REG - Sovereign Metals Ltd - Kasiya Optimisation Advances to Pilot Phase

Sovereign MetalsAnnouncement

22/05/2024 07:00

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RNS Number : 4216P  Sovereign Metals Limited  22 May 2024

NEWS RELEASE I 22 MAY 2024

KASIYA OPTIMISATION ADVANCES TO PILOT PHASE

 ·         Sovereign to immediately commence a pilot mining and land rehabilitation
           program ("Pilot Phase") at Kasiya as part of the ongoing Optimisation Study
 ·         Empirical data generated from the Pilot Phase will assist towards determining
           optimal excavation, material handling, processing, backfilling and
           rehabilitation approaches
 ·         Sovereign will excavate approximately 150,000 bench cubic metres of ore from a
           test pit over a three-month period using a combination of dry and hydraulic
           mining techniques
 ·         Excavated material will be processed on-site and at Sovereign's laboratory in
           Malawi and will also provide additional bulk samples for graphite product
           qualification
 ·         The test pit will be backfilled, and multiple rehabilitation strategies will
           be implemented to demonstrate successful restoration of agricultural land
 ·         Demonstrates strong support for mining projects in Malawi with all required
           approvals and community permissions for the Pilot Phase obtained within three
           months

 

Figure 1: Natural concentration of heavy minerals at surface at Kasiya
(Source: C12 Consultants)

Managing Director Frank Eagar commented: "Advancing to a Pilot Phase is an
important milestone for Kasiya. This covers the full spectrum of engineering
and design, logistics, materials handling, water and environmental approvals,
stakeholder engagement, livelihood restoration, tailings management and land
rehabilitation. The successful permitting is a testament to the strong owner's
team we have assembled. We are progressing Kasiya into a totally new phase of
development. The scale and results from this phase will significantly enhance
our knowledge base from the previous laboratory-based studies. I want to thank
the Malawi Government for an efficient approvals process, demonstrating just
how important Kasiya is to all stakeholders."

·

Classification 2.2: This announcement includes Inside Information

Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or Sovereign) is
pleased to announce that the Company has initiated a Pilot Mining and Land
Rehabilitation Program at its Kasiya Rutile-Graphite Project (Kasiya or
Project) in Malawi.

The results will allow Sovereign to determine optimal excavation, backfill and
land rehabilitation approaches. The Pilot Phase will be a demonstration to
local communities of the successful rehabilitation of land for agricultural
use post-mining. Results will also provide critical information for the
upcoming Definitive Feasibility Study (DFS) and once commenced, it will
shorten the time to its completion.

The objectives of the Pilot Phase include:

·    Optimisation of mining methods by construction of a pilot-scale open
pit close to the maximum depth of the current reserves at 20m;

·   Scale-up of existing in-country processing capability by installation
of commercial scale spirals to produce additional bulk samples for graphite
product qualification;

·      Optimising the tailings management and storage designs; and

·      Optimising land rehabilitation, soil restoration and selection of
revegetation species.

The commencement of the Pilot Phase follows the receipt within three months of
all relevant approvals and permissions from the Malawi Environment Protection
Authority (MEPA), National Water Resources Authority (NWRA), the Ministry of
Mines, and the local community.

The Pilot Phase will be undertaken on a 9.9-hectare site and will include the
following activities:

1.    Test Pit: A test pit of 120m by 110m will be excavated to a depth of
20m, allowing optimisation of hydraulic and dry mining excavation methods.

2.  Stockpiles: The excavated material will be temporarily stored in 4
stockpiles, namely all dry mining material, wet slimes (in a pond) and two
sizes of sand fractions from the hydraulic mining.

3.    Backfilling and Grading: The material will be placed back into the
pit, and all areas will be graded.

4.  Rehabilitation Demonstration: Sovereign will construct eight small
rehabilitation demonstration pits covering a combined area of 100m by 130m.
These will be used for water storage, excavated material storage, and
demonstration of multiple rehabilitation approaches.

