TIDMSVML
RNS Number : 9327N
Sovereign Metals Limited
28 September 2023
SOVEREIGN METALS LIMITED
NEWS RELEASE | 28 September 2023
KASIYA PRE-FEASIBILITY STUDY RESULTS
PFS CONFIRMS KASIYA AS A MAJOR CRITICAL MINERALS PROJECT
DELIVERING INDUSTRY-LEADING ECONOMIC RETURNS AND SUSTAINABILITY
METRICS
ECONOMIC HIGHLIGHTS
US$1,605M 28% US$415M
================ ============= ==================
After Tax NPV(8) After Tax IRR Ave. Annual EBITDA
------------- ------------------
US$16Bn US$404/t US$597M
===================== ====================== =========================
Total Revenue Operating Cost Capex to 1(st) Production
(initial modelled 25 (FOB Nacala per tonne
years LOM) of product)
---------------------- -------------------------
PFS HIGHLIGHTS
-- "Market Leader" Position in Two Critical Minerals:
o Positioned to become the world's largest rutile producer at
222kt per annum for an initial 25 year life-of-mine (LOM)
o Potentially one of the world's largest natural graphite
producers outside of China at 244kt per annum
o Natural rutile facing significant global supply deficit
forecast to widen further considerably in the next 5 years(1)
o Natural graphite market moving into deficit as demand rapidly
grows in the lithium-ion battery and electric vehicle (EV)
sectors
o Initial Probable Ore Reserves declared of 538Mt, representing
conversion of only 30% of the total Mineral Resource
o Substantial production rate and mine life upside exists as the
PFS modelling was limited to only 25 years
-- Highly Compelling Cost Profile:
o Cash operating costs of US$404/t of product will position
Kasiya as the lowest cost producer of rutile and graphite
globally
o Increased capital to first production from the Expanded
Scoping Study, is primarily due to bringing forward capital items
previously planned for Stage 2 including a rail spur, full-scale
water dam, integrated power and optimised graphite production, as
well as generally enhanced engineering and global cost
inflation
-- Industry-Redefining Environmental and Social Advantages:
o Extremely low CO(2) -footprint operation incorporating
climate-smart attributes including hydro-mining with renewables
power solution
o CO(2) emissions expected to be lowest in class versus existing
and planned operations and versus alternative synthetic
products
o Low-impact operation with mineralisation at surface,
zero-strip ratio, low reagent usage, simple process flowsheet and
progressive land rehabilitation
-- Strong Support from the Government of Malawi:
o Government of Malawi has applauded the timely investment by
Rio Tinto and marked it as a milestone towards realising the
country's aspirations of growing the mining sector as a priority
industry
o PFS demonstrates Kasiya's potential to provide significant
socio-economic benefits for Malawi including fiscal returns, job
creation, skills transfer and sustainable community development
initiatives
o With mining being one of the key pillars for growth under
Malawi's economic development strategy (Agriculture, Tourism,
Mining - ATM Policy) and the potential for Kasiya to be a project
of national significance, the Government has constituted an
Inter-ministerial Project Development Committee to work alongside
the Company to assist in the permitting processes
-- Optimisation with Strategic Investor Rio Tinto to Commence:
o Advancing into an optimisation phase prior to moving to the
Definitive Feasibility Study (DFS) with support from the Company's
strategic investor, Rio Tinto
o Formal establishment of the Technical Committee with Rio
Tinto
Managing Director, Dr Julian Stephens commented: "The release of
the Kasiya PFS marks another important step towards unlocking a
major source of two critical minerals required to decarbonise
global supply chains and to achieve Net-Zero.
The Project benefits from existing high-quality infrastructure
and inherent ESG advantages. Natural rutile has a far lower carbon
footprint compared to other titanium feedstocks used in the pigment
industry, and natural graphite is a key component in lithium-ion
batteries - crucial to de-carbonising the global economy.
The high-quality of work completed and the results of the PFS
demonstrates that Kasiya is a globally significant project that has
the potential to deliver a valuable long-term source of low-CO(2)
products and generate substantial economic returns with a forecast
average EBITDA of US$415 Million per annum for the initial 25 years
modelled. The Project is well positioned to be a large scale,
multi-generational asset with significant opportunity for further
upside as only 30% of the current mineral resource (MRE) is
utilised in the PFS model.
Kasiya's compelling economics demonstrate the potential for
industry-leading returns, even against the backdrop of global cost
inflation.
The Company is looking forward to conducting an optimisation
review in collaboration with new strategic investor, Rio Tinto and
progressing to the Definitive Feasibility Study."
ENQUIRIES
Dr Julian Stephens (Perth) Sam Cordin (Perth) Sapan Ghai (London)
Managing Director +61(8) 9322 6322 +44 207 478 3900
+61(8) 9322 6322
Nominated Adviser on AIM and
Joint Broker
SP Angel Corporate Finance
LLP
Ewan Leggat
Charlie Bouverat
Harry Davies-Ball +44 20 3470 0470
Joint Brokers
Berenberg +44 20 3207 7800
Matthew Armitt
Jennifer Lee
Tavistock PR +44 20 7920 3150
To view the announcement in full, please refer to the
announcement at http://sovereignmetals.com.au/announcements/ .
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.
Source:
1. TZ Minerals International Pty Ltd (TZMI)
KASIYA PFS OUTCOMES
Sovereign Metals Limited (the Company or Sovereign) is pleased
to announce the results of the Pre-Feasibility Study (PFS or Study)
for the Company's Kasiya Rutile-Graphite Project (Kasiya or the
Project) in Malawi.
The PFS confirmed Kasiya as potentially a major critical
minerals project with an extremely low CO(2) -footprint delivering
major volumes of natural rutile and graphite while generating
significant economic returns.
The PFS is an Association for the Advancement of Cost
Engineering International ( AACEI ) Class 3 estimate with an
accuracy of -20% and +25%.
Table 1: Key Outcomes
Outcome Unit Kasiya
NPV(8) (real post-tax) US$ US$1,605M
-------------------------------------------------- --- --------------- -----------
NPV(10) (real post-tax) US$ US$1,205M
-------------------------------------------------- --- --------------- -----------
IRR (post-tax) % 28%
-------------------------------------------------- ------------------- -----------
Capital Costs to First Production (Stage 1) US$ US$597M
-------------------------------------------------- --- --------------- -----------
Expansion Capital (Stage 2) US$ US$287M
-------------------------------------------------- --- --------------- -----------
Plant relocation US$ US$366M
-------------------------------------------------- --- --------------- -----------
Operating Costs US$/t mined US$8.74
-------------------------------------------------- --- --------------- -----------
Operating Costs US$/t product US$404
-------------------------------------------------- --- --------------- -----------
Revenue to Cost Ratio X 2.8
-------------------------------------------------- ------------------- -----------
NPV(8) / Capital Costs to First Production X 2.7
-------------------------------------------------- ------------------- -----------
Throughput (Average LOM) Mtpa 21.5
-------------------------------------------------- ------------------- -----------
Modelled Life years 25
-------------------------------------------------- ------------------- -----------
Annual Production (Average LOM) - rutile ktpa 222
-------------------------------------------------- ------------------- -----------
Annual Production (Average LOM) - graphite ktpa 244
-------------------------------------------------- ------------------- -----------
Total Revenue (LOM) US$ US$16,121M
-------------------------------------------------- ------------------- -----------
Annual Revenue (Average LOM) US$ US$645M
-------------------------------------------------- ------------------- -----------
Annual EBITDA (Average LOM) US$/year US$415M
-------------------------------------------------- ------------------- -----------
Payback - from start of production years 4.3 years
-------------------------------------------------- ------------------- -----------
LARGE-SCALE, LONG-LIFE AND HIGH-MARGIN OPERATION
Kasiya, located in central Malawi, is the largest natural rutile
deposit and second largest flake graphite deposit in the world.
Sovereign is aiming to develop a low-CO(2) and sustainable
operation to supply highly sought-after natural rutile and graphite
to global markets.
Kasiya has a geological benefit with both natural graphite and
rutile hosted in soft, friable saprolite material at surface that
can be mined, beneficiated, and purified with a considerably lower
carbon footprint than hard-rock operations or synthetic graphite
and synthetic rutile production.
Figure 1: High-level schematic of the planned Kasiya
Rutile-Graphite Project
The proposed large-scale operation will process 24 million
tonnes of ore per annum to produce approximately 245kt of natural
rutile and 288kt of natural graphite per annum once at steady
state.
