Rio Tinto to Invest $40.4 Million and Become a 15% Strategic Investor in Sovereign
- Rio Tinto to make an investment of A$40.4 million in Sovereign resulting in an initial 15% shareholding
- Investment proceeds will be used to advance the Kasiya Rutile-Graphite Project in Malawi
- Rio Tinto’s investment represents a significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite
- Under the Investment Agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of Kasiya including with respect to Sovereign’s graphite co-product, with a primary focus on spherical purified graphite for the lithium-ion battery anode market
- Issue of 83,095,592 new Shares of Sovereign to Rio Tinto at a price of A$0.486 per share represents a 10% premium to the 45-day volume weighted average price on the ASX as at close 14th July 2023.
- Rio Tinto also issued with 34,549,598 options to increase its shareholding by an additional 4.99% to potentially 19.99% of Sovereign within 12 months
- Rio Tinto’s 34.5 million options have an exercise price of A$0.535 per Share, representing a 21% premium to the 45-day volume weighted average price on the ASX as at close 14th July 2023, for additional proceeds of up to $18.5 million (if all options are exercised)
17 July 2023 - Sovereign’s Chairman Ben Stoikovich commented: “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. 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. Furthermore, this is yet another step towards unlocking significant benefits from development of the Kasiya project for Malawi. We welcome Rio Tinto as a major shareholder of Sovereign and look forward to working with Rio Tinto as our strategic partner in the development of Kasiya.”
Sovereign Metals Limited (ASX:SVM ; AIM:SVML) (Sovereign or the Company) is delighted to announce a A$40.4 million strategic investment by Rio Tinto Mining and Exploration Limited (Rio Tinto) to advance Sovereign’s world-class Kasiya Rutile-Graphite Project (Kasiya or the Project) in Malawi.
Rio Tinto has agreed to initially subscribe for and purchase 83,095,592 new fully paid ordinary shares (Shares) in Sovereign at a price of A$0.486 per Share for aggregate proceeds of A$40.4 million. Rio Tinto’s subscription price reflects a 10% premium to the 45-day volume weighted average price on the ASX as at close 14th July 2023 and will result in Rio Tinto holding approximately 15% of the ordinary shares of the Company.
The subscription also involves Rio Tinto being granted options to acquire 34,549,598 further Shares in Sovereign within 12 months of the initial subscription which could result in Rio Tinto’s shareholding in the Company to potentially increase up to 19.99% (based on the number of shares in issue in the Company as at the date of this announcement).
The Company will use the proceeds from Rio Tinto’s strategic investment to fund the advancement of Kasiya, including progressing a Definitive Feasibility Study (DFS) focused on the development of a world-class, low-CO2-footprint mine capable of supplying to the titanium pigment, titanium metal and lithium-ion battery industries.
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Further issuance of Shares
An advisory fee of 3% is payable to SCP on the amount of Rio Tinto’s investment and, subject to shareholder approval, can be paid by way of the issue of ordinary shares to SCP, with 2,492,868 shares being issuable to SCP based on Rio Tinto’s initial subscription. The Company has agreed, subject to Shareholder approval, to issue a further 439,918 Shares to Rio Tinto at the subscription price of A$0.486 per Share upon the issue of shares to SCP. The Company will call a general meeting, to be held in late August/early September 2023 to obtain these shareholder approvals. A notice of meeting (and explanatory statement) will be sent out to shareholders in early August 2023.
Kasiya, located in central Malawi, is the largest natural rutile deposit and one of the largest flake graphite deposits in the world. Sovereign is aiming to develop a sustainable operation to supply highly sought-after natural rutile and graphite to global markets.
An Expanded Scoping Study (ESS) released in June 2022 by the Company confirmed Kasiya as potentially one of the world’s largest and lowest cost producers of natural rutile and natural graphite with a global warming potential substantially lower than other existing and planned operations.
The Company is in the advanced stages of a Pre-feasibility Study (PFS) for Kasiya which will build on the on the ESS. The Company expects to announce the outcomes of the PFS in the coming months.
Dr Julian Stephens (Perth)
+61(8) 9322 6322
Sam Cordin (Perth)
+61(8) 9322 6322
Sapan Ghai (London)
+44 207 478 3900
Forward Looking Statement
This release may include forward-looking statements, which may be identified by words such as "expects", "anticipates", "believes", "projects", "plans", and similar expressions. These forward-looking statements are based on Sovereign’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Sovereign, which could cause actual results to differ materially from such statements. There can be no assurance that forward-looking statements will prove to be correct. Sovereign makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.
This ASX Announcement has been approved and authorised for release by the Company’s Board of Directors.