TIDMSVML
RNS Number : 1826U
Sovereign Metals Limited
29 July 2022
SOVEREIGN METALS LIMITED
NEWS RELEASE I 29 JULY 2022
JUNE 2022 QUARTERLY REPORT
Sovereign Metals Limited (Company or Sovereign) (ASX:SVM &
AIM:SVML) is pleased to provide its quarterly report for the period
ended 30 June 2022.
HIGHLIGHTS
Expanded Scoping Study results confirm Kasiya as an
industry-leading major source of critical raw materials
-- The Expanded Scoping Study (ESS) confirmed Kasiya as one of
the world's largest and lowest cost producers of natural rutile and
natural graphite with a carbon-footprint substantially lower than
current alternatives
-- The ESS demonstrated outstanding results including:
o a two-stage development (stage 2 self-funded) with full
production at 24Mtpa operation producing 265kt rutile and 170kt
graphite per annum with a 25 year mine life
o exceptional economics including a post-tax NPV(8) of US$1,537m and post-tax IRR of 36%
o a large-scale operation with a low-cost profile resulting from
the deposits near surface nature, grade, conventional processing
and excellent existing infrastructure
o conservative assumptions applied with long-term prices used
discounted against current spot prices
-- Natural rutile market is in structural deficit with current
global supply estimated to decline 45% in the next three years with
graphite demand set to soar as electric vehicle production is
forecast to increase 12-fold by 2040
-- Highly strategic project and a potential major source of raw
materials deemed critical to the decarbonisation of the global
economy
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
Offtake MoU and Market Alliance with major Japanese trader
-- MoU (non-binding) signed with Mitsui & Co Ltd (Mitsui),
one of the largest global trading and investment companies in
Japan
-- The MoU establishes a marketing alliance and offtake for
30,000 tonnes of natural rutile per annum. The alliance will allow
Sovereign to leverage off Mitsui's extensive network and their
market-leading understanding of the titanium industry and global
logistics
Institutional Placement for A$15m
-- In May 2022, Sovereign completed a Placement raising A$15m at
an issue price of A$0.67 from UK, European and North American
institutional investors
-- The Placement was corner-stoned by Thematica Future Mobility
UCITS Fund, a European green energy fund which offers exposure to
companies to benefit from the transition to clean and sustainable
energy solutions
PFS commenced with drilling underway and key consultants
appointed
-- Pre-Feasibility Study (PFS) for Kasiya commenced with
globally recognised consultants appointed.
-- 12,000m drilling program commenced across Kasiya to upgrade
higher-grade Mineral Resource areas to underpin conversion to
Reserves as part of the PFS
Rutile market remains strong and robust
-- Demand for high-grade titanium dioxide feedstocks continued
to remain strong, and along with supply shortages leading to
continued rutile price appreciation, with contract prices of
+US$1,500/t(1) recorded in the quarter and spot price currently
+US$2,200/t(2)
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
Optiva Securities +44 20 3137 1902
Daniel Ingram
Mariela Jaho
Christian Dennis
Sources:
1. Iluka Resources Limited - Quarterly Review to 30 June 2022
(released 20 July 2022)
2. Ruidow.com TiO(2) >95%, P<0.03%, S<0.03 CIF:
China
EXPANDED SCOPING STUDY
In June 2022, the Company announced the Expanded Scoping Study
that confirmed Kasiya will be one of the world's largest and lowest
cost producers of natural rutile and natural graphite with a
carbon-footprint substantially lower than current alternatives
while significantly contributing to the social and economic
development of Malawi.
