REG - Sovereign Metals Ltd - Rio Tinto to Invest Additional A$18.5 million

Sovereign MetalsAnnouncement

03/07/2024 07:00

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RNS Number : 9050U  Sovereign Metals Limited  03 July 2024

 

 

NEWS RELEASE I 3 JULY 2024

 

RIO TINTO TO INVEST ADDITIONAL A$18.5 MILLION VIA OPTION EXERCISE

 ·         Rio Tinto to invest A$18.5 million via the exercise of options, to increase
           its shareholding in Sovereign to 19.76%
 ·         Investment proceeds to be used to continue advancing the Kasiya
           Rutile-Graphite Project in Malawi
 ·         Rio Tinto's further investment represents another significant step towards
           unlocking a major new supply of low-CO(2)-footprint natural rutile and flake
           graphite
 ·         Under the Investment Agreement between Sovereign and Rio Tinto, Rio Tinto
           continues to provide assistance and advice on technical and marketing aspects
           of Kasiya

·

Sovereign Metals Limited (ASX: SVM; AIM: SVML) (Sovereign or the Company) is
pleased to announce that Rio Tinto Mining and Exploration Limited (Rio Tinto)
has notified the Company that it has exercised all its share options to
increase its shareholding in Sovereign to 19.76%.

 

Rio Tinto has exercised 34,549,598 share options to acquire the same number of
new fully paid ordinary shares (Shares) in Sovereign at A$0.535 per Share for
proceeds of A$18,484,035.

The Company will use the proceeds from Rio Tinto's additional strategic
investment to continue advancing Sovereign's Tier 1 Kasiya Rutile-Graphite
Project (Kasiya or the Project) in Malawi. This includes progressing the
current optimisation study for Kasiya which is focused on the development of a
world-class mine capable of supplying critical minerals to the titanium
pigment, titanium metal and lithium-ion battery industries. Under the
Investment Agreement between Sovereign and Rio Tinto, Rio Tinto continues to
provide assistance and advice on technical and marketing aspects of Kasiya.

Funds from the option exercise are expected to be received by Friday, 5 July
2024.

Sovereign's Chairman, Ben Stoikovich, commented: "Rio Tinto's further
investment in Sovereign reaffirms Kasiya's position as one of the most
significant critical minerals projects globally. With Rio Tinto's wealth of
experience as one of the world's largest and most accomplished global mining
companies, Kasiya is well-positioned to potentially become a market leader in
low-CO(2)-footprint natural rutile and graphite."

Sovereign's Managing Director, Frank Eagar, commented: "In collaboration with
Rio Tinto, we have made significant progress in advancing Kasiya over the
course of this year, including the successful launch of the pilot phase mining
in May. We are excited about Rio Tinto's further investment in Sovereign,
which represents another significant step towards unlocking a major new supply
of low-CO(2)-footprint natural rutile and flake graphite."

BACKGROUND TO RIO TINTO'S STRATEGIC INVESTMENT

 

In July 2023, Rio Tinto agreed to initially subscribe for and purchase
83,095,592 Shares in Sovereign at a price of A$0.486 per Share for aggregate
proceeds of A$40.4 million. Rio Tinto's initial subscription price reflected a
10% premium to the 45-day volume weighted average price on the ASX as at close
on 14 July 2023 and resulted in Rio Tinto holding approximately 15% of the
ordinary shares of the Company.

 

The subscription also involved Rio Tinto being granted options to acquire
34,549,598 further Shares in Sovereign within 12 months of the initial
subscription.

Sovereign and Rio Tinto also entered into an Investment Agreement pursuant to
which a joint technical committee has been established between Sovereign and
Rio Tinto to advance the development of Kasiya. Please refer to the Company's
announcement on 17 July 2023 for further details.

For acting as financial advisor and subject to receipt of exercise funds, an
advisory fee of 3% is payable to SCP Resource Finance (SCP) on the amount of
Rio Tinto's exercise of options investment and, subject to shareholder
approval, can be paid by way of the issue of ordinary shares to SCP, with
1,036,488 shares being issuable to SCP. A notice of meeting (and explanatory
statement) will be sent out to shareholders in the coming weeks.

 

ENQUIRIES

 Frank Eagar (South Africa/Malawi)  Sam Cordin (Perth)     Sapan Ghai (London)

Managing Director
Business Development
CCO

 +61(8) 9322 6322                   +61(8) 9322 6322       +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

 

The information contained within this announcement is deemed by Sovereign to
constitute inside information as stipulated under the Regulation 2014/596/EU
which is part of domestic law pursuant to the Market Abuse (Amendment) (EU
Exit) Regulations (SI 2019/310) ("UK MAR"). By the publication of this
announcement via a Regulatory Information Service, this inside information (as
defined in UK MAR) is now considered to be in the public domain. The person
responsible for arranging for the release of this announcement on behalf of
Sovereign is Mr Dylan Browne (Company Secretary).

 

Admission

 

Subject to receipt of exercise funds, an application to AIM will be made for
the 34,549,598 Shares to be admitted to trading on AIM (the AIM Admission). It
is expected that AIM Admission will take place and dealings will commence on
AIM on or around 8.00 a.m. on 12 July 2024.

 

Total Voting Rights

 

Immediately following the AIM Admission, the Company's issued share capital
will be 597,552,999 Shares, with each share carrying the right to one vote.
The Company does not hold any Ordinary Shares in treasury. The total voting
rights figure immediately following the AIM Admission of 597,552,999 may be
used by shareholders (and others with notification obligations) as the
denominator for the calculations by which they will determine whether they are
required to notify their interest in, or a change to their interest in, the
Company under the Disclosure Guidance and Transparency Rules.

 

 

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.

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