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#FCM First Class Metals PLC – Zigzag Drilling Results

First Class Metals PLC (“First Class Metals” “FCM” or the “Company”) the UK listed metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is delighted to announce the results of an inaugural drilling programme on the Company’s Zigzag Property, (the “Property”) located in the Seymour-Falcon corridor in northwestern Ontario, Canada.

HIGHLIGHTS

·      Assay results from the recent drill programme are in line with and exceed the channel sample results.

 

Selected highlights include:

ZIG-23-01    4.3m @ 1.65% Lithium (Li20) including 1m at 2.93%

ZIG-23-02    5.0m @ 1.5% Li20 including 0.2m @ 5.19% and 5.75m @ 0.21% Rb20

ZIG-23-07    6.5m @ 1.09% Li20 including 0.5m @ 2.76%

 

·      Elevated grades of several key technology critical metals present including: gallium (Ga), rubidium (Rb20) , caesium (Ca) and tantalum (Ta).

 

·      Significant upside for the expansion of the geochemical envelope along strike in both directions and down dip.

 

·      Initial geochemical results indicate the probable existence of a second structure.

 

·      An Exploration Permit to allow additional stripping and drilling on the Property is being drafted.

 

 

Marc J Sale Chief Executive Officer Commented- The results from our first drill programme at Zigzag are first class and have not only confirmed our belief in the potential of the ‘core zone’, but have also significantly exceeded our expectations for the Property. The associated critical metals identified have added another dimension to the Property’s potential.  Obviously more work is required specifically along strike and further exploration of the southern structure, hence we are to initiate discussion regarding a new Exploration Permit.

Zigzag is growing as a significant lithium and critical metal play in this rapidly emerging pegmatite district.”

 

A focussed drill programme of under 500m in 10 NQ diamond drillholes was completed in late December and all the geochemical assay results are now available. Nine of the holes were targeted at the pegmatite with two ‘step-back’ holes and a 10th being drilled as a scissor. All targeted holes successfully intersected the pegmatite.

The drilling has vindicated the channel sampling as well as extended the geochemical and geological knowledge of the structure hosting the pegmatite, (see Map 1). The most easterly and westerly holes indicate the structure remains open along strike and importantly the successful step-back holes show the structure continues and remains open at depth.

The Company will now look to initiate the next most appropriate plan of exploration which will be focussed to extend strike and delineate the recently discovered southern structure.

Map 1 showing the drill traces of the 10 holes drilled as well as their locations relative to the previous channel sampling.

 

Significant intersections for the drill programme appear in table 1, see below

Drill Hole

Metal

Depth From

Width

Grade

ZIG-23-01

Li₂O

12.7m

4.3m

1.65%

incl.

1.0m

2.93%

Rb₂O

11.7m

5.3m

0.21%

ZIG-23-02

Li₂O

15.0m

5.0m

1.5%

incl.

0.2m

5.19%

Rb₂O

14.25m

5.75m

0.21%

incl.

0.3m

0.54%

Cs

14.25m

3.25m

132 ppm

incl.

0.25m

430 ppm

Ta

14.0m

6.8m

90 ppm

incl.

0.2m

235 ppm

Ga

15.5m

0.2m

144 ppm

ZIG-23-03

Li₂O

14.7m

0.75m

2.1%

Rb₂O

12.6m

2.1m

0.16%

Cs

12.0m

5.0m

151 ppm

incl.

0.45m

480 ppm

Ta

12.6m

3.9m

164 ppm

incl.

0.45m

624 ppm

Ga

21.9m

0.25m

127 ppm

and

ZIG-23-03

Li₂O

28.4m

1.6m

0.46%

Rb₂O

27.8m

2.2m

0.17%

ZIG-23-04

Li₂O

20.0m

1.6m

0.79%

Rb₂O

20.0m

1.6m

0.21%

Ta

 15.3m

7.8m

165 ppm

 incl.