5.    Temporary Laydown Areas: Four areas will be used as temporary laydown
areas, offices, and associated infrastructure.

6.    Communication: The Pilot Phase will be an educational opportunity for
Project stakeholders. Sovereign will undertake a series of stakeholder visits
and consultations for this purpose.

Kasiya is the world's largest natural rutile deposit and the second-largest
flake graphite deposit. Sovereign aims to develop a low-CO(2) and sustainable
operation to supply highly sought-after natural rutile and graphite to global
markets.

Results of the PFS, released in late 2023, demonstrated Kasiya's potential to
become the world's largest rutile producer at 222kt per annum and one of the
world's largest natural graphite producers (ex-China) at 244kt per annum.

The PFS delivered compelling economics with a post-tax NPV(8) of US$1.6
Billion and a post-tax IRR of 28%. This long-life, multi-generational
operation generates over US$16 Billion of revenue based on an initial 25-year
life-of-mine and delivers an average annual EBITDA of US$415 Million per
annum.

Pilot Phase Program Design

Activities have been designed to establish a 9.9-hectare site over the current
Ore Reserve defined in the Kasiya PFS, covering a mineralised zone with soil
conditions deemed representative of the overall Mineral Resource Estimate
(MRE). Over approximately three months, Sovereign will excavate several test
pits and collect geological and geotechnical samples. The main pit will be
backfilled with dry material, while material from hydraulic mining will be
used to fill the remaining pits as part of the rehabilitation phase.

Land rehabilitation will form an integral component of the DFS. Sovereign's
objective is to restore land after mining to conditions that achieve the same
or better agricultural yields than existing land uses and crop yields. For
this reason, the Company will undertake field-based demonstrations of
rehabilitation showcasing drying times, soil recoveries, soil nutrients,
growth variants, and including different soil inputs and revegetation methods.

Site Construction

Prior to the establishment of site infrastructure, eight boreholes have been
permitted and drilled using a locally appointed drilling contractor. These
boreholes will supply water to the site, which will be stored in a temporary
water storage pond.

A perimeter fence will be erected around the site to maintain the necessary
health and safety standards. Existing roads will be used for access to the
site and, if required, improved through grading.

Temporary buildings such as offices and stores will be brought to the site on
flatbed lorries and erected. To support pilot mining, two 1MW mobile
diesel-powered electricity generators will be installed to provide the
electricity required for high-pressure water monitors.

Pilot Mining

The main pit will be excavated using conventional load and haul to 20m depth
to develop a sump to test hydraulic mining to the full depth of the current
Ore Reserves. The excavated material will be temporarily stored in stockpiles.

On-Site Processing Facility

Material mined from the test pit will be processed on-site and at the
Company's laboratory facility in Lilongwe. As previously announced (Please
refer to announcement dated 1 May 2024 entitled "Sovereign to Increase Bulk
Sample Preparation Capacity"), as part of the Pilot Phase, a commercial-scale
spiral plant will be installed at site in Malawi.

Rutile and graphite concentrate samples generated from the Pilot Phase will be
shared with potential off-takers and end-users, and used for further testwork
as part of the Company's graphite commercialisation strategy.

Rehabilitation Phase

This phase will consist of establishing a strong soils baseline, backfilling
of the test pit with different soil compositions, rehabilitation tests,
revegetation with plants, and the improvement of soil conditions post-mining.

Regular monitoring and evaluation of the rehabilitation activities will be
undertaken to assess the progress of vegetation growth and soil stabilisation.
Following the conclusion of the rehabilitation, the proposed project site will
be returned to farmland.

Figure 2: Site layout

Permitting

Permissions for the Pilot Phase were received following the successful
submission of an Environmental and Social Management Plan to MEPA. Sovereign
is committed to the responsible development of Kasiya. The Pilot Phase will be
undertaken in accordance with Malawian Law and IFC Performance Standards,
which will include protecting local communities and the natural environment.