HIGHLIGHTS
-- Significant increase in NPV and EBITDA from the 2021 Initial
Scoping Study with lower operating costs for a relatively small
increase in Capex to first production
US$1,537M 36% US$12,038M
================ ============= ===========
After Tax NPV(8) After Tax IRR LOM Revenue
------------- -----------
( 79%) (No change) ( 92%)
------------- -----------
US$323M US$320/t US$372M
================== ===================== =========================
Ave. Annual EBITDA Operating Cost Capex to 1(st) Production
per tonne of product
--------------------- -------------------------
( 101%) ( 10%) ( 12%)
--------------------- -------------------------
-- Potential to become a major producer in both the natural
rutile and graphite markets with steady state production of 265,000
tonnes of rutile and 170,000 tonnes of graphite over a 25-year mine
life
-- Low capital costs to first production due to exceptional
existing infrastructure offering significant cost reductions and
providing optionality and scalability
-- Low operating cost and high margins due to deposit size, zero
strip ratio with soft, friable high-grade mineralisation from
surface, amenability to hydro-mining, conventional processing,
enviable deposit location and low transport costs
-- Extremely favourable market fundamentals as rutile (titanium)
and natural graphite deemed critical raw materials for the US and
EU based on economic importance and supply risk
-- Natural rutile market in structural deficit with current
global supply estimated to decline 45% in the next three years with
graphite demand set to soar as electric vehicle production is
forecast to increase 12-fold by 2040
-- Natural ESG benefits for Kasiya:
o Substantially reduced CO(2) emissions for both rutile and
graphite compared to current alternatives, including substantial
Scope 3 emissions reductions for pigment production from rutile
compared to alternative feedstocks
o Significant social and economic benefits for Malawi including
job creation, fiscal returns, training and continued community
social initiatives
-- Study based on conservative commodity price estimates.
Long-term rutile price (real) of US$1,254/t versus current spot
price of +US$2,200/t(1) and long-term natural graphite basket price
(real) of US$1,085/t versus current equivalent spot price of
US$1,223/t(2)
The Study envisages a 25-year mine life during which time both
rutile and graphite are produced during two stages:
Stage 1 Years 0-5: 12Mt of ore processed per annum to produce
approximately 145,000 tonne of natural rutile and 85,000 tonnes of
flake graphite per annum
Stage 2 Years 6-25: Additional 12Mt capacity for total 24Mt of
ore processed per annum to produce approximately 265,000 tonnes of
natural rutile and 170,000 tonnes of flake graphite per annum.
Stage 2 will be funded from cashflows from Stage 1.
Table 1: Key Scoping Study Outcomes
Outcome Unit Kasiya Rutile Project
NPV(8) (real post-tax) US$ $1,537M
==================================================================== ======================= ======================
NPV(10) (real post-tax) US$ $1,185M
==================================================================== ======================= ======================
IRR (post-tax) % 36%
==================================================================== ======================= ======================
Capital Costs to First Production - Stage 1 US$ $372M
==================================================================== ======================= ======================
Expansion Capex - Stage 2 (funded from project cashflows) US$ $311M
==================================================================== ======================= ======================
Operating Costs US$/t mined $5.86
==================================================================== ======================= ======================
Operating Costs US$/t product $320
==================================================================== ======================= ======================
Revenue to Cost Ratio X 3.0
==================================================================== ======================= ======================
NPV(8) / Capital Costs to First Production X 4.1
==================================================================== ======================= ======================
Throughput (LOM) Mtpa 21.6
==================================================================== ======================= ======================
Life of Mine years 25
==================================================================== ======================= ======================
Annual Production - rutile ktpa 242
==================================================================== ======================= ======================
Annual Production - graphite ktpa 155
==================================================================== ======================= ======================
Total Revenue (LOM) US$ $12,038M
==================================================================== ======================= ======================
Annual Revenue (Average LOM) US$ $482M
==================================================================== ======================= ======================
Annual EBITDA (Average LOM) US$/year $323M
==================================================================== ======================= ======================
Payback - from start of production years 2.6 years
==================================================================== ======= =============== ======================
Payback - from start of construction years 3.7 years
==================================================================== ======= =============== ======================
Government Royalties (LOM) US$ $601M
============================================================================= =============== ======================
Corporate Taxes (LOM) US$ $2,138M
============================================================================= =============== ======================
ESS OVERVIEW
Sovereign is aiming to develop an environmentally and socially
sustainable operation to be the largest supplier of highly
sought-after natural rutile to global markets and an important
low-cost natural graphite supplier.