1.0m

347 ppm

ZIG-23-05

Li₂O

7.6m

6.0m

1.13%

incl.

1.0m

2.17%

Rb₂O

5.7m

3.8m

0.16%

Ta

4.8m

9.9m

167 ppm

incl.

0.4m

401 ppm

ZIG-23-06

Li₂O

28.8m

2.2m

1.09%

incl.

0.3m

2.26%

Rb₂O

28.8m

2.2m

0.19%

ZIG-23-07

Li₂O

9.9m

6.5m

1.09%

incl.

0.5m

2.76%

Rb₂O

10.4m

6.6m

0.21%

incl.

1.0m

0.41%

Cs

13.0m

4.0m

126 ppm

Ta

9.0m

7.4m

131 ppm

incl.

0.6m

177 ppm

ZIG-23-08

Li₂O

65.5m

3.0m

1.28%

Rb₂O

65.5m

3.4m

0.11%

Ga

65.5m

3.0m

98 ppm

incl

1.0m

114 ppm

ZIG-23-09

Li₂O

47.25m

4.75m

0.52%

incl.

0.8m

1.06%

Rb₂O

47.25m

4.75m

0.14%

 

Table 1 assays from the (nine) hole drill programme at Zigzag, every hole had reportable intersections of Li₂O with significant ‘credits’ from the accessory critical elements / metals, specifically rubidium oxide, Rb₂O.

 

Map 2 showing the relative position of the ‘core’ drill area and the soil sample lines as well as the geochemistry indicating the potential for a second subparallel structure to the south.

The combined geochemical data that the initial grab samples (RNS 31 October 2023), the subsequent channel sampling programme (RNS 28 November 2023) and the recent MMI soil survey (RNS 7 February 2024) support the belief that the ‘core 400m zone’ contains a significant structure of >1% Li₂O and is open along strike. As previously reported, both the most eastern and western holes of the recent drilling programme intersected pegmatite. The soil sample results further suggest that the mineralisation is open in both directions.

Furthermore, there is strong geochemical support for a sub parallel trend about 200m to the south of the Main Zone. Additional work is needed to expand and confirm the anomalism identified. As well follow up sampling is required to confirm the presence of a possible third trend currently identified in anomalous rare element results in grab samples.

 

Critical Technology Metals @ Zigzag

While the focus of the project remains on the lithium component, the presence of elevated levels of Rb₂O (peak 0.54% over 0.3m within interval of 5.75m @ 0.21% (2100 g/t) in hole ZIG-23-02), Caesium (peak 480 g/t over 0.45m within interval of 5.00m @ 151 g/t in hole ZIG-23-03), Gallium, and Tantalum (peak 624 g/t over 0.45m within interval of 164g/t over 3.9m in hole ZIG-23-03-03) are potentially a significant ‘credit’ to the metallurgy of any resource identified.

These speciality metals have been classified as 1 & 2 ‘Critical Metals’ by the USA and Canadian Governments, highlighting their significance usage in modern technology due to their crucial role in various electronic, semi-conductor, and military hardware. Currently China dominates world production and supply of all these elements.

Despite the limited market for specialty metals, it is noteworthy that Rubidium has recently demonstrated a strong price performance, with trading prices exceeding $3100 per ounce on the Shanghai Metals Market3. Recognizing the potential economic benefits and value-added by these specialty technology metals, First Class intends to conduct further investigations into their possibilities and explore their impact on the overall value of the project.