 

ENQUIRIES

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

Managing Director
+61(8) 9322 6322
+44 207 478 3900

 +61(8) 9322 6322

 

 Nominated Adviser on AIM and Joint Broker
 SP Angel Corporate Finance LLP             +44 20 3470 0470
 Ewan Leggat

 Charlie Bouverat

 Joint Brokers
 Stifel                                     +44 20 7710 7600
 Varun Talwar
 Ashton Clanfield

 Berenberg                                  +44 20 3207 7800
 Matthew Armitt
 Jennifer Lee

 Buchanan                                   + 44 20 7466 5000

Competent Person Statement

The information in this announcement that relates to the Mineral Resource
Estimate is extracted from an announcement dated 5 April 2023 entitled 'Kasiya
Indicated Resource Increased by over 80%' which is available to view at
www.sovereignmetals.com.au (http://www.sovereignmetals.com.au) and is based
on, and fairly represents information compiled by Mr Richard Stockwell, a
Competent Person, who is a fellow of the Australian Institute of Geoscientists
(AIG). Mr Stockwell is a principal of Placer Consulting Pty Ltd, an
independent consulting company. Sovereign confirms that a) it is not aware of
any new information or data that materially affects the information included
in the original announcement; b) all material assumptions included in the
original announcement continue to apply and have not materially changed; and
c) the form and context in which the relevant Competent Persons' findings are
presented in this announcement have not been materially changed from the
original announcement.

The information in this announcement that relates to Production Targets, Ore
Reserves, Processing, Infrastructure and Capital Operating Costs, Metallurgy
(rutile and graphite) is extracted from an announcement dated 28 September
2023 entitled 'Kasiya Pre-Feasibility Study Results' which is available to
view at www.sovereignmetals.com.au (http://www.sovereignmetals.com.au) .
Sovereign confirms that: a) it is not aware of any new information or data
that materially affects the information included in the original announcement;
b) all material assumptions and technical parameters underpinning the
Production Target, and related forecast financial information derived from the
Production Target included in the original announcement continue to apply and
have not materially changed; and c) the form and context in which the relevant
Competent Persons' findings are presented in this presentation have not been
materially modified from the Announcement.

The information in this announcement that relates to the Exploration Results
is extracted from an announcement dated 1 February 2024 entitled 'Extensions
to Rutile & Graphite Mineralisation at Kasiya' which is available to view
at www.sovereignmetals.com.au (http://www.sovereignmetals.com.au) . Sovereign
confirms that a) it is not aware of any new information or data that
materially affects the information included in the original announcement; b)
all material assumptions included in the original announcement continue to
apply and have not materially changed; and c) the form and context in which
the relevant Competent Persons' findings are presented in this report have not
been materially changed from the announcement.

 Ore Reserve for the Kasiya Deposit
 Classification  Tonnes     Rutile Grade  Contained Rutile      Graphite Grade (TGC) (%)  Contained Graphite  RutEq. Grade*

(Mt)
(%)
(Mt)
(Mt)
 (%)
 Proved          -          -             -                     -                         -                   -
 Probable         538       1.03%         5.5                   1.66%                     8.9                 2.00%
 Total            538       1.03%         5.5                   1.66%                     8.9                 2.00%

* RutEq. Formula: Rutile Grade x Recovery (100%) x Rutile Price (US$1,484/t) +
Graphite Grade x Recovery (67.5%) x Graphite Price (US$1,290/t) / Rutile Price
(US$1,484/t). All assumptions are from the Kasiya PFS ** Any minor summation
inconsistencies are due to rounding

 Kasiya Total Indicated + Inferred Mineral Resource Estimate at 0.7% rutile
 cut-off grade
 Classification  Resource  Rutile Grade  Contained Rutile  Graphite Grade (TGC) (%)  Contained Graphite

(Mt)
(%)
(Mt)
(Mt)
 Indicated        1,200    1.0%          12.2              1.5%                      18.0
 Inferred         609      0.9%          5.7               1.1%                      6.5
 Total            1,809    1.0%          17.9              1.4%                      24.4

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.

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

 

 

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