TIDMSVML
RNS Number : 7923J
Sovereign Metals Limited
29 April 2022
SOVEREIGN METALS LIMITED
NEWS RELEASE | 29 APRIL 2022
MARCH 2022 QUARTERLY REPORT
Sovereign Metals Limited (ASX:SVM; AIM:SVML) (Sovereign or the
Company) is pleased to provide its quarterly report for the period
ended 31 March 2022.
HIGHLIGHTS
MRE upgrade confirmed Kasiya as the largest rutile deposit ever
discovered
-- 1.8 Billion tonnes @ 1.01% rutile and 1.32% graphite
(Indicated + Inferred) equating to 18 million tonnes contained
rutile and 23 million tonnes contained graphite
-- The updated Mineral Resource Estimate (MRE) confirmed Kasiya
as the world's largest rutile deposit and one of the largest flake
graphite deposits globally
-- High global resource grade @ 1.64% RutEq.* (recovered rutile + recovered graphite)
-- 662 Mt (37%) of the total MRE reports to the Indicated
category with remainder in Inferred category
Updated Scoping Study underway
-- Updated Scoping Study to build on initial study reflecting
the substantial MRE scale increase and to examine the impact of
higher grades, increased production volumes and increased
mine-life
Industry defining independent LCA studies shows Sovereign's
ability to reduce the carbon footprint
-- Scope 1, 2 and 3 benchmark Life Cycle Assessment (LCA)
studies for natural rutile and graphite produced from Kasiya have
the potential for a substantially reduced carbon footprint compared
to other titanium feedstocks and flake graphite products in the
market, with results including:
o Each tonne of natural rutile produced at Kasiya is expected to
have a Global Warming Potential (GWP) of only 0.1 tonnes CO(2) eq.,
which equates to a 95% to 97% reduction in total greenhouse gas
emissions (20 to 33 times less) compared to production of titania
slag and synthetic rutile respectively - both of which are
alternative titanium pigment feedstocks produced by upgrading
ilmenite via energy and carbon intensive processes
o Each tonne of graphite produced from Kasiya is expected to
have a GWP of only 0.2 tonnes CO(2) e which represents 80% lower
greenhouse gas emissions compared to natural graphite produced in
China
Offtake MoU for premium priced rutile sales to the welding
sector
-- MoU (non-binding) 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
-- Hascor to provide Sovereign with strategic advice on marketing and product development
-- Pricing of rutile for welding generally attracts significant
premiums to bulk rutile prices in the titanium pigment sector
Former Rio Tinto executive joins Sovereign board
-- Leading international mining executive, Mr Nigel Jones,
appointed as Non-Executive Director of Sovereign Metals and
Chairman of the ESG Committee
-- Mr Jones has over 30 years of mining industry experience with
22 years in a number of senior roles at Rio Tinto Group including
most recently as Managing Director of Rio Tinto's Simandou iron ore
project, one of the world's largest proposed mining
developments
Joined UK's Critical Minerals Association
-- During the quarter, Sovereign became a member of the UK's
Critical Minerals Association which works to increase the
self-sufficiency of supply chains for the UK's industrial
strategy
-- Presentation at UK Houses of Parliament on the potential for
Sovereign to become an important supplier of low carbon footprint
natural graphite
Rutile market remains strong and robust
-- Demand for high-grade titanium dioxide feedstocks continued
to remain strong, and along with supply shortages has led to
continued rutile price appreciation, with major producer Iluka
Resource commenting that the current rutile spot price is at ten
year highs.
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
CRITICAL MINERALS FOR A SUSTAINABLE WORLD
Sovereign is focused on developing its flagship project Kasiya,
which is a major potential source of sustainable critical raw
materials to contribute to a low carbon global economy.
-- natural rutile is the cleanest, purest natural form of
titanium dioxide with a far lower carbon footprint than other
higher energy and carbon intensive "upgraded" titanium pigment
feedstocks such as synthetic rutile or titania slag.
-- natural graphite mined, beneficiated, and purified with a
considerably lower carbon footprint than hard-rock operations or
synthetic graphite production, with the product potentially
suitable as feedstock for the rapidly expanding lithium-ion battery
sector.
Kasiya is the largest rutile deposit in the world and is highly
strategic in a market characterised by extreme supply deficit. The
initial Scoping Study confirmed Kasiya as a globally significant
natural rutile project with a multi-decade operation providing a
stable supply of highly sought-after rutile (TiO(2) ) and graphite
whilst contributing significantly to the economy of Malawi.