The proposed large-scale operation will process soft, friable
mineralisation from surface. The 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.
Graphite rich concentrate is collected from the gravity spirals
and processed in a separate graphite flotation plant, producing a
high purity and high value coarse-flake graphite product.
The Project has excellent surrounding infrastructure including
bitumen roads, a high-quality rail line connecting to the
deep-water of Nacala on the Indian Ocean and hydro-sourced grid
power. At full production, 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 deep-water
port of Nacala or southward via the Sena Rail Line to the
deep-water port of Beira.
LOW CARBON ADVANTAGE FOR TWO CRITICAL RAW MATERIALS
Natural Rutile - critical to lowering the Titanium industry's
carbon footprint
Like many other industries globally, the titanium dioxide
pigment industry is targeting reduced carbon emissions, reduced
energy consumption and a move toward renewable energy and waste
minimisation. A shift towards a greater percentage of natural
rutile feedstock offers the titanium pigment industry a simple and
short lead-time opportunity to significantly lower its carbon
intensity and total environmental impact.
Sovereign's natural rutile product is expected to have
substantially lower Global Warming Potential (GWP) (Scope 1, 2 and
3 scope emissions) when compared to other titanium feedstock
alternatives produced by upgrading ilmenite (i.e., synthetic rutile
and titania slag). Using natural rutile from Kasiya as titanium
feedstock for the chloride pigment process would significantly
reduce Scope 1, 2 and 3 greenhouse gas emissions.
Titanium feedstock is a key component of various industrial and
consumer products. Therefore, utilising natural rutile such as from
Kasiya as direct use titanium feedstock could hold the solution to
developing low-carbon footprint products including low carbon
paints.
Natural Graphite - a significant component in lithium-ion
batteries for electric vehicles
The lithium-ion battery sector is the main emerging market for
flake graphite. Greater capacity batteries, such as those required
for electric vehicles, are expected to drive significant demand for
graphite over the coming years. It is forecast the battery sector
will drive the largest demand for graphite by 2028, with graphite
making up to 50% of the composition of a lithium-ion battery.
Currently, China is the world's largest supplier of natural
flake graphite. In 2020, leading data provider and market
intelligence publisher Benchmark Mineral Intelligence reported that
China produced 86% of all lithium-ion battery anodes from natural
and synthetic graphite and 100% of all the world's natural graphite
anodes.
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 - 5x lower than producing natural flake graphite
concentrate in the Heilongjiang Province, China and 103x lower than
production of synthetic graphite.
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
Heilongjiang Province, China where hard-rock ore requires drilling,
blasting, excavation, trucking, crushing, and grinding - overall
high CO2e activities.
LOW-COST OPERATION
Kasiya's low operating costs are achieved through deposit size
and grade, zero strip ratio, location and excellent existing
operational infrastructure. Central Malawi boasts hydropower and an
extensive sealed road network. The Kasiya Rutile Project is
strategically located in close proximity to the capital city of
Lilongwe, providing access to a skilled workforce and industrial
services.
The existing quality logistics routes to the Indian Ocean
deep-water ports of Nacala and Beira for the export of products to
global markets provides significant capital cost savings for Kasiya
compared to many other undeveloped minerals projects.
The soft, friable and high-grade mineralisation occurring from
surface results in no waste stripping requirement and the
amenability to hydro-mining means the mining cost component is kept
relatively low.
One of the highest Revenue: Cost of Sales Ratios in the Mineral
Sands Industry
The revenue-to-cash cost ratio of 3.0x positions Kasiya in the
first quartile compared to other undeveloped mineral sands
operations. The production of high value natural rutile and
graphite provides strong margins with a cash margin of over 67% 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. 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.
Lowest Cost Flake Graphite Project in the World
Benchmarking the co-product production cost of graphite from
Kasiya based on the Study results against peer flake graphite
projects positions Kasiya as the lowest operating cost graphite
project in the world. Kasiya has an average life-of-mine FOB
(Nacala) operating cost of US$320 per tonne of product (rutile plus
graphite). On an incremental cost basis reflecting graphite
production as a co-product to primary rutile production, the
operating cost is US$140 per tonne of graphite produced (FOB
Nacala).