 

https://www.usgs.gov/news/national-news-release/us-geological-survey-releases-2022-list-critical-minerals

2 https://www.canada.ca/en/campaign/critical-minerals-in-canada/critical-minerals-an-opportunity-for-canada.html

3https://www.metal.com/Other-Minor-Metals/202012250003

 

 

Ends

For further information, please contact:

 

James Knowles, Executive Chairman

JamesK@Firstclassmetalsplc.com

07488 362641

Marc J Sale, CEO

MarcS@Firstclassmetalsplc.com

07711 093532

 

Novum Securities Limited

(Financial Adviser)

David Coffman/ George Duxberry

 www.novumsecurities.com

(0)20 7399 9400

Qualified Person

The technical disclosures contained in this announcement have been drafted in line with the Canadian Institute of Mining, Metallurgy and Petroleum standards and guidelines and approved by Marc J. Sale, who has more than 30 years in the gold exploration industry and is considered a Qualified person owing to his status as a Fellow of the Australian Institute of Mining and Metallurgy.

#FCM First Class Metals PLC – Zigzag-Further Lithium & Critical Metal trend

First Class Metals PLC (“First Class Metals” “FCM” or the “Company”) the UK listed metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is pleased to announce the results of a mobile metal ion (MMI) soil sampling programme as well as accompanying rock-grab samples on the Company’s Zigzag Property , (the “Property”) located in the Seymour-Falcon corridor in northwestern Ontario, Canada.

Soil samples were collected along six north-north-west to south-south-east soil sample lines between 100-200m in length, with 12.5m sample station spacing (see Map 1). These included four lines along strike to the west and east of the main 400m ‘core zone’ which was subject to the drilling campaign in December 2023. A further two lines starting ~200m orthogonal to the dominant strike and to the south of the trend of the main zone were sampled. All soil samples were analysed using the Mobile Metal Ion (MMI) method of SGS Labs.

The sample results support the belief that the ‘core 400m zone’ is open along strike. As previously reported, both the most eastern and western holes of the recent drilling programme intersected pegmatite. The soil sample results further confirm the mineralisation is open.

HIGHLIGHTS

·      The results from 64 rock-grab and 68 soil samples collected late last year are now available.

·      Soil sampling lines to the east west of the core section show anomalous lithium (Li) ratios.

·      Results from soil lines 200m to the south of the ‘Main zone’ indicate the probability of a second subparallel structure.

·      Grab samples anomalous in Li and other pegmatite associated elements indicate a possible third trend.

·      Assay results from the recent drill programme are anticipated in the coming days.

Marc J Sale Chief Executive Officer Commented- The results from this combined sampling programme validate the belief by FCM that the ‘Main Zone’; is open along strike for a considerable distance. Furthermore, the strong evidence of a second structure to the south with the possibility of a third structure compels FCM to engage in discussions with the First Nations to initiate the application for an Exploration Permit to be able to fully evaluate these new zones”.

 

 

Map 1, showing the location of the MMI samples as well as the response ratio (RR) for caesium, (Cs) which overall is the most representative of the anomalism. Note[1]: values are generally considered anomalous when the response ratio is above 5.

RR Response Ratio Highlights from MMI sampling

·     Highest lithium (“Li”) response ratio (“RR”) of 11 obtained ~100m along strike to the east of the eastern most DDH from December 2023 (ZIG-23-07).

·     Highest caesium (“Cs”) RRs of 15 and 30 obtained at consecutive stations ~100m along strike to the west of the western extent of sampling on the main zone.

·     Li RRs up to 10 on the southern lines.

·     Multiple MMI anomalies in other elements, especially on the eastern and southern lines, zinc RRs up to 40, silver up to 50, molybdenum up to 51, copper up to 21.

 

[1] According to SGS Labs, response ratios generally need to be greater than 2-5 to be considered anomalous. https://www.sgs.com/en-ca/-/media/sgscorp/documents/corporate/brochures/sgs-minerals-mmi-tb-23-processing-and-presenting-mmi-geochemical-data.cdn.en-CA.pdf

Grab Samples

·      Grab samples of pegmatite at two sites 200-250m across strike to the south of the main zone returned up to: 2600 ppm Li; 4290 ppm Rubidium; 920 ppm Cs (highest value of 2023 sampling); and 686 ppm Tantalum. Sampled dykes could represent offshoots of a parallel zone to the main zone.