The initial Scoping Study completed in December 2021
demonstrated outstanding results including:
-- a 12Mtpa operation producing 122kt rutile and 80kt graphite
per annum over a 25 year mine life
-- exceptional economics including a post-tax NPV(8) of US$861m and post-tax IRR of 36%
-- a large-scale operation with a low-cost profile resulting
from the deposit's near surface nature, grade and excellent
existing infrastructure
-- a low carbon operation with the project to be powered by 100% renewables (hydro and solar)
The Company is advancing an updated Scoping Study which is
targeted for completion Q2 2022 to build on the 2021 Scoping Study.
This will be driven by the significant increase in the MRE,
providing the opportunity to assess higher grade throughput,
increased production rates and longer mine life.
KASIYA - THE LARGEST RUTILE DEPOSIT IN THE WORLD
In April, the Company announced its updated MRE for Kasiya which
confirmed it as a Tier 1 natural rutile deposit and a potential
major source of low CO(2) footprint critical minerals natural
rutile and graphite.
The updated MRE now places Kasiya as the largest rutile deposit
in the world with more than double the contained rutile as its
nearest rutile peer, Sierra Rutile (Tables 1, 2 & 3).
Additionally, the graphite by-product MRE at Kasiya places it as
one of the largest flake graphite deposits in the world.
Table 1: Kasiya Mineral Resource Estimate at 0.7% Rutile Cut-off
Mineral Resource Material Tonnes Rutile Rutile Tonnes TGC TGC Tonnes RutEq. Grade*
Category (millions) (%) (millions) (%) (millions) (%)
Indicated 662 1.05% 6.9 1.43% 9.5 1.73%
==================== =================== ======= ==================== ====== ==================== ==============
Inferred 1,113 0.99% 11.0 1.26% 14.0 1.59%
==================== =================== ======= ==================== ====== ==================== ==============
Total 1,775 1.01% 18.0 1.32% 23.4 1.64%
==================== =================== ======= ==================== ====== ==================== ==============
* RutEq. Formula: Rutile Grade x Recovery (97%) x Rutile Price
(US$1,346/t) + Graphite Grade x Recovery (62%) x Graphite Price
(US$1,085/t) / Rutile Price (US$1,346/t). All assumptions taken
from the Company's 2021 Scoping Study released 16 December 2021 **
Any minor summation errors are due to rounding
The MRE has broad zones of very high-grade rutile which occurs
contiguously across a very large area of over 180km(2) . Rutile
mineralisation lies in laterally extensive, near surface, flat
"blanket" style bodies in areas where the weathering profile is
preserved and not significantly eroded.
Overall, the new MRE shows a number of new large, but generally
discrete high grade rutile zones, particularly in the southern
parts and eastern parts of the resource area. The discovery and
delineation of these new high grade mineralised zones has been the
dominant factor in the tripling of the resource base.
A Total of 662 Mt (37%) of the total MRE reports to the
Indicated category @ 1.05% rutile and 1.43% TGC, with a recovered
grade of 1.73% RutEq.
The deposit is expansive with high-grade rutile mineralisation
commonly grading 1.2% to 2.0% in the top 3-5m from surface.
Moderate grade mineralisation generally grading 0.5% to 1.2% rutile
commonly extends from 5m to end of hole where it remains open at
depths >10m in numerous drill-defined, N to NE-striking
zones.
Graphite is generally depleted near surface in the top 3-5m with
grades commonly in the 0.1% to 0.5% total graphitic carbon (TGC)
range. Graphite grades generally increase with depth to about 8m,
then remain constant ranging from 1% to 8% TGC. A number of
higher-grade graphite zones at depth have been identified which are
generally associated with higher grade rutile at surface. Some of
these zones have graphite grades at depth >8m in the 4% to 8%
TGC range and represent very significant coarse flake graphite
tonnages.
The highlighted cut-off of 0.70% presents 1.8 billion tonnes at
a rutile grade of 1.01% with high-grade components providing over
352 Mt at a rutile grade of 1.44% at a 1.20% cut-off (Table 2). The
overall recovered rutile equivalent grade for the MRE at the global
0.7% cut-off is 1.64% RutEq. (Table 1).
