REG - Sovereign Metals Ltd - Kasiya - Optimised PFS Results
22/01/2025 07:00
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RNS Number : 2244U Sovereign Metals Limited 22 January 2025
NEWS RELEASE I 22 JANUARY 2025
KASIYA - OPTIMISED PFS RESULTS
OPTIMISED PFS COMPLETED WITH OVERSIGHT FROM SOVEREIGN-RIO TINTO TECHNICAL
COMMITTEE
LARGEST AND LOWEST-COST STRATEGIC CRITICAL MINERALS PRODUCER POTENTIAL
REAFFIRMED
SUPERIOR PROJECT DELIVERY, OPERATIONAL FLEXIBILITY, PERMITTING, ENVIRONMENTAL
AND SOCIAL OUTCOMES
US$2.3Bn US$16.4Bn US$423/t
NPV (pre-tax) Total Revenue Operating Cost
27% US$409M US$665M
IRR (pre-tax) Ave. Annual EBITDA Capital Expenditure
(to 1(st) Production)
"The level of accuracy and confidence in the economic and technical
fundamentals of Kasiya have taken a massive step forward. The successful
completion of large-scale field trials, in particular for dry mining, the high
degree of technical rigour by our enhanced owner's team, and Rio Tinto's
technical support have all contributed to confirming Kasiya's potential to
become a long-life, low-cost, secure source of two genuine critical and
globally strategic minerals."
- Frank Eagar, Managing Director and CEO
Sovereign Metals Limited (ASX:SVM; AIM:SVML; OTCQX: SVMLF) (Sovereign or the
Company) is pleased to announce the results of an Optimised Pre-feasibility
Study (OPFS) for its Kasiya Rutile-Graphite Project (Kasiya or the Project)
undertaken following a strategic investment by Rio Tinto Mining and
Exploration Limited (Rio Tinto) in 2023, which established a joint Technical
Committee to advance the development of Kasiya.
Following input from various organisations, including world-class
consultancies, the Company's owner's team, and subject matter experts from Rio
Tinto, the OPFS has reconfirmed Kasiya as a leading global future supplier of
strategic critical minerals outside of China.
The OPFS proposes a large-scale, long-life operation to deliver substantial
volumes of natural rutile and graphite while generating significant returns.
Table 1 summarises the key findings from the OPFS and includes a comparison to
the Pre-Feasibility Study (PFS) results released 16 months ago, in September
2023. It is important to note that the results for the 2023 PFS in Table 1
have not been updated or adjusted for inflation since their release in
September 2023.
TABLE 1: KEY OPFS METRICS
Units OPFS Results 2023 PFS
Jan 25 Sep 23
Production
Initial Mine Life Years 25 25
Plant Throughput (Stage 1: Years 1-4) Mtpa 12 12
Plant Throughput (Stage 2: Years 5-25) Mtpa 24 24
Average Annual Rutile Produced (95%+TiO(2)) ktpa 222 222
Annual Average Graphite Produced (96% TGC)* ktpa 233 244
Operating and Capital Expenditure
Capex to First Production (Stage 1) US$M 665 597
Total LOM Development Capex US$M 1,127 1,250
Total LOM Sustaining Capex US$M 397 470
Operating Costs (FOB Nacala) US$/t product 423 404
Financial Performance
Total Revenue* US$M 16,367 16,121
Annual Revenue (Average LOM) US$M 640 645
Annual EBITDA (Average LOM) US$M 409 415
NPV(8) (real, pre-tax) US$M 2,322 2,419
IRR (pre-tax) % 27% 32%
Revenue to Cost Ratio x 2.8 2.8
*Annual average graphite produced includes 292kt of graphite processed and
sold in two years post cessation of active ore mining. Average graphite
produced during the 25-year initial mine life only is 240ktpa; total revenue
during the same period is US$15,990 million. All rutile is produced and sold
during the 25-year initial mine life. Note: All cashflows and costs are
presented in US$ real January 2025 terms unless otherwise stated. Operating
costs exclude mineral royalties and community development support costs.
SUMMARY OF OPTIMISATIONS
The OPFS optimises seven key areas compared to the 2023 PFS as summarised
below.
Mining Method
The PFS proposed a 25-year initial LOM based on a hydraulic mining process
where slurry material would be screened and pumped overland to processing
plants.
Based on findings from the mining trials undertaken as part of the Pilot
Mining and Land Rehabilitation (Pilot Phase), the OPFS proposes a large-scale
open-pit dry mining operation using draglines and trucking of material to the
processing plants. The change in mining method has not changed the initial
mine life of 25 years.
Operating Model
The 2023 PFS envisaged mining would take place on a contractor basis.
During the OPFS, Sovereign undertook a trade-off analysis between the
following operating options:
· Fully owner-operated mine with draglines and trucks purchased by the
owner
· Owner-operated mine with draglines and trucks leased by the owner
· Mining contractor operation using excavators and trucks
Due to the preference for draglines and maintaining flexibility, an
owner-operated mine with leased equipment is selected as the preferred
operating model.
Plant Configuration
Dry mining Kasiya means the material received at the plant is not pre-wet and
pre-scrubbed. Therefore, the OPFS proposes a process plant front end
consisting of two scrubbers and two oversize screens per 12Mt plant. No
further changes are proposed to the processing plant flowsheet.
Plant Location
Per the 2023 PFS, mining would commence in the southern area of the Kasiya
deposit, ramping up to 12Mt per annum and then scaling up to 24Mt per annum in
Year 5 by constructing a second plant module in the same area, reaching
nameplate capacity by the end of the year.
In Year 10 of production, another new 12Mt per annum plant module would be
built and commissioned in the northern area of Kasiya, supported by the
relocation to the north of one of the southern plants to maintain a steady
state of 24Mt per annum.
However, the OPFS has determined the most efficient plant locations to be an
initial 12Mtpa South Kasiya plant followed by the construction of another
12Mtpa North Kasiya plant in year 5 of production, negating any relocation
requirements in later years.
The OPFS maintains the ROM schedule with operations commencing with 12Mt per
annum of throughput during the first four years of production (Stage 1) and
expanding to 24Mt per annum in year 5, with full capacity reached by end of
year 5 (Stage 2).
Tailings Management
Per the PFS, a conventional process would be used to produce rutile and
graphite concentrate with tailings in separate sand and fines streams being
pumped to a conventional TSF. Mined out pit areas would be backfilled as part
of a rehabilitation process.
The OPFS proposes maximising backfilling of pits as undertaken during the
Pilot Phase and the introduction of mud farming on the TSF to accelerate
dewatering. This approach has reduced tailings volumes in the TSF by 44% from
187 Mm³ to 105 Mm³.
Mud farming is a technique used by Rio Tinto at operations such as its
100%-owned Weipa bauxite operations in Queensland, Australia, which has been
in production since 1963 and produced 35.1Mt of bauxite in 2023.
Water Management
The PFS proposed that the primary water supply for the Kasiya mining complex
would be created by building a dam and collecting run-off water from the
greater catchment area. Following the introduction of dry mining and mud
farming, the size of the water dam proposed in the PFS has been significantly
reduced, with less process water required and more process water recovered.
The OPFS mining trials and material deposition tests indicated a water demand
of 10.2 Mm³ per annum, almost a 40% decrease in water requirement from the
PFS (16.7 Mm³). The effect on the raw water dam wall could be a reduction in
volume from 0.79 Mm³ to 0.57 Mm³ and a reduction in dam wall height from 20
metres to 17 metres.
Power
The 2023 PFS envisaged a hybrid hydro-generated grid power plus solar power
system solution.
The Malawi grid reliability has improved since completion of the PFS and is
expected to further improve considerably with the commissioning of the
country's first HV transmission interconnector to Mozambique in Q2 2025.
This will provide the Project with sufficient power and therefore the OPFS
proposes to connect the Project's power system to the hydro-sourced grid
network only. This mitigates any risks associated with commissioning a new
solar power project and reducing the overall power tariff by eliminating the
need for an Independent Power Producer as per the 2023 PFS.
Figure 1: Pilot Phase test pit during mining trials (left) and subsequently
backfilled (right)
OPTIMISATION MAINTAINS KASIYA'S GLOBAL LEADER POTENTIAL
Kasiya, located in central Malawi, is the world's largest known natural rutile
deposit and second-largest flake graphite deposit.
Natural Rutile is the purest, highest-grade form of naturally occurring
titanium feedstock.
Natural Graphite is required for various technological and industrial
applications.
Both titanium and graphite have been designated "Critical Minerals" by the USA
and the EU. In December 2024, NATO designated both titanium and graphite as
defence-critical, strategic minerals essential for the Allied defence
industry.
Over the 25-year LOM, Kasiya is set to produce an average of 222kt of natural
rutile and 233kt of natural flake graphite per annum. At steady state
throughput of 24 million tonnes of ore per annum the Project is anticipated to
produce approximately 246kt of natural rutile and 265kt of natural graphite
per annum, positioning Sovereign as potentially the world's largest producer
of natural rutile and natural flake graphite.
Further, the depletion of rutile reserves at Lenoil Company Limited's Area 1
Mine(1) in the coming 2-3 years and the recent cessation of mining activities
at Energy Fuels Inc.'s Kwale Operations(2) in Kenya means that Sovereign could
potentially become the world's only primary natural rutile producer of scale
(see Appendix 2).
The incremental cost of producing a tonne of graphite from Kasiya under the
OPFS is US$241/t(3). Based on public disclosures by listed graphite companies
that have undertaken project studies up to a pre-feasibility stage or later,
an incremental graphite cost of production of US$241/t would make Sovereign
the world's lowest-cost graphite producer outside of China (see Appendix 3).
The rutile-graphite-rich mineralisation will be extracted from surface and
trucked to the process plant front end to scrub and screen ROM before it
enters a Wet Concentration Plant (WCP) where a low-energy requirement,
chemical-free process using gravity spirals produces a Heavy Mineral
Concentrate (HMC). The HMC is transferred to the dry Mineral Separation Plant
(MSP) where premium quality rutile (+95% TiO(2)) is produced via electrostatic
and magnetic separation.
The high quality Kasiya rutile product will be amenable for use in high-end
titanium products including aerospace and defence applications.
Graphite rich concentrate is collected from the gravity spirals and processed
in a separate graphite flotation plant, producing a high purity, high
crystallinity and high value coarse-flake graphite product.
(1) In 2024, the previous owner of the Area 1 Mine, Sierra Rutlie Limited, was
acquired by Lenoil Company Limited, a private company based in Sierra Leone.
(2) In 2024, the previous owner of the Kwale Operations, Base Resources
Limited was acquired by Energy Fuels Inc., a US-based uranium and critical
minerals company.
3 Incremental cost of graphite production is calculated with the following
costs attributed to rutile production: all mining costs, all G&A, all
material handling costs except for graphitic fines reclamation and graphite
concentrate transport, and approximately half of total processing costs.
Incremental cost of graphite production therefore includes only those costs
incurred on top of primary rutile production to produce an incremental tonne
from the process plant and transport the graphite to market. Unit cost of
rutile production under this scenario would be US$628/t (FOB Nacala)).
Kasiya's graphite has been confirmed to produce outstanding anode materials
suitable for battery production as well as demonstrating suitability for
traditional industrial uses such as the production of refractory materials.
The Project has excellent surrounding infrastructure including sealed roads, a
high-quality rail line connecting to the deep-water port of Nacala on the
Indian Ocean and hydro-sourced grid power. For the duration of the
operation, Kasiya's highly sought-after rutile and graphite products will be
railed directly from a purpose-built rail dry port at the mine site eastward
via the Nacala Logistics Corridor (NLC) to the port of Nacala. The southern
port of Beira, connecting Kasiya via the recently refurbished Sena Rail Line,
offers a secondary export route.
Enquiries
Frank Eagar, Managing Director & CEO Sapan Ghai, CCO
South Africa / Malawi London
+27 21 065 1890 +44 207 478 3900
Nominated Adviser on AIM and Joint Broker
SP Angel Corporate Finance LLP +44 20 3470 0470
Ewan Leggat
Charlie Bouverat
Joint Brokers
Stifel +44 20 7710 7600
Varun Talwar
Ashton Clanfield
Berenberg +44 20 3207 7800
Matthew Armitt
Jennifer Lee
Buchanan + 44 20 7466 5000
DISCLOSURES & DISCLAIMERS
Competent Person Statements
The information in this announcement that relates to Production Targets and
Ore Reserves is based on and fairly represents information provided by Mr
Frikkie Fourie, a Competent Person, who is an Associate Member of The South
African Institute of Mining and Metallurgy and a Registered Professional
Engineer with the Engineering Council of South Africa, a Recognised
Professional Organisation' (RPO) included in a list promulgated by ASX from
time to time. Mr Fourie is employed by Moletech Consulting Pty Ltd, an
independent consulting company. Mr Fourie has sufficient experience, which is
relevant to the style of mineralisation and type of deposit under
consideration, and to the to the activities undertaken, to qualify as a
Competent Person as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr
Fourie consents to the inclusion in the Announcement of the matters based on
his information in the form and context in which it appears.
