TIDMSVML
RNS Number : 4641D
Sovereign Metals Limited
03 March 2022
SOVEREIGN METALS LIMITED
NEWS RELEASE | 3 MARCH 2022
SOVEREIGN SIGNS OFFTAKE MOU FOR PREMIUM PRICED RUTILE SALES TO
THE WELDING SECTOR
-- MoU signed for supply of 25,000 tonnes of natural rutile per
annum to Hascor, a market leading global processor and distributor
of rutile products for the welding industry
-- Pricing of rutile for welding generally attracts significant
premiums to bulk rutile prices in the titanium pigment sector
-- Hascor to provide Sovereign with strategic advice on marketing
and product development
-- Kasiya continues to attract significant offtaker interest as
the largest undeveloped natural rutile project in the world
and first major rutile discovery in over half a century
Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or
Sovereign) is pleased to announce that it has entered into a
non-binding Memorandum of Understanding (MoU) with Hascor
International Group(TM) (Hascor) for potential supply of 25,000
tonnes of natural rutile per annum from the Company's Kasiya Rutile
Project (Kasiya) in Malawi to Hascor's processing plants and
clients across five continents.
The MoU contemplates a supply agreement to cover an initial
five-year period from commencement of nameplate production for
potential 25,000 tonnes per annum of natural rutile to Hascor and
their existing clients. Volumes may be varied up or down by mutual
agreement. Pricing at commencement will reference market prices to
the welding sector subject to agreed price variations through the
supply term.
Hascor is a multinational ferroalloy and metal powder supplier.
The group is a key processor and global distributor of natural
rutile products for the welding industry with production and
distribution centres across five continents.
This maiden MoU is part of Sovereign's product marketing
strategy as the demand and pricing for natural rutile are both very
strong as the global structural deficit in supply continues to
widen. The premium chemical parameters of Kasiya's natural rutile
produced indicates the product is suitable for all major end-use
markets including welding, TiO2 pigment feedstock and titanium
metal.
Sovereign's Managing Director Dr Julian Stephens commented: "We
are very excited to have signed this MoU with a major rutile
supplier like Hascor about a future offtake agreement and to
provide input on marketing for our premium rutile products from
Kasiya. Hascor is a market leader in natural rutile product
development and distribution for the welding industry across five
continents. The offtake MoU with Hascor points to the quality and
strategic nature of our world-class Kasiya Rutile Project."
The MoU is non-exclusive and non-binding and remains subject to
negotiation and execution of a definitive agreement to give effect
to the MoU. The MoU will expire on 31 December 2023 but can be
extended by agreement by both parties should a definitive agreement
not have been reached by that time.
ENQUIRIES
Dr Julian Stephens (Perth) Sam Cordin (Perth) Sapan Ghai (London)
Managing Director +61(8) 9322 6322 +44 207 478 3900
+61(8) 9322 6322
Nominated Adviser on AIM
RFC Ambrian
Bhavesh Patel / Andrew Thomson +44 20 3440 6800
Joint Brokers
Berenberg +44 20 3207 7800
Matthew Armitt
Jennifer Lee
Varun Talwar
Optiva Securities +44 20 3137 1902
Daniel Ingrams
Mariela Jaho
Christian Dennis
RUTILE IN THE WELDING INDUSTRY
Natural rutile is classified as a high-grade titanium feedstock.
The high-grade titanium feedstock market consumes approximately
2.8Mt of contained titanium dioxide with strong demand driven from
the welding, pigment and metal sectors.
Major natural rutile producers have noted over recent years that
very strong demand from the welding market is outstripping supply.
Bagged rutile sales into the welding and other non-pigment sectors
achieve significantly better pricing, often with significant
premiums to bulk rutile pricing.
Consequently, market leading independent consulting and
publishing company, TZ Minerals International (TZMI), expects
bagged rutile sales to fetch US$500-600 per tonne price premiums
over the bulk market in 2022. TZMI understands that some bagged
rutile sales for Q1 of 2022 were agreed at close to US$2,100-2,200
per tonne CIF. TZMI also expects bagged rutile sales to lead
pricing growth because the welding end-use sector has limited
alternatives to rutile feedstock input.
About Hascor International Group(TM)
Hascor International Group(TM) is a key producer of nitrogen
bearing ferro alloys, metal powders, and specialty minerals, who
brings several decades of experience as a processor and global
distributor of natural rutile products including rutile flour,
calcined rutile and rutile sand for the welding industry.
Established in 1993, the group has earned an excellent reputation
for performance and consistent quality with production and
distribution centres across five continents. Key locations include
Houston, Hong Kong, Bangkok, Santiago, Altamira, Rotterdam, and
Koper.
About Sovereign Metals
Sovereign Metals Limited (ASX:SVM & AIM:SVML) is an ASX and
AIM-listed company focused on the exploration and development of
its Kasiya rutile project in Malawi.
Kasiya is a strategic and globally significant natural rutile
deposit with substantial additional resource growth expected.
Kasiya's Mineral Resource Estimate is 605Mt at 0.98% rutile (0.7%
cut-off, indicated + inferred).
Natural rutile is the purest, highest-grade natural form of
titanium dioxide (TiO2) and is the preferred feedstock in
manufacturing titanium pigment and producing titanium metal.
Results of life cycle studies show that Sovereign's natural
rutile could potentially eliminate significant global titanium
industry CO2 emissions by displacing and substantially reducing the
use of carbon-intensive upgraded alternatives.
The rutile market fundamentals are robust with current and
forecast pricing remaining very strong. In 2021, the market has
rebounded strongly with pigment plant utilisation rates returning
to pre-pandemic levels. Major producers have noted that very strong
demand in the welding market is outstripping supply.
Natural rutile supply is tight with limited new projects coming
online in the short to medium term. Extreme supply-side tightness
is expected and will be exacerbated by production suspensions
recently announced by major high-grade producers. A resurgence in
demand for titanium pigment and from the welding sector combined
with concurrent supply shortages has led the CIF China spot prices
sharply upwards to over US$2,000 per tonne.
The Company completed an initial Scoping Study in December 2021
which confirms Kasiya as a globally significant natural rutile
project. It is the largest undeveloped rutile deposit in the world
and therefore is highly strategic in a market characterised by
extreme supply deficit. The initial Scoping Study developed the
concept for a multi-decade mine providing a stable supply of a
highly sought-after rutile (TiO(2) ) and graphite whilst
contributing significantly to the economy of Malawi.
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.
Competent Persons Statement
The information in this announcement that relates to Sovereign's
Scoping Study at Kasiya is extracted from the announcement dated 16
December 2021 which is available to view at Sovereign's website at
www.sovereignmetals.com.au. Sovereign confirms that a) it is not
aware of any new information or data that materially affects the
information included in the ASX announcement; b) all material
assumptions and technical parameters underpinning the Production
Target, and related forecast financial information derived from the
Production Target included in the announcement continue to apply
and have not materially changed;; and c) the form and context in
which the relevant Competent Persons' findings are presented in
this report have not been materially changed from the
announcement.
The information in this announcement that relates to the Mineral
Resource Estimate is extracted from the announcement dated 16
December 2021. The 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 announcement; b) all material
assumptions included in the announcement continue to apply and have
not materially changed; and c) the form and context in which the
relevant Competent Persons' findings are presented in this report
have not been materially changed from the announcement.
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END
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