Table 2: Kasiya Total Indicated + Inferred Mineral Resource
Estimate at various rutile cut-offs
Cut-off (rutile) Resource Rutile Grade Contained Graphite Contained
(Mt) (%) Rutile Grade (%) Graphite
(Mt) (Mt)
0.40% 2,825 0.84% 23.8 1.26% 35.5
================= ========= ============= ========== =========== ==========
0.50% 2,503 0.89% 22.4 1.30% 32.5
================= ========= ============= ========== =========== ==========
0.60% 2,155 0.95% 20.4 1.33% 28.6
================= ========= ============= ========== =========== ==========
0.70% 1,775 1.01% 18.0 1.32% 23.4
================= ========= ============= ========== =========== ==========
0.80% 1,391 1.09% 15.1 1.24% 17.3
================= ========= ============= ========== =========== ==========
0.90% 1,024 1.17% 12.0 1.09% 11.2
================= ========= ============= ========== =========== ==========
1.00% 727 1.26% 9.2 0.92% 6.7
================= ========= ============= ========== =========== ==========
1.10% 516 1.35% 7.0 0.76% 3.9
================= ========= ============= ========== =========== ==========
1.20% 352 1.44% 5.1 0.55% 1.9
================= ========= ============= ========== =========== ==========
1.30% 241 1.53% 3.7 0.46% 1.1
================= ========= ============= ========== =========== ==========
1.40% 165 1.62% 2.7 0.43% 0.7
================= ========= ============= ========== =========== ==========
Global Significance - Rutile
Natural rutile is a genuinely scarce commodity, with no other
known large rutile dominant deposits being discovered in over half
a century. Kasiya is now shown to be the largest single rutile
deposit in the world (Table 3), with central Malawi now hosting the
largest known rutile province in the world.
Current sources of natural rutile are in decline as several
operations' reserves are depleting concurrently with declining ore
grades. These include Iluka Resources' (Iluka) Sierra Rutile and
Base Resources' Kwale operations in Sierra Leone and Kenya
respectively. Additionally, there are limited new deposits forecast
to come online, meaning supplies of natural rutile are likely to
remain in extreme structural deficit.
Table 3: Summary of major rutile dominant resources (1)
In-situ Grade
================== =============== ========= ----------------------------------- =================
Resource Rutile Ilmenite Zircon TGC Contained Rutile
Company Project (Mt) (%) (%) (%) (%) (Mt)
================== =============== ========= ======= ========= ======= ====== =================
Sovereign Metals Kasiya 1,775 1.01% - - 1.32% 18.0
================== =============== ========= ======= ========= ======= ====== =================
Iluka Resources Sierra Rutile 752 1.10% 0.90% 0.10% - 8.1
================== =============== ========= ======= ========= ======= ====== =================
Iluka Resources Balranald(2) 53 3.68% 19.34% 3.38% - 2.0
================== =============== ========= ======= ========= ======= ====== =================
Base Resources Kwale 194 0.37% 1.31% 0.17% - 0.7
================== =============== ========= ======= ========= ======= ====== =================
Sources: Refer to Appendix 2
Notes:
1. Projects selected with rutile contributing over 30% of the in-situ value
2. The Balranald Project is being investigated for underground mining by Iluka
As contemplated in the December 2021 initial Scoping Study, the
Kasiya operation will primarily employ conventional hydro-mining to
produce a slurry that is pumped to a Wet Concentration Plant (WCP)
where the material is sized. A Heavy Mineral Concentrate (HMC) is
produced via processing the sand fraction through a series of
gravity spirals. The HMC is transferred to the dry Mineral
Separation Plant (MSP) where premium quality rutile is produced via
electrostatic and magnetic separation. Test work has been very
successful and has resulted in conventional flowsheets proving
highly efficient for producing premium quality rutile and graphite
products.
World-class rutile product chemical specifications are reported
at 95.0% to 97.2% TiO(2) with low impurities and stand-out
metallurgical recoveries ranging from 94% to 100%. For the Scoping
Study and rutile equivalent (RutEq.) grade calculation, a product
grade of 96% TiO(2) and recovery of 97% are assumed for rutile.
Graphite - A Valuable By-Product
The 23.4 Mt of contained graphite in the Kasiya MRE now places
it as one of the largest flake graphite deposits in the world
(Table 4).
Table 4: Summary of major listed flake graphite resources
Company(1) Project Resource TGC Grade Contained Graphite
(Mt) (%) (Mt)
Syrah Resources Balama 1,421 10.3% 146.3
====================== =============== ========= ========== ===================
Sovereign Metals Kasiya 1,775 1.3% 23.4
====================== =============== ========= ========== ===================
Volt Resources Bunyu 461 4.9% 22.6
====================== =============== ========= ========== ===================
Black Rock Mining Mahenge 213 7.8% 16.6
====================== =============== ========= ========== ===================
Mason Graphite Lac Gueret 83 17.6% 14.7
====================== =============== ========= ========== ===================
Magnis Energy Nachu 174 5.4% 9.3
====================== =============== ========= ========== ===================
NextSource Materials Molo 141 6.1% 8.7
====================== =============== ========= ========== ===================
Graphite One Graphite One 103 8.0% 8.2
====================== =============== ========= ========== ===================
Focus Graphite Lac Tetepisca 74 10.6% 7.9
====================== =============== ========= ========== ===================
Sources: Refer to Appendix 2
Graphite rich pre-concentrate will be produced from the light
fraction of the gravity spiral tails and processed in a separate
graphite flotation plant to produce a high-quality flake graphite
by-product. Because graphite will be a by-product from rutile
production, it will have a very low production cost compared to
graphite-only projects, as shown in the initial Kasiya Scoping
Study.