The information in this announcement that relates to Infrastructure, Capital
and Operating Costs and process engineering fairly represents information
compiled or reviewed by Mr James Gemmel, a Competent Person, who is a who is a
Registered Professional Engineer with the Engineering Council of South Africa,
a RPO included in a list promulgated by ASX from time to time. Mr Gemmel is
employed by DRA Limited, an independent consulting company. Mr Gemmal has
sufficient experience, which is relevant to the style of mineralisation and
type of deposit under consideration, and to the activities undertaken, to
qualify as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves'. Mr Gemmel consents to the inclusion in the Announcement of the
matters based on his information in the form and context in which it appears.
The information in this announcement that relates to Metallurgy - rutile and
graphite is extracted from announcements dated 28 September 2023, 8 May 2024,
15 May 2024 and 4 September 2024, which are available to view at
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 original announcement; b) all material assumptions included in the
original 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 the Mineral Resource
Estimate is extracted from Sovereign's 2024 Annual Report and is based on, and
fairly represents information compiled by Mr Richard Stockwell, a Competent
Person, who is a fellow of the Australian Institute of Geoscientists (AIG). Mr
Stockwell is a principal of Placer Consulting Pty Ltd, an independent
consulting company. Sovereign confirms that a) it is not aware of any new
information or data that materially affects the information included in the
original announcement; b) all material assumptions included in the 2024 Annual
Report continue to apply and have not materially changed; and c) the form and
context in which the relevant Competent Persons' findings are presented in
2024 Annual Report have not been materially changed from the disclosure in the
2024 Annual Report.
Qualified Person
Information disclosed in this announcement has been reviewed by Dr Julian
Stephens (B.Sc (Hons), PhD, MAIG), Director, a Qualified Person for the
purposes of the AIM Rules for Companies.
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.
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.
To view this announcement in full, including the summary section of the OPFS
and all images and figures, please refer to
https://api.investi.com.au/api/announcements/svm/3b41394f-65e.pdf
(https://api.investi.com.au/api/announcements/svm/3b41394f-65e.pdf) .
SUMMARY OF MATERIAL ASSUMPTIONS
Material assumptions used in the estimation of the production target and
associated financial information are set out in the following table.
TABLE 13: ASSUMPTIONS
Assumption Inputs
Maximum accuracy variation - Capital costs -20%/+25%
Maximum accuracy variation - Operating costs -20%/+25%
Minimum Life of Mine 25 years
Annual average throughput (tonnes) - Stage 1 12,000,000
Annual average throughput (tonnes) - Stage 2 24,000,000
Head grade - rutile 1.03%
Recovery - rutile 100%
Product grade (TiO(2)) - rutile 96%
Head grade - graphite 1.66%
Recovery - graphite 67.5%
Product grade (TGC) - graphite 96%
Annual production (average LoM) - rutile (tonnes) 222,000
Annual production (average LoM) - graphite (tonnes) 233,000
Sales Price - rutile (average LoM) US$1,490/t
Sales Price - graphite (average LoM) US$1,290/t
Government Royalty 5% of gross revenue
Vendor Royalty 2% of gross profit
Community Development Fund 0.45% of gross revenue
Stage 1 Capital (12Mtpa South Plant) US$665m
Stage 2 Capital (12Mtpa North Plant) US$462m
Sustaining Capital US$397m
Operating Costs excluding royalties (LoM) - FOB Nacala US$423/t
Operating Costs including royalties (LoM) - FOB Nacala US$493/t
Discount Rate 8%
ORE RESERVE STATEMENT
As part of the PFS, an initial Probable Ore Reserve of 538Mt was declared at
Kasiya, in accordance with the guidelines of the JORC Code 2012.
As part of the OPFS, a review of the Ore Reserve was completed, taking into
account the optimised sections of the OPFS including mining method, operating
model, plant configuration and locations, capital and operating costs, and
updated financial model. The findings and learning during the Pilot Phase were
also considered. As a result of this review, the Ore Reserve at Kasiya remains
unchanged.
The current Kasiya MRE was used as the basis for the OPFS Ore Reserve
estimate. Mineral Resources were converted to Ore Reserves in line with the
material classifications which reflect the level of confidence within the
resource estimate. The Ore Reserve reflects that portion of the Mineral
Resource which can be economically extracted by open pits utilising dry mining
methodologies. The Ore Reserve considers the Modifying Factors and other
parameters detailed in the relevant sections of the OPFS report, including but
not limited to the mining, metallurgical, social, environmental, approvals,
tenure, statutory and financial aspects of the Project.
In line with the JORC 2012 guidelines, the Kasiya Probable Ore Reserve is
based on Indicated classified Mineral Resources. There is no Measured
classified Mineral Resource at Kasiya and consequently no Proved Ore Reserve.
The reported MRE is inclusive of the Ore Reserve.
The Ore Reserve includes an allowance for mining dilution and ore loss on the
basis that all material within the shell is classified and extracted as ore.
The open pit geometries developed for the purposes of mine planning, and which
define the subsequent Ore Reserve, are based on Whittle pit shells edited to
comply with practical mining requirements and identified exclusion zones.
The information that relates to Ore Reserves for the OPFS was reviewed and
compiled by Mr Frikkie Fourie who takes overall responsibility for the Ore
Reserve as Competent Person (see Competent Persons Statement above). Mr Fourie
is Associate Member of The South African Institute of Mining and Metallurgy
and a Registered Professional Engineer with the Engineering Council of South
Africa, and has sufficient experience, which is relevant to the style of
mineralisation and type of deposit under consideration, and to the activity he
is undertaking, to qualify as Competent Person in terms of the JORC (2012
Edition).
A site visit has been undertaken by Mr Fourie who also oversaw excavation of
the trial mining pit as part of the Pilot Phase.
The Ore Reserve estimate is summarised in Table 14 below, along with the
associated cut-off grade used to define the shell.
Table 14: Ore Reserve for the Kasiya Deposit
Classification Tonnes Rutile Contained Rutile Graphite Grade Contained Graphite
(Mt) Grade (Mt) (TGC, %) (Mt)
(%)
Proved - - - - -
Probable 538 1.03% 5.5 1.66% 8.9
Total 538 1.03% 5.5 1.66% 8.9
Pit Optimisation
An open pit optimisation utilising Whittle™ software was carried out on the
Kasiya deposit using Indicated Mineral Resources only (in line with the JORC
2012 guidelines). The latest parameters available were used to determine the
economic extent of the open pit excavation. The process plant production
parameters were supplied by Sovereign with an initial rate of 12Mtpa and a
ramp up in production in year 5 to annual rate of 24Mtpa by the beginning of
year 6.
Whilst dry mining lends itself to a selective mining approach, the basis of
the OPFS is a bulk mining operation and therefore, all material within the
"shell" will be extracted and fed to the plant as ore and any interstitial
waste and/or sub-economic grade material will be likewise treated as diluent
material. However, due to the relatively homogenous and continuous nature the
orebody, the quantities of this material will be relatively small and
therefore a simple 5% dilution was applied within the Whittle™ tool to
approximate this assumption.
For the production schedule on which the Ore Reserve is based all material
within the shell was treated as "ore" to ensure the appropriate dilution was
captured.
Mineable Pit Geometries
Based on the cut-off grades applied the mining areas was further interrogated
to determine the potential recoverable mining inventory. The interrogation
process applied the following constraints to determine the bulk mining
boundaries:
· A minimum depth of 5m.
· Pit extents limited to mineable areas and to remain outside of
identified exclusion areas wherever reasonably possible. Sovereign identified
all local village areas and areas of cultural or environmental significance
within the potential mining envelope that should not be disturbed during the
mining phase of the Project.
MODIFYING FACTORS
The Modifying Factors included in the JORC Code (2012) have been assessed as
part of the Optimised Pre-Feasibility Study (OPFS), including mining,
processing, metallurgical, infrastructure, economic, marketing, legal,
environmental, social and government factors. The Company has received advice
from appropriate experts when assessing each Modifying Factor.
A summary assessment of each relevant Modifying Factor is provided below.
Mining - refer to section entitled 'Mining' in the Announcement.
For The OPFS, the Company engaged independent consultants, DRA Limited, Fraser
Alexander and Moletech to carry out and determine the pit optimisations, mine
design, scheduling, mining cost estimation, updated production schedules and
Ore Reserves.
During the second half of 2024, trial mining was successfully completed as
part of Pilot Phase at Kasiya. As part of the Pilot Phase, a dry mining trial
confirmed Kasiya can be efficiently mined to depth using standard mobile
excavators and trucks. Following completion and results of the Pilot Phase and
dry mining trial, the proposed mining method for the Study is dry mining using
draglines. The Pilot Phase provided significant insight and real mining data
as the test pit, which was excavated using conventional dry mining techniques
and a simple mobile excavator fleet, covered an area of 120 metres by 110
metres, was mined to a depth of 20 metres through the weathered ore at Kasiya.
Dry mining is considered appropriate, safe, low-risk and operationally
flexible for this style of shallow, soft and friable saprolite-hosted rutile
and graphite mineralisation. Dry mining is used across numerous at-surface
mining operations globally and is well suited for the Kasiya style of
mineralisation, as evidenced in the Pilot Phase dry mining trial.
Metallurgy and Processing - refer to section entitled 'Processing and
Metallurgy' in the Announcement.
Rutile
The Company completed bulk rutile testwork programs at the globally recognised
AML in Perth, Australia. Testwork programs are supervised by Sovereign's Head
of Development, Paul Marcos. Mr Marcos is a metallurgist and process engineer
and a mineral sands industry veteran. Bulk test-work programs have confirmed
premium grade rutile can be produced via a simple and conventional process
flow sheet.
All the Rutile metallurgical and processing design and performance assumptions
of the PFS were carried through to the OPFS and remained unchanged.
Processing engineering was completed by DRA Limited who developed the process
plant design and associated cost estimate for the OPFS. An average product
grade of 95% TiO(2) and 100% recovery to product factor has been applied.
Graphite
The Company has conducted graphite testwork across ALS Laboratory in Perth,
SGS Lakefield in Canada and ProGraphite GmbH in Germany.
DRA's Senior Engineer, Stewart Calder and Manager Metallurgy, John Fleay
supervised and advised on sample selection, testwork scope and results from
the latest testwork programs. Both consultants are considered to have the
appropriate capabilities and similarities with the material and the early
stage of the project.
Processing engineering was completed by DRA Limited who developed the process
plant design and associated cost estimates for the PFS. Overall average
graphite recovery applied in the model was 67.5%. Gravity recovery ranges
between 73.6% to 86.2%, averaging 77.9% and flotation plant recovery ranges
between 89.2% and 96.1%, averaging 91.4%. Total Graphite (TGC) recovery
average is 72.5%. Overall concentrate grades average 96% C(t) with over 57% of
the graphite flake product being larger than 180µm.
All the graphite metallurgical and processing design and performance
assumptions of the PFS were carried through to the OPFS and remained
unchanged.
Rutile & Graphite
It is acknowledged that laboratory scale test-work will not always represent
actual results achieved from a production plant in terms of grade, chemistry,
sizing and recovery. Further test-work will be required to gain additional
confidence on specifications and recoveries that will be achieved at
full-scale production.
Overall, the process flow-sheet is conventional for both rutile and graphite
with no novel features or equipment incorporated.
Infrastructure - refer to sections entitled 'Infrastructure', and 'Transport
and Logistics' in the Announcement.
The indicated resource for the Kasiya Rutile Project is immediately
proximate to the township of Kasiya, which is approximately 30 km to the
northwest of Lilongwe (direct line) and about 45 km by existing roads. The
proximity to Lilongwe gives the project a number of benefits, including access
to a large pool of professionals and skilled tradespeople, as well as
industrial services.
Logistics cost estimates, including rail and port infrastructure and handling,
were provided by Thelo DB, Nacala Logistics and Grindrod based on market data,
suppliers' quotations, industry databases, industry contacts and consultants'
existing knowledge of southern African transport infrastructure and freight
markets. All consultants are independent with substantial experience in the
management of transport logistics studies in southern Africa.
Marketing - refer to sections entitled 'Rutile Market' and Graphite Market' in
the Announcement.
Rutile
During the PFS, the Company engaged TZMI to provide a bespoke marketing report
to support the PFS and engaged them again for the OPFS to update the rutile
price. TZMI is a global, independent consulting and publishing company which
specialises in technical, strategic and commercial analyses of the opaque
(non-terminal market) mineral, chemical and metal sectors.