·      Grab samples of pegmatite ~500m across strike to the south of the eastern extension of the main zone, near the eastern property boundary, returned up to 186 ppm Li; 1240 ppm Rb; 102 ppm Cs, potentially a third structure.

Coleman Robertson, Project Geologist from Emerald Geological Services commented– “There is compelling geochemical evidence to indicate that a second subparallel trend at Zigzag could be present.

The combined results of both the soil sampling programme and the associated ‘grab’ samples support the belief that the ‘core zone/ Main zone’ that was drilled in December is open to both the west and east.

Furthermore, there is strong geochemical support for a sub parallel trend about 200m to the south of the Main Zone. Additional work is needed to expand and confirm the anomalism identified. As well follow up sampling is required to confirm the presence of a possible third trend currently identified in anomalous rare element results in grab samples.

A significant silver anomaly was identified over the two eastern most MMI lines off the Main Zone. This also requires further investigation.

Ends

For further information, please contact:

James Knowles, Executive Chairman

JamesK@Firstclassmetalsplc.com

07488 362641

Marc J Sale, CEO

MarcS@Firstclassmetalsplc.com

07711 093532

 

Novum Securities Limited

(Financial Adviser)

David Coffman/ George Duxberry

 www.novumsecurities.com

(0)20 7399 9400

Qualified Person

The technical disclosures contained in this announcement have been drafted in line with the  Canadian Institute of Mining, Metallurgy and Petroleum standards and guidelines and approved by Marc J. Sale, who has more than 30years in the gold exploration industry and is considered a Qualified person owing to his status as a Fellow of the Australian Institute of Mining and Metallurgy.

#SVML Sovereign Metals LTD – December 2023 Quarterly Report

Project Optimisation

·        During the quarter, Sovereign advanced optimisation test work and technical studies for the Kasiya rutile-graphite project (Kasiya or the Project) with the Company’s strategic investor, Rio Tinto

·        Significant field activities and a number of test work programs have commenced in order to provide data for the Project optimisation phase

·        The Company aims to become the world’s largest, lowest cost and lowest-emissions producer of two critical minerals – titanium (rutile) and graphite

Key Management Appointments to Drive Project Optimisation and Development at Kasiya

·        Appointment of experienced Africa-based mining executive, Mr Frank Eagar, as the new Managing Director and CEO

·        Previous Managing Director Dr Julian Stephens has transitioned to Non-Executive Director

·        Key technical appointments of experienced African engineering, social and environmental teams to work on advancing the Kasiya project

Lithium-Ion battery graphite program upscaled

·        Over 60 tonnes of ore was extracted targeting production of an initial 600kg of natural graphite for lithium-ion battery anode test work and product qualification

·        The upscaled graphite qualification program will support ongoing Project studies

·        Sovereign and Rio Tinto have agreed to collaborate to qualify graphite from Kasiya, with a particular focus on supplying the spherical purified graphite (SPG) segment of the lithium-ion battery anode market

·        This graphite qualification program coincides with China’s announced curbs on exports of natural graphite, a critical mineral for the US, EU, Japan and Australia

Highly-experienced social specialist appointed

·        Africa-based social specialist consultancy, SocialEssence were appointed to lead social and community development programs for Sovereign in Malawi

·        SocialEssence joins Sovereign’s Owners Team and will design, implement, and manage several social and community initiatives which will feed into Project studies and permitting

·        SocialEssence has a strong and successful track record of implementing social responsibility programs across southern Africa, including at First Quantum Minerals’ Zambian project

 

Classification 2.2: This announcement includes Inside Information

ENQUIRIES

Mr Frank Eagar (South Africa/Malawi)
Managing Director and CEO

+27 76 753 5377

Sam Cordin (Perth)
+61 (0)422 799 087

Sapan Ghai (London)
+44 207 478 3900

 

 

Nominated Adviser on AIM and Joint Broker

SP Angel Corporate Finance LLP

Joint Brokers

Berenberg

Buchanan

+44 20 7466 5000

 

KASIYA PROJECT OPTIMISATION

The Pre-Feasibility Study (PFS) confirmed Kasiya as a potential major critical minerals project with an extremely low CO2-footprint delivering substantial volumes of natural rutile and graphite to global markets while generating significant economic returns.  