The rutile-graphite rich mineralisation will be extracted from
surface utilising cost-effective hydro-mining to depths averaging
15m. Ore is transported as slurry via a pumping network to a Wet
Concentration Plant (WCP) where a low-energy requirement,
chemical-free process 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.
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.
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, 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.
Based on the build-out strategy, the operation will commence in
the southern section of the Ore Reserve with a 12Mtpa throughput
plant which will be expanded from Year 6 to increase the throughput
to 24Mtpa. As the southern mineralisation is exhausted, a new plant
will be constructed in the north and the second stage WCP moved in
order to continue to support 24Mtpa throughput.
CRITICAL RAW MATERIALS
Both rutile and graphite are critical to the world economy as
well as crucial to decarbonisation solutions required to meet
"Net-Zero" and other targets set by policymakers. Titanium and
natural graphite have been classified as critical raw materials by
the US and EU due to a combination of their scarceness and
China-controlled supply chains.
Current sources of natural rutile are in decline as several
operations' reserves are depleting concurrently with declining ore
grades. These include Sierra Rutile's (SRL) Mine Area 1 in Sierra
Leone and Base Resources' Kwale operations in Kenya.
Global rutile supply is projected to decline sharply beyond
2023, following the scheduled closures of Base Resource's Kwale and
SRL operations unless mine life extension is approved (Source: TZ
Minerals International Pty Ltd (TZMI). There are limited new
deposits forecast to come online, and hence supply of natural
rutile is likely to remain in structural deficit for the long term,
even with Kasiya at full production.
Figure 2: Previous and forecast global natural rutile supply
2018-2033
*Supply profile only reflects existing operations
(source: TZMI)
Demand for high quality flake graphite and natural rutile is
growing due to global decarbonisation requirements and current and
future predicted supply deficits. Per Benchmark Mineral
Intelligence, the demand for anodes grew by 46% in 2022 compared to
only 14% growth in natural flake graphite supply.
Figure 3: Graphite demand / supply showing market deficit
beginning 2024E
Source: Macquarie Research (March 2023)
LOW-COST OPERATION
Kasiya's low operating costs are achieved through deposit size
and grade, zero strip ratio from surface, location and excellent
existing operational infrastructure. Kasiya is strategically
located in close proximity to Malawi's capital city Lilongwe,
providing access to a skilled workforce and industrial
services.
Products will be exported to global markets via the deep water
port of Nacala along the existing Nacala Logistics Rail Corridor
(NLC). This existing infrastructure provides significant capital
cost savings for Kasiya compared to many other undeveloped minerals
projects.
Kasiya has an average life-of-mine FOB (Nacala) operating cost
of US$404 per tonne of product produced (rutile plus graphite).
One of the highest Revenue : Cost of Sales Ratios in the Mineral
Sands Industry
The revenue-to-cash cost ratio of 2.8x positions Kasiya in the
first quartile compared to other undeveloped mineral sands
operations. The production of high value natural rutile and
graphite delivers strong cashflows with a cash margin of over 64%
for the life of the operation.
The Study has applied conservative pricing assumptions for both
products which still results in a strong position on the revenue to
cost ratio metric. This supports the robustness of the Kasiya
operation and its strong profitability during different pricing
environments and the revenue stability of two different products
with different demand drivers.
Figure 4: Revenue to cost ratio of Kasiya and other selected
mineral sands projects
Lowest Cost Flake Graphite Project in the World
Graphite is produced at Kasiya via obtaining a graphite rich
concentrate from the gravity spirals as part of the rutile
processing. The graphite rich concentrate is then processed in a
separate standard graphite flotation plant, producing a high
purity, high crystallinity and high value coarse-flake graphite
product.
On an incremental cost basis reflecting graphite production as a
co-product to primary rutile production, the operating cost is
US$182 per tonne of graphite produced (FOB Nacala).
Figure 5: Actual and forecast graphite production
(non-Chinese)
LOW CO(2) ADVANTAGE
Kasiya has the potential to provide two products that both have
very favourable low carbon in-use advantages. Benchmark Life Cycle
Assessment (LCA) studies for natural rutile and natural graphite
produced from Kasiya* have the potential for a substantially
reduced carbon footprint compared to other titanium feedstocks and
natural graphite products in the market.
Natural rutile (95% TiO(2) ) is the cleanest, purest natural
mineral form of TiO(2) with the other major source being ilmenite
(50% TiO(2) ). The genuine scarcity of natural rutile prompted the
titanium industry to develop upgraded titanium feedstock products
from ilmenite that can be used as substitutes for natural rutile
(i.e. synthetic rutile and titania slag).
Two energy and carbon intensive processes are used by major
market participants to produce the upgraded synthetic rutile and
titania slag. Both methods use ilmenite (FeTiO(3) ) as the raw
feedstock and are essentially processes for the removal of iron
oxide. The downstream pigment production process relies heavily on
the use of these upgraded titanium feedstocks, each having an
associated substantial environmental impact.
Figure 6: Natural rutile versus synthetic rutile and titania
slag flowchart
Natural rutile produced at Kasiya has a fraction of the GWP of
the alternative feedstocks. The Global Warming Potential (GWP) for
natural rutile concentrate from Kasiya (0.1 t CO(2) e per tonne) is
significantly lower than producing titania slag in South Africa
(2.0 t CO(2) e per tonne) and producing synthetic rutile via the
Becher process in Australia (3.3 t CO(2) e per tonne).
The Scope 1 and 2 emissions comparing the carbon footprint of
these three production routes are shown in Figure 6. The higher GWP
for synthetic rutile is mainly due to the use of coal and other
reagents for the upgrading of lower grade ilmenite to the final
synthetic rutile feedstock product.
* LCA conducted on inputs from the Expanded Scoping Study
released July 2022.
Figure 7: GWP impact of natural rutile production from Kasiya as
a titanium feedstock vs. alternatives
(Source: Minviro)
Kasiya has the lowest GWP compared with currently known and
planned future natural graphite projects:
-- Up to 60% lower than currently reported GWP of graphite
producers and developers, including suppliers to Tesla Inc.
-- 3x less polluting than proposed Tanzanian natural graphite
production from hard rock sources
-- 6x less polluting than current Chinese natural graphite
production which accounts for up to 80% of current global graphite
supply
Figure 8: Global Warming Potential per tonne of graphite product
(CO(2) e/t)
(Note: All figures are cradle-to-gate except for Syrah Resources
which includes transportation to the port of Nacala; transportation
of Kasiya's graphite to the port of Nacala would add an estimated
incremental 0.04CO(2) e to its GWP)
Industry's interaction with supply chain participants indicates
the progression towards higher proportions of natural graphite used
in battery anodes will be supported by its lower cost and superior
environmental credentials. The environmental footprint of EVs will
become an increasingly important market consideration as EV
penetration accelerates, noting that synthetic graphite has a
carbon footprint orders of magnitude higher than flake graphite
because it is made from needle coke produced from oil and coal
refining via energy intensive processes.
Leading EV producer Tesla Inc.'s (Tesla) "Master Plan 3"
outlines its proposed path to reach a sustainable global energy
economy through end-use electrification and sustainable electricity
generation and storage. In the plan, Tesla suggests that the world
would need to produce 10.5Mt of graphite per year and estimates
US$104 Billion of new graphite mining investment is required to
achieve its target (source: Tesla Master Plan 3 (April 2023)).
STRONG GOVERNMENT SUPPORT
The Malawian government identifies mining as one of the sectors
that could potentially generate economic growth for the country.
The country has several significant mineral resources that could be
sustainably mined to contribute to Malawi's economic goals.
Kasiya has the potential to deliver significant social and
economic benefits for Malawi including fiscal returns, job
creation, skills transfer and sustainable community development
initiatives.
The Government of Malawi strongly supports Sovereign and its
development of the Kasiya project. Malawi's Minister of Mines and
Minerals, The Honourable Monica Chang'anamuno, recently 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
isolates mining as a priority industry.
With mining being one of the key pillars for growth under
Malawi's economic development strategy (Agriculture, Tourism,
Mining - ATM Policy) and the potential for Kasiya to be a project
of national significance, the Government has constituted an
Inter-ministerial Project Development Committee to work alongside
the Company to assist in the permitting processes.
INVESTMENT BY RIO TINTO
In July 2023, Rio Tinto made an investment in Sovereign
resulting in an initial 15% shareholding and options expiring
within 12 months of initial investment to increase their position
to 19.99%. Under the Investment Agreement, Rio Tinto will provide
assistance and advice on technical and marketing aspects of Kasiya
including with respect to Sovereign's graphite co-product, with a
primary focus on spherical purified graphite for the lithium-ion
battery anode market.
