REG - Sovereign Metals Ltd - Graphite Bulk Sample Operations Commenced

Sovereign MetalsAnnouncement

20/06/2023 07:00

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RNS Number : 2789D  Sovereign Metals Limited  20 June 2023

SOVEREIGN METALS LIMITED

 

NEWS RELEASE | 20 JUNE 2023

 

GRAPHITE BULK SAMPLE OPERATIONS COMMENCED

 

 ·               Bulk sample program commenced to produce larger volumes of natural graphite
                 from Kasiya. Samples to be used for downstream testwork and product
                 qualification for the lithium-ion battery sector
 ·               Initial four tonnes of flake graphite pre-concentrate produced at the
                 Company's laboratory in Malawi ready for despatch to world leading laboratory
                 SGS Lakefield
 ·               Significant laboratory upgrade underway to enable continuous production of
                 bulk sample going forward
 ·               Initial characterisation testwork on Kasiya's graphite has already indicated
                 excellent suitability for use in lithium-ion batteries
 ·               Bulk sample program in line with Sovereign's graphite marketing strategy to
                 establish Kasiya as a major supplier of two critical minerals - natural flake
                 graphite and natural rutile
 ·               Active marketing of Kasiya's graphite to end users to follow; Sovereign has
                 already secured rutile offtake MOUs with major blue chip partners including
                 Japan's Mitsui and US-listed Chemours
 ·               Multiple government initiatives across the G7 and other world economies
                 recently announced focusing on securing graphite supply alongside other
                 critical minerals

 

Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or Sovereign) is
pleased to announce the commencement of a graphite bulk sample program for
qualification, downstream testwork and product development. The Company is
upgrading in-country facilities to enable continuous production of bulk
samples for marketing.

The Company's Kasiya Project (Kasiya) in Malawi has the potential to be the
one of the world's lowest cost and lowest global warming potential (GWP)
sources of natural rutile and graphite. Kasiya is the largest natural rutile
deposit and one of the largest flake graphite deposits in the world. Both
minerals are critical to several of the world's economies as well as crucial
to decarbonisation solutions required to meet "Net-Zero" and other targets set
by policymakers.

Sovereign's product marketing strategy is to align itself with high-quality
partners and brands during the technical study and development phases to
completely qualify Kasiya's future products for end-markets, including the
lithium-ion battery anode market which has now become the largest end-market
for natural flake graphite. Demand for high quality flake graphite continues
to grow due to global decarbonisation requirements. The demand for anodes grew
by 46% in 2022 compared to only 14% growth in natural flake graphite supply.

Sovereign's Managing Director Dr Julian Stephens commented:

"Kasiya will potentially be one of the lowest cost flake graphite projects in
the world and is also estimated to have one of the lowest global warming
potentials of any current and future graphite projects. Sovereign wants to be
at the forefront of these critical mineral supply chains and today's
announcement is another important step towards achieving that.

"The world's economies need surety of supply for high-quality,
low-carbon-footprint graphite suitable for use in lithium-ion batteries.
Without graphite there is no electric vehicle revolution. The US, Japan and
the EU see it as a critical mineral and have allocated many billions of
dollars towards securing graphite supply."

 

 

ENQUIRIES

 Dr Julian Stephens (Perth)  Sam Cordin (Perth)  Sapan Ghai (London)

Managing Director
+61(8) 9322 6322
+44 207 478 3900

 +61(8) 9322 6322

 

 Nominated Adviser on AIM
 RFC Ambrian
 Andrew Thomson            +61 8 9480 2500

 Joint Brokers
 Berenberg                 +44 20 3207 7800
 Matthew Armitt
 Jennifer Lee

 Optiva Securities         +44 20 3137 1902
 Daniel Ingram
 Mariela Jaho
 Christian Dennis

 Tavistock PR              +44 20 7920 3150

BULK SAMPLE PROGRAM COMMENCED

Currently, material from the planned mining pits is sourced from remaining
samples from the 2022 Kasiya resource drill program. The samples are blended
to create a bulk sample which is prepared for processing at the Company's
facility in Malawi where it is, sized and deslimed - processes replicating the
planned operation.

Post removal of the coarse and fine fractions, the remaining clean sand
fraction (45µm to 2mm) containing the graphite and rutile is processed over a
wet shaking table to isolate two gravity concentrates. A graphite
pre-concentrate (light mineral concentrate) with a target grade of 3-5%
graphite (up from ~1.5% in the raw ore) and a heavy mineral concentrate (HMC)
containing the rutile.