A very coarse-flake and high-grade graphite product at 96% TGC
can be produced via this simple flowsheet. This product has over
60% in the large to super-jumbo fractions (+180<MU>m) with
overall graphite recovery from the raw sample to product of
62%.
As well as being very coarse flake, the Kasiya graphite is also
highly crystalline and of high purity. These are both important
features required for use in lithium-ion battery anodes. The high
crystallinity means that the graphite will have high electrical
conductivity - a key requirement. High purity means the material
will be easier to upgrade to 99.95% TGC, the minimum requirement
for lithium-ion battery anodes.
INDUSTRY DEFINING LCA STUDIES
Sovereign's Natural Rutile to significantly reduce Pigment
Industry Carbon Footprint
Sovereign has recently completed LCA study assessing the GWP of
natural rutile produced at Kasiya.
This expanded LCA builds on the Company's LCA study completed
last year which demonstrated the substantial environmental benefits
possible by utilising natural rutile (TiO(2) ) versus beneficiated
high-grade titanium feedstocks made from the lower quality mineral
ilmenite (FeTiO(3) ) such as synthetic rutile and titania slag,
with this latest study extending the scope to include the positive
environmental attributes of the Kasiya operation.
In assessing each GWP, Scope 1, 2 and 3 greenhouse gas emissions
were included. The Greenhouse Gas Protocol supplies the world's
most widely used greenhouse gas (GHG) accounting standards and
establishes comprehensive global standardised frameworks to measure
and manage GHG emissions from private and public sector operations,
value chains and mitigation actions. The Protocol identifies three
"scopes" of GHG emissions which were included in this study.
The LCA demonstrated the potential for Sovereign's natural
rutile to significantly reduce the carbon footprint of the titanium
pigment industry. Each tonne of natural rutile produced at Kasiya
is expected to have a Global Warming Potential of only 0.1 tonnes
CO2 eq., which equates to a 95% to 97% reduction in total
greenhouse gas emissions (20 to 33 times less) compared to
production of titania slag and synthetic rutile respectively - both
of which are alternative titanium feedstocks produced by upgrading
ilmenite via energy and carbon intensive processes
Kasiya's by-product graphite has a significantly lower carbon
footprint than natural graphite from China
The LCA benchmarked the GWP of Sovereign's natural flake
graphite product versus natural flake graphite concentrate produced
in the Heilongjiang Province, China. This benchmark was chosen as a
comparison point as it is one of the largest global production
centres for natural flake graphite.
The Study made efforts to ensure maximum comparability for the
benchmarking exercise meaning that the Study focused on graphite
produced at site and does not include transportation. The Study
concluded that Sovereign's natural flake graphite concentrate has
significantly lower greenhouse gas emissions than the Chinese
produced natural flake graphite concentrate from the Heilongjiang
Province.
Each tonne of Sovereign's natural graphite is estimated to have
a GWP of 0.2 tonnes CO(2) e (carbon dioxide equivalent) - 5x lower
than producing natural flake graphite concentrate in the
Heilongjiang Province, China which is estimated to have a GWP of
1.1 tonnes CO(2) e for each tonne produced.
The significantly lower GWP for Kasiya graphite is due to the
fact that it is hosted in soft, friable saprolite material which
will be mined via hydro methods (high pressure water monitors)
powered by renewable energy sources - hydro power from the Malawi
grid and on-site solar power. This is opposed to the production in
Heilonjiang Province, China where hard-rock ore requires drilling,
blasting, excavation, trucking, crushing and grinding - overall
high CO(2) e activities.
In addition to the results of the LCA, the Company's research
noted a report published in the Journal of Industrial Ecology
estimating the GWP of synthetic graphite production. Synthetic
graphite is manufactured by high-temperature treatment of
by-products of hydrocarbon refining such as petroleum coke and coal
tar pitch. Currently, the highest purity synthetic graphite is
produced from petroleum needle coke which is a complex, emission,
and energy intensive process which is estimated to have a GWP of
20.6 tonnes CO(2) e for each tonne produced.
OFFTAKE MOU INTO PREMIUM PRICED WELDING SECTOR
In March, Sovereign 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 Kasiya to Hascor's processing plants and clients across five
continents.
The MoU with Hascor 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, TiO(2) pigment feedstock and titanium
metal.
Appointmment of Director
In February, the Company appointed leading international mining
executive, Mr Nigel Jones, as Non-Executive Director of Sovereign
Metals and Chairman of the ESG Committee. Mr Jones has over 30
years of mining industry experience with 22 years in a number of
senior roles at Rio Tinto Group, where most recently, Mr Jones was
Managing Director of Rio Tinto's Simandou iron ore project, one of
the world's largest proposed mining developments.