The Company is planning to commence optimisation phase prior to
advancing to the DFS. Sovereign is soon to establish a Technical
Committee and commence the working relationship with Rio Tinto
after the publication of this Study.
DISCLOSURES, DISCLAIMERS, MODIFYING FACTORS & SOURCES
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 Ross Cheyne, a Competent Person, who is
a Fellow Member of The Australasian Institute of Mining and
Metallurgy. Mr Cheyne is employed by Orelogy Consulting Pty Ltd, an
independent consulting company. Mr Cheyne 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 a Competent Person as defined in the
2012 Edition of the 'Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves'. Mr Cheyne 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 Processing,
Infrastructure and Capital and Operating Costs is based on and
fairly represents information compiled or reviewed by Mr Tomasz
Tomicki, a Competent Person, who is a Fellow Member of The
Australasian Institute of Mining and Metallurgy. Mr Tomicki is
employed by DRA Pacific Pty Ltd, an independent consulting company.
Mr Tomicki has sufficient experience that is relevant to the style
of mineralisation and type of deposit under consideration and to
the activities undertaken. Mr Tomicki, 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 is based on and fairly represents information compiled or
reviewed by Mr Tomasz Tomicki, a Competent Person, who is a Fellow
Member of The Australasian Institute of Mining and Metallurgy. Mr
Tomicki is employed by DRA Pacific Pty Ltd, an independent
consulting company. Mr Tomicki has sufficient experience that is
relevant to the style of mineralisation and type of deposit under
consideration and to the activities undertaken. Mr Tomicki,
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
- graphite is based on and fairly represents information compiled
or reviewed by Mr John Fleay, a Competent Person, who is a Fellow
Member of The Australasian Institute of Mining and Metallurgy. Mr
Fleay is employed by DRA Pacific Pty Ltd, an independent consulting
company. Mr Fleay has sufficient experience that is relevant to the
style of mineralisation and type of deposit under consideration and
to the activities undertaken. Mr Fleay, 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 the Mineral
Resource Estimate is extracted from the announcement entitled
'Kasiya Indicated Resource Increased by over 80%' dated 5 April
2023 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. The original announcement is available to view on
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 announcement have not been materially changed from the
original announcement.
Forward Looking Statement
This release may include forward-looking statements, which may
be identified by words such as "expects", "anticipates",
"believes", "projects", "plans", and similar expressions. These
forward-looking statements are based on Sovereign's expectations
and beliefs concerning future events. Forward looking statements
are necessarily subject to risks, uncertainties and other factors,
many of which are outside the control of Sovereign, which could
cause actual results to differ materially from such statements.
There can be no assurance that forward-looking statements will
prove to be correct. Sovereign makes no undertaking to subsequently
update or revise the forward-looking statements made in this
release, to reflect the circumstances or events after the date of
that release.
Qualified Person
Information disclosed in this announcement has been reviewed by
Dr Julian Stephens (B.Sc (Hons), PhD, MAIG), Managing Director, a
Qualified Person for the purposes of the AIM Rules for
Companies.
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 2: Assumptions
Assumption Input
-------------------------------------------------------- -----------------------
Maximum accuracy variation - Capital costs -20%/+25%
-------------------------------------------------------- -----------------------
Maximum accuracy variation - Operating costs -20%/+25%
-------------------------------------------------------- -----------------------
Minimum LoM 25 years
-------------------------------------------------------- -----------------------
Annual average throughput (tonnes) - Stage 1 12,000,000
-------------------------------------------------------- -----------------------
Annual average throughput (tonnes) - Stage 2 24,000,000
-------------------------------------------------------- -----------------------
Annual throughput (tonnes) - LoM average 21,600,000
-------------------------------------------------------- -----------------------
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) 244,000
-------------------------------------------------------- -----------------------
USD:AUD 0.67
-------------------------------------------------------- -----------------------
USD:MWK 0.0010
-------------------------------------------------------- -----------------------
USD:ZAR 0.0549
-------------------------------------------------------- -----------------------
Sales Price - rutile (average LoM) US$1,484/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 US$572m
-------------------------------------------------------- -----------------------
Stage 2 Capital (expansion to 24Mtpa) US$287m
-------------------------------------------------------- -----------------------
Plant Relocation US$366m
-------------------------------------------------------- -----------------------
Sustaining Capital US$470m
-------------------------------------------------------- -----------------------
Operating Costs including royalties (LoM) - FOB Nacala US$404/t
-------------------------------------------------------- -----------------------
Corporate Tax Rate 30%
-------------------------------------------------------- -----------------------
Rent Resource Tax (RRT) 15% after-profits
-------------------------------------------------------- -----------------------
Discount Rate 8%
-------------------------------------------------------- -----------------------
ORE RESERVE STATEMENT
Orelogy Consulting Pty Ltd (Orelogy) was responsible for the
mine planning component of the PFS for Kasiya. As such Orelogy have
developed an Ore Reserve estimate for Kasiya in accordance with the
guidelines of the JORC Code 2012.
The Kasiya MRE released by Sovereign in on 5 April 2023 was used
as the basis for the PFS 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 a combination of hydro mining and bulldozer
methodologies. The Ore Reserve considers the modifying factors and
other parameters detailed in the relevant sections of the PFS
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 was compiled by Mr
Ross Cheyne of Orelogy who takes overall responsibility for the Ore
Reserve as Competent Person (see Competent Persons Statement
above). Mr Cheyne is a Fellow of The Australasian Institute of
Mining and Metallurgy 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 was undertaken by Mr Ryan Locke in, a Principal
Consultant with Orelogy, as a nominated representative of the
Competent Person.
The Ore Reserve estimate is summarised in Table 3 below, along
with the associated cut-off grade used to define the shell.
Table 3: Ore Reserve for the Kasiya Deposit as of September 2023
Classification Tonnes Rutile Grade Contained Rutile Graphite Grade (TGC) (%) Contained Graphite
(Mt) (%) (Mt) (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(TM) 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 from years 5 - 7 to annual rate of 24Mtpa.
The intention to hydro-mine the majority of the defined Ore
Reserve means that there is no ability to selectively mine and all
material will be extracted and sent as plant feed. 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(TM) tool.
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 for the hydro mining method.
-- Removal of any small, isolated pits.
-- 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 Pre-Feasibility Study, 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 full
Announcement at http://sovereignmetals.com.au/announcements/.
The Company engaged independent consultants, Orelogy and Fraser
Alexander to carry out the pit optimisations, mine design,
scheduling, mining cost estimation and Ore Reserves for the Study.
The proposed mining method is hydro mining with minor bulldozer
assistance. This is considered appropriate for this style of
shallow, soft and friable saprolite-hosted rutile and graphite
mineralisation. This methodology is used across numerous mineral
sands operations, particularly in Africa, and is well suited for
this style of mineralisation.
Metallurgy and Processing - refer to section entitled
'Metallurgy and Process Design' in the full Announcement at
http://sovereignmetals.com.au/announcements/.
Rutile
The Company completed bulk rutile testwork programs at the
globally recognised AML in Perth, Australia. The latest program was
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.
Processing engineering was completed by DRA Global who developed
the process plant design and associated cost estimate for the
Study. An average product grade of 96% TiO(2) and 100% recovery to
product factor has been applied.
Graphite
The Company 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. 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 Global 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 180um.
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 full Announcement at
http://sovereignmetals.com.au/announcements/.
Kasiya is located approximately 40km northwest of Lilongwe,
Malawi's capital, and boasts excellent access to services and
infrastructure. 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.
The Company appointed JCM to design a preliminary IPP solution
for Kasiya. JCM is a Canada-headquartered IPP which develops,
constructs, owns and operates renewable energy and storage projects
in emerging markets across the globe. JCM provided an estimated,
levelized cost of energy ( LOCE ) on a Power Purchase Agreement (
PPA ).
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 'Marketing Strategy' in
the full Announcement at
http://sovereignmetals.com.au/announcements/.
Rutile
The Company engaged market leading TZMI to provide a bespoke
marketing report to support the Study. TZMI is a global,
independent consulting and publishing company specialising in
technical, strategic and commercial analyses of 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.
In July 2023, Rio Tinto made an investment in Sovereign
resulting in an initial 15% shareholding and options expiring
within 12 months of initial investment to increase their position
to 19.99%. Under the Investment Agreement, Rio Tinto will provide
assistance and advice on technical and marketing aspects of Kasiya.
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 elect to be the operator of the Project
and for so long as Rio Tinto remain the operator, Rio Tinto shall
have exclusive marketing rights to market 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 the Rio Tinto's Option 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 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 Metals to Fastmarkets and have
not conducted any independent analysis or due diligence on the
information provided.