TZMI's assessment has confirmed that global demand and supply forecasts for
natural rutile, and with reference to the specific attributes of Kasiya, there
is a reasonable expectation that the product will be able to be sold into
existing and future rutile markets.
Since July 2023, leading global mining company Rio Tinto has made an
investment in Sovereign for A$60 million resulting in a shareholding of 19.9%.
Rio Tinto is a global leader in titanium feedstock production and is set to
produce 1.0 to 1.2 Mt of TiO(2) products in 2025 according to company
guidance, giving it a 14% market share.
Under an Investment Agreement, Rio Tinto has been providing assistance and
advice on technical and marketing aspects of Kasiya as part of the
Sovereign-Rio Tinto technical committee. Also, included under the Investment
Agreement, Rio Tinto has the option to become the operator of Kasiya on
commercial arm's-length terms.
In the event, Rio Tinto elects to become the operator of Kasiya, and for so
long as Rio Tinto remain the operator, Rio Tinto shall have exclusive
marketing rights to 40% of the annual production of all products from the
Project as identified in the DFS on arm's-length terms.
Rio Tinto's option over operatorship and 40% marketing rights lapse if not
exercised by the earlier of (i) 90 days after the Company announces its DFS
results or 180 days after the announcement of the DFS if Rio Tinto's advises
it needs additional time to consider the exercise of its option to become
operator or (ii) Rio Tinto ceasing to hold voting power in the Company of at
least 10%.
Graphite
The Company engaged Fastmarkets, a specialist international publisher and
information provider for the global steel, non-ferrous and industrial minerals
markets, to prepare a marketing report for graphite.
Fastmarkets' assessment has confirmed that global demand and supply forecasts
for natural flake graphite, and with reference to the specific attributes of
Sovereign's project, there is a reasonable expectation that the product from
Sovereign's Kasiya project will be able to be sold into existing and future
graphite markets. Given the extremely low-cost profile and high-quality
product, it is expected that output from Kasiya will be able to fill new
demand or substitute existing lower quality / higher cost supply.
Project considerations taken by Fastmarkets in forming an opinion about the
marketability of product include:
· Low capital costs (incremental)
· Low operating costs
· High quality concentrate specifications
Industry participants confirm that the highest value graphite concentrates
remain the large, jumbo and super-jumbo flake fractions, primarily used in
industrial applications such as refractories, foundries and expandable
products. These sectors currently make up the significant majority of total
global natural flake graphite market by value.
Fastmarkets have formed their opinion based solely upon project information
provided by Sovereign Metals to Fastmarkets and have not conducted any
independent analysis or due diligence on the information provided.
As noted above, Rio Tinto have made a A$60 million investment in Sovereign and
own 19.9% of the Company. Since 2023, Sovereign and Rio Tinto have been
working together to qualify Kasiya's graphite product with a particular focus
on supplying the spherical purified graphite segment of the lithium-ion
battery anode market. Rio Tinto has set up a battery materials business in
2021, including its announced plans to set up a battery testing plant in
Melbourne, Australia.
In September 2024, Sovereign announced an update on the downstream testwork
which demonstrated that Coated Spherical Purified Graphite (CSPG) produced
from Kasiya natural flake graphite has performance characteristics comparable
to the leading Chinese natural graphite anode materials manufacturers such as
BTR New Material Group (BTR). Electrochemical testing of the CSPG samples at a
leading German institute achieved first cycle efficiencies (FCE) of 94.2% to
95.8%, with results above 95%, a key specification for highest quality natural
graphite anode materials under the Chinese standard.
BTR has a 20-year track record in the production of lithium-ion battery anode
materials, is a dominant player in the market and has recently concluded anode
material offtake agreements with global automotive companies including Ford.
BTR's highest specification CSPG materials, that have low swelling, long cycle
life, good processability and outstanding electrochemical performance include
their GSN17 and LSG17 products (with D50 of 17.0+/- 1.5μm).
Economic - also refer to sections entitled 'Cost Estimations' and 'Financial
& Economic Analysis' in the Announcement.
Capital estimates for the process plant have been prepared by PCC, together
with input from DRA Limited, the Company and other contributing consultants
using combinations of cost estimates from suppliers, historical data,
benchmarks and other independent sources. The accuracy of the initial capital
cost estimate for the Project is -20%/+25%.
Capital costs include the cost of all services, direct costs, contractor
indirects, EPCM expenses, non-process infrastructure, sustaining capital and
other facilities used for the mine. Capital costs make provision for
mitigation expenses and mine closure and environmental costs.
Working capital requirements (including contingency) for plant commissioning
and full ramp-up have been included in the headline capital estimate reported
under construction, owner's and start-up costs.
Mining costs have been estimated by DRA GIobal, an independent Mining EPCM and
Engineering consulting company. Mining costs have been built up from first
principles based on equipment, vendor, and contractor quotations, local unit
cost rates, and benchmarked costs.
Labor costs have been developed based on a first-principles build-up of
staffing requirements with labour rates benchmarked in Malawi and expatriate
rates benchmarked for professionals from South Africa and other jurisdictions.
A Government royalty of 5% (applied to revenue) and a vendor profit share of
2% (applied to gross profit) have been included in all project economics. A
0.45% royalty (applied to revenue) has been applied for the community
development fund.
Rehabilitation and mine closure costs are included within the reported capital
and operating cost figures.
A detailed financial model and discounted cash flow (DCF) analysis has been
built and prepared by an independent specialist mining financial modelling
firm, Practara (Practara), using inputs from various expert consultants in
order to demonstrate the economic viability of the Project. The financial
model and DCF were modelled with conservative inputs to provide management
with a baseline valuation of the Project.
The DCF analysis demonstrated compelling economics of the prospective Project,
with an NPV (ungeared, pre-tax, at an 8% discount rate) of US$2,322 million,
and an (ungeared) IRR of 27%.
Sensitivity analysis was performed on all key assumptions used. The robust
project economics insulate the Kasiya Project from variation in market
pricing, capital expense, or operating expenses. With both rutile and graphite
concentrate prices simultaneously 25% lower than the OPFS prices, the Project
still displays a positive NPV (ungeared, pre-tax, 8% discount rate) of
US$1,079 million and pre-tax IRR of 18%.
Sovereign estimates the total capital cost to construct the mine to be US$665m
(which includes a contingency of 16% of direct and indirect costs).
Key parameters are disclosed in the body of the announcement, and include:
· Life of Mine: 25 years
· Discount rate: 8%
· Royalty rate: 5% royalty (Government), 2% of gross profit
(Original Project Vendor) and 0.45% Community Development Fund.
· Pricing: Rutile average price of US$1,490 per tonne and
Graphite average basket price of US$1,290 per tonne
There is uncertainty in the tax law applicable to mining companies in Malawi.
The 2023 PFS assumed a 30% corporate income tax rate and a resource rent tax
(RRT) equating to 15% of post-tax profits.
In 2024, mining companies Lotus and Mkango entered into fiscal stability
agreements known as MDA with the Government of Malawi. In both the Lotus and
Mkango MDAs, it was agreed that no RRT shall be payable until such time that
the Government of Malawi completed a review of the relevant legislation. As
such, and until such time Sovereign has sight of what actual fiscal terms
would apply to the Kasiya Project, results for the OPFS have been reported on
a pre-tax basis only.
Applying a 30% corporate income tax rate and a range of RRT from 15% to 0%
would result in post-tax NPV at an 8% discount rate of US$1,284 million to
US1,557 million.
The financial model has been built and prepared by Practara using inputs from
the various expert consultants and has been reviewed by SP Angel Corporate
Finance LLP, the Company's Nominated Advisor and Corporate Broker as defined
by the AIM Rules for Companies set out by the London Stock Exchange, to
validate the functionality and accuracy of the model.
The Company engaged the services of advisory firm, Argonaut PCF Limited
(Argonaut), with regards to project economics. Argonaut is a financial
advisory firm that offers full-service advisory, stockbroking and research,
which specialises in the resources sector. Argonaut is well regarded as a
specialist capital markets service provider and has raised project development
funding for companies across a range of commodities including the industrial
and speciality minerals sector.
Following the assessment of a number of key criteria, Argonaut has confirmed
that, on the basis of continued support from Rio Tinto, that a DFS arrives at
a result that is not materially negatively different than the OPFS, all
in-country government and regulatory approvals are received, commercial
offtake agreements are in place for the majority of rutile and graphite
production for at least the first five years of mine life, and that there has
not been any material adverse change in financial condition, results of
operations, or business prospects of the Company, or any material adverse
changes in global financial markets in general, Sovereign should be able to
secure necessary financing for the development of the Project.
Since July 2023, leading global mining company Rio Tinto has made an
investment in Sovereign for A$60 million resulting in a shareholding of 19.9%.
The investment proceeds are being used to advance Kasiya and represent a
significant step towards unlocking the Project as a major new supplier of
natural rutile and flake graphite. Under the Investment Agreement with Rio
Tinto, it has been agreed with Rio Tinto that if Sovereign is raising debt
finance for the development of the Project, Sovereign and Rio Tinto will
negotiate, in good faith, financing arrangements in order to put in place an
acceptable mine construction funding package. Further, Rio Tinto has a right
of first refusal on equity raisings that if the Company undertakes equity
raisings (other than pursuant to a pro rata entitlement offer), Rio Tinto has
a right to be consulted and a right of first refusal to participate in the
equity raisings up to a level where Rio Tinto's aggregate voting power does
not exceed 19.9%.
Since initial exploration of the Kasiya Project in November 2019, the Company
has completed extensive drilling, sampling, metallurgical test-work,
geological modelling and defined an Indicated and Inferred Mineral Resource
Estimate which was converted to Ore Reserves as part of the September 2023 PFS
and underpins this OPFS. Over this period, with these key milestones being
attained and the Project de-risked, the Company's market capitalisation has
increased from approximately A$18m to over A$450m. As the Project continues to
achieve key milestones, which can also be significant de-risking events, the
Company's share price could be anticipated to increase.
The Company has an uncomplicated, clean corporate and capital structure, is
debt free and is in a strong financial position, with approximately A$34
million cash on hand (31 December 2024(unaudited)). The current financial
position means the Company is soundly funded to continue into a DFS phase to
further develop and de-risk the Project.
The Company's shares are listed on the ASX and AIM which are premier markets
for growth companies and provide increased access to capital from
institutional and retail investors in Australia and the UK. The Company's
shares are also quoted on the OTCQX and Frankfurt Stock Exchange.
Sovereign has a strong track record of successfully raising equity funds for
Kasiya plus it has an experienced and high-quality Board and management team
comprising highly respected resource executives with extensive technical,
financial, commercial and capital markets experience. The directors have
previously raised more than A$2.5 billion from capital markets for a number of
exploration and development companies.
As a result, the Board has a high level of confidence that the Project will be
able to secure funding in due course, having particular regard to:
1. Required capital expenditure;
2. Sovereign's strategic partner relationship with Rio Tinto;
3. Sovereign's market capitalisation;
4. Recent funding activities by directors in respect of other
resource projects;
5. Recently completed funding arrangements;
6. The range of potential funding options available;
7. The favourable key metrics generated by the Kasiya Project;
8. Ongoing discussions for potential offtake agreements;
9. Investor interest to date;
10. the Company owns 100% of Kasiya which is highly attractive to
potential financiers;
11. the OPFS demonstrates that the Project is commercially viable
and provides justification to progress to DFS stage.
Environmental, Social, Legal and Governmental - refer to section entitled
'Environmental and Social Impact' in the Announcement.
Sovereign is committed to conduct its activities in full compliance to the
requirements of national regulations, its obligations under international
conventions and treaties and giving due consideration to international best
practices and policies. The Company has appointed an experienced environmental
consultant to manage the ESIA process, and environmental and social baseline
studies have commenced with appropriately qualified independent experts.
The Company has also completed a high-level risk assessment to identify major
environmental and social risks which could affect the development of the
Project, along with mitigating strategies to allow identified risks to be
addressed early in the project design phase.
The Company has embarked on several community engagement exercises in the area
and there is a general positive acceptance of the Project. Social
responsibility/RAP costs totalling US$97m have been included in this OPFS, as
well as a 0.45% revenue royalty for the community development fund.
Based on the current assessments and commenced ESIA, the Company believes
there are no environmental issues currently identified that cannot be
appropriately mitigated in accordance with standard practices adopted for the
development of mining projects.
Subject to further positive technical studies, Sovereign intends to apply for
a Mining Licence (ML) to secure mineral deposits for mining. Under the Mines
Act there are certain requirements, milestones and approvals required prior to
submission of a ML application. At this point of Kasiya's development, the
Company notes no known issues or impediments obtaining a ML under normal
course of business.