At the completion of the PFS, the Company commenced an optimisation study phase prior to advancing to the Definitive Feasibility Study (DFS). During the quarter, significant field activities and test work commenced.

The optimisation phase will be conducted in collaboration with the Company’s strategic partner, Rio Tinto, following their investment into the Company in July 2023.

KEY MANAGEMENT APPOINTMENTS TO DRIVE PROJECT OPTIMISATION

Effective from 20 October 2023, the Company appointed Mr Frank Eagar as Managing Director and Chief Executive Officer (CEO). Dr Julian Stephens, transitioned to a Non-Executive Director of Sovereign, remaining as a consultant assisting and supporting the incoming technical and management team.

Mr Eagar has over 20 years’ experience in the financing, permitting, development and operation of mining projects with a strong focus in southern Africa.

Mr Eagar is a Chartered Accountant who has gained extensive corporate, commercial and technical experience in the mining sector throughout his career. Mr Eagar has previously held a number of senior executive positions in the resources sector, more recently with African mining focused private equity firm AMED Funds, which included acting as Chief Financial Officer (CFO) for AMED’s controlled company, Central Copper Resources PLC (Central Copper).

Prior to Central Copper, Mr Eagar was the CEO (and prior to that the CFO) of Baobab Steel Limited (Baobab) another AMED controlled company, where he managed the completion of a DFS and a joint venture with the World Bank’s IFC to procure strategic investors and raise project finance for Baobab’s US$1 Billion, fully permitted, integrated 500ktpa Steel and Vanadium Project in Mozambique.

Mr Eagar joined Sovereign in December 2022 as General Manager in Malawi, where he has already expanded the team with a focus on Malawian nationals, developed strong relationships with Government and developed a clear understanding of the Kasiya Project and its development landscape.

Sovereign has also made several key technical appointments as the Company transitions into project optimisation and development of the Kasiya Project and is poised to become a significant supplier of natural rutile and graphite. These key appointments bring a strong track record of successful large-scale project development and operations management, as well as extensive experience in southern Africa.

These management changes come at an important time for the Company as it transitions from the PFS into the next study phases including optimisation, community and stakeholder engagements and project permitting.

LITHIUM-ION BATTERY GRAPHITE PROGRAM UPSCALED

During the quarter, Sovereign completed the extraction of a 60 tonne bulk sample of ore from Kasiya to produce an initial 600kg of natural flake graphite. This sampling program is part of the Company’s graphite qualification, product development and downstream battery anode test work phase. A major component to graphite sales agreements is customer qualification with graphite produced from this program to be shared with prospective end-users in addition to being used for upscaled downstream test work.

The mechanised drill program used a bespoke 300mm diameter spiral auger to extract the material from across Kasiya’s planned future pits with sampling to a maximum 20m depth.

A group of men wearing hard hats and blue overalls Description automatically generated

Figures 1 & 2: Bulk sample mechanised spiral drilling and sampling at Kasiya in November 2023

The bulk sample is undergoing pre-processing at the Company’s laboratory in Lilongwe, Malawi. The sample is being processed utilising the newly installed Kwatani 30-inch single and double-deck vibrating separators for sizing and de-sliming (Figure 3). The sand fraction is then processed over the new Holman Wilfley 2000 wet shaking table to produce a graphite pre-concentrate and a separate heavy mineral concentrate (HMC) containing the rutile (Figure 4). The graphite pre-concentrate is expected to grade 4-5% Ct.