As noted above, Rio Tinto recently made an investment in
Sovereign. The Company and Rio Tinto will work 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 recently announced plans to set up a battery
testing plant in Melbourne, Australia.
Economic - also refer to sections entitled 'Cost Estimations'
and 'Financial & Economic Analysis' in the full Announcement at
http://sovereignmetals.com.au/announcements/.
Capital estimates for the procress plant have been prepared by
DRA global, together with input from 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%.
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 Fraser Alexander, a regional
leader in hydro-mining and materials handling. 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) 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 figures.
A detailed financial model and discounted cash flow ( DCF )
analysis has been prepared by the Company 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, after-tax, at an 8%
discount rate) of US$1,605 million, and an (ungeared) IRR of
28%.
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 a rutile and graphite concentrate price 30% lower
than the PFS prices the Project still displays a positive NPV
(ungeared, after-tax, 8% discount rate) of US$636 million and IRR
of 17%.
Payback period for the Project is 4.3 years from the start of
production. The payback period is based on free-cash flow, after
taxes.
Sovereign estimates the total capital cost to construct the mine
to be US$597m (which includes a contingency of 17% 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%
- Tax rate: 30%
- Resource Rent Tax (RRT) of 15% after tax profit
- Royalty rate: 5% royalty (Government), 2% of gross profit
(Original Project Vendor) and 0.45% Community Development Fund.
- Pricing: Rutile average price of US$1,484 per tonne and
Graphite average basket price of US$1,290 per tonne
The financial model has been prepared internally by the Company
using inputs from the various expert consultants and has been
reviewed by BDO Australia - Perth, an independent leading
accountancy, tax and advisory services firm 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 which specialises in multiple sectors,
including metals and oil & gas. 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 that a DFS arrives at a result that is not
materially negatively different than the PFS as noted above, 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, business or
prospects of the Company/or political and business environment in
Malawi and/or financial or capital markets in general, Sovereign
should be able to raise sufficient funding to develop the
Project.
In July 2023, Rio Tinto made an investment in Sovereign
resulting in an initial 15% shareholding and options expiring
within 12 months of initial investment to increase their position
to 19.99%. Under the Investment Agreement, is 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.
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. 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$236m. 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 is debt free and is in a strong financial position,
with approximately A$45m cash on hand (31 August 2023). The current
financial position means the Company is soundly funded to continue
into a DFS phase to further develop the Project.
In July and August 2023, Rio Tinto invested $40.6m to become a
strategic investor of the Company. The investment proceeds will be
used to advance Kasiya and represents a significant step towards
unlocking the Project for a major new supply of low-CO(2)
-footprint natural rutile and flake graphite. Under the Investment
Agreement, Rio Tinto will provide assistance and advice on
technical and marketing aspects of Kasiya including with respect to
Sovereign's graphite co-product, with a primary focus on spherical
purified graphite for the lithium-ion battery anode market.
The Company's shares are listed on the ASX and AIM which are
premier markets for growth companies and provides increased access
to capital from institutional and retailed investors in Australia
and the UK.
Sovereign 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 m ore than A$2bn
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 for similar or larger scale development projects;
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; and
9. Investor interest to date.
Environmental, Social, Legal and Governmental - refer to section
entitled 'Environmental & Social Impact' in the full
Announcement at http://sovereignmetals.com.au/announcements/.
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$92m have
been included in this Study, 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 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 current Mines Act, The Government of Malawi shall have
the right, but not the obligation, to acquire, directly or through
a Government nominee, without cost, a free equity ownership
interest of up to ten percent ( 10% ) in any mining project that
will be subject to a large-scale mining licence (>5Mt mined per
annum or >US$250m Capex).
As previously noted by the Company, the Government of Malawi has
proposed a new Mines and Minerals Bill (2023) (New Bill) which has
been passed by the Malawian Parliament and received Presidential
Assent, though awaits publication in the Malawi Gazette before
coming into force. If approved, the New Bill will replace the
current Mines Act. The New Bill introduces amendments to improve
transparency and governance of the mining industry in Malawi.
Sovereign notes the following updates in the New Bill which may
affect the Company in the future: (i) ELs may be granted for an
initial period of 5 years with the ability to extend by 3 years on
two occasions (total 11 years); (ii) the Malawian Government
maintains a right to free equity ownership (as discussed above) for
large-scale mining licences but the New Bill proposes to remove the
free government equity ownership percentage with the right to be a
negotiation matter; and (iii) A new Mining and Regulatory Authority
will be responsible for implementing the objectives of the New
Bill.
In a Press Release issued on 20 July 2023, the Government of
Malawi has 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 Government's statement confirms its commitment to ensuring
the growth of the mining sector through deliberate initiatives
aiming at establishing a conducive investment environment in the
sector.
APPIX 1 - JORC CODE, 2012 EDITION - TABLE 1
SECTION 1 - SAMPLING TECHNIQUES AND DATA
Criteria JORC Code explanation Commentary
Sampling Nature and quality of Hand Auger (HA) samples are composited
Techniques sampling (e.g. cut channels, based on regolith boundaries and sample
random chips, or specific chemistry generated by hand-held XRF
specialised industry (pXRF). Each 1m of sample is dried
standard measurement and riffle-split to generate a total
tools appropriate to sample weight of 3kg for analysis,
the minerals under generally at 2 - 5m intervals. This
investigation, primary sample is then split again
such as down hole gamma to create a 3kg composite to provide
sondes, or handheld XRF a 1.5kg sample for both rutile and
instruments, etc). These graphite analyses.
examples should not be Infill Push-Tube (PT) core drilling
taken as limiting the is sampled routinely at 2m intervals
broad meaning of sampling. 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 Drilling and sampling activities are
measures taken to ensure supervised by a suitably qualified
sample representivity company geologist who is present at
and the appropriate calibration all times. All drill samples are geologically
of any measurement tools logged by the geologist at the drill
or systems used. 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 the Mineral Resource
Estimate (MRE). The primary composite
sample is considered representative
for this style of rutile mineralisation.
--------------------------------- -----------------------------------------------------------------
Aspects of the determination Logged mineralogy percentages, lithology/regolith
of mineralisation that information and TiO(2) % obtained from
are Material to the Public pXRF are used to assist in determining
Report. In cases where compositing intervals. Care is taken
'industry standard' work to ensure that only samples with similar
has been done this would geological characteristics are composited
be relatively simple together.
(e.g. 'reverse circulation
drilling was used to
obtain 1 m samples from
which 3 kg was pulverised
to produce a 30 g charge
for fire 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 Drill type (e.g. core, A total of 1,357 HA holes for 12,643m
Techniques reverse circulation, have been drilled to date at the Kasiya
open -- hole hammer, Rutile Deposit to obtain samples for
rotary air blast, auger, quantitative determination of recoverable
Bangka, sonic, etc) and rutile and Total Graphitic Carbon (TGC).
details (e.g. core diameter, A PT infill drilling programme, designed
triple or standard tube, to support this resource estimate upgrade,
depth of diamond tails, was completed. An additional 234 core
face -- sampling bit holes for 2,368.5m were included in
or other type, whether the updated MRE. The total PT holes
core is oriented and contributing to the updated MRE are
if so, by what method, 488 for 4,669m.
etc). 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 Method of recording Samples are assessed visually for recoveries.
Sample and assessing core and The configuration of drilling and nature
Recovery chip sample recoveries of materials encountered results in
and results assessed. 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 The Company's trained geologists supervise
sample recovery and ensure drilling on a 1 team 1 geologist basis
representative nature and are responsible for monitoring
of the samples. 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 No relationship is believed to exist
exists between sample between grade and sample recovery.
recovery and grade and The high percentage of silt and absence
whether sample bias may of hydraulic inflow from groundwater
have occurred due to at this deposit results in a sample
preferential loss/gain size that is well within the expected
of fine/coarse material. size range.
No bias related to preferential loss
or gain of different materials is observed.
--------------------------------- -----------------------------------------------------------------
Logging Whether core and chip Geologically, data is collected in
samples have been geologically detail, sufficient to aid in Mineral
and geotechnically logged Resource estimation.
to a level of detail All individual 1m HA intervals are
to support appropriate geologically logged, recording relevant
Mineral Resource estimation data to a set log-chief template using
mining studies and metallurgical company codes. A small representative
studies. 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 All logging includes lithological features
or quantitative in nature. and estimates of basic mineralogy.
Core (or costean, channel, Logging is generally qualitative.
etc.) photography. The PT core is photographed dry, after
logging and sampling is completed.