Under the Mines and Minerals Act (2023)(Mines Act), the Government of Malawi
has a right to equity ownership for large-scale mining licences (>5Mt mined
per annum or >US$250m Capex) with the right a negotiation matter, likely as
part of any future MDA. The Mkango and Lotus MDAs included a 10% non-diluting
equity interest to the Malawi Government.
In a Press Release issued on 20 July 2023, the Government of Malawi publicly
applauded the timely investment by Rio Tinto and marked it as a milestone
towards realising the country's aspirations of growing the mining industry as
promoted in the Malawi Vision 2063, which identifies mining as a priority
industry. The Malawi Mines department has also set up a technical working
group, with resources dedicated to the Kasiya Project to ensure its continual
progress and development.
The Government's statement and actions confirms its commitment to ensuring the
growth of the mining sector through deliberate initiatives aiming at
establishing a conducive investment environment in the sector.
Following successful completion of the mining trials stage at the Pilot Phase,
the test pit mined at Kasiya has been successfully backfilled which has
allowed Sovereign to commence with on-site soil remediation and land
rehabilitation activities, testing our proposed rehabilitation approach and
demonstrating that the mined land can support sustainable farming
post-closure.
During the Pilot Phase mining trials, 170,000m(3) was mined using a
conventional excavator fleet. The fleet was then used to place mined material
back into the pit, filling the pit to the original ground level in less than
two months and ahead of schedule.
The rehabilitation approach has been based on agronomic principles, including
promoting sustainable farming practices and providing various end-land uses.
Rehabilitation is underway through a five-step process:
Step 1: Introduce Lime
The land rehabilitation demonstration commenced with the application and
incorporation of locally sourced dolomitic lime (calcium and
calcium-magnesium-carbonate) to improve naturally low PH levels.
Step 2: Introduce Carbon and Basic Nutrients
Sovereign is augmenting the mined area with organic carbon and basic nutrients
to support post-closure farming. The Company is testing the application of
biochar (to provide carbon) and fertiliser (in the form of potash (MOP),
phosphate (MAP) and a blend of nitrogen, potash, and sulphur (NPK) 15:23:16).
Step 3: Grading, Ripping and Discing
Lime, biochar, and fertiliser are incorporated into the soil through grading,
ripping, and discing using graders and locally sourced farming equipment. This
ensures the land is level and safe and that essential inputs are incorporated
into the soil.
Step 4: Planting of Rehabilitation Crops
In December 2024 and January 2025, Sovereign has planted rehabilitation crops
to maximise the benefit of the coming summer rainfall. Giant bamboo has been
introduced in 4 by 8-metre blocks and will act as the primary crop to enhance
carbon and bioactivity in the remediated soils. To return the land to farmers,
maize and other cover crops will be intercropped between the giant bamboo in
formalised farm blocks.
Step 5: Monitoring and Evaluation
Sovereign will monitor soil remediation, plant growth and crop yields. As part
of stakeholder engagement, the Company will work with local farmers to improve
results through conservation farming, composting operations, testing new seed
varieties and establishing an indigenous, fruit and farming nursery. This will
serve as a live demonstration of rehabilitation and timely return of land to
pre-mining use.
APPENDIX 1 - JORC CODE, 2012 EDITION - TABLE 1
Section 1 - Sampling Techniques and Data
Criteria JORC Code explanation Commentary
Sampling Techniques Nature and quality of sampling (e.g. cut channels, random chips, or specific Hand Auger (HA) samples are composited based on regolith boundaries and sample
specialised industry standard measurement tools appropriate to the minerals chemistry generated by hand-held XRF (pXRF). Each 1m of sample is dried and
under investigation, such as down hole gamma sondes, or handheld XRF riffle-split to generate a total sample weight of 3kg for analysis, generally
instruments, etc). These examples should not be taken as limiting the broad at 2 - 5m intervals. This primary sample is then split again to create a 3kg
meaning of sampling. composite to provide a 1.5kg sample for both rutile and graphite analyses.
Infill Push-Tube (PT) core drilling is sampled routinely at 2m intervals by
compositing dried and riffle-split half core. A consistent, 1.5kg sample is
generated for both the rutile and graphite determination.
Air-Core (AC) samples are composited based on expertly logged regolith
boundaries. Each 1m of sample is dried and riffle-split to generate a total
sample weight of 3kg for analysis, generally at 2m intervals. This primary
sample is then split again to provide a 1.5kg sample for both rutile and
graphite analyses.
Include reference to measures taken to ensure sample representivity and the Drilling and sampling activities are supervised by a suitably qualified
appropriate calibration of any measurement tools or systems used. company geologist who is present at all times. All drill samples are
geologically logged by the geologist at the drill site/core yard.
Each sample is sun dried and homogenised. Sub-samples are carefully riffle
split to ensure representivity. The 1.5kg composite samples are then
processed.
An equivalent mass is taken from each sample to make up the composite. A
calibration schedule is in place for laboratory scales, sieves and field XRF
equipment.
Placer Consulting Pty Ltd (Placer) Resource Geologists have reviewed Standard
Operating Procedures (SOPs) for the collection and processing of drill samples
and found them to be fit for purpose and support the resource classifications
as applied to theMRE. The primary composite sample is considered
representative for this style of rutile mineralisation.
Aspects of the determination of mineralisation that are Material to the Public Logged mineralogy percentages, lithology/regolith information and TiO(2)%
Report. In cases where 'industry standard' work has been done this would be obtained from pXRF are used to assist in determining compositing intervals.
relatively simple (e.g. 'reverse circulation drilling was used to obtain 1 m Care is taken to ensure that only samples with similar geological
samples from which 3 kg was pulverised to produce a 30 g charge for fire characteristics are composited together.
assay'). In other cases more explanation may be required, such as where there
is coarse gold that has inherent sampling problems. Unusual commodities or
mineralisation types (e.g. submarine nodules) may warrant disclosure of
detailed information.
Drilling Techniques Drill type (e.g. core, reverse circulation, open‐hole hammer, rotary air A total of 1,357 HA holes for 12,643m have been drilled to date at the Kasiya
blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or Rutile Deposit to obtain samples for quantitative determination of recoverable
standard tube, depth of diamond tails, face‐sampling bit or other type, rutile and Total Graphitic Carbon (TGC).
whether core is oriented and if so, by what method, etc).
A PT infill drilling programme, designed to support the resource estimate, was
completed. An additional 234 core holes for 2,368.5m were included in the
updated MRE. The total PT holes contributing to the updated MRE are 488 for
4,669m.
A total of 182 AC holes for 4,404m were completed in six locations across the
Kasiya deposit deemed likely to fall into mining pit areas. The results are
included in this updated MRE.
Placer has reviewed SOPs for HA, PT and AC drilling and found them to be fit
for purpose and support the resource classifications as applied to the MRE.
Sample handling and preparation techniques are consistent for PT and coring
samples.
Two similar designs of HA drilling equipment are employed. HA drilling with
75mm diameter enclosed spiral bits (SOS) with 1m long steel rods and with 62mm
diameter open spiral bits (SP) with 1m long steel rods. Drilling is oriented
vertically by eye.
Each 1m of drill sample is collected into separate sample bags and set
aside. The auger bits and flights are cleaned between each metre of sampling
to avoid contamination.
Core-drilling is undertaken using a drop hammer, Dando Terrier MK1. The
drilling generated 1m runs of 83mm PQ core in the first 2m and then
transitioned to 72mm core for the remainder of the hole. Core drilling is
oriented vertically by spirit level.
AC drilling was completed by Thompson Drilling utilising a Smith Capital 10R3H
compact track-mounted drill. The drilling is vertical and generates 1m samples
with care taken in the top metres to ensure good recoveries of the high-grade
surface material. Each 1m sample bag is immediately transported back to
Sovereign's field laydown yard where they await processing.
Drill Sample Recovery Method of recording and assessing core and chip sample recoveries and results Samples are assessed visually for recoveries. The configuration of drilling
assessed. and nature of materials encountered results in negligible sample loss or
contamination.
HA and PT drilling is ceased when recoveries become poor once the water table
has been reached. Water table and recovery information is included in
lithological logs.
Core drilling samples are actively assessed by the driller and geologist
onsite for recoveries and contamination.
AC drilling recovery in the top few metres are moderate to good. Extra care is
taken to ensure sample is recovered best as possible in these metres.
Recoveries are recorded on the rig at the time of drilling by the geologist.
Drilling is ceased when recoveries become poor or once Saprock or refusal has
been reached.
Measures taken to maximise sample recovery and ensure representative nature of The Company's trained geologists supervise drilling on a 1 team 1 geologist
the samples. basis and are responsible for monitoring all aspects of the drilling and
sampling process.
For PT drilling, core is extruded into core trays; slough is actively removed
by the driller at the drilling rig and core recovery and quality is recorded
by the geologist.
AC samples are recovered in large plastic bags. The bags are clearly labelled
and delivered back to sovereign's laydown yard at the end of shift for
processing.
Whether a relationship exists between sample recovery and grade and whether No relationship is believed to exist between grade and sample recovery. The
sample bias may have occurred due to preferential loss/gain of fine/coarse high percentage of silt and absence of hydraulic inflow from groundwater at
material. this deposit results in a sample size that is well within the expected size
range.
No bias related to preferential loss or gain of different materials is
observed.
Logging Whether core and chip samples have been geologically and geotechnically logged Geologically, data is collected in detail, sufficient to aid in Mineral
to a level of detail to support appropriate Mineral Resource estimation mining Resource estimation.
studies and metallurgical studies.
All individual 1m HA intervals are geologically logged, recording relevant
data to a set log-chief template using company codes. A small representative
sample is collected for each 1m interval and placed in appropriately labelled
chip trays for future reference.
All individual 1m PT core intervals are geologically logged, recording
relevant data to a set log-chief template using company codes.
Half core remains in the trays and is securely stored in the company
warehouse.
All individual AC 1-metre intervals are geologically logged, recording
relevant features.
data to a set log-chief template using company codes. A small representative
sample is collected for each 1-metre interval and placed in appropriately
labelled chip trays for future reference.
Whether logging is qualitative or quantitative in nature. Core (or costean, All logging includes lithological features and estimates of basic mineralogy.
channel, etc.) photography. Logging is generally qualitative.
The PT core is photographed dry, after logging and sampling is completed.
The total length and percentage of the relevant intersection logged 100% of samples are geologically logged.
Sub-sampling techniques and sample preparation If core, whether cut or sawn and whether quarter, half or all core taken. Due to the soft nature of the material, core samples are carefully cut in half
by hand tools.
If non-core, whether riffled, tube sampled, rotary split, etc. and whether HA, PT and AC hole samples are dried, riffle split and composited. Samples are
sampled wet or dry. collected and homogenised prior to splitting to ensure sample representivity.
~1.5kg composite samples are processed.
An equivalent mass is taken from each primary sample to make up the composite.
The primary composite sample is considered representative for this style of
mineralisation and is consistent with industry standard practice.
For all sample types, the nature, quality and appropriateness of the sample Techniques for sample preparation are detailed on SOP documents verified by
preparation technique. Placer Resource Geologists.
Sample preparation is recorded on a standard flow sheet and detailed QA/QC is
undertaken on all samples. Sample preparation techniques and QA/QC protocols
are appropriate for mineral determination and support the resource
classifications as stated.
Quality control procedures adopted for all sub-sampling stages to maximise The sampling equipment is cleaned after each sub-sample is taken.
representivity of samples.
Field duplicate, laboratory replicate and standard sample geostatistical
analysis is employed to manage sample precision and analysis accuracy.
Measures taken to ensure that the sampling is representative of the in situ Sample size analysis is completed to verify sampling accuracy. Field
material collected, including for instance results for field duplicates are collected for precision analysis of riffle splitting. SOPs
duplicate/second-half sampling. consider sample representivity. Results indicate a sufficient level of
precision for the resource classification.
Whether sample sizes are appropriate to the grain size of the material being The sample size is considered appropriate for the material sampled.
sampled.
Quality of assay data and laboratory tests The nature, quality and appropriateness of the assaying and laboratory Rutile
procedures used and whether the technique is considered partial or total.
The Malawi onsite laboratory sample preparation methods are considered
quantitative to the point where a heavy mineral concentrate (HMC) is
generated.
Final results generated are for recovered rutile i.e, the % mass of the sample
that is rutile that can be recovered to the non-magnetic component of a HMC.
Heavy liquid separation (HLS) of the HM is no longer required and a HM result
is not reported in the updated MRE. The HMC prepared via wet-table, gravity
separation at the Lilongwe Laboratory provides an ideal sample for subsequent
magnetic separation and XRF.
All 8,855 samples (not incl. QA) included in the MRE update received the
following workflow undertaken on-site in Malawi;
· Dry sample in oven for 1 hour at 105℃
· Soak in water and lightly agitate
· Wet screen at 5mm, 600µm and 45µm to remove oversize and slimes
material
· Dry +45µm -600mm (sand fraction) in oven for 1 hour at 105℃
7,904 of the 8,855 samples received the following workflow undertaken on-site
in Malawi
· Pass +45µm -600mm (sand fraction) across wet table to generate a
HMC.
