Sovereign Metals Limited: Kasiya Expanded Scoping Study Results

EXCEPTIONAL ECONOMICS CONFIRM KASIYA AS AN INDUSTRY-LEADING SOURCE OF CRITICAL RAW MATERIALS

Sovereign Metals Limited (the Company or Sovereign) is pleased to announce the results of the Expanded Scoping Study (Scoping Study or Study) for the Company’s Kasiya Rutile Project (Kasiya or the Project) in Malawi.

Scoping Study Parameters - Cautionary Statements

The Scoping Study referred to in this announcement has been undertaken to determine the potential viability of an open pit mine, rutile and graphite processing plant constructed onsite at the Kasiya project in Malawi and to reach a decision to proceed with more definitive studies. The Scoping Study has been prepared to an accuracy level of ±30%. The results should not be considered a profit forecast or production forecast.

The Scoping Study is a preliminary technical and economic study of the potential viability of the Kasiya project. In accordance with the ASX Listing Rules, the Company advises it is based on low-level technical and economic assessments that are not sufficient to support the estimation of ore reserves. Further evaluation work including infill drilling and appropriate studies are required before Sovereign will be able to estimate any ore reserves or to provide any assurance of an economic development case.

61% of the total production target is in the Indicated Mineral Resource category with 39% in the Inferred Mineral Resource category. 100% of the scheduled throughput over the first eight and half years of production is in the Indicated Mineral Resource category, with 0% in the Inferred Mineral Resource category. The Company has concluded that it has reasonable grounds for disclosing a production target which includes a modest amount of Inferred material. However, there is a low level of geological confidence associated with Inferred mineral resources and there is no certainty that further exploration work (including infill drilling) on the Kasiya deposit will result in the determination of additional Indicated Mineral Resources or that the production target itself will be realised.

The Scoping Study is based on the material assumptions outlined elsewhere in this announcement. These include assumptions about the availability of funding. While Sovereign considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.

To achieve the range outcomes indicated in the Scoping Study, additional funding will likely be required. Investors should note that there is no certainty that Sovereign will be able to raise funding when needed. It is also possible that such funding may only be available on terms that dilute or otherwise affect the value of the Sovereign’s existing shares. It is also possible that Sovereign could pursue other ‘value realisation’ strategies such as sale, partial sale, or joint venture of the Project. If it does, this could materially reduce Sovereign’s proportionate ownership of the Project.

The Company has concluded it has a reasonable basis for providing the forward looking statements included in this announcement and believes that it has a reasonable basis to expect it will be able to fund the development of the Project. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.

In April 2022, Sovereign announced a new JORC Mineral Resource Estimate (MRE) for Kasiya which confirmed the Project as the world’s largest rutile (titanium dioxide) deposit and one of the world’s largest flake graphite deposits.

The Expanded Scoping Study based on the April 2022 MRE confirms that Kasiya will be one of the world’s largest and lowest cost producers of natural rutile and natural graphite with a carbon-footprint substantially lower than current alternatives while significantly contributing to the social and economic development of Malawi.

KEY EXPANDED SCOPING STUDY HIGHLIGHTS

-          Significant increase in NPV and EBITDA from the 2021 Initial Scoping Study with lower operating costs for a relatively small increase in Capex to first production

-          Potential to become a major producer in both the natural rutile and graphite markets with steady state production of 265,000 rutile and 170,000 tonnes of graphite with a 25-year mine life

-          Low capital costs to first production due to exceptional existing available infrastructure offering significant cost reductions and providing optionality and scalability

-          Low operating cost and high margins due to deposit size, zero strip ratio of soft, friable high-grade mineralisation from surface, amenability to hydro-mining, conventional processing, deposit location and low transport costs

-          Extremely favourable market fundamentals as rutile (titanium) and natural graphite deemed critical raw materials for the US and EU based on economic importance and supply risk

-          Natural rutile market in structural deficit with current global supply estimated to decline 45% in the next three years with graphite demand set to soar as electric vehicle production is forecast to increase 12-fold by 2040

-          Natural ESG benefits for Kasiya:

-          Substantially reduced CO2 emissions for both rutile and graphite compared to current alternatives, including substantial Scope 3 emissions reductions for pigment production from rutile compared to alternative feedstocks

-          Significant social and economic benefits for Malawi including job creation, fiscal returns, training and continued community social initiatives

-          Study based on conservative commodity price estimates. Long-term rutile price (real) of US$1,254/t versus current spot price of +US$2,200/t1 and long-term natural graphite basket price (real) of US$1,085/t versus current equivalent spot price of US$1,223/t2

Managing Director, Dr Julian Stephens

“The Expanded Scoping Study demonstrates Kasiya is a Tier 1 minerals project being the largest natural rutile resource and one of the largest graphite resources in the world. Both minerals are classified on the Critical Minerals lists of the US and EU and rutile is in extreme market supply deficit. In light of these factors, Kasiya is seen as a highly strategic project with the potential to be a major supplier in both rutile and graphite markets.

The project benefits from existing high-quality infrastructure and has inherent ESG advantages. Natural rutile has a far lower carbon footprint compared to other titanium feedstocks used in the pigment industry, and natural graphite is a key component in lithium-ion batteries – crucial to de-carbonising the global economy. Further, the vast majority of power for the planned Kasiya mining operation will be supplied by renewable hydro and solar – giving the mine itself a very low carbon footprint.

The future development of the Kasiya Rutile Project will bring substantial benefits to Malawi in terms of GDP, royalties, taxes, employment and training, local business opportunities and community development.”

ENQUIRIES

Dr Julian Stephens (Perth)

Managing Director

+61(8) 9322 6322

Sam Cordin (Perth)

+61(8) 9322 6322

Sapan Ghai (London)

+44 207 478 3900

Sources:

1. Ruidow

2. RefWin & Asian Metals: Basket: +3295 (5.4%) US$1,950, +595 (25.1%) US$1,490, +895 (30.9%) US$1,250, +195 (10.9%) US$1,000 & -195 (27.7%) US$900

KASIYA EXPANDED SCOPING STUDY OUTCOMES

Sovereign’s Expanded Scoping Study for Kasiya is based on the updated MRE reported in April 2022, of 1.8Bt containing 18Mt rutile at 1.01% and 23.4Mt graphite at 1.32%. The Study envisages a 25-year mine life during which time both rutile and graphite are produced during two stages:

Stage 1: Years 0-5: 12Mt of ore processed per annum to produce approximately 145,000 tonne of natural rutile and 85,000 tonnes of flake graphite per annum

Stage 2: Years 5-25: Add 12Mt capacity for total 24Mt of ore processed per annum to produce approximately 260,000 tonnes of natural rutile and 170,000 tonnes of flake graphite per annum

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