A group of people in blue uniforms Description automatically generated A circular object with a round surface Description automatically generated with medium confidence

Figure 3. Installation of the new Kwatani 30-inch single-deck and double-deck vibrating separators for sizing and de-sliming bulk samples at the Company’s Malawi laboratory and metallurgical facility

Figure 4: Holman-Wilfley 2000 Series shaking table operating at Sovereign’s Lilongwe laboratory in Malawi.

 

Final processing will then be completed at international commercial laboratories. The graphite pre-concentrate will undergo traditional flotation and polishing processes to target >96% Ct product suitable as a lithium-ion battery anode feedstock.

Downstream Test work

The initial ~600kg of flake graphite product produced will be used for downstream test-work and product qualification targeting the battery anode sector. Previously reported initial characterisation test work on Kasiya’s graphite has indicated excellent suitability for use in lithium-ion batteries with very high purity and very high crystallinity being the key features (refer to ASX Announcement dated 8 June 2023).

Downstream test-work and qualification on the flake graphite product will involve the following stages to be completed at recognised international battery sector laboratories;

–    Purification to >99.95% Ct

–    Micronisation

–    Spheronisation

–    Carbon coating

–    Anode production

–    Electrochemical characterisation

Raw flake graphite products plus final CSPG (coated spheronised graphite product) will be provided to potential offtakers for assessment and pre-qualification. Through Sovereign’s long-term experience in graphite, the Company has built a strong understanding of the graphite market and developed well-established relationships with offtakers and customers.

A close-up of a microscope Description automatically generated

Figures 5 & 6: SEM micrograph of Kasiya graphite flotation concentrate from previous test work

Industry Developments

The upscaled graphite program comes as China implements curbs on exports of natural graphite under “national security” concerns. Effective 1 December 2023, China requires export permits for some graphite products including natural graphite and natural graphite products critical to EV production. China is the world’s top graphite producer and exporter and also refines more than 90% of the world’s graphite into the material that is used in virtually all EV battery anodes.

China’s commerce ministry said the move on graphite was “conducive to ensuring the security and stability of the global supply chain and industrial chain, and conducive to better safeguarding national security and interests”.

Since the restrictions, total exports of flake graphite dropped by 94% on a monthly basis in December, while exports of spherical graphite slumped by 92% (China customs data). Exports to major destinations also slowed notably in December. Flake graphite volumes to Japan fell from 6,138 tonnes in November to zero in December, while exports to the United States fell from 511 tonnes in November to zero in December (Fastmarkets). It was reported by Japan News, that, Japan, which depends on China for 90% of its graphite imports, likely needs to urgently diversify its procurement sources.

Kasiya is one of the world’s largest natural flake graphite deposits and has the potential to become a key source of long term strategic supply to the US, UK, EU, Japan and South Korea.

HIGHLY-EXPERIENCED SOCIAL SPECIALIST APPOINTED

Subsequent to the quarter, Sovereign appointed SocialEssence (Pty) Ltd (SocialEssence), an Africa-based specialist social performance consultancy, who will assist in the continued development of the Company’s stakeholder relations, social performance objectives and its Community and Social Responsibility (CSR) framework. 

Sovereign has engaged SocialEssence to design and execute social performance activities during the DFS phase. Founder, Mr Garth Lappeman, has over 16 years of on the ground social performance planning and implementation experience in accordance with IFC Performance Standards and World Bank Environmental, Health and Safety Guidelines. SocialEssence has been active in a number of countries working on projects in Angola, Botswana, Democratic Republic of Congo, Kenya, Kyrgyzstan, Liberia, Malawi, Mozambique, Namibia, Panama, Uganda, Sierra Leone, South Africa, Northern Sudan, Tanzania, Uzbekistan, and Zambia.