· Dry HMC in oven for 30 minutes at 105℃
Bag HMC fraction and send to Perth, Australia for quantitative chemical and
mineralogical determination.
951 of the 8,855 samples received the following workflow undertaken at Perth
based Laboratories (superseded).
· Split ~150g of sand fraction for HLS using Tetrabromoethane (TBE,
SG 2.96g/cc) as the liquid heavy media to generate HMC. Work undertaken at
Diamantina Laboratories.
4,738 of the 8,855 samples received magnetic separation undertaken at Allied
Mineral Laboratories in Perth, Western Australia.
· Magnetic separation of the HMC by Carpco magnet @ 16,800G
(2.9Amps) into a magnetic (M) and non-magnetic (NM) fraction.
4,117 of the 8,855 samples received magnetic separation undertaken on-site in
Malawi.
· Magnetic separation of the HMC by Mineral Technologies Reading
Pilot IRM (Induced Roll Magnetic) @ 16,800G (2.9Amps) into a magnetic (M) and
non-magnetic (NM) fraction.
All 8,855 routine samples received the following chemical analysis in Perth,
Western Australia.
· The routine NM fractions are sent to ALS Metallurgy Perth for
quantitative XRF analysis. Samples receive XRF_MS and are analysed for:
TiO(2,) Al(2)O(3,) CaO, Cr(2)O(3), Fe(2)O(3), K(2)O, MgO, MnO, SiO(2),
V(2)O(5), ZrO(2,) HfO(2.)
Graphite
8,078 graphite samples are processed at Intertek-Genalysis Johannesburg and
Perth via method C72/CSA.
A portion of each test sample is dissolved in dilute hydrochloric acid to
liberate carbonate carbon. The solution is filtered using a filter paper and
the collected residue is the dried to 425°C in a muffle oven to drive off
organic carbon. The dried sample is then combusted in a Carbon/ Sulphur
analyser to yield total graphitic or TGC.
An Eltra CS-800 induction furnace infra-red CS analyser is then used to
determine the remaining carbon which is reported as TGC as a percentage.
For geophysical tools, spectrometers, handheld XRF instruments, etc., the Acceptable levels of accuracy and precision have been established. No pXRF
parameters used in determining the analysis including instrument make and methods are used for quantitative determination.
model, reading times, calibrations factors applied and their derivation, etc.
Nature of quality control procedures adopted (e.g. standards, blanks, Sovereign uses internal and externally sourced wet screening reference
duplicate, external laboratory checks) and whether acceptable levels of material inserted into samples batches at a rate of 1 in 20. The externally
accuracy (i.e. lack of bias) and precision have been established. sourced, certified standard reference material for HM and Slimes assessment is
provided by Placer Consulting.
An external laboratory raw sample duplicate is sent to laboratories in Perth,
Australia as an external check of the full workflow. These duplicates are
produced at a rate of 1 in 20.
Accuracy monitoring is achieved through submission of certified reference
materials (CRM's). ALS and Intertek both use internal CRMs and duplicates on
XRF analyses.
Sovereign also inserts CRMs into the sample batches at a rate of 1 in 20.
Three Rutile CRMs are used by Sovereign and range from 35% - 95% TiO(2).
Three Graphite CRMs are used by Sovereign and range from 3% - 25% TGC.
Analysis of sample duplicates is undertaken by standard geostatistical
methodologies (Scatter, Pair Difference and QQ Plots) to test for bias and to
ensure that sample splitting is representative. Standards determine assay
accuracy performance, monitored on control charts, where failure (beyond 3SD
from the mean) may trigger re-assay of the affected batch.
Examination of the QA/QC sample data indicates satisfactory performance of
field sampling protocols and assay laboratories providing acceptable levels of
precision and accuracy.
Acceptable levels of accuracy and precision are displayed in geostatistical
analyses to support the resource classifications as applied to the estimate.
Verification of sampling & assaying The verification of significant intersections by either independent or Results are reviewed in cross-section using Datamine Studio RM software and
alternative company personnel. any spurious results are investigated. The deposit type and consistency of
mineralisation leaves little room for unexplained variance. Extreme high
grades are not encountered.
The use of twinned holes. Twinned holes are drilled across a geographically dispersed area to determine
short-range geological and assay field variability for the resource
estimation. Twin drilling is applied at a rate of 1 in 20 routine holes.
Twin paired data in all drill methods represent ~4% of the database included
in the updated MRE. Substantial comparative data between different drilling
types and test pit results are also available but not referenced in the MRE.
Documentation of primary data, data entry procedures, data verification, data All data are collected electronically using coded templates and logging
storage (physical and electronic) protocols. software. This data is then imported to a cloud hosted Database and validated
automatically and manually.
A transition to electronic field and laboratory data capture has been
achieved.
Discuss any adjustment to assay data. Assay data adjustments are made to convert laboratory collected weights to
assay field percentages and to account for moisture.
QEMSCAN of the NM fraction shows dominantly clean and liberated rutile grains
and confirms rutile is the only titanium species in the NM fraction.
Recovered rutile is defined and reported here as: TiO(2) recovered in the +45
to -600um range to the NM concentrate fraction as a % of the total primary,
dry, raw sample mass divided by 95% (to represent an approximation of final
product specifications). i.e recoverable rutile within the whole sample.
Location of data points Accuracy and quality of surveys used to locate drill holes (collar and A Trimble R2 Differential GPS is used to pick up the collars. Daily capture at
down-hole surveys), trenches, mine workings and other locations used in a registered reference marker ensures equipment remains in calibration.
Mineral Resource estimation.
No downhole surveying of any holes is completed. Given the vertical nature and
shallow depths of the holes, drill hole deviation is not considered to
significantly affect the downhole location of samples.
Specification of the grid system used. WGS84 UTM Zone 36 South.
Quality and adequacy of topographic control. The digital terrane model (DTM) was generated by wireframing a 20m-by-20m
lidar drone survey point array, commissioned by SVM in March 2022. Major
cultural features were removed from the survey points file prior to generating
the topographical wireframe for resource model construction. The ultra-high
resolution 3D drone aerial survey was executed utilising a RTK GPS equipped
Zenith aircraft with accuracy of <10cm ground sampling distance (GSD).
Post-processing includes the removal of cultural features that do not reflect
material movements (pits, mounds, etc)
The DTM is suitable for the classification of the resources as stated.
Data spacing & distribution Data spacing for reporting of Exploration Results. The HA collars are spaced at nominally 400m along the 400m spaced drill-lines
with the PT holes similarly spaced at an offset, infill grid. The resultant
200m-by-200m drill spacing (to the strike orientation of the deposit) is
deemed to adequately define the mineralisation in the MRE.
The AC collars are spaced on a 200m x 200m grid which is deemed to adequately
define the mineralisation.
The PT twin and density sample holes are selectively placed throughout the
deposit to ensure a broad geographical and lithological spread for the
analysis.
Whether the data spacing and distribution is sufficient to establish the The drill spacing and distribution is considered to be sufficient to establish
degree of geological and grade continuity appropriate for the Mineral Resource a degree of geological and grade continuity appropriate for the Mineral
and Ore Reserve estimation procedure(s) and classifications applied. Resource estimation.
Kriging neighbourhood analysis completed using Supervisor software informs the
optimal drill and sample spacing for the MRE. Based on these results and the
experience of the Competent Person, the data spacing and distribution is
considered adequate for the definition of mineralisation and adequate for
Mineral Resource Estimation.
Whether sample compositing has been applied. Individual 1m auger intervals have been composited, based on lithology, at 2 -
5m sample intervals for the 1,357 HA holes. 488 PT core holes have been
sampled at a regular 2m interval to provide greater control on mineralisation
for the Indicated Resource.
Individual 1m intervals have been composited, based on lithology, at a max 2m
sample interval for the 182 AC holes.
The DH Compositing tool was utilised in Supervisor software to define the
optimal sample compositing length. A 2m interval is applied to the MRE.
Orientation of data in relation to geological structure Whether the orientation of sampling achieves unbiased sampling of possible Sample orientation is vertical and approximately perpendicular to the
structures and the extent to which this is known considering the deposit type orientation of the mineralisation, which results in true thickness estimates,
limited by the sampling interval as applied. Drilling and sampling are carried
out on a regular square grid. There is no apparent bias arising from the
orientation of the drill holes with respect to the orientation of the deposit.
If the relationship between the drilling orientation and the orientation of There is no apparent bias arising from the orientation of the drill holes with
key mineralised structures is considered to have introduced a sampling bias, respect to the orientation of the deposit.
this should be assessed and reported if material.
Sample security The measures taken to ensure sample security Samples are stored in secure storage from the time of drilling, through
gathering, compositing and analysis. The samples are sealed as soon as site
preparation is complete.
A reputable international transport company with shipment tracking enables a
chain of custody to be maintained while the samples move from Malawi to
Australia. Samples are again securely stored once they arrive and are
processed at Australian laboratories. A reputable domestic courier company
manages the movement of samples within Perth, Australia.
At each point of the sample workflow the samples are inspected by a company
representative to monitor sample condition. Each laboratory confirms the
integrity of the samples upon receipt.
Audits or reviews The results of any audits or reviews of sampling techniques and data The CP Richard Stockwell has reviewed and advised on all stages of data
collection, sample processing, QA protocol and Mineral Resource Estimation.
Methods employed are considered industry best-practice.
Perth Laboratory visits have been completed by Mr Stockwell. Field and
in-country lab visits have been completed by Mr Stockwell. A high standard of
operation, procedure and personnel was observed and reported.
Section 2 - Reporting of Exploration Results
Criteria Explanation Commentary
Mineral tenement & land tenure status Type, reference name/number, location and ownership including agreements or The Company owns 100% of the following Exploration Licences (ELs) issued under
material issues with third parties such as joint ventures, partnerships, the 2019 Mines Act, held in the Company's wholly-owned, Malawi-registered
overriding royalties, native title interests, historical sites, wilderness or subsidiaries: EL0609, EL0582, EL0492, EL0528, EL0545, EL0561, EL0657
national park and environment settings. and EL0710.
A 5% royalty is payable to the government upon mining and a 2% of net profit
royalty is payable to the original project vendor.
No significant native vegetation or reserves exist in the area. The region is
intensively cultivated for agricultural crops.
The security of the tenure held at the time of reporting along with any known The tenements are in good standing and no known impediments to exploration or
impediments to obtaining a licence to operate in the area. mining exist.
Exploration done by other parties Acknowledgement and appraisal of exploration by other parties. Sovereign is a first-mover in the discovery and definition of residual rutile
and graphite resources in Malawi. No other parties are, or have been, involved
in exploration.
Geology Deposit type, geological setting and style of mineralisation The rutile deposit type is considered a residual placer formed by the intense
weathering of rutile-rich basement paragneisses and variable enrichment by
elluvial processes.
Rutile occurs in a mostly topographically flat area west of Malawi's capital,
known as the Lilongwe Plain, where a deep tropical weathering profile is
preserved. A typical profile from top to base is generally soil ("SOIL" 0-1m)
ferruginous pedolith ("FERP", 1-4m), mottled zone ("MOTT", 4-7m), pallid
saprolite ("PSAP", 7-9m), saprolite ("SAPL", 9-25m), saprock ("SAPR", 25-35m)
and fresh rock ("FRESH" >35m).
The low-grade graphite mineralisation occurs as multiple bands of graphite
gneisses, hosted within a broader Proterozoic paragneiss package. In the
Kasiya areas specifically, the preserved weathering profile hosts significant
vertical thicknesses, from near surface, of graphite mineralisation.
Drill hole information A summary of all information material to the understanding of the exploration All intercepts relating to the Kasiya Deposit have been included in public
results including a tabulation of the following information for all Material releases during each phase of exploration and in this report. Releases
drill holes: easting and northings of the drill hole collar; elevation or RL included all collar and composite data and these can be viewed on the Company
(Reduced Level-elevation above sea level in metres of the drill hole collar); website.
dip and azimuth of the hole; down hole length and interception depth; and hole
length There are no further drill hole results that are considered material to the
understanding of the exploration results. Identification of the broad zone of
mineralisation is made via multiple intersections of drill holes and to list
them all would not give the reader any further clarification of the
distribution of mineralisation throughout the deposit.
If the exclusion of this information is justified on the basis that the No information has been excluded.
information is not Material and this exclusion does not detract from the
understanding of the report, the Competent Person should clearly explain why
this is the case
Data aggregation methods In reporting Exploration Results, weighting averaging techniques, maximum All results reported are of a length-weighted average of in-situ grades. The
and/or minimum grade truncations (e.g. cutting of high-grades) and cut-off resource is reported at a range of bottom cut-off grades in recognition that
grades are usually Material and should be stated. optimisation and financial assessment is outstanding.