The graphite pre-concentrate is planned to be sent to SGS Lakefield for
flotation and final processing into a final graphite product. This initial
representative graphite product will provide samples for:

·   Downstream testwork focussed on Coated Spherical Purified Graphite
(CSPG) anode material via purification, spheronisation, coating and battery
cell cycling tests.

·      Assessment and qualification for traditional industrial graphite
markets, including the refractory, foundry, and expandable graphite segments.

·   Future production of CSPG to be provided to anode / battery
manufacturers for assessment and qualification.

GRAPHITE PRODUCT MARKETING STRATEGY

Through Sovereign's long-established expertise in graphite, the Company has
built a strong understanding of the product's market and developed a number of
relationships with well-established offtakers and customers.

A major component to graphite sales agreements is customer qualification, and
this is a key reason for initiating the graphite bulk sample program and
scaling up in-country facilities in order to continuously produce bulk sample
over the coming months. The graphite produced from this program will be shared
with prospective end-users and is an important next step for Sovereign to
qualify the Kasiya graphite product.

Sovereign's recent initial graphite characterisation testwork conducted by an
independent German industrial minerals specialist demonstrated superior
qualities and excellent suitability for its use in lithium-ion batteries.
Further downstream testwork is planned that will use the graphite concentrate
produced.

Industry's interaction with supply chain participants indicates the
progression towards higher proportions of natural graphite used in battery
anodes will be supported by its lower cost and superior environmental
credentials. Environmental footprint of electric vehicles (EVs) will become
increasingly important market consideration as EV penetration accelerates,
noting that synthetic graphite has a carbon footprint orders of magnitude
higher than flake graphite because it is made from by-products of coke and oil
refining via energy intensive processes.

Leading EV producer Tesla Inc.'s (Tesla) "Master Plan 3" outlines its proposed
path to reach a sustainable global energy economy through end-use
electrification and sustainable electricity generation and storage.  In the
plan, Tesla suggests that the world would need to produce 10.5Mt of graphite
per year and estimates US$104 Billion of new graphite mining investment is
required to achieve its target.(1)

Sovereign has already shared samples of rutile product from Kasiya with major
end-users globally, all of which have confirmed its premium chemical and
physical specifications will be suitable for use in their titanium metal and
pigment processes.

This has resulted in the Company entering initially non-binding Memorandums of
Understanding (MoU) with three major partners in the natural rutile sector:
Mitsui, Chemours and Hascor. The Company has already over 50% of Stage 1
production under MoU (based on the Company's Expanded Scoping Study released
June 2022). Sovereign's next objective is to secure offtake MOUs for the
Kasiya flake graphite co-product.

MALAWI LABORATORY UPGRADE UNDERWAY

Sovereign has constructed a bespoke laboratory in Lilongwe, Malawi in order to
process exploration drill samples for rutile and graphite determination. The
Lilongwe laboratory has allowed the Company to efficiently process large
numbers of exploration samples at a fraction of the cost and time versus
sending raw samples directly to commercial laboratories in South Africa or
Australia.

To date, the Company has processed over 16,000 samples from the Kasiya
rutile-graphite deposit at the Lilongwe facility. This has resulted in the
Company reporting the largest natural rutile and second largest flake graphite
deposit in the world delineated in just a three-year period.

LABORATORY UPGRADES & UPSCALING

The Company has recently commenced an upscale and upgrade program of the
Lilongwe laboratory to allow processing of about 500 tonnes of raw ore feed
per annum (subject to Malawi Government regulatory approvals) resulting in
continuous production flake graphite and natural rutile bulk samples.

Raw ore samples will be provided from processing remaining Kasiya resource
drill-hole samples in storage and further planned bulk spiral auger drilling
at Kasiya. A newly acquired 300mm diameter bulk sampling spiral bit will allow
approximately 2 to 2.5 tonnes of representative sample to be acquired per 20m
hole.

Key upgrades planned, completed or underway at the laboratory to enable bulk
scale production of graphite pre-concentrate and HMC containing rutile
include;

Sizing and desliming

Acquisition of two Kwatani 30 inch shaking screens including one single deck
and one double deck model with associated sumps, pumps, piping, and electrical
components. This will increase the sizing and desliming capacity throughput to
approximately 2 tonnes of raw sample per day or around 300kg per hour. This
should produce approximately 150kg per hour of clean sand containing rutile
and graphite to feed the wet shaking table.