Most notably, in Zambia, SocialEssence’s Director was involved from early exploration through to steady state production of First Quantum Minerals Ltd’s (First Quantum Minerals) Trident operations, which includes the Sentinel Copper Mine which is of similar scale to Sovereign’s Kasiya project. Mr Lappeman was responsible for implementing and managing social and community initiatives for First Quantum Minerals as it established its large-scale commercial operations

SocialEssence will:

·      prepare Kasiya’s Social Impact Assessment and Management Plan for the DFS and permitting;

·      design, implement and manage social performance activities including stakeholder engagement, development of key relationships;

·      prove the feasibility of critical social performance measures (including early local content, and piloting of livelihood restoration programs, and piloting of rehabilitation activities to restore land for agricultural use); and

·      align with the Company’s ESG Framework.

NEXT STEPS

Sovereign is currently conducting an optimisation study prior to advancing to the DFS. The Company aims to become the world’s largest, lowest cost and lowest-emissions producer of two critical minerals – titanium (rutile) and graphite. The Company plans to update the market on the progress of the following in coming months:

·     Further appointments to owner’s team to build on the Company’s execution capabilities;

·     Results of graphite product development, downstream and qualification test work;

·     Regional hand-auger drilling on mineralisation extensions;

·     Progress on the optimisation work streams alongside Rio Tinto via the project Technical Committee; and

·     Community and social engagements across Malawi and the Kasiya area.

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 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. 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.

Ore Reserve for the Kasiya Deposit

 

Classification

Tonnes
(Mt)

Rutile Grade
(%)

Contained Rutile
(Mt)

Graphite Grade (TGC) (%)

Contained Graphite
(Mt)

RutEq. Grade*
(%)

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

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.

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.

APPENDIX 1: RELATED PARTY PAYMENTS

During the quarter ended 31 December 2023, the Company made payments of $461,000 to related parties and their associates. These payments relate to existing remuneration arrangements (executive salaries, director fees, superannuation and bonuses ($273,000)), business development services ($35,000) and provision of serviced office facilities, company secretarial services and administration services ($153,000).

APPENDIX 2: SUMMARY OF MINING TENEMENTS

As at 31 December 2023, the Company had an interest in the following tenements:

Licence

Holding Entity

Interest

Type

Licence Renewal Date

Expiry Term Date1

Licence Area (km2)

Status

EL0609

MML

100%

Exploration

25/09/2024

25/09/2028

440.5

Granted

EL0582

SSL

100%

Exploration

15/09/20232

15/09/2027

285.0

Granted

EL0492

SSL

100%

Exploration

29/01/2025

29/01/2025

935.4

Granted

EL0528

SSL

100%

Exploration

27/11/2023

27/11/2025

16.2

Granted

EL0545

SSL

100%

Exploration

12/05/2024

12/05/2026

53.2

Granted

EL0561

SSL

100%

Exploration

15/09/20232

15/09/2027

124.0

Granted

EL0657

SSL

100%

Exploration

3/10/2025

3/10/2029

2.3

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 (No 8. Of 2019) (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  The Company submitted an extension application for EL0582 and EL0561 prior to the renewal date in accordance with the Mines Act .

APPENDIX 3: MINING EXPLORATION EXPENDITURES

During the quarter, the Company made the following payments in relation to mining exploration activities:

Activity

A$’000

 Drilling

(291)

 Assaying and Metallurgical Test-work

(162)

 Studies, Reserve/Resource Estimation, Programs

(986)

 Malawi Operations – Site Office, Personnel, Field Supplies, Equipment, Vehicles and Travel

(984)

 Total as reported in Appendix 5B

(2,423)

There were no mining or production activities and expenses incurred during the quarter ended 31 December 2023.

 

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

31 December 2023

 

Consolidated statement of cash flows

Current quarter
$A’000

Year to date
(6 months)
$A’000

1.