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. Additionally, the graphite
by-product MRE at Kasiya places it as one of the largest flake
graphite deposits in the world.
Table 2: Kasiya Mineral Resource Estimate at 0.7% Rutile Cut-off
Mineral Resource Category Material Tonnes (millions) Rutile Rutile Tonnes (millions) Total Contained Graphite (TGC) TGC Tonnes (millions) RutEq.
Grade*
(%) (%) (%)
Indicated 662 1.05% 6.9 1.43% 9.5 1.76%
============================ ============================ ======== ========================== ================================ ======================= ========
Inferred 1,113 0.99% 11.0 1.26% 14.0 1.61%
============================ ============================ ======== ========================== ================================ ======================= ========
Total 1,775 1.01% 18.0 1.32% 23.4 1.67%
============================ ============================ ======== ========================== ================================ ======================= ========
* RutEq. Formula: Rutile Grade x Recovery (98%) x Rutile Price
(US$1,308/t) + Graphite Grade x Recovery (62%) x Graphite Price
(US$1,085/t) / Rutile Price (US$1,308/t). All assumptions are taken
from this Study ** Any minor summation inconsistencies 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 1.76% 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 3). The
overall recovered rutile equivalent grade for the MRE at the global
0.7% cut-off is 1.67% RutEq. (Table 2).
Table 3: Kasiya Total Indicated + Inferred Mineral Resource Estimate
at various rutile cut-offs
Cut-off Resource Rutile Grade Contained Graphite Contained
(rutile) (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
=========== ========== =============== =========== ============ ==========
OFFTAKE AND MARKETING ALLIANCE
In July 2022, Sovereign entered into a non-binding Memorandum of
Understanding (MoU) with Mitsui & Co Ltd (Mitsui), one of the
largest global trading and investment companies in Japan. The MoU
establishes a marketing alliance and offtake for 30,000 tonnes of
natural rutile per annum from the Company's world-class Kasiya
project.
This MoU creates a marketing alliance between the two parties to
jointly market Sovereign's rutile across Asia and other markets.
The alliance will allow Sovereign to leverage off Mitsui's
extensive network and their market-leading understanding of the
titanium industry and global logistics.
Mitsui has shared samples of rutile product from Kasiya with
Asian end-users that have confirmed its premium chemical
specifications should be suitable for use in their titanium sponge
and pigment processes, as a precursor for high-grade,
high-specification titanium metal and pigment production.
COMMENCEMENT OF PFS
Activities for Kasiya's PFS have commenced with globally
recognised consultants appointed with the Company hosting a site
visit for all major consultants during the quarter. The first key
PFS program was initiated with the commencement of a major drilling
program across Kasiya.
Drilling
A 10,000m air-core (AC) drilling program was designed to extend
Indicated zones at depth to base of saprolite 20 - 25m, from the
current 10m average drill depth. Drilling will be on a 200m x 200m
grid to target Indicated classification which should convert to
Probable Reserves as part of the PFS.
The Company has also commenced a core (push-tube) drilling
program across Inferred areas of the MRE. This in-fill program is
targeting nearer-surface, high-grade areas for conversion to
Indicated and Measured resources.
In parallel to these mechanical drill programs, the Company is
continuing extensional and regional hand-auger drilling with
multiple drill teams active across the Company's extensive target
areas at Kasiya with the aim to expand the overall mineralised
footprint and identify further high-grade rutile zones.
The low cost and low impact hand-auger drilling technique has
proven to be a very effective exploration tool in the initial
delineation of the Kasiya rutile and graphite MRE.
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 further with
all rutile end-user sectors continuing to seek more supply than is
available as they aim to maximise output.
Supply of high-grade feedstock remains constrained with no new
major sources of supply likely to impact the market in the short
term. Rutile prices increased again through the quarter with
further price gains likely in the September 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.