Shaking table

A Holman-Wilfley 2000 Series shaking table has been ordered and is currently
under fabrication. The table is rated to process up to 450kg per hour and will
produce a bulk graphite concentrate with a targeted grade of 3-5% graphite,
upgrading the original ore from approximately 1.5% contained graphite. The
table also will produce a bulk rougher heavy mineral concentrate containing
the rutile product which would be expected to grade between 25% and 40%
rutile.

Water recycling system

Installation of a water system for settling fines and recovering water for
re-use in the process flowsheet is now complete - reducing the water usage and
waste disposal requirements.

GLOBAL CRITICAL MINERALS INITIATIVES

In June 2022, the United States and its G7 partners launched the Partnership
for Global Infrastructure and Investment to build clean energy supply chains.
They also signed the Minerals Security Partnership to produce, process, and
recycle critical minerals, including graphite.(2)

In August 2022, the US Senate's passage of the Inflation Reduction Act
provided tax incentives and other financial support to develop critical
minerals whilst providing US$369 billion for climate and clean energy
programs. Graphite was named in the list of critical minerals.(3)

Subsequently at Davos, in January 2023, European Commission President Ursula
von der Leyen announced that a key pillar of the EU's new industrial strategy
will be global partnerships to access inputs needed for industry.(4) This
builds on existing EU initiatives, such as the European Battery Alliance and
the Critical Raw Materials Act, which both aim to onshore and secure supply
chains.

On 28 March 2023, in an effort to support their partnership as allies in the
race to strengthen their critical mineral supply chains for electric vehicle
batteries, the US and Japan Governments entered into an agreement on
Strengthening Critical Minerals Supply Chains.(5) It is noteworthy that the
definition of "critical minerals" under the Trade Agreement includes a list of
only five minerals- graphite, cobalt, lithium, manganese, and nickel.

In April 2023, Japan's Ministry of Economy, Trade and Industry announced that
it will subsidize up to half the cost of mine development and smelting
projects for Japanese companies to secure critical minerals.(6) Graphite,
lithium, manganese, nickel, cobalt, and rare earths are reportedly the main
targets for this financial support.

In the same month, the G7 pledged US$7 billion to secure a stable supply of
critical minerals such as graphite. The funds are to be used for mine
development and other projects.

- END -

 

REFERENCES

1.     Tesla Master Plan 3 -
https://www.tesla.com/ns_videos/Tesla-Master-Plan-Part-3.pdf

2.
https://carnegieendowment.org/2023/05/03/friendshoring-critical-minerals-what-could-u.s.-and-its-partners-produce-pub-89659

3.
https://www.mining-journal.com/energy-minerals-news/news/1437372/us-senate-passes-act-with-incentives-for-critical-minerals

4.     https://ec.europa.eu/commission/presscorner/detail/en/speech_23_232

5.
https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/march/united-states-and-japan-sign-critical-minerals-agreement

6.
https://www.mining.com/japan-to-subsidize-half-the-costs-of-lithium-critical-minerals-projects-report/

Competent Person Statement

The information in this announcement that relates to the Mineral Resource
Estimate is extracted from the announcement dated 5 April 2023. The
announcement is available to view on www.sovereignmetals.com.au
(http://www.sovereignmetals.com.au) . Sovereign confirms that a) it is not
aware of any new information or data that materially affects the information
included in the announcement; b) all material assumptions included in the
announcement continue to apply and have not materially changed; and c) the
form and context in which the relevant Competent Persons' findings are
presented in this report have not been materially changed from the
announcement.

The information in this announcement that relates to Production Targets,
Processing, Infrastructure and Capital and Operating Costs, is extracted from
the announcement dated 16 June 2022 entitled 'Kasiya Expanded Scoping Study
Results'. Sovereign confirms that: a) it is not aware of any new information
or data that materially affects the information included in the announcement;
b) all material assumptions and technical parameters underpinning the
Production Target, and related forecast financial information derived from the
Production Target included in the Announcement continue to apply and have not
materially changed; and c) the form and context in which the relevant
Competent Persons' findings are presented in this presentation have not been
materially modified from the Announcement.

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.

To view this announcement in full, including all figures and illustrations,
please refer to:
http://www.investi.com.au/api/announcements/svm/6944f8b6-791.pdf
(http://www.investi.com.au/api/announcements/svm/6944f8b6-791.pdf)

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