In this role, he was accountable for all aspects of the
project's development, including its complex environmental, social
and governance (ESG) strategy. Such aspects included impacts on
natural ecosystems, biodiversity, and community and government
relations.
Mr Jones was also a member of the senior leadership team of the
Energy and Minerals product group, which incorporated Rio Tinto's
titanium dioxide feedstock businesses in Canada and southern
Africa. Prior roles in Rio Tinto included Head of Business
Development, Head of Business Evaluation and Managing Director of
the group's Marine operations.
UK CRITICAL MINERALS ASSOCIATION
During the quarter, Sovereign became a member of the UK's
Critical Minerals Association (CMA) which works to increase the
self-sufficiency of supply chains for the UK's industrial strategy.
Discussions with governmental groups are ongoing with Sovereign's
Chairman attending the UK Government's Critical Minerals Strategy
Roundtable.
RUTILE MARKET
The rutile market fundamentals are robust with current and
forecast pricing remaining very strong.
Major producers Base Resources and Iluka Resources have reported
that demand for high grade TiO(2) feedstocks increased through the
quarter as western TiO(2) pigment producers maximise their output
volumes and the welding consumable and titanium metal sectors
continue to strengthen.
Major western pigment producers have reported that a lack of
titanium feedstock is limiting their production rates and
inhibiting their ability to meet demand from their end customers.
Rutile prices increased significantly through the quarter and
further price increases have been secured for the June quarter.
The war in Ukraine has caused disruptions throughout the
titanium feedstock and titanium finished goods supply chains, with
bulk exports of ilmenite for pigment manufacture and rutile used in
welding consumables significantly impacted. Ukrainian producers in
aggregate comprise the largest source of rutile to the global
welding market. The production and export of titanium metal has
also been impacted. A continuation of disruption to mining and
processing of titanium feedstock and finished goods will further
constrain supply into what is already a tight market.
Iluka reports current spot prices for rutile are at ten year
highs.
Sources:
Base Resources Limited - Quarterly Report 31 March 2022
Iluka Resources Limited - Quarterly Report 31 March 2022
NEXT STEPS
The updated MRE confirmed Kasiya as a Tier 1 mineral project,
being the largest deposit of natural rutile in the world and the
second largest flake graphite deposit in the world. The strong
economics of the project were confirmed in the initial Scoping
Study based on the previous resource estimate which was released in
December 2021.
Sovereign is rapidly continuing its work programs with the
following near and medium-term targets and developments:
-- An updated Scoping Study is targeted for completion Q2 2022
to build on the 2021 Scoping Study. This will be driven by the
significant increase in the MRE, providing the opportunity to
assess higher grade throughput, increased production rates and
longer mine life.
-- Initial Pre-feasibility Study (PFS) activities are commencing
and include metallurgical programs and hydrogeological studies.
Other study elements will commence shortly with major technical
consultant site visits commencing in April. The PFS is targeted for
completion in early 2023.
-- Drilling programs are planned to continue, testing depth and
lateral extensions at Kasiya. These include:
- An air-core drilling rig is set to be mobilise to Kasiya in
mid-May, with a planned 300 hole/10,000m program with the aim of
deepening the better high-grade areas in order to add to the next
MRE upgrade
- Continued infill and step-out hand-auger drilling expand the
overall mineralised footprint with drill teams to mobilise in
April
-- The Company continues to work with potential offtakers and
strategic partners in the pigment, welding and titanium metal
industries to secure further agreements regarding future
offtakes.
-- Continued strong focus on ESG and sustainability - initial
ESIA activities have commenced including environmental and
community baseline surveys, which will inform the upcoming PFS,
with continued focus on developing low carbon-footprint operations
taking advantage of renewable power supply and soft-friable
saprolite mineralisation to produce natural rutile and graphite
with far lower Global Warming Potential than alternative
products.
CORPORATE
At the date of release of this report, Sovereign has
approximately A$6.2m of cash at bank.
Subsequent to the end of the quarter, the Company issued 8.67
million shares as a result of the exercising of $0.50 unlisted
options. The exercising of the options raised an additional A$4.3m
in working capital to fund further exploration and development of
Kasiya.
During the quarter, Sovereign appointed Joh. Berenberg, Gossler
& Co KG (Berenberg) as the Company's Joint Corporate Broker to
work alongside the Company's other broker, Optiva Securities, to
further assist in raising Sovereign's profile in UK and European
capital markets.