Cash flows from operating activities

1.1

Receipts from customers

1.2

Payments for

(2,423)

(4,296)

(a)   exploration & evaluation

(b)   development

(c)   production

(d)   staff costs

(780)

(1,107)

(e)   administration and corporate costs

(414)

(928)

1.3

Dividends received (see note 3)

1.4

Interest received

673

745

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 – Demerger Costs

(41)

(67)

1.8

Other – Business Development

(325)

(595)

1.9

Net cash from / (used in) operating activities

(3,310)

(6,248)

2.

Cash flows from investing activities

2.1

Payments to acquire or for:

(a)   entities

(b)   tenements

(c)   property, plant and equipment

(243)

(243)

(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

34

2.4

Dividends received (see note 3)

2.5

Other (provide details if material)

2.6

Net cash from / (used in) investing activities

(243)

(209)

3.

Cash flows from financing activities

40,598

3.1

Proceeds from issues of equity securities (excluding convertible debt securities)

3.2

Proceeds from issue of convertible debt securities

3.3

Proceeds from exercise of options

3.4

Transaction costs related to issues of equity securities or convertible debt securities

(13)

(252)

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)

3.10

Net cash from / (used in) financing activities

(13)

40,346

4.

Net increase / (decrease) in cash and cash equivalents for the period

4.1

Cash and cash equivalents at beginning of period

43,021

5,564

4.2

Net cash from / (used in) operating activities (item 1.9 above)

(3,310)

(6,248)

4.3

Net cash from / (used in) investing activities (item 2.6 above)

(243)

(209)

4.4

Net cash from / (used in) financing activities (item 3.10 above)

(13)

40,346

4.5

Effect of movement in exchange rates on cash held

(18)

(16)

4.6

Cash and cash equivalents at end of period

39,437

39,437

 

5.

Reconciliation of cash and cash equivalents
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts

Current quarter
$A’000

Previous quarter
$A’000

5.1

Bank balances

129

189

5.2

Call deposits

39,308

42,832

5.3

Bank overdrafts

5.4

Other (provide details)

5.5

Cash and cash equivalents at end of quarter (should equal item 4.6 above)

39,437

43,021

 

6.

Payments to related parties of the entity and their associates

Current quarter
$A’000

6.1

Aggregate amount of payments to related parties and their associates included in item 1

461

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
Note: the term “facility’ includes all forms of financing arrangements available to the entity.

Add notes as necessary for an understanding of the sources of finance available to the entity.

Total facility amount at quarter end
$A’000

Amount drawn at quarter end
$A’000

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 activities

$A’000

8.1

Net cash from / (used in) operating activities (item 1.9)

(3,310)

8.2

(Payments for exploration & evaluation classified as investing activities) (item 2.1(d))

8.3

Total relevant outgoings (item 8.1 + item 8.2)

(3,310)

8.4

Cash and cash equivalents at quarter end (item 4.6)

39,437

8.5

Unused finance facilities available at quarter end (item 7.5)

8.6

Total available funding (item 8.4 + item 8.5)

39,437

8.7

Estimated quarters of funding available (item 8.6 divided by item 8.3)

12

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:                31 January 2024

 

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.

 

 

#FCM First Class Metals Plc – SPODUMENE IN ALL NINE ZIGZAG DRILL INTERSECTIONS

First Class Metals PLC (“First Class Metals” “FCM” or the “Company”) the UK listed metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is pleased to announce that spodumene-bearing pegmatites have been intersected in every targeted hole drilled at First Class Metals’ Zigzag lithium Property. The identified mineralization remains open along strike and down dip.

HIGHLIGHTS

·      Spodumene (a high-grade lithium mineral – Li[AlSi 2O6].) bearing pegmatite intersected in all nine targeted holes drilled.

·      Over 50m of pegmatite intersections recorded (see figure 1 for area of drilling)

·      Multiple mineralised pegmatite zones were intersected in holes targeting 400m of the known 800m strike.

·      Pegmatite thickness exceeded 5m thick, down hole, and the potentially multiphase mