several key technical appointments as the company seeks to transition into project optimisation and development.

Strong government support

The Malawian government has declared strong support for Sovereign and the Kasiya development.

The country’s Minister of Mines and Minerals, Monica Chang’anamuno, recently publicly applauded the Rio Tinto investment and noted that it was a milestone towards the country realising its aspirations of growing the mining industry.

Mining has been identified as one of the key pillars for growth under Malawi’s economic development strategy, with Kasiya considered to be a project of national significance.

So much so, that the government has constituted an inter-ministerial project development committee to work alongside the company to assist in the permitting processes.