RELATED PARTY PAYMENTS
During the quarter ended 31 March 2022, the Company made
payments of $188,000 to related parties and their associates. These
payments relate to existing remuneration arrangements (executive
salaries, director fees and superannuation of $88,000), business
development services ($25,000) and provision of serviced office
facilities, company secretarial services and administration
services ($75,000).
MINING EXPLORATION EXPITURES
During the quarter, the Company made the following payments in
relation to mining exploration activities:
Activity A$'000
------------------------------------------------------- -------------
Assaying and Metallurgical Test-work (578)
Resource Estimation and Studies (391)
Field Supplies, Equipment, Vehicles (120)
Tenement Rents and Rates (29)
Malawi Operations - Site Office, Personnel and Travel (525)
Total as reported in Appendix 5B (1,643)
------------------------------------------------------- -------------
There were no mining or production activities and expenses
incurred during the quarter ended 31 March 2022.
Competent Person Statement
The information in this announcement that relates to the Mineral
Resource Estimate is extracted from the announcement dated 5 April
2022. 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.
The information in this announcement that relates to Production
Targets, Processing, Infrastructure and Capital and Operating
Costs, is extracted from the announcement dated 16 December 2021
entitled 'Kasiya Scoping Study Confirms Globally Significant
Natural Rutile Project' (Announcement). Sovereign confirms that: a)
it is not aware of any new information or data that materially
affects the information included in the announcement; b) all
material assumptions and technical parameters underpinning the
Production Target, and related forecast financial information
derived from the Production Target included in the Announcement
continue to apply and have not materially changed; and c) the form
and context in which the relevant Competent Persons' findings are
presented in this presentation have not been materially modified
from the Announcement.
The information in this announcement that relates to the
Metallurgy is extracted from the announcement dated 7 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.
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.
Authorisation Statement
To view this announcement in full, including all illustrations
and figures, please refer to www.sovereignmetals.com.au .
APPIX 1: SUMMARY OF MINING TENEMENTS
As at 31 March 2022, the Company had an interest in the
following tenements:
Licence Holding Entity Interest Status Licence Renewal Expiry Term Licence Area Comments
Date Date(1) (km(2) )
EL0609 MML 100% Exploration 25/09/2024 25/09/2028 440.5 Granted
========= ================ ========= ============ ================ ================ =============== ===========
EL0582 SSL 100% Exploration 15/09/2023 15/09/2027 285.0 Granted
========= ================ ========= ============ ================ ================ =============== ===========
EL0372 SSL 100% Exploration N/A 13/03/2022(2) 729.2 Granted
========= ================ ========= ============ ================ ================ =============== ===========
EL0492 SSL 100% Exploration 29/01/2023 29/01/2025 935.4 Granted
========= ================ ========= ============ ================ ================ =============== ===========
EL0528 SSL 100% Exploration 27/11/2021(3) 27/11/2025 16.2 Granted
========= ================ ========= ============ ================ ================ =============== ===========
EL0545 SSL 100% Exploration 12/05/2022(3) 12/05/2026 53.2 Granted
========= ================ ========= ============ ================ ================ =============== ===========
EL0561 SSL 100% Exploration 15/09/2023 15/09/2027 124.0 Granted
========= ================ ========= ============ ================ ================ =============== ===========
EL0574 SSL 100% Exploration 15/09/2023 15/09/2027 292.0 Granted(4)
========= ================ ========= ============ ================ ================ =============== ===========
RL0012 SSL 100% Retention N/A 26/07/2026 6.0 Granted
========= ================ ========= ============ ================ ================ =============== ===========
Notes:
SSL: Sovereign Services Limited & MML: McCourt Mining
Limited
(1) An exploration licence (EL) covering a preliminary period in
accordance with the Malawi Mines and Minerals Act (2018) (Mines
Act) is granted for a period not exceeding three (3) years.
Thereafter two successive periods of renewal may be granted, but
each must not exceed two (2) years. This means that an EL has a
potential life span of seven (7) years. ELs that have come to the
end of their term can be converted by the EL holder into a
retention licence (RL) for a term of up to 5 years subject to
meeting certain criteria.
(2) Prior to expiry of EL0372, the Company applied for the grant
of a mining licence (ML) and a RL over separate parts of EL0372.
Under the Mines Act, an EL term automatically extends until the ML
application has been processed and/or granted.
(3) EL0528 and EL0545 currently under application for
renewal.
(4) Relinquishment report submitted.