--------------------------------- -----------------------------------------------------------------
The total length and 100% of samples are geologically logged.
percentage of the relevant
intersection logged
--------------------------------- -----------------------------------------------------------------
Sub-sampling If core, whether cut Due to the soft nature of the material,
techniques or sawn and whether quarter, core samples are carefully cut in half
and sample half or all core taken. by hand tools.
preparation
--------------------------------- -----------------------------------------------------------------
If non-core, whether HA, PT and AC hole samples are dried,
riffled, tube sampled, riffle split and composited. Samples
rotary split, etc. and are collected and homogenised prior
whether sampled wet or to splitting to ensure sample representivity.
dry. 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, Techniques for sample preparation are
the nature, quality and detailed on SOP documents verified
appropriateness of the by Placer Resource Geologists.
sample preparation technique. 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 The sampling equipment is cleaned after
adopted for all sub-sampling each sub-sample is taken.
stages to maximise Field duplicate, laboratory replicate
representivity and standard sample geostatistical
of samples. analysis is employed to manage sample
precision and analysis accuracy.
--------------------------------- -----------------------------------------------------------------
Measures taken to ensure Sample size analysis is completed to
that the sampling is verify sampling accuracy. Field duplicates
representative of the are collected for precision analysis
in situ material collected, of riffle splitting. SOPs consider
including for instance sample representivity. Results indicate
results for field a sufficient level of precision for
duplicate/second-half the resource classification.
sampling.
--------------------------------- -----------------------------------------------------------------
Whether sample sizes The sample size is considered appropriate
are appropriate to the for the material sampled.
grain size of the material
being sampled.
--------------------------------- -----------------------------------------------------------------
Quality The nature, quality Rutile
of assay and appropriateness of The Malawi onsite laboratory sample
data and the assaying and laboratory preparation methods are considered
laboratory procedures used and whether quantitative to the point where a heavy
tests the technique is considered mineral concentrate (HMC) is generated.
partial or total. 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, 600um and 45um to remove oversize
and slimes material
* Dry +45um -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 +45um -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 425degC 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, Acceptable levels of accuracy and precision
spectrometers, handheld have been established. No pXRF methods
XRF instruments, etc., are used for quantitative determination.
the parameters used in
determining the analysis
including instrument
make and model, reading
times, calibrations factors
applied and their derivation,
etc.
--------------------------------- -----------------------------------------------------------------
Nature of quality control Sovereign uses internal and externally
procedures adopted (e.g. sourced wet screening reference material
standards, blanks, duplicate, inserted into samples batches at a
external laboratory checks) rate of 1 in 20. The externally sourced,
and whether acceptable certified standard reference material
levels of accuracy (i.e. for HM and Slimes assessment is provided
lack of bias) and precision by Placer Consulting.
have been established. 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 The verification of Results are reviewed in cross-section
of sampling significant intersections using Datamine Studio RM software and
& assaying by either independent any spurious results are investigated.
or alternative company The deposit type and consistency of
personnel. 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 All data are collected electronically
data, data entry procedures, using coded templates and logging software.
data verification, data This data is then imported to a cloud
storage (physical and hosted Database and validated automatically
electronic) protocols. and manually.
A transition to electronic field and
laboratory data capture has been achieved.
--------------------------------- -----------------------------------------------------------------
Discuss any adjustment Assay data adjustments are made to
to assay data. 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 Accuracy and quality A Trimble R2 Differential GPS is used
of data of surveys used to locate to pick up the collars. Daily capture
points drill holes (collar and at a registered reference marker ensures
down-hole surveys), trenches, equipment remains in calibration.
mine workings and other No downhole surveying of any holes
locations used in Mineral is completed. Given the vertical nature
Resource estimation. and shallow depths of the holes, drill
hole deviation is not considered to
significantly affect the downhole location
of samples.
--------------------------------- -----------------------------------------------------------------
Specification of the WGS84 UTM Zone 36 South.
grid system used.
--------------------------------- -----------------------------------------------------------------
Quality and adequacy The digital terrane model (DTM) was
of topographic control. 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 Data spacing for reporting The HA collars are spaced at nominally
spacing of Exploration Results. 400m along the 400m spaced drill-lines
& distribution 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 The drill spacing and distribution
and distribution is sufficient is considered to be sufficient to establish
to establish the degree a degree of geological and grade continuity
of geological and grade appropriate for the Mineral Resource
continuity appropriate estimation.
for the Mineral Resource Kriging neighbourhood analysis completed
and Ore Reserve estimation using Supervisor software informs the
procedure(s) and classifications optimal drill and sample spacing for
applied. 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 Individual 1m auger intervals have
has been applied. 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 Whether the orientation Sample orientation is vertical and
of data of sampling achieves approximately perpendicular to the
in relation unbiased sampling of orientation of the mineralisation,
to geological possible structures and which results in true thickness estimates,
structure the extent to which this limited by the sampling interval as
is known considering applied. Drilling and sampling are
the deposit type 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 There is no apparent bias arising from
between the drilling the orientation of the drill holes
orientation and the orientation with respect to the orientation of
of key mineralised structures the deposit.
is considered to have
introduced a sampling
bias, this should be
assessed and reported
if material.
--------------------------------- -----------------------------------------------------------------
Sample The measures taken to Samples are stored in secure storage
security ensure sample security 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 The results of any audits The CP Richard Stockwell has reviewed
or reviews or reviews of sampling and advised on all stages of data collection,
techniques and data 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 in May 2022. A high standard
of operation, procedure and personnel
was observed and reported.
Sovereign Metals Managing Director
Julian Stephens and Exploration Manager
Samuel Moyle have been onsite in Malawi
numerous times since the discovery
of the Kasiya Deposit.
--------------------------------- -----------------------------------------------------------------
SECTION 2 - REPORTING OF EXPLORATION RESULTS
Criteria Explanation Commentary
Mineral tenement & land tenure status Type, reference name/number, location The Company owns 100% of the
and ownership including agreements or following Exploration Licences (ELs)
material issues and Licence Applications
with third parties such as joint (APLs) under the Mines and Minerals
ventures, partnerships, overriding Act 2019, held in the Company's
royalties, native title wholly-owned, Malawi-registered
interests, historical sites, subsidiaries: EL0561, EL0492, EL0609,
wilderness or national park and EL0582, EL0545, EL0528, EL0657 and
environment settings. APL0404.
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 tenements are in good standing
the time of reporting along with any and no known impediments to
known impediments exploration or mining exist.
to obtaining a licence to operate in
the area.
-------------------------------------- --------------------------------------
Exploration done by other parties Acknowledgement and appraisal of Sovereign Metals Ltd is a first-mover
exploration by other parties. 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 The rutile deposit type is considered
style of mineralisation 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 All intercepts relating to the Kasiya
to the understanding of the Deposit have been included in public
exploration results including releases during
a tabulation of the following each phase of exploration and in this
information for all Material drill report. Releases included all collar
holes: easting and northings and composite data
of the drill hole collar; elevation and these can be viewed on the
or RL (Reduced Level-elevation above Company website.
sea level in metres There are no further drill hole
of the drill hole collar); dip and results that are considered material
azimuth of the hole; down hole length to the understanding
and interception of the exploration results.
depth; and hole length 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 No information has been excluded.
is justified on the basis that the
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, All results reported are of a
weighting averaging techniques, length-weighted average of in-situ
maximum and/or minimum grades. The resource is reported
grade truncations (e.g. cutting of at a range of bottom cut-off grades
high-grades) and cut-off grades are in recognition that optimisation and
usually Material and financial assessment
should be stated. 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 No data aggregation was required.
incorporate short lengths of
high-grade results and 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 Rutile Equivalent (RutEq)
reporting of metal equivalent values Formula : ((Rutile Grade x
should be clearly stated. 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 These relationships are particularly The mineralisation has been released
widths & intercept lengths important in the reporting of by weathering of the underlying,
Exploration Results. layered 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 045deg in the North of Kasiya and
360deg in the South of Kasiya.
-------------------------------------- --------------------------------------
If the geometry of the mineralisation The mineralisation is laterally
with respect to the drill hole angle extensive where the entire weathering
is known, its profile is preserved
nature should be reported. 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 Downhole widths approximate true
hole lengths are reported, there widths limited to the sample
should be a clear statement intervals applied. Mineralisation
to this effect (e.g. 'down hole remains open at depth and in areas
length, true width not known'. coincident with 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 Refer to figures in this report and
scales) and tabulations of intercepts in previous releases. These are
should be included accessible on the Company's
for any significant discovery being webpage.
reported. These should 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 All results are included in this
Exploration Results is not report and in previous releases.
practicable, representative These are accessible on
reporting of both low and high-grades the Company's webpage.
and/or widths should be practiced to
avoid misleading
reporting of exploration results.