Sources:
Base Resources Limited - Quarterly Activities Report - June
2022
Iluka Resources Limited - Quarterly Review to 30 June 2022
INSTITUTIONAL PLACEMENT
During the quarter, Sovereign completed a placement for A$15
million (gross proceeds) from UK, European and North American
institutional investors to subscribe for 22,210,268 new ordinary
shares of the Company at an issue price of A$0.67 plus a
one-for-two unlisted option with an exercise price of A$0.80 and 12
month expiry.
Thematica Future Mobility UCITS Fund, a Luxembourg-based green
energy fund with a strong emphasis on Critical Raw Materials and
ESG, was the cornerstone participant in the well-supported
Placement which will fund exploration and development activities at
Kasiya.
RELATED PARTY PAYMENTS
During the quarter ended 30 June 2022, the Company made payments
of $376,000 to related parties and their associates. These payments
relate to existing remuneration arrangements (executive salaries,
director fees, superannuation and bonuses of $231,000), business
development services ($45,000) and provision of serviced office
facilities, company secretarial services and administration
services ($100,000).
MINING EXPLORATION EXPITURES
During the quarter, the Company made the following payments in
relation to mining exploration activities:
Activity A$'000
------------------------------------------------------- --------
Drilling (103)
Assaying and Metallurgical Test-work (112)
Studies and Reserve/Resource Estimation (412)
Field Supplies, Equipment, Vehicles (199)
Tenement Rents and Rates (2)
Malawi Operations - Site Office, Personnel and Travel (507)
Total as reported in Appendix 5B (1,335)
------------------------------------------------------- --------
There were no mining or production activities and expenses
incurred during the quarter ended 30 June 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 June 2022
entitled 'Kasiya Expanded Scoping Study Results'. 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.
To view this announcement in full, including all figures and
illustrations, please refer to www.sovereignmetals.com.au .
APPIX 1: SUMMARY OF MINING TENEMENTS
As at 30 June 2022, the Company had an interest in the following
tenements:
Licence Holding Entity Interest Type Licence Renewal Expiry Term Licence Area Status
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
SOURCE 1 - MINERAL SANDS PEER INFORMATION
Reference Company Project Stage of Revenue Source
Development to Cost
ratio
Ilmenite Base Toliara FS Complete 3.5 ASX Announcement: https://wcsecure.weblink.com.au/pdf/BSE/02426235.pdf
-Madagascar Resources
============ =========== ============ ============= ======== =============================================================================================
Ilmenite - Strandline Coburn Construction 2.4 Investor Presentation:
Western https://www
Australia .strandline.com.au/irm/PDF/35d74951-750a-4bdf-8234-62e58a2d10a9/InvestorPresentation
============ =========== ============ ============= ======== =============================================================================================
Zircon - Sheffield Thunderbird FS Complete 2.1 ASX Announcement:
Western Resources https://www
Australia .sheffieldresources.com.au/site/PDF/1b39388b-3a10-4733-9976-167a3d4a2333/BFSUpdateMaterially
ImprovesProjectEconomics
============ =========== ============ ============= ======== =============================================================================================
Ilmenite - Bluejay Dundas FS Complete 2.0 Investor Presentation:
Greenland Mining https://bluejaymining.com/wp-content/uploads/2021/09/Jay-Corporate-September-2021-1.pdf
============ =========== ============ ============= ======== =============================================================================================
SOURCE 2 - GRAPHITE PEERS INFORMATION
Company Project Stage Operating Steady Current Source
of Development Costs State Production
(FOB) Production tpa
US$/t tpa
ASX Announcement: Updated
DFS Confirms Standout
Walkabout Graphite Project
A Resources Lindi Construction 347 40,000 n/a (7 Mar 2019)
=============== =========== ================ ========= =========== =========== =============================
ASX Announcement: Siviour
Definitive Feasibility
Study
B Renascor Siviour DFS Complete 355 105,000 n/a (11 Nov 2019)
=============== =========== ================ ========= =========== =========== =============================
SEDAR FILING: NI 43-101
Technical Report: Feasibility
Study Update of the Lac
Mason Gueret Graphite Project
C Graphite(1) Lac Gueret FS Complete 370 51,865 n/a (12 Dec 2018)