APPIX 2 - PEER SOURCE INFORMATION
Table 3
Company Project Source
================ ============== ====================================================================================
Iluka Resources Sierra Rutile Iluka Resources Limited's 2021 Annual Report (released on ASX 24/02/2022)
================ ============== ====================================================================================
Iluka Resources Balranald Iluka Resources Limited Annual Ore Reserve and Resources as at 31 December 2021:
https://iluka.com/CMSPages/GetFile.aspx?guid=213396d8-1630-49ff-8d1b-fe4b1ee71e7e
================ ============== ====================================================================================
Base Resources Kwale Updated Kwale North Dune and maiden Bumamani Mineral Resource Estimate (released on
ASX 19/02/2021)
================ ============== ====================================================================================
Table 4
Company Project Source
Syrah Balama Syrah Resources Limited's 2021 Annual Report (released on ASX 24/02/2022)
Resources
=========== ========== =======================================================================================================================================================
Volt Bunyu Volt Resources Limited's 2021 Annual Report (released on ASX 29/09/2021)
Resources
=========== ========== =======================================================================================================================================================
Black Rock Mahenge ASX Announcement: Black Rock Mining confirms 25% increase in Measured Mineral Resource, now
Mining the largest in class globally (released 3/02/2022)
=========== ========== =======================================================================================================================================================
Mason Lac Mason Graphite's Corporate Presentation released July 2021
Graphite Gueret
=========== ========== =======================================================================================================================================================
Magnis Nachu Magnis' Corporate Presentation released February 2022
Energy
=========== ========== =======================================================================================================================================================
NextSource Molo https://www.nextsourcematerials.com/graphite/molo-graphite-project/
Materials
=========== ========== =======================================================================================================================================================
Graphite Graphite https://www.graphiteoneinc.com/graphite-one-increases-tonnage-grade-and-contained-graphite-of-measured-and-indicated-and-inferred-resources-in-updated
One One -mineral-resource-estimate/
=========== ========== =======================================================================================================================================================
Focus Lac https://focusgraphite.com/focus-graphite-reports-major-maiden-mineral-resource-estimate-at-lac-tetepisca-quebec/
Graphite Tetepisca
=========== ========== =======================================================================================================================================================
Appendix 5B
Mining exploration entity or oil and gas exploration entity
quarterly cash flow report
Name of entity
-----------------------------------------------------
Sovereign Metals Limited
ABN Quarter ended ("current quarter")
--------------- ----------------------------------
71 120 833 427 31 March 2022
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows (9 months)
$A'000 $A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (1,643) (4,920)
(b) development - -
(c) production - -
(d) staff costs (331) (900)
(e) administration and corporate
costs (148) (614)
1.3 Dividends received (see note - -
3)
1.4 Interest received 2 12
1.5 Interest and other costs of - -
finance paid
1.6 Income taxes paid - -
1.7 Government grants and tax - -
incentives
1.8.1 Other - R&D Tax Refund - -
1.8.2 Other - Business Development (234) (531)
---------------- -------------
1.8.3 Initial AIM Dual Listing Fees (388) (547)
---------------- -------------
Net cash from / (used in)
1.9 operating activities (2,742) (7,500)
----------------- ----------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire or for:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - (170)
(d) exploration & evaluation - -
(e) investments - -
(f) other non-current assets - -
2.2 Proceeds from the disposal
of:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment - -
(d) investments - -
(e) other non-current assets - -
2.3 Cash flows from loans to other - -
entities
2.4 Dividends received (see note - -
3)
2.5 Other (provide details if - -
material)
---------------- -------------
Net cash from / (used in)
2.6 investing activities - (170)
----------------- ----------------------------------- ---------------- -------------
3. Cash flows from financing
activities
Proceeds from issues of equity
securities (excluding convertible
3.1 debt securities) 1,923 1,923
3.2 Proceeds from issue of convertible - -
debt securities
Proceeds from exercise of
3.3 options 157 877
Transaction costs related
to issues of equity securities
3.4 or convertible debt securities (97) (101)
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
3.9 Other (provide details if - -
material)
---------------- -------------
Net cash from / (used in)
3.10 financing activities 1,983 2,699
----------------- ----------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 3,747 7,959
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (2,742) (7,500)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) - (170)
Net cash from / (used in)
financing activities (item
4.4 3.10 above) 1,983 2,699
Effect of movement in exchange
4.5 rates on cash held (151) (151)
---------------- -------------
Cash and cash equivalents
4.6 at end of period 2,837 2,837
----------------- ----------------------------------- ---------------- -------------
5. Reconciliation of cash and Current quarter Previous quarter
cash equivalents $A'000 $A'000
at the end of the quarter
(as shown in the consolidated
statement of cash flows) to
the related items in the accounts
5.1 Bank balances 1,848 59
5.2 Call deposits 989 3,688
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- -----------------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 2,837 3,747
----------------- ----------------------------------- ---------------- -----------------
6. Payments to related parties of the entity Current quarter
and their associates $A'000
Aggregate amount of payments to related
parties and their associates included in
6.1 item 1 188
----------------
6.2 Aggregate amount of payments to related -
parties and their associates included in
item 2
----------------
Note: if any amounts are shown in items 6.1 or 6.2, your quarterly
activity report must include a description of, and an explanation
for, such payments.