A nominal bottom cut of 0.7% rutile is offered, based on preliminary
assessment of resource product value and anticipated cost of operations.
Where aggregate intercepts incorporate short lengths of high-grade results and No data aggregation was required.
longer lengths of low-grade results, the procedure used for such aggregation
should be stated and some typical examples of such aggregations should be
shown in detail.
The assumptions used for any reporting of metal equivalent values should be Rutile Equivalent (RutEq) - where applicable
clearly stated.
Formula: ((Rutile Grade x Recovery (100%) x Rutile Price (US$1,484/t) +
Graphite Grade x Recovery (67.5%) x Graphite Price (US$1,290/t)) / Rutile
Price (US$1,484/t)).
Commodity Prices:
· Rutile price: US$1,484/t
· Graphite price: US$1,290/t
Metallurgical Recovery to Product:
· Rutile Recovery: 100%
· Graphite Recovery: 67.5%
All assumptions taken from this Study and with discussion and Modifying
Factors included in this document.
Relationship between mineralisation widths & intercept lengths These relationships are particularly important in the reporting of Exploration The mineralisation has been released by weathering of the underlying, layered
Results. gneissic bedrock that broadly trends NE-SW at Kasiya North and N-S at Kasiya
South. It lies in a laterally extensive superficial blanket with high-grade
zones reflecting the broad bedrock strike orientation of ~045° in the North
of Kasiya and 360° in the South of Kasiya.
If the geometry of the mineralisation with respect to the drill hole angle is The mineralisation is laterally extensive where the entire weathering profile
known, its nature should be reported. is preserved and not significantly eroded. Minor removal of the mineralised
profile has occurred in alluvial channels. These areas are adequately defined
by the drilling pattern and topographical control for the resource estimate.
If it is not known and only the down hole lengths are reported, there should Downhole widths approximate true widths limited to the sample intervals
be a clear statement to this effect (e.g. 'down hole length, true width not applied. Mineralisation remains open at depth and in areas coincident with
known'. high-rutile grade lithologies in basement rocks, is increasing with depth.
Graphite results are approximate true width as defined by the sample interval
and typically increase with depth.
Diagrams Appropriate maps and sections (with scales) and tabulations of intercepts Refer to figures in this report and in previous releases. These are accessible
should be included for any significant discovery being reported. These should on the Company's webpage.
include, but not be limited to a plan view of the drill collar locations and
appropriate sectional views.
Balanced reporting Where comprehensive reporting of all Exploration Results is not practicable, All results are included in this report and in previous releases. These are
representative reporting of both low and high-grades and/or widths should be accessible on the Company's webpage.
practiced to avoid misleading reporting of exploration results.
Other substantive exploration data Other exploration data, if meaningful and material, should be reported Limited lateritic duricrust has been variably developed at Kasiya, as is
including (but not limited to: geological observations; geophysical survey customary in tropical highland areas subjected to seasonal wet/dry cycles.
results; geochemical survey results; bulk samples - size and method of Lithological logs record drilling refusal in just under 2% of the HA/PT drill
treatment; metallurgical test results; bulk density, groundwater, geotechnical database. No drilling refusal was recorded above the saprock interface by AC
and rock characteristics; potential deleterious or contaminating substances. drilling.
Slimes (-45 µm) averages 46wt% in the Indicated Resource at a 0.7% rutile
bottom cut. Separation test work conducted at AML demonstrates the success in
applying a contemporary mineral sands flowsheet in treating this material and
achieving excellent rutile recovery.
Sample quality (representivity) is established by geostatistical analysis of
comparable sample intervals.
Several generations of QEMSCAN analysis of the NM performed at ALS Metallurgy
fraction shows dominantly clean and liberated rutile grains and confirms
rutile is the only titanium species in the NM fraction.
Further work The nature and scale of planned further work (e.g. test for lateral extensions Further AC drilling will allow the definition of a more extensive
or depth extensions or large-scale step-out drilling). saprock-interface basement and should continue to deliver additional resources
below the HA/PT-drilled regions.
A greater understanding of the lithological character and extent of those
basement units, where high-grade (>1%) rutile persists at the saprock
interface, may assist in focussing further resource definition and exploration
targeting.
Further metallurgical assessment is suggested to characterise rutile quality
and establish whether any chemical variability is inherent across the deposit.
Trialling drill definition at a 100m spacing is suggested for Measured
Resource assessment.
Diagrams clearly highlighting the areas of possible extensions, including the Refer to diagrams in the body of this report and in previous releases. These
main geological interpretations and future drilling areas, provided this are accessible on the Company's webiste.
information is not commercially sensitive.
Section 3 - Estimation and Reporting of Mineral Resources
Criteria JORC Code explanation Commentary
Database integrity Measures taken to ensure that data has not been corrupted by, for example, Data are manually entered into database tables according to SOPs and
transcription or keying errors, between its initial collection and its use for conforming to company field names and classifications. These are then migrated
Mineral Resource estimation purposes. to Datashed5 cloud-hosted database managed internally by the Company with
validation and quarantine capability. Relevant tables from the database are
exported to csv format and forwarded to Placer for independent review.
Data validation procedures used. Validation of the primary data include checks for overlapping intervals,
missing survey data, missing assay data, missing lithological data, missing
and mis-matched (to Lithology) collars.
Statistical, out-of-range, distribution, error and missing data validation is
completed by Placer on data sets before being compiled into a de-surveyed
drill hole file and interrogated in 3D using Datamine Studio RM software.
All questions relating to the input data are forwarded to the client for
review and resolution prior to resource estimation.
Site visits Comment on any site visits undertaken by the Competent Person and the outcome Perth Laboratory visits have been completed by the Competent Person, Mr
of those visits. Richard Stockwell. Field and in-country lab visits were complete over a 1-week
period in May 2022. A high standard of operation, procedure and personnel was
observed and reported.
If no site visits have been undertaken indicate why this is the case. Not applicable
Geological interpretation Confidence in (or conversely, the uncertainty of) the geological There is a high degree of repeatability and uniformity in the geological
interpretation of the mineral deposit. character of the Kasiya Deposit demonstrated by lithological logging of AC, PT
core and HA samples. Satellite imagery and airborne geophysical data provided
guidance for interpreting the strike continuity of the deposit.
Drill hole intercept logging and assay results (AC, PT and HA), stratigraphic
interpretations from drill core and geological logs of drill data have formed
the basis for the geological interpretation. The drilling exclusively targeted
the SOIL, FERP, MOTT and SAPL weathering horizons, with no sampling of the
SAPR and below the upper level of the fresh rock (FRESH) domain.
Nature of the data used and of any assumptions made. No assumptions were made.
The effect, if any, of alternative interpretations on Mineral Resource No alternative interpretations on Mineral Resource Estimation are offered.
estimation.
The use of geology in guiding and controlling Mineral Resource estimation. The mineral resource is constrained by the drill array plus one interval in
each of the X, Y and Z axes.
The topographical DTM constrains the vertical extent of the resource. Rutile,
enriched at surface by deflation and elluvial processes, is constrained
internally by a hard boundary at the base of the SOIL and FERP horizons that
overly the (generally less-mineralised) MOTT and SAPL horizons. In this way,
continuity of rutile, observed in surface drilling results, is honoured
between drill lines rather than being diluted by averaging with underlying,
lower-grade material.
The base to mineralisation is arbitrarily designated at effective drill depth
plus one (average sample width) interval in the Z orientation in HA/PT
drilling. The effective drill depth is where HA drilling intersects the static
water table, rather than being a true depth to un-mineralised basement. Deeper
drilling using the AC method has shown rutile enrichment persists to bedrock
and a material resource increase is anticipated upon application of this
method to a broader area.
A base to mineralisation of BOH plus 2.7m (-2.7 RL) is retained for this
estimate, where drilled by HA/PT methods. This basement horizon is interpreted
on 200m north sections and accounts for artifacts of ineffective drilling
terminating in soil or ferp horizons. It is applied consistently to both
Indicated and Inferred resource areas.
AC drilling has accurately defined depth to basement at the saprock interface,
which has been modelled where intersected in the updated MRE.
The factors affecting continuity both of grade and geology. Rutile grade is generally concentrated in surface regolith horizons. Deposit
stratigraphy and weathering is consistent along and across strike. Rutile
grade trend is oriented at 45 degrees at Kasiya North and 360 degrees at
Kasiya South, which mimics the underlying basement source rocks and residual
topography. Rutile varies across strike as a result of the layering of
mineralised and non-mineralised basement rocks.
Dimensions The extent and variability of the Mineral Resource expressed as length (along The Kasiya mineralised footprint strikes NE - SW and currently occupies an
strike or otherwise), plan width, and depth below surface to the upper and area of about 201km(2).
lower limits of the Mineral Resource.
Depth to basement is described previously.
Estimation and modelling techniques The nature and appropriateness of the estimation technique(s) applied and key Datamine Studio RM and Supervisor software are used for the data analysis,
assumptions, including treatment of extreme grade values, domaining, variography, geological interpretation and resource estimation. Key fields are
interpolation parameters and maximum distance of extrapolation from data interpolated into the volume model using a range of parameters and
points. If a computer assisted estimation method was chosen include a interpolation methods to establish best fit for the deposit. For the Kasiya
description of computer software and parameters used. MRE update, the Inverse Distance weighting (power 4) method was seen to
perform a superior interpolation of informing data and replication of the
high-value and thin, surface (SOIL/FERP) grade distribution. This was assisted
by the (customary) application of a Dynamic Anisotropy search, informed by the
results of variography, Suitable limitations on the number of samples and the
impact of those samples, was maintained.
Extreme grade values were not identified by statistical analysis, nor were
they anticipated in this style of deposit. No top cut is applied to the
resource estimation.
Interpolation was constrained by hard boundaries (domains) that result from
the geological interpretation.
The availability of check estimates, previous estimates and/or mine production This is the fourth MRE for the Kasiya Deposit.
records and whether the Mineral Resource estimate takes appropriate account of
such data. Bulk-scale test work has been completed and results support the view of the
Competent Person that an economic deposit of readily separable, high-quality
rutile is anticipated from the Kasiya Deposit. The recovery of a coarse-flake
graphite by-product was achieved by the test work.
The assumptions made regarding recovery of by-products. A graphite co-product was modelled as recoverable TGC.
Estimation of deleterious elements or other non-grade variables of economic No significant deleterious elements are identified. A selection of assay,
significance (e.g. sulphur for acid mine drainage characterisation). magnetic separation and XRF results are modelled and are reported.
In the case of block model interpolation, the block size in relation to the The average parent cell size used is equivalent to the average drill hole
average sample spacing and the search employed. spacing within the Indicated Resource (200m*200m). Cell size in the Z-axis
is established to cater for the composite sample spacing and definition of the
Topsoil domain. This resulted in a parent cell size of 200m x 200m x 3m for
the volume model with 5 sub-cell splits available in the X and Y axes and 10
in the Z axis to smooth topographical and lithological transitions. Both
parent cell and sub-cell interpolations were completed and reported. The
sub-cell interpolation was again applied to this MRE as it better reflected
the geological interpretation and a reasonable graduation of informing data
through intermediate cell areas.
A Topsoil horizon has been defined at 0.3m thickness throughout the Indicated
Resource area to support anticipated ore reserve calculation and mining
studies. Topsoil is disclosed separately but remains in the MRE in recognition
of advanced rehabilitation studies in the PFS by Agreenco.
Any assumptions behind modelling of selective mining units. No assumptions were made regarding the modelling of selective mining units.
The resource is reported at an Indicated level of confidence and is suitable
for optimisation and the calculation of a Probable Reserve.
Any assumptions about correlation between variables. No assumptions were made regarding the correlation between variables.
Description of how the geological interpretation was used to control the Interpolation was constrained by hard boundaries (domains) that result from
resource estimates. the geological interpretation.
Discussion of basis for using or not using grade cutting or capping. Extreme grade values were not identified by statistical analysis, nor were
they anticipated in this style of deposit. No top cut is applied to the
resource estimation.
The process of validation, the checking process used, the comparison of model Validation of grade interpolations was done visually In Datamine by loading
data to drill hole data, and use of reconciliation data if available. model and drill hole files and annotating, colouring and using filtering to
check for the appropriateness of interpolations.
Statistical distributions were prepared for model zones from both drill holes
and the model to compare the effectiveness of the interpolation. Distributions
of section line averages (swath plots) for drill holes and models were also
prepared for each zone and orientation for comparison purposes.
The resource model has effectively averaged informing drill hole data and is
considered suitable to support the resource classifications as applied to the
estimate.