=============== =========== ================ ========= =========== =========== =============================
SEDAR FILING: NI 43-101
Technical Feasibility
Study Report for the
Matawinie
Nouveau Graphite Project
D Monde(1) Matawinie Construction 382 100,000 n/a (10 Dec 2018)
=============== =========== ================ ========= =========== =========== =============================
ASX Announcement: Q1 2022
Syrah Quarterly Activities Report
E Resources(2) Balama Production 464 184,000 46,000 (27 Apr 2022)
=============== =========== ================ ========= =========== =========== =============================
(Molo
NextSource Phase Press Release: MD&A March
F Materials 2) PEA Complete 496 150,000 n/a 2022
(16 May 2022)
=============================================== ========= =========== =========== =============================
ASX Announcement: Positive
Response to Proposed US$60m
Epanko Debt Financing
G Ecograf Epanko BFS Complete 500 60,000 n/a (10 Mar 2019)
=============== =========== ================ ========= =========== =========== =============================
SEDAR FILING: Lola Graphite
Project NI 43-101 Technical
Report - Feasibility Study
H SRG Mining Lola FS Complete 508 55,000 n/a (16 Aug 2019)
=============== =========== ================ ========= =========== =========== =============================
ASX Announcement: Nachu
Bankable Feasibility Study
Magnis Finalised
I Energy Nachu BFS Complete 559 220,000 n/a (31 Mar 2016)
=============== =========== ================ ========= =========== =========== =============================
(Molo SEDAR Filing: 2021 Annual
NextSource Phase Information Form
J Materials 1) Construction 566 17,000 n/a (28 Sep 2021)
=============== =========== ================ ========= =========== =========== =============================
COMPANY PRESENTATION:
Developing the World Class
Triton Ancuabe Graphite Project
K Minerals Ancuabe DFS Complete 634 60,000 n/a (16 Feb 2022)
=============== =========== ================ ========= =========== =========== =============================
COMPANY PRESENTATION:
Building the leading public
Northern Bisset graphite company
L Graphite(3) Creek FS & PEA 660 44,000 n/a (May 2022)
=============== =========== ================ ========= =========== =========== =============================
ASX Announcement: Positive
Stage 1 Feasibility Study
Bunyu For Bunyu Graphite Project,
(Stage Tanzania
M Volt Resources 1) FS Complete 664 23,700 n/a (30 Jul 2018)
=============== =========== ================ ========= =========== =========== =============================
NI 43-101 Preliminary
Economic Analysis On the
Graphite Graphite Graphite One Project
N One One PEA Complete 960 60,000 n/a (30 Jun 2017)
=============== =========== ================ ========= =========== =========== =============================
1. Canadian dollar (CAD) costs converted to US$ at CAD1.307 /
US$
2. Operating costs shown are actual C1 cash costs for Q1 2022;
Steady State Production is last quarter natural graphite production
annualised
3. Includes Phase 1 (Feasibility Study Stage) and Phase 2 (PEA
Stage)
SOURCE 3 - RUTILE MINERAL RESOURCES INFORMATION
Ref Company Project Status Source
==== ================ ============== ========================= ===================================================
1 Iluka Resources Sierra Rutile Production & Development Iluka Resources Limited's 2021 Annual Report
(released on ASX 24/02/2022)
==== ================ ============== ========================= ===================================================
2 Iluka Resources Balranald Development Iluka Resources Limited Annual Ore Reserve and
Resources as at 31 December 2021:
https://iluka.com/CMSPages/GetFile.aspx?guid=21339
6d8-1630-49ff-8d1b-fe4b1ee71e7e
==== ================ ============== ========================= ===================================================
3 Base Resources Kwale Production Updated Kwale North Dune and maiden Bumamani
Mineral Resource Estimate (released on ASX
19/02/2021)
==== ================ ============== ========================= ===================================================
Detailed Mineral Resources by Category
1. Iluka Resources - Sierra Rutile
Mt Rutile Grade* In-situ Rutile
---- -------------- ---------------
Measured 178 1.4% 2.4
---- -------------- ---------------
Indicated 309 1.0% 3.1
---- -------------- ---------------
Inferred 265 1.0% 2.6
---- -------------- ---------------
Total 752 1.1% 8.1
---- -------------- ---------------
2. Iluka Resources - Balranald
---- -------------- ---------------
Mt Rutile Grade* In-situ Rutile
---- -------------- ---------------