-------------------------------------- --------------------------------------
Other substantive exploration data Other exploration data, if meaningful Limited lateritic duricrust has been
and material, should be reported variably developed at Kasiya, as is
including (but not customary in tropical
limited to: geological observations; highland areas subjected to seasonal
geophysical survey results; wet/dry cycles. Lithological logs
geochemical survey results; record drilling refusal
bulk samples - size and method of in just under 2% of the HA/PT drill
treatment; metallurgical test database. No drilling refusal was
results; bulk density, groundwater, recorded above the saprock
geotechnical and rock interface by AC drilling.
characteristics; potential Slimes (-45 um) averages 46wt% in the
deleterious or contaminating Indicated Resource at a 0.7% rutile
substances. 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 AC drilling will allow
further work (e.g. test for lateral the definition of a more
extensions or depth extensions extensive saprock-interface
or large-scale step-out drilling). 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 Refer to diagrams in the body of this
areas of possible extensions, report and in previous releases.
including the main geological These are accessible
interpretations and future drilling on the Company's webpage.
areas, provided this 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 Data are manually entered into
has not been corrupted by, for database tables according to SOPs and
example, transcription conforming to company
or keying errors, between its initial field names and classifications.
collection and its use for Mineral These are then migrated to Datashed5
Resource estimation cloud-hosted database
purposes. 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 D atamine 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 Perth Laboratory visits have been
by the Competent Person and the completed by the Competent Person, Mr
outcome 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 Not applicable
undertaken indicate why this is the
case.
-------------------------------------- --------------------------------------
Geological interpretation Confidence in (or conversely, the There is a high degree of
uncertainty of) the geological repeatability and uniformity in the
interpretation of the mineral geological character of the
deposit. 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 No assumptions were made.
assumptions made.
-------------------------------------- --------------------------------------
The effect, if any, of alternative No alternative interpretations on
interpretations on Mineral Resource Mineral Resource Estimation are
estimation. offered.
-------------------------------------- --------------------------------------
The use of geology in guiding and The mineral resource is constrained
controlling Mineral Resource by the drill array plus one interval
estimation. 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 Rutile grade is generally
of grade and geology. 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 The Kasiya mineralised footprint
Mineral Resource expressed as length strikes NE - SW and currently
(along strike or otherwise), occupies an area of about 201km(2)
plan width, and depth below surface .
to the upper and lower limits of the Depth to basement is described
Mineral Resource. previously.
-------------------------------------- --------------------------------------
Estimation and modelling techniques The nature and appropriateness of the Datamine Studio RM and Supervisor
estimation technique(s) applied and software are used for the data
key assumptions, analysis, variography, geological
including treatment of extreme grade interpretation and resource
values, domaining, interpolation estimation. Key fields are
parameters and maximum interpolated into the volume model
distance of extrapolation from data using a range of parameters and
points. If a computer assisted interpolation methods to establish
estimation method was chosen best fit for the deposit.
include a description of computer For the Kasiya MRE update, the
software and parameters used. 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, This is the fourth MRE for the Kasiya
previous estimates and/or mine Deposit.
production records and Bulk-scale test work has been
whether the Mineral Resource estimate completed and results support the
takes appropriate account of such view of the Competent Person
data. 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 A graphite co-product was modelled as
recovery of by-products. recoverable TGC.
-------------------------------------- --------------------------------------
Estimation of deleterious elements or No significant deleterious elements
other non-grade variables of economic are identified. A selection of assay,
significance magnetic separation
(e.g. sulphur for acid mine drainage and XRF results are modelled and are
characterisation). reported.
-------------------------------------- --------------------------------------
In the case of block model The average parent cell size used is
interpolation, the block size in equivalent to the average drill hole
relation to the average sample spacing within the
spacing and the search employed. 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 No assumptions were made regarding
selective mining units. 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 No assumptions were made regarding
between variables. the correlation between variables.
-------------------------------------- --------------------------------------
Description of how the geological Interpolation was constrained by hard
interpretation was used to control boundaries (domains) that result from
the resource estimates. the geological
interpretation.
-------------------------------------- --------------------------------------
Discussion of basis for using or not Extreme grade values were not
using grade cutting or capping. 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 Validation of grade interpolations
checking process used, the comparison was done visually In Datamine by
of model data to drill loading model and drill
hole data, and use of reconciliation hole files and annotating, colouring
data if available. 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 Tonnages are estimated on a dry
a dry basis or with natural moisture, basis. No moisture content is
and the method factored.
of determination of the moisture
content.
-------------------------------------- --------------------------------------
Cut-off parameters The basis of the adopted cut-off The resource is reported at a range
grade(s) or quality parameters of bottom cut-off grades in
applied. 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 Hydro-mining has been determined as
mining methods, minimum mining the optimal method of mining for the
dimensions and internal Kasiya Rutile deposit.
(or, if applicable, external) mining The materials competence is loose,
dilution. It is always necessary as soft, fine and friable with no
part of the process cemented sand or dense clay
of determining reasonable prospects layers rendering it amenable to
for eventual economic extraction to hydro-mining. It is considered that
consider potential the strip ratio would
mining methods, but the assumptions be zero or near zero.
made regarding mining methods and Dilution is considered to be minimal
parameters when estimating as mineralisation commonly occurs
Mineral Resources may not always be from surface and mineralisation
rigorous. Where this is the case, is generally gradational with few
this should be reported sharp boundaries.
with an explanation of the basis of Recovery parameters have not been
the mining assumptions made. 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 Rigorous metallurgical testwork on
predictions regarding metallurgical rutile and graphite recoverability
amenability. It is always and specifications has
necessary as part of the process of been completed on numerous bulk
determining reasonable prospects for samples since 2018.
eventual economic Rutile recovered to product is
extraction to consider potential modelled at 100% and graphite
metallurgical methods, but the recovered to product is modelled
assumptions regarding metallurgical at 67.5%.
treatment processes and parameters Both products have best-in-class
made when reporting Mineral Resources chemical and physical specifications.
may not always be Refer to text for further details.
rigorous. Where this is the case,
this should be reported with an
explanation of the basis
of the metallurgical assumptions
made.
-------------------------------------- --------------------------------------
Environmental factors or assumptions Assumptions made regarding possible A large portion of the Mineral
waste and process residue disposal Resource is confined to the SOIL,
options. It is always FERP and MOTT weathering
necessary as part of the process of domains, and any sulphide minerals
determining reasonable prospects for have been oxidised in the geological
eventual economic past. Therefore, acid
extraction to consider the potential mine-drainage is not anticipated to
environmental impacts of the mining be a significant risk when mining
and processing operation. from the oxidised domain.
While at this stage the determination
of potential environmental impacts, The Kasiya deposit is located within
particularly for a farming area and has villages
a greenfields project, may not always located along the strike
be well advanced, the status of early of the deposit. Sovereign holds
consideration regular discussions with local
of these potential environmental landholders and community groups
impacts should be reported. Where to keep them well informed of the
these aspects have not status and future planned directions
been considered this should be of the project. Sovereign
reported with an explanation of the has benefited from maintaining good
environmental assumptions relations with landowners and enjoys
made. 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 Density was calculated from 310 full
assumed, the basis for the core samples taken from
assumptions. If determined, geographically and
the method used, whether wet or dry, lithologically-diverse
the frequency of the measurements, sites across the deposit. Density is
the nature, size and calculated using a cylinder volume
representativeness of the samples. 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 As above.
must have been measured by methods
that adequately account
for void spaces (vughs, porosity,
etc.), moisture and differences
between rock and alteration
zones within the deposit.
-------------------------------------- --------------------------------------
Discuss assumptions for bulk density An average density of 1.65 t/m(3) was
estimates used in the evaluation determined for the total weathering
process of the different profile.
materials. 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 Classification of the M RE is at an
the Mineral Resources into varying Indicated and Inferred category.
confidence categories. Minor 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 All available data were assessed and
taken of all relevant factors (i.e. the competent person's relative
relative confidence confidence in the data
in tonnage/grade estimations, was used to assist in the
reliability of input data, confidence classification of the Mineral
in continuity of geology Resource.
and metal values, quality, quantity
and distribution of the data).
-------------------------------------- --------------------------------------
Whether the result appropriately Results appropriately reflects a
reflects the Competent Person's view reasonable and conservative view of
of the deposit the deposit.
