Rio Tinto lifts stake in Malawi rutile/graphite project

Titanium minerals are used in paint pigments

RIO Tinto has increased its investment in a specialist minerals project in Malawi agreeing to exercise options in Sydney-listed Sovereign Metals.

The mining group will 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%. Sovereign is developing the Kasiya Rutile-Graphite Project.

Rio Tinto’s increased investment underpinned “… Kasiya’s position as one of the most significant critical minerals projects globally,” said Ben Stoikovich, chairperson of Sovereign Metals in an announcement on Wednesday.

Shares in the company, which are now worth 70 cents/share, have increased a quarter in the last four trading days.

Rio Tinto bought a 15% beachhead in Sovereign last year for A$40.4m. In terms of this investment, the partners agreed to form a joint technical committee which also includes marketing.

Sovereign said this week the proceeds from Rio Tinto’s additional investment would be ploughed into optimising Kasiya. Rutile and graphite supplies the titanium pigment, titanium metal and the lithium-ion battery industries.

Kasiya, which Sovereign says on its website is the largest known rutile deposit globally, is scoped to produce about 222,000 tons of rutile and 244,000 tons of graphite annually.

The project will require $597m in pre-production capital expenditure. Graphite production is forecast to ramp up to more than 500,000 tons a year during the 25 year life of mine.

In terms of the farm-in agreement, Rio Tinto has the option to become the operator of Kasiya once a definitive feasibility study is completed by the joint team.