Measured 12 3.8% 0.5
---- -------------- ---------------
Indicated 28 4.3% 1.2
---- -------------- ---------------
Inferred 13 3.0% 0.4
---- -------------- ---------------
Total 53 3.7% 2.0
---- -------------- ---------------
3. Base Resources - Kwale
---- -------------- ---------------
Mt Rutile Grade* In-situ Rutile
---- -------------- ---------------
Measured 160 0.3% 0.3
---- -------------- ---------------
Indicated 91 0.2% 0.2
---- -------------- ---------------
Inferred 13 0.2% 0.2
---- -------------- ---------------
Total 254 0.2% 0.7
---- -------------- ---------------
* Rutile grade calculated as HM% times rutile % of
assemblage
SOURCE 4 - GRAPHITE RESOURCE INFORMATION
Ref Company Project Project Source
Status
1 Syrah Balama Production Syrah Resources Limited's 2021 Annual Report (released on ASX 24/02/2022)
Resources
==== =========== ========== =========== =======================================================================================================================================================
2 Volt Bunyu FS Volt Resources Limited's 2021 Annual Report (released on ASX 29/09/2021)
Resources Complete
==== =========== ========== =========== =======================================================================================================================================================
3 Black Rock Mahenge FS ASX Announcement: Black Rock Mining confirms 25% increase in Measured Mineral Resource, now
Mining Complete the largest in class globally (released 3/02/2022)
==== =========== ========== =========== =======================================================================================================================================================
4 Mason Lac FS Mason Graphite's Corporate Presentation released July 2021
Graphite Gueret Complete
==== =========== ========== =========== =======================================================================================================================================================
5 Magnis Nachu BFS Magnis' Corporate Presentation released February 2022
Energy Complete
==== =========== ========== =========== =======================================================================================================================================================
6 NextSource Molo PEA https://www.nextsourcematerials.com/graphite/molo-graphite-project/
Materials Complete
==== =========== ========== =========== =======================================================================================================================================================
7 Graphite Graphite PEA https://www.graphiteoneinc.com/graphite-one-increases-tonnage-grade-and-contained-graphite-of-measured-and-indicated-and-inferred-resources-in-updated
One One Complete -mineral-resource-estimate/
==== =========== ========== =========== =======================================================================================================================================================
8 Focus Lac Resource https://focusgraphite.com/focus-graphite-reports-major-maiden-mineral-resource-estimate-at-lac-tetepisca-quebec/
Graphite Tetepisca
==== =========== ========== =========== =======================================================================================================================================================
Detailed Mineral Resources by Category
1. Syrah Resources - Balama
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured 23 17.5% 4.0
------ -------- ------------
Indicated 378 11.2% 42.3
------ -------- ------------
Inferred 1,020 9.8% 100.0
------ -------- ------------
Total 1,421 10.3% 146.3
------ -------- ------------
2. Volt Resources - Bunyu
------ -------- ------------
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured 20 5.3% 1.1
------ -------- ------------
Indicated 155 5.0% 7.8
------ -------- ------------
Inferred 286 4.9% 14.0
------ -------- ------------
Total 461 4.9% 22.6
------ -------- ------------
3. Black Rock Mining - Mahenge
------ -------- ------------
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured 32 8.6% 2.7
------ -------- ------------
Indicated 85 7.8% 6.6
------ -------- ------------
Inferred 97 7.4% 7.2
------ -------- ------------
Total 213 7.8% 16.6
------ -------- ------------
4. Mason - Lac Gueret
------ -------- ------------
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured 19.0 17.9% 3.4
------ -------- ------------
Indicated 46.5 16.9% 7.9
------ -------- ------------
Inferred 17.6 17.3% 3.4
------ -------- ------------
Total 83.2 17.6% 14.7
------ -------- ------------
5. Magnis - Nachu
------ -------- ------------