-------------------------------------- --------------------------------------
Audits or reviews The results of any audits or reviews Independent audit of the MRE
of Mineral Resource estimates. 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/ Where appropriate a statement of the Substantial additional mineralisation
confidence relative accuracy and confidence was expected to occur below the
level in the Mineral effective depth of HA
Resource estimate using an approach and PT drilling. This has been
or procedure deemed appropriate by confirmed by the deeper AC drilling.
the Competent Person. A high-degree of uniformity exists in
For example, the application of the broad and contiguous lithological
statistical or geostatistical and grade character
procedures to quantify the relative of the deposit. Drilling technique
accuracy of the resource within have been expertly applied and data
stated confidence limits, or, if such collection procedures,
an approach is not deemed density assessments, QA protocols and
appropriate, a qualitative discussion interpretations conform to industry
of the factors that could affect the best practice with
relative accuracy few exceptions.
and confidence of the estimate. 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 The estimate is global.
it relates to global or local
estimates, 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 No production data are available to
and confidence of the estimate should reconcile model results.
be compared with
production data, where available.
-------------------------------------- --------------------------------------
SECTION 4 - ESTIMATION AND REPORTING OF ORE RESERVES
Criteria Explanation Commentary
Mineral Resource estimate Description of the Mineral The Minerals Resource Estimate ("MRE") declared on 5 April
for conversion to Ore Resource estimate used as 2023 underpins the Ore Reserve.
Reserves a basis for the conversion Sovereign engaged independent geological and mining
to an Ore consultants Placer to complete the MRE
Reserve. for the Kasiya deposit.
The principal resource geologist Mr Richard Stockwell is
Clear statement as to highly experienced with more than
whether the Mineral 25 years in resource estimation and mine geology. Mr
Resources are reported Richard Stockwell is a Competent Person
additional to, or for the purposes of the MRE as defined and in accordance
inclusive with the JORC Code 2012.
of, the Ore Reserves . 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 Site visits have been carried out by the following
undertaken by the personnel:
Competent Person and the * Mr Ryan Locke, as representative for the Competent
outcome of those visits. Person Mr Ross Cheyne for the JORC Reserve Estimate
has been to site on multiple site visits prior to and
since the discovery of the Kasiya Deposit.
* 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.
* Mr Samuel Moyle, the Competent Person for Exploration
Results and Exploration Manager of Sovereign Metals
Ltd has conducted multiple site visits since the
discovery of the Kasiya deposit;
--------------------------- ------------------------------------------------------------
Study status The type and level of The technical and financial information in this release is
study undertaken to enable at PFS-level enabling the declaration
Mineral Resources to be of Ore Reserves. The studies carried out have determined a
converted to Ore mine plan that is technically achievable
Reserves. and economically viable with all material Modifying Factors
The Code requires that a having been considered.
study to at least The Ore Reserve was underpinned by a mine plan detailing
Pre-Feasibility Study mining locations, ore and waste quantities;
level has been undertaken plant feed quantities and plant head grades. Scheduling was
to convert Mineral undertaken in annual and quarterly
Resources to Ore Reserves. periods.
Such studies will have Mine planning activities included an updated pit
been carried out and optimisation, development of mineable pit
will have determined a geometries, scheduling, mining cost estimation and
mine plan that is financial analysis in order to confirm
technically achievable and the ability to economically mine the Kasiya Ore Reserve.
economically viable, and Modifying factors considered during the mine planning
that material Modifying process included pit slope design criteria,
Factors have been mining costs, mining dilution and ore loss, processing
considered. recoveries, processing costs, selling
costs, general and administration costs and product price.
--------------------------- ------------------------------------------------------------
Cut-off parameters The basis of the adopted Pit cut-off grades varied between 0.7% and 0.9% rutile with
cut-off grade(s) or cut-offs selected to provide the
quality parameters most tonnage whilst minimising the pit footprint to have as
applied. 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 The method and assumptions The Kasiya MRE released by Sovereign in on 5 April 2023 was
assumptions used as reported in the used as the basis for the PFS
Pre-Feasibility or Ore Reserve estimate. Mineral Resources were converted to
Feasibility Study to Ore Reserves in line with the material
convert the Mineral classifications which reflect the level of confidence
Resource to an Ore Reserve within the resource estimate. The Ore
(i.e. either by Reserve reflects that portion of the Mineral Resource which
application of appropriate can be economically extracted
factors by optimisation or by open pits utilising a combination of hydro mining and
by preliminary or detailed limited truck/shovel methodologies.
design). The Ore Reserve considers the modifying factors and other
The choice, nature and parameters detailed in the relevant
appropriateness of the sections of the PFS report, including but not limited to
selected mining method(s) the mining, metallurgical, social,
and other mining environmental, approvals, tenure, statutory and financial
parameters including aspects of the project.
associated design issues In line with the JORC 2012 guidelines, the Kasiya Probable
such as pre-strip, access, Ore Reserve is based on Indicated
etc. classified Mineral Resources. There is no Measured
The assumptions made classified Mineral Resource at Kasiya and
regarding geotechnical consequently no Proved Ore Reserve. Inferred classified
parameters (e.g. pit material is not included in the Ore
slopes, stope sizes, Reserve and therefore is not considered for mining.
etc.), The reported MRE is inclusive of the resources converted to
grade control and Ore Reserves.
pre-production drilling. The Ore Reserve includes an allowance for mining dilution
The major assumptions made and ore loss on the basis that all
and Mineral Resource model material within the shell is classified and extracted as
used for pit and stope ore.
optimisation The open pit geometries developed for the purposes of mine
(if appropriate). planning, and which define the
The mining dilution subsequent Ore Reserve, are based on Whittle pit shells
factors used. edited to comply with practical mining
The mining recovery requirements and identified exclusion zones.
factors used. Selection of Mining method
Any minimum mining widths The mining options were evaluated in detail during the PFS
used. to determine the best suited mining
The manner in which method for the operation. The criteria for selection were
Inferred Mineral Resources based not only on capital and operating
are utilised in mining cost, but ESG considerations and infrastructure
studies and the requirements. Sovereign performed testwork
sensitivity on ROM material and conducted an independent assessment and
of the outcome to their trade-off analysis for all possible
inclusion. mining methods. The outcomes of this work resulted in hydro
The infrastructure mining being determined as the
requirements of the optimal method for mining the Kasiya rutile- graphite
selected mining methods. deposit. Due to the consistent particle
size distribution through the reserve, favourable operating
and capital costs, low carbon
footprint and air pollution (low dust and no diesel
emissions) as well as the support of infrastructure
and water availability within the project designated
footprint.
Hydro-mining is defined as the excavation of material from
its in-situ state using pressurised
water. A stream of high-pressure water is directed at the
ore with the purpose of mechanically
breaking and softening the material so that it can be
carried away by the created gravitational
slurry flow. The mineralisation at Kasiya is largely
homogenous and has relatively consistent
physical properties throughout the MRE and contained Ore
Reserve. The material competence
is described as loose and friable, soft and well weathered
with no cemented particles or dense
clay layers. The particle size distribution (PSD) is
favourable for hydro-mining due to its
high content of -45um fines and the fines component
effectively increases the viscosity of
the slurry created, which enhances the slurry's ability to
carry sand and heavy mineral particles.
Hydro mining is a proven technology and has been
successfully applied on heavy mineral sand
operations in Africa. Hydro mining for the PFS is based on
the block-mine and top-down methodologies.
The top-down operational method has advantages in terms of
safety, achieving and maintaining
design slurry densities, achieving and maintaining design
production rates and ease of planning
and control.
Sovereign Mining engaged Fraser Alexander, a highly
experienced mining contractor and consultancy
specialising in hydro-mining to provide engineering and
cost inputs for hydro-mining in the
PFS.
Dry mining methods are required where hydro mining is
inefficient and will be required to
push approximately 11% of the Ore Reserve. These are the
"basin" of the hydro mining areas
which need selective "floor clean-up" mining.
Pit Optimisation
An open pit optimisation utilising Whittle(TM) 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 from years 5 - 7 to an
annual rate of 24Mtpa.
The intention to hydro-mine the majority of the defined Ore
Reserve means that there is no
ability to selectively mine and all material will be
extracted and sent as plant feed. 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(TM) tool to approximate this assumption.
For the PFS, an overall slope angle of 20 degrees has been
applied within the optimisation,
in line with a conservative stable angle for a mineral
sands operation.
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 for the hydro mining method.
* Removal of any small, isolated pits.
* 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 The metallurgical process Rutile
assumptions proposed and the Sovereign completed bulk rutile testwork programs at the
appropriateness of that globally recognised AML in Perth,
process to the style of Australia. The latest program was supervised by Sovereign's
mineralisation. Head of Development, Paul Marcos.
