#SVML Sovereign Metals – June 2022 Quarterly Report

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 NPV₈ 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/t¹ recorded in the quarter and spot price currently +US$2,200/t²

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