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured 63 4.7% 3.0
------ -------- ------------
Indicated 61 5.7% 3.5
------ -------- ------------
Inferred 50 5.8% 2.9
------ -------- ------------
Total 174 5.4% 9.3
------ -------- ------------
6. NextSource - Molo
------ -------- ------------
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured 160 0.3% 0.3
------ -------- ------------
Indicated 91 0.2% 0.2
------ -------- ------------
Inferred 13 0.2% 0.2
------ -------- ------------
Total 254 0.2% 0.7
------ -------- ------------
7. Graphite One - Graphite One
------ -------- ------------
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured 2 8.0% 0.1
------ -------- ------------
Indicated 9 7.7% 0.7
------ -------- ------------
Inferred 92 8.0% 7.3
------ -------- ------------
Total 103 8.0% 8.2
------ -------- ------------
8. Focus - Lac Tetepisca
------ -------- ------------
Mt TGC (%) In-situ TGC
------ -------- ------------
Measured - -% -
------ -------- ------------
Indicated 59 10.6% 6.3
------ -------- ------------
Inferred 15 11.1% 1.6
------ -------- ------------
Total 74 10.6% 7.9
------ -------- ------------
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 30 June 2022
----------------------------------
Consolidated statement of cash Current quarter Year to date
flows (12 months)
$A'000 $A'000
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (1,335) (6,257)
(b) development - -
(c) production - -
(d) staff costs (573) (1,473)
(e) administration and corporate
costs (290) (878)
1.3 Dividends received (see note - -
3)
1.4 Interest received 8 20
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 (255) (785)
---------------- -------------
1.8.3 Initial AIM Dual Listing Fees - (547)
---------------- -------------
Net cash from / (used in)
1.9 operating activities (2,445) (9,920)
----------------- ----------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire or for:
(a) entities - -
(b) tenements - -
(c) property, plant and equipment (235) (405)
(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 (235) (405)
----------------- ----------------------------------- ---------------- -------------
3. Cash flows from financing
activities
Proceeds from issues of equity
securities (excluding convertible
3.1 debt securities) 14,915 16,839
3.2 Proceeds from issue of convertible - -
debt securities
Proceeds from exercise of
3.3 options 4,189 5,066
Transaction costs related
to issues of equity securities
3.4 or convertible debt securities (372) (500)
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 18,732 21,405
----------------- ----------------------------------- ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 2,837 7,959
Net cash from / (used in)
operating activities (item
4.2 1.9 above) (2,445) (9,920)
Net cash from / (used in)
investing activities (item
4.3 2.6 above) (235) (405)
Net cash from / (used in)
financing activities (item
4.4 3.10 above) 18,732 21,405
Effect of movement in exchange
4.5 rates on cash held 5 (145)
---------------- -------------
Cash and cash equivalents
4.6 at end of period 18,894 18,894
----------------- ----------------------------------- ---------------- -------------
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 1,322 1,848
5.2 Call deposits 17,572 989
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) 18,894 2,837
----------------- ----------------------------------- ---------------- -----------------
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 1 376
----------------
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) (2,445)
8.2 (Payments for exploration & evaluation classified -
as investing activities) (item 2.1(d))
8.3 Total relevant outgoings (item 8.1 + item (2,445)
8.2)
8.4 Cash and cash equivalents at quarter end 18,894
(item 4.6)
8.5 Unused finance facilities available at quarter -
end (item 7.5)
--------
8.6 Total available funding (item 8.4 + item 18,894
8.5)
--------
Estimated quarters of funding available
8.7 (item 8.6 divided by item 8.3) 7.7
--------
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: Not applicable
-------------------------------------------------------------------
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: Not applicable
-------------------------------------------------------------------
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: Not applicable
-------------------------------------------------------------------
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 July 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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