Moisture Whether the tonnages are estimated on a dry basis or with natural moisture, Tonnages are estimated on a dry basis. No moisture content is factored.
and the method of determination of the moisture content.
Cut-off parameters The basis of the adopted cut-off grade(s) or quality parameters applied. The resource is reported at a range of bottom cut-off grades in recognition
that optimisation and financial assessment is outstanding.
A nominal bottom cut of 0.7% rutile is offered, based on preliminary
assessment of resource value and anticipated operational cost.
Mining factors or assumptions Assumptions made regarding possible mining methods, minimum mining dimensions Dry-mining has been determined as the optimal method of mining for the Kasiya
and internal (or, if applicable, external) mining dilution. It is always Rutile deposit. The materials competence is loose, soft, fine and friable with
necessary as part of the process of determining reasonable prospects for no cemented sand or dense clay layers, allowing for a free dig mining method.
eventual economic extraction to consider potential mining methods, but the It is considered that the strip ratio would be zero or near zero.
assumptions made regarding mining methods and parameters when estimating
Mineral Resources may not always be rigorous. Where this is the case, this Dilution is considered to be minimal as mineralisation commonly occurs from
should be reported with an explanation of the basis of the mining assumptions surface and mineralisation is generally gradational with few sharp boundaries.
made.
Recovery parameters have not been factored into the estimate. However, the
valuable minerals are readily separable due to their SG differential and are
expected to have a high recovery through the proposed, conventional wet
concentration plant.
Metallurgical factors or assumptions The basis for assumptions or predictions regarding metallurgical amenability. Rigorous metallurgical testwork on rutile and graphite recoverability and
It is always necessary as part of the process of determining reasonable specifications has been completed on numerous bulk samples since 2018.
prospects for eventual economic extraction to consider potential metallurgical
methods, but the assumptions regarding metallurgical treatment processes and Rutile recovered to product is modelled at 100% and graphite recovered to
parameters made when reporting Mineral Resources may not always be rigorous. product is modelled at 67.5%.
Where this is the case, this should be reported with an explanation of the
basis of the metallurgical assumptions made. Both products have best-in-class chemical and physical specifications.
Refer to text of the announcement for further details.
Environmental factors or assumptions Assumptions made regarding possible waste and process residue disposal A large portion of the Mineral Resource is confined to the SOIL, FERP and MOTT
options. It is always necessary as part of the process of determining weathering domains, and any sulphide minerals have been oxidised in the
reasonable prospects for eventual economic extraction to consider the geological past. Therefore, acid mine-drainage is not anticipated to be a
potential environmental impacts of the mining and processing operation. While significant risk when mining from the oxidised domain.
at this stage the determination of potential environmental impacts,
particularly for a greenfields project, may not always be well advanced, the The Kasiya deposit is located within a farming area and has villages located
status of early consideration of these potential environmental impacts should along the strike of the deposit. Sovereign holds regular discussions with
be reported. Where these aspects have not been considered this should be local landholders and community groups to keep them well informed of the
reported with an explanation of the environmental assumptions made. status and future planned directions of the project. Sovereign has benefited
from maintaining good relations with landowners and enjoys strong support from
the community at large.
Kasiya is in a sub-equatorial region of Malawi and is subject to heavy
seasonal rainfall, with rapid growth of vegetation in season. Substantial
vegetation or nature reserve is absent in the area.
Bulk density Whether assumed or determined. If assumed, the basis for the assumptions. If Density was calculated from 310 full core samples taken from geographically
determined, the method used, whether wet or dry, the frequency of the and lithologically-diverse sites across the deposit. Density is calculated
measurements, the nature, size and representativeness of the samples. using a cylinder volume wet and dry method performed by Sovereign in Malawi
and calculations verified by Placer Consulting.
Density data was loaded into an Excel file, which was flagged against
weathering horizons and mineralisation domains. These results were then
averaged, by domain and applied to the MRE.
The bulk density for bulk material must have been measured by methods that As above.
adequately account for void spaces (vughs, porosity, etc.), moisture and
differences between rock and alteration zones within the deposit.
Discuss assumptions for bulk density estimates used in the evaluation process An average density of 1.65 t/m(3) was determined for the total weathering
of the different materials. profile.
This incorporates and average density of 1.39 t/m(3) for the SOIL domain, 1.58
t/m(3) for the FERP domain, 1.66 t/m(3) for the MOTT domain, 1.69 t/m(3) for
the PSAP domain, 1.97 t/m(3) for the SAPL domain, and 1.95 t/m(3) for the LAT
domain. Density data are interpolated into the resource estimate by the
nearest neighbour method.
Classification The basis for the classification of the Mineral Resources into varying Classification of the MRE is at an Indicated and Inferred category. Minor
confidence categories. regions of unclassified material occur in sparsely drilled, typically
extraneous regions of the mineralised area. These are excluded from the
resource inventory.
Inferred classification is attributed to those areas with drilling spaced at
400m x 400m. Indicated classification is attributed to those areas with
drilling spaced at 200m x 200m.
Whether appropriate account has been taken of all relevant factors (i.e. All available data were assessed and the competent person's relative
relative confidence in tonnage/grade estimations, reliability of input data, confidence in the data was used to assist in the classification of the Mineral
confidence in continuity of geology and metal values, quality, quantity and Resource.
distribution of the data).
Whether the result appropriately reflects the Competent Person's view of the Results appropriately reflects a reasonable and conservative view of the
deposit deposit.
Audits or reviews The results of any audits or reviews of Mineral Resource estimates. Independent audit of the MRE construction was contracted to Datamine Australia
by Placer prior to delivery to SVM. A third party is engaged by SVM for a
further verification of the MRE.
Discussion of relative accuracy/ confidence Where appropriate a statement of the relative accuracy and confidence level in Substantial additional mineralisation was expected to occur below the
the Mineral Resource estimate using an approach or procedure deemed effective depth of HA and PT drilling. This has been confirmed by the deeper
appropriate by the Competent Person. For example, the application of AC drilling.
statistical or geostatistical procedures to quantify the relative accuracy of
the resource within stated confidence limits, or, if such an approach is not A high-degree of uniformity exists in the broad and contiguous lithological
deemed appropriate, a qualitative discussion of the factors that could affect and grade character of the deposit. Drilling technique have been expertly
the relative accuracy and confidence of the estimate. applied and data collection procedures, density assessments, QA protocols and
interpretations conform to industry best practice with few exceptions.
Assay, mineralogical determinations and metallurgical test work conform to
industry best practice and demonstrate a rigorous assessment of product and
procedure. The development of a conventional processing flowsheet and
marketability studies support the classification of the Kasiya Resource.
The statement should specify whether it relates to global or local estimates, The estimate is global.
and, if local, state the relevant tonnages, which should be relevant to
technical and economic evaluation. Documentation should include assumptions
made and the procedures used.
These statements of relative accuracy and confidence of the estimate should be No production data are available to reconcile model results.
compared with production data, where available.
Section 4 - Estimation and Reporting of Ore Reserves
Criteria Explanation Commentary
Mineral Resource estimate for conversion to Ore Reserves Description of the Mineral Resource estimate used as a basis for the The current identified MRE underpins the Ore Reserve. Sovereign engaged
conversion to an Ore Reserve. independent geological and mining consultants Placer to complete the MRE for
the Kasiya deposit.
The principal resource geologist Mr Richard Stockwell is highly experienced
Clear statement as to whether the Mineral Resources are reported additional with more than 25 years in resource estimation and mine geology. Mr Richard
to, or inclusive of, the Ore Reserves. Stockwell is a Competent Person for the purposes of the MRE as defined and in
accordance with the JORC Code 2012.
The MRE as reported in this document is inclusive of the Ore Reserve declared
in this document. The Ore Reserve does not include Inferred Mineral Resources.
Site visits Comment on any site visits undertaken by the Competent Person and the outcome Site visits have been carried out by the following personnel:
of those visits.
· Mr Frikkie Fourie, the Competent Person for the JORC Mineral
Reserve Estimate update, has conducted multiple site visits, overseeing the
excavation of the trial mining pit as part of the recent Pilot Phase.
· Mr Richard Stockwell, the Competent Person for the JORC
Mineral Resource Estimate and a representative of Placer Consulting Pty Ltd
has conducted one site visit.
Study status The type and level of study undertaken to enable Mineral Resources to be The technical and financial information in this release is at PFS-level
converted to Ore Reserves. enabling the restament of Ore Reserves. The studies carried out have
determined a mine plan that is technically achievable and economically viable
The Code requires that a study to at least Pre-Feasibility Study level has with all material Modifying Factors having been considered.
been undertaken to convert Mineral Resources to Ore Reserves. Such studies
will have been carried out and will have determined a mine plan that is The Ore Reserve in this OPFS, in underpinned by a mine plan detailing mining
technically achievable and economically viable, and that material Modifying locations, ore and waste quantities; plant feed quantities and plant head
Factors have been considered. grades. Scheduling was undertaken in annual and quarterly periods.
The Mine planning activities included an updated pit optimisation, development
of mineable pit geometries, scheduling, mining cost estimation and financial
analysis in order to confirm the ability to economically mine the Kasiya Ore
Reserve.
Modifying factors considered and reviewed during the OPFS mine planning
process included pit slope design criteria, mining costs, mining dilution and
ore loss, processing recoveries, processing costs, selling costs, general and
administration costs and product price.
Cut-off parameters The basis of the adopted cut-off grade(s) or quality parameters applied. Pit cut-off grades varied between 0.7% and 0.9% rutile with cut-offs selected
to provide the most tonnage whilst minimising the pit footprint to have as
little environmental/social impact as possible.
The selected cut-off grades are above the final project breakeven cut-off
grade of approximately 0.40% rutile.
Mining factors or assumptions The method and assumptions used as reported in the Pre-Feasibility or The Kasiya MRE was used as the basis for the PFS Ore Reserve estimate. Mineral
Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. Resources were converted to Ore Reserves in line with the material
either by application of appropriate factors by optimisation or by preliminary classifications which reflect the level of confidence within the resource
or detailed design). estimate. The Ore Reserve reflects that portion of the Mineral Resource which
can be economically extracted by open pits utilising using conventional dry
The choice, nature and appropriateness of the selected mining method(s) and mining techniques and a simple mobile excavator fleet. The Ore Reserve
other mining parameters including associated design issues such as pre-strip, considers the modifying factors and other parameters detailed in the relevant
access, etc. sections of the OPFS report, including but not limited to the mining,
metallurgical, social, environmental, approvals, tenure, statutory and
The assumptions made regarding geotechnical parameters (e.g. pit slopes, stope financial aspects of the project.
sizes, etc.), grade control and pre-production drilling.
In line with the JORC 2012 guidelines, the Kasiya Probable Ore Reserve is
The major assumptions made and Mineral Resource model used for pit and stope based on Indicated classified Mineral Resources. There is no Measured
optimisation (if appropriate). classified Mineral Resource at Kasiya and consequently no Proved Ore Reserve.
Inferred classified material is not included in the Ore Reserve and therefore
The mining dilution factors used. is not considered for mining.
The mining recovery factors used. The reported MRE is inclusive of the resources converted to Ore Reserves.
Any minimum mining widths used. The Ore Reserve includes an allowance for mining dilution and ore loss on the
basis that all material within the shell is classified and extracted as ore.
The manner in which Inferred Mineral Resources are utilised in mining studies
and the sensitivity of the outcome to their inclusion. The open pit geometries developed for the purposes of mine planning, and which
define the subsequent Ore Reserve, are based on Whittle pit shells edited to
The infrastructure requirements of the selected mining methods. comply with practical mining requirements and identified exclusion zones.
Selection of Mining method
The mining options were evaluated in detail during the OPFS to determine the
best suited mining method for the operation. The criteria for selection were
based not only on capital and operating cost, but ESG considerations,
infrastructure requirements and operability. Sovereign performed testwork on
ROM material and conducted an extensive trial mining, backfilling and
rehabilitation operation. The outcomes of this work resulted in a dry mining
solution, utilising draglines, shovels and trucks.
The conversion to conventional dry mining methods adds significant production
flexibility and lower operational risk.
Pit Optimisation
An open pit optimisation utilising Whittle™ software was carried out on the
Kasiya deposit using Indicated Mineral Resources only (in line with the JORC
2012 guidelines). The latest parameters available were used to determine the
economic extent of the open pit excavation. The process plant production
parameters were supplied by Sovereign with an initial rate of 12mtpa and a
ramp up in production in year 5 to an annual rate of 24Mtpa by the beginning
of year 6.
Whilst dry mining lends itself to a selective mining approach, the basis of
the OPFS is a bulk mining operation and therefore, all material within the
"shell" will be extracted and fed to the plant as ore and any interstitial
waste and/or sub-economic grade material will be likewise treated as diluent
material. However, due to the relatively homogenous and continuous nature the
orebody, the quantities of this material will be relatively small and
therefore a simple 5% dilution was applied within the Whittle™ tool to
approximate this assumption.