Whether the metallurgical Mr Marcos is a metallurgist and process engineer and a
process is well-tested mineral sands industry veteran. Bulk
technology or novel in test-work programs have confirmed premium grade rutile can
nature. be produced via a simple and conventional
The nature, amount and process flow sheet.
representativeness of Processing engineering was completed by DRA Global who
metallurgical test work developed the process plant design
undertaken, the nature and associated cost estimate for the Study. An average
of the metallurgical product grade of 96% TiO(2) with 100%
domaining applied and the recovery to rutile product was assumed for the PFS.
corresponding Graphite
metallurgical recovery Sovereign has conducted graphite testwork across ALS
factors Laboratory in Perth and SGS Lakefield
applied. in Canada. Veteran graphite metallurgist Oliver Peters,
Any assumptions or MSc, P.Eng., MBA (Consulting Metallurgist
allowances made for for SGS and Principal Metallurgist of Metpro Management
deleterious elements. Inc.) was engaged to supervise and
The existence of any bulk consult on the testwork programs. Mr Peters has over 25
sample or pilot scale test years' experience in metallurgy on
work and the degree to graphite and other commodities. He has operated numerous
which such samples graphite pilot plants and commissioned
are considered a number of full-scale processing facilities.
representative of the DRA's Senior Engineer, Stewart Calder and Manager
orebody as a whole Metallurgy, John Fleay supervised and advised
For minerals that are on sample selection, testwork scope and results from the
defined by a latest testwork programs. Both consultants
specification, has the ore are considered to have the appropriate capabilities and
reserve estimation been similarities with the material and
based the early stage of the project.
on the appropriate An average product grade of 96% C(t) with 67.5% recovery to
mineralogy to meet product was assumed for the PFS.
specifications? 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 An Environmental Impact Assessment (ESIA) is currently
potential environmental commencing with reference to applicable
impacts of the mining and Malawian and international environmental and social
processing operation. permitting and baseline requirements for
Details of waste rock the Kasiya Project.
characterisation and the Sovereign is committed to conduct its activities in full
consideration of potential compliance to the requirements of
sites, status of national regulations, its obligations under international
design options considered conventions and treaties and giving
and, where applicable, the due consideration to international best practices and
status of approvals for policies. Sovereign has appointed an
process residue experienced environmental consultant to manage the ESIA
storage and waste dumps process, and environmental and social
should be reported. 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 Kasiya is located approximately 40km northwest of Lilongwe,
appropriate Malawi's capital, and boasts favourable
infrastructure: access to services and infrastructure. The proximity to
availability of land for Lilongwe gives the project access
plant development, to a large pool of professionals and skilled tradespeople,
power, water, as well as industrial services.
transportation Sovereign appointed JCM to design a preliminary IPP
(particularly for bulk solution for Kasiya. JCM is a Canada-headquartered
commodities), labour, IPP which develops, constructs, owns and operates renewable
accommodation; or energy and storage projects in
the ease with which the emerging markets across the globe. JCM provided an
infrastructure can be estimated, levelized cost of energy ( LOCE
provided, or accessed. ) on a Power Purchase Agreement ( PPA ).
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 Capital estimates for the procress plant have been prepared
assumptions made, by DRA Global, together with input
regarding projected from Sovereign and other contributing consultants using
capital costs in the combinations of cost estimates from
study. suppliers, historical data, benchmarks and other
The methodology used to independent sources. The accuracy of the
estimate operating costs. initial capital cost estimate for the Project is -20% and
Allowances made for the +25%.
content of deleterious Capital costs include the cost of all services, direct
elements. costs, contractor indirects, EPCM expenses,
The derivation of non-process infrastructure, sustaining capital and other
assumptions made of metal facilities used for the mine. Capital
or commodity price(s), for costs make provision for mitigation expenses and mine
the principal minerals closure and environmental costs.
and co- products. Working capital requirements (including contingency) for
Derivation of plant commissioning and full ramp-up
transportation charges. have been included in the headline capital estimate
The basis for forecasting reported under construction, owner's and
or source of treatment and start-up costs.
refining charges, Mining costs have been estimated by Fraser Alexander, a
penalties for failure regional leader in hydro-mining and
to meet specification, materials handling. Mining costs have been built up from
etc. first principles based on equipment,
The allowances made for vendor, and contractor quotations, local unit cost rates,
royalties payable, both and benchmarked costs.
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 Sales pricing for both products is based on current market
assumptions made regarding analysis by an independent party
revenue factors including (see below)
head grade, metal
or commodity price(s)
exchange rates,
transportation and
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 Sovereign obtained independent market assessments for both
stock situation for the products.
particular commodity, Rutile
consumption trends and Sovereign engaged market leading TZMI to provide a bespoke
factors likely to affect marketing report to support the
supply and demand into the Study. TZMI is a global, independent consulting and
future. publishing company which specialises in
A customer and competitor technical, strategic and commercial analyses of the opaque
analysis along with the (non-terminal market) mineral,
identification of likely chemical and metal sectors.
market windows TZMI's assessment has confirmed that, based upon their
for the product. high-level view on global demand and
Price and volume forecasts supply forecasts for natural rutile, and with reference to
and the basis for these the specific attributes of Kasiya,
forecasts. 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.
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
Metals to Fastmarkets and have not conducted any
independent analysis or due diligence on
the information provided.
--------------------------- ------------------------------------------------------------
Economic The inputs to the economic Key parameters are disclosed in the body of the
analysis to produce the announcement, and include:
net present value (NPV) in - Life of Mine: 25 years
the study, - Discount rate: 8%
the source and confidence - Tax rate: 30%
of these economic inputs - Resource Rent Tax (RRT) of 15% after tax profit
including estimated - Royalty rate: 5% royalty (Government), 2% of gross
inflation, discount profit (Original Project Vendor) and
rate, etc 0.45% Community Development Fund.
NPV ranges and sensitivity - Pricing: Rutile average price of US$1,484 per tonne and
to variations in the Graphite average basket price of
significant assumptions US$1,290 per tonne
and inputs. The PFS financial model has been prepared internally by
Sovereign using inputs from the various
expert consultants and has been reviewed by BDO Australia
- Perth, an independent leading
accountancy, tax and advisory services firm to validate
the functionality and accuracy of
the model.
NPV sensitivity to costs and price were assessed utilising
the Project financial model developed
by Sovereign. As is the case for most commodity-based
projects, the NPV is most sensitive
to changes in price, with a +/-30% price variation
generating a +/-60% variation in project
value. It is moderately sensitive to operating cost
changes, with a +/-30% cost change producing
a -/+ 18% fluctuation in value. Approximately 4% of this
value change is attributable to mining
costs, 5% to logistics costs and the remaining 9% to
processing/labour/G&A related costs.
The project is less sensitive to capital cost changes,
with a +/-30% variation in capital
affecting NPV by -/+10%.
--------------------------- ------------------------------------------------------------
Social The status of agreements Sovereign expects to enter into a Community Development
with key stakeholders and Agreement ("CDA") with the surrounding
matters leading to social communities. Significant engagement with these communities
license to operate. 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, No identifiable naturally occurring risks have been
the impact of the identified to impact the Kasiya Ore Reserve.
following on the project Sovereign has no existing binding offtake agreement in
and/or on the estimation place.
and classification of the Sovereign is yet to apply for a Mining Licence ("ML")
Ore Reserves: covering the footprint of the project,
Any identified material however it is not anticipated for there to be any
naturally occurring risks. objections in obtaining the necessary government
The status of material approvals.
legal agreements and
marketing arrangements.
The status of government
agreements and approvals
critical to the viability
of 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 The Kasiya PFS Ore Reserves comprise Indicated Mineral
classification of the Ore Resource material converted to "Probable"
Reserves into varying reserves.
confidence categories. In line with JORC 2012 guidelines, Inferred Mineral
Whether Resource material has not been included.
the result appropriately 100% of the Kasiya PFS Ore Reserve is in the Probable
reflects the Competent Reserves category.
Person's view of the
deposit. The proportion
of Probable Ore Reserves
that have been derived
from Measured Mineral
Resources (if any).
--------------------------- ------------------------------------------------------------
Audit or reviews The results of any audits No external audits or reviews have been carried out to
or reviews of Ore Reserve date.
estimates.
--------------------------- ------------------------------------------------------------
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END
UPDGDGDCCGDDGXI
(END) Dow Jones Newswires
September 28, 2023 02:00 ET (06:00 GMT)
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