7. Financing facilities Total facility Amount drawn
Note: the term "facility' amount at quarter at quarter end
includes all forms of financing end $A'000
arrangements available to $A'000
the entity. Add notes as necessary
for an understanding of the
sources of finance available
to the entity.
7.1 Loan facilities - -
------------------- ----------------
7.2 Credit standby arrangements - -
------------------- ----------------
7.3 Other (please specify) - -
------------------- ----------------
7.4 Total financing facilities - -
------------------- ----------------
7.5 Unused financing facilities available at -
quarter end
----------------
7.6 Include in the box below a description of each facility
above, including the lender, interest rate, maturity date
and whether it is secured or unsecured. If any additional
financing facilities have been entered into or are proposed
to be entered into after quarter end, include a note providing
details of those facilities as well.
----------------- ---------------------------------------------------------------------------
-
-----------------
8. Estimated cash available for future operating $A'000
activities
Net cash from / (used in) operating activities
8.1 (item 1.9) (2,742)
8.2 (Payments for exploration & evaluation classified -
as investing activities) (item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item (2,742)
8.2)
8.4 Cash and cash equivalents at quarter end 2,837
(item 4.6)
8.5 Unused finance facilities available at quarter -
end (item 7.5)
--------
8.6 Total available funding (item 8.4 + item 2,837
8.5)
--------
Estimated quarters of funding available
8.7 (item 8.6 divided by item 8.3) 1
--------
Note: if the entity has reported positive relevant outgoings
(ie a net cash inflow) in item 8.3, answer item 8.7 as
"N/A". Otherwise, a figure for the estimated quarters
of funding available must be included in item 8.7.
8.8 If item 8.7 is less than 2 quarters, please provide answers
to the following questions:
8.8.1 Does the entity expect that it will continue to
have the current level of net operating cash flows for
the time being and, if not, why not?
-------------------------------------------------------------------
Answer: Yes
-------------------------------------------------------------------
8.8.2 Has the entity taken any steps, or does it propose
to take any steps, to raise further cash to fund its operations
and, if so, what are those steps and how likely does it
believe that they will be successful?
-------------------------------------------------------------------
Answer: Yes, at the date of release of this report, Sovereign
has approximately A$6.2m of cash at bank.
Subsequent to the end of the quarter, the Company issued
8.67 million shares as a result of the exercising of $0.50
unlisted options. The exercising of the options raised
an additional A$4.3m in working capital to fund further
exploration and development of Kasiya.
Further, on 28 April 2022, the Company announced a trading
halt of its securities on ASX, pending the announcement
regarding a capital raising.
-------------------------------------------------------------------
8.8.3 Does the entity expect to be able to continue its
operations and to meet its business objectives and, if
so, on what basis?
-------------------------------------------------------------------
Answer: Yes - refer to question 8.8.2.
-------------------------------------------------------------------
Note: where item 8.7 is less than 2 quarters, all of questions
8.8.1, 8.8.2 and 8.8.3 above must be answered.
----------------- -------------------------------------------------------------------
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
Date: 29 April 2022
Authorised by: Company Secretary
(Name of body or officer authorising release - see note 4)
Notes
1. This quarterly cash flow report and the accompanying activity
report provide a basis for informing the market about the entity's
activities for the past quarter, how they have been financed and
the effect this has had on its cash position. An entity that wishes
to disclose additional information over and above the minimum
required under the Listing Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in
accordance with Australian Accounting Standards, the definitions
in, and provisions of, AASB 6: Exploration for and Evaluation of
Mineral Resources and AASB 107: Statement of Cash Flows apply to
this report. If this quarterly cash flow report has been prepared
in accordance with other accounting standards agreed by ASX
pursuant to Listing Rule 19.11A, the corresponding equivalent
standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
4. If this report has been authorised for release to the market
by your board of directors, you can insert here: "By the board". If
it has been authorised for release to the market by a committee of
your board of directors, you can insert here: "By the [name of
board committee - eg Audit and Risk Committee]". If it has been
authorised for release to the market by a disclosure committee, you
can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the market
by your board of directors and you wish to hold yourself out as
complying with recommendation 4.2 of the ASX Corporate Governance
Council's Corporate Governance Principles and Recommendations, the
board should have received a declaration from its CEO and CFO that,
in their opinion, the financial records of the entity have been
properly maintained, that this report complies with the appropriate
accounting standards and gives a true and fair view of the cash
flows of the entity, and that their opinion has been formed on the
basis of a sound system of risk management and internal control
which is operating effectively.
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QRTFZGZDGLZGZZG
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