The OPFS uses an overall slope angle of 20 degrees has been applied within the
optimisation.
Mineable Pit Geometries
Based on the cut-off grades applied, the optimization shells were further were
further refined to develop a mineable geometry. The process applied the
following constraints:
- A minimum depth of 5m.
- Pit extents limited to mineable areas and to remain outside of
identified exclusion areas wherever reasonably possible. Sovereign identified
all local village areas and areas of cultural or environmental significance
within the potential mining envelope that should not be disturbed during the
mining phase of the Project.
Metallurgical factors or assumptions The metallurgical process proposed and the appropriateness of that process to Rutile
the style of mineralisation.
Sovereign completed bulk rutile testwork programs at the globally recognised
Whether the metallurgical process is well-tested technology or novel in AML in Perth, Australia. The program was supervised by Sovereign's Head of
nature. Development, Paul Marcos. Mr Marcos is a metallurgist and process engineer and
a mineral sands industry veteran. Bulk test-work programs have confirmed
The nature, amount and representativeness of metallurgical test work premium grade rutile can be produced via a simple and conventional process
undertaken, the nature of the metallurgical domaining applied and the flow sheet.
corresponding metallurgical recovery factors applied.
Processing engineering was completed by DRA Limited who developed the process
Any assumptions or allowances made for deleterious elements. plant design and associated cost estimate for the OPFS. An average product
grade of 96% TiO(2) with 100% recovery to rutile product was assumed for the
The existence of any bulk sample or pilot scale test work and the degree to PFS.
which such samples are considered representative of the orebody as a whole
Graphite
For minerals that are defined by a specification, has the ore reserve
estimation been based on the appropriate mineralogy to meet specifications? Sovereign has conducted graphite testwork across ALS Laboratory in Perth and
SGS Lakefield in Canada. Veteran graphite metallurgist Oliver Peters, MSc,
P.Eng., MBA (Consulting Metallurgist for SGS and Principal Metallurgist of
Metpro Management Inc.) was engaged to supervise and consult on the testwork
programs. Mr Peters has over 25 years' experience in metallurgy on graphite
and other commodities. He has operated numerous graphite pilot plants and
commissioned a number of full-scale processing facilities.
DRA's Senior Engineer, Stewart Calder and Manager Metallurgy, John Fleay
supervised and advised on sample selection, testwork scope and results from
the latest testwork programs for the PFS. Both consultants are considered to
have the appropriate capabilities and similarities with the material and the
early stage of the project.
An average product grade of 96% C(t) with 67.5% recovery to product was
assumed for the PFS.
Rutile & Graphite
It is acknowledged that laboratory scale test-work will not always represent
actual results achieved from a production plant in terms of grade, chemistry,
sizing and recovery. Further test-work will be required to gain additional
confidence of specifications and recoveries that will be achieved at
full-scale production.
Overall, the process flow-sheet is conventional for both rutile and graphite
with no novel features or equipment incorporated.
Environmental The status of studies of potential environmental impacts of the mining and An Environmental Impact Assessment (ESIA) is underway with reference to
processing operation. Details of waste rock characterisation and the applicable Malawian and international environmental and social permitting and
consideration of potential sites, status of design options considered and, baseline requirements for the Kasiya Project.
where applicable, the status of approvals for process residue storage and
waste dumps should be reported. Sovereign is committed to conduct its activities in full compliance to the
requirements of national regulations, its obligations under international
conventions and treaties and giving due consideration to international best
practices and policies. Sovereign has appointed an experienced environmental
consultant to manage the ESIA process, and environmental and social baseline
studies have commenced with appropriately qualified independent experts.
Sovereign has also completed a high-level risk assessment to identify major
environmental and social risks which could affect the development of the
Project, along with mitigating strategies to allow identified risks to be
addressed early in the project design phase.
Sovereign has embarked on several exercises with the communities in the area
and there is a general positive acceptance of the Project.
Based on the current assessments and commenced ESIA, the Competent Person
believes there are no environmental issues currently identified that cannot be
appropriately mitigated in accordance with standard practices adopted for the
development of mining projects.
Infrastructure The existence of appropriate infrastructure: availability of land for plant Kasiya is located approximately 40km northwest of Lilongwe, Malawi's capital,
development, power, water, transportation (particularly for bulk commodities), and boasts favourable access to services and infrastructure. The proximity to
labour, accommodation; or the ease with which the infrastructure can be Lilongwe gives the project access to a large pool of professionals and skilled
provided, or accessed. tradespeople, as well as industrial services.
Logistics cost estimates, including rail and port infrastructure and handling,
were provided by Thelo DB, Nacala Logistics and Grindrod based on market data,
suppliers' quotations, industry databases, industry contacts and the
consultant's existing knowledge of southern African transport infrastructure
and freight markets.
The above consultants are independent with appropriate experience in the
management of transport logistics studies in southern Africa.
Costs The derivation of, or assumptions made, regarding projected capital costs in Capital estimates for the Project have been prepared by PCC, together with
the study. input from DRA Limited, Sovereign and other contributing consultants using
combinations of cost estimates from suppliers, historical data, benchmarks and
The methodology used to estimate operating costs. other independent sources. The accuracy of the initial capital cost estimate
for the Project is -20% and +25%.
Allowances made for the content of deleterious elements.
Capital costs include the cost of all services, direct costs, contractor
The derivation of assumptions made of metal or commodity price(s), for the indirects, EPCM expenses, non-process infrastructure, sustaining capital and
principal minerals and co- products. other facilities used for the mine. Capital costs make provision for
mitigation expenses and mine closure and environmental costs.
Derivation of transportation charges.
Working capital requirements (including contingency) for plant commissioning
The basis for forecasting or source of treatment and refining charges, and full ramp-up have been included in the headline capital estimate reported
penalties for failure to meet specification, etc. under construction, owner's and start-up costs.
The allowances made for royalties payable, both Government and private. Labor costs have been developed based on a first-principles build-up of
staffing requirements with labor rates benchmarked in Malawi and expatriate
rates benchmarked for professionals from South Africa and other jurisdictions.
A Government royalty of 5% (applied to revenue) and a vendor profit share of
2% (applied to gross profit) has been included in all project economics. A
0.45% royalty (applied to revenue) has been applied for the community
development fund.
Rehabilitation and mine closure costs are included within the reported
operating cost and sustaining capital estimates.
Revenue factors The derivation of, or assumptions made regarding revenue factors including Sales pricing for both products is based on current market analysis conducted
head grade, metal or commodity price(s) exchange rates, transportation and by independent parties (see below).
treatment charges, penalties, net smelter returns, etc.
The derivation of assumptions made of metal or commodity price(s), for the
principal metals, minerals and co-products.
Market assessment The demand, supply and stock situation for the particular commodity, Sovereign obtained independent market assessments for both products.
consumption trends and factors likely to affect supply and demand into the
future. Rutile
A customer and competitor analysis along with the identification of likely Sovereign engaged market leading TZMI to provide a bespoke marketing report to
market windows for the product. support the Study. TZMI is a global, independent consulting and publishing
company which specialises in technical, strategic and commercial analyses of
Price and volume forecasts and the basis for these forecasts. the opaque (non-terminal market) mineral, chemical and metal sectors.
TZMI's assessment has confirmed that, based upon their high-level view on
global demand and supply forecasts for natural rutile, and with reference to
the specific attributes of Kasiya, there is a reasonable expectation that the
product will be able to be sold into existing and future rutile markets.
Given the premium specifications of Kasiya's natural rutile, the product
should be suitable for all major natural end-use markets including TiO(2)
pigment feedstock, titanium metal and welding sectors.
The rutile price adopted in the OPFS is unchanged from the 2023 PFS rutile
price which was based on TZMI's real 2023 price forecast and confirmed by TZMI
as part of the OPFS. Using the above product mix, the LOM average "realised"
price for rutile was US$1,490 per tonne FOB, Nacala
Graphite
Sovereign engaged Fastmarkets, a specialist international publisher and
information provider for the global steel, non-ferrous and industrial minerals
markets, to prepare a marketing report for graphite.
Fastmarkets' assessment has confirmed that based upon their high-level view on
global demand and supply forecasts for natural flake graphite, and with
reference to the specific attributes of Sovereign's projects, there is a
reasonable expectation that the product from Sovereign's projects will be able
to be sold into existing and future graphite markets. Given the extremely
low-cost profile and high-quality product, it is expected that output from
Kasiya will be able to fill new demand or substitute existing lower quality /
higher cost supply.
Project considerations taken by Fastmarkets in forming an opinion about the
marketability of product include:
- Low capital costs (incremental)
- Low operating costs
- High quality concentrate specifications
Industry participants confirm that the highest value graphite concentrates
remain the large, jumbo and super-jumbo flake fractions, primarily used in
industrial applications such as refractories, foundries and expandable
products. These sectors currently make up the significant majority of total
global natural flake graphite market by value.
Fastmarkets have formed their opinion based solely upon project information
provided by Sovereign to Fastmarkets and have not conducted any independent
analysis or due diligence on the information provided.
The Company has taken conservative view on graphite pricing. The basket price
used for the OPFS remains unchanged from the 2023 PFS, remaining at US$1,290/t
(real) for the LOM.
Price forecasts for Kasiya's graphite basket were sourced Fastmarkets as part
of the OPFS. The graphite price used in the OPFS is 30% lower than
Fastmarkets' long-term price forecast of US$1,846.
Economic The inputs to the economic analysis to produce the net present value (NPV) in Key parameters are disclosed in the body of the announcement, and include:
the study, the source and confidence of these economic inputs including
estimated inflation, discount rate, etc - Life of Mine: 25 years
NPV ranges and sensitivity to variations in the significant assumptions and - Discount rate: 8%
inputs.
- Royalty rate: 5% royalty (Government), 2% of gross
profit (Original Project Vendor) and 0.45% Community Development Fund.
- Pricing: Rutile average price of US$1,490 per tonne
and Graphite average basket price of US$1,290 per tonne
The OPFS financial model has been built and prepared by Practara, an
independent specialist mining financial modelling company using inputs from
the various expert consultants and has been reviewed by SP Angel Corporate
Finance LLP, the Company's Nominated Advisor and Corporate Broker as defined
by the AIM Rules for Companies set out by the London Stock Exchange, to
validate the functionality and accuracy of the model.
NPV sensitivity to costs and price were assessed utilising the Project
financial model developed by Practara. As is the case for most commodity-based
projects, the NPV is most sensitive to changes in price, with a +/-25%
variation in both rutile and graphite price generating a +/-54% variation in
project pre-tax ungeared net present value at an 8% discount. It is moderately
sensitive to operating cost changes, with a +/-25% cost change producing a
-/+18% fluctuation in project pre-tax ungeared net present value at an 8%
discount. Approximately 3% of this value change is attributable to mining
costs, 4% to logistics costs and the remaining 10% to
processing/labour/G&A related costs. The project is less sensitive to
capital cost changes, with a +/-25% variation in capital affecting NPV by
-/+11%.
Social The status of agreements with key stakeholders and matters leading to social Sovereign expects to enter into a Community Development Agreement ("CDA") with
license to operate. the surrounding communities. Significant engagement with these communities has
occurred over the exploration phases and is ongoing ahead of negotiation of
the CDA which is expected to be concluded during the DFS stage.
Other To the extent relevant, the impact of the following on the project and/or on No identifiable naturally occurring risks have been identified to impact the
the estimation and classification of the Ore Reserves: Kasiya Ore Reserve.
Any identified material naturally occurring risks. Sovereign has no existing binding offtake agreement in place.
The status of material legal agreements and marketing arrangements. Sovereign is yet to apply for a Mining Licence ("ML") covering the footprint
of the project, however it is not anticipated for there to be any objections
The status of government agreements and approvals critical to the viability of in obtaining the necessary government approvals.
the project, such as mineral tenement status and government and statutory
approvals. There must be reasonable grounds to expect that all necessary
Government approvals will be received within the timeframes anticipated in the
Pre-Feasibility or Feasibility study. Highlight and discuss the materiality of
any unresolved matter that is dependent on a third party on which extraction
of the reserve is contingent.
Classification The basis for the classification of the Ore Reserves into varying confidence The Kasiya Ore Reserves comprise Indicated Mineral Resource material converted
categories. Whether the result appropriately reflects the Competent Person's to "Probable" reserves.
view of the deposit. The proportion of Probable Ore Reserves that have been
derived from Measured Mineral Resources (if any). In line with JORC 2012 guidelines, Inferred Mineral Resource material has not
been included.
100% of the Kasiya Ore Reserve is in the Probable Reserves category.
Audit or reviews The results of any audits or reviews of Ore Reserve estimates. No external audits or reviews have been carried out to date.
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