
SOVEREIGN Metals expected to spend $665m building its Kasiya Rutile-Graphite Project, representing an 11% increase over a previous estimate.
This is following an optimised prefeasibility study on the prospect which is situated in Southern Africa’s Malawi. The earlier study completed in 2023 estimated $597m in capital expenditure. Both estimates are pre-production capital spend.
But the life of mine capital decreases in terms of the optimised study. It falls to $1.13bn from $1.25bn. Other key metrics such as life of mine and plant throughput are unchanged (25 years and 12 million tons/year in the first four years respectively).
The estimated average rutile produced will be 222,000 tons in terms of the optimised study, unchanged from the former study but average graphite production falls slightly to 233,000 tons to 244,000 tons annually. This will be produced at an operating cost of about $423 per ton, Sovereign Metals said.
Kasyia has been described as the world’s highest grade rutile (titanium metals) deposit. It is also the second largest flake graphite deposit.
These twin benefits were clearly factors in attracting Rio Tinto to Sovereign. Rio announced last year it would buy about 35.4 million share options in Sovereign for A$18.5m (equal to 54 Australian cents a share) increasing its shareholding to 19.76% from the 15% beachhead it acquired in Sovereign for A$40.4m in 2023.
Rio Tinto has the option to become the operator of Kasiya once a definitive feasibility study is completed by the joint team.
The outcome for shareholders of the optimised study is an annual average pre-tax profit of $409m and an internal rate of return of 27%.
“The level of accuracy and confidence in the economic and technical fundamentals of Kasiya have taken a massive step forward,” said Frank Eager, MD and CEO of Sovereign Metals.
Shares in the company gained nearly 5% on the Australian Securities Exchange on Thursday taking gains over 12 months up an impressive 71%. Sovereign Metals has a market value of A$450m. The optimised study estimates a pre-tax net present value of US$2.3bn.
Of the two metals Kasyia will produce, graphite is causing a bit of a stir as the mineral in the electric vehicle market (the anode) least likely to be disrupted.
Sovereign has African competitors two of which are in Madagascar. In October, NextSource said the first commercial graphite concentrate was delivered from its Molo mine to clients in Germany and the US. NextSource is backed by Mick Davis, the former Xstrata boss. In 2023, Tirupati Resources achieved commercial grade production.
Another graphite miner is Syrah Resources which has a supply agreement with Tesla, the electric car manufacturer. The Australian listed firm, backed with US government loans, declared a force majeure in December amid post-election riots in Mozambique where its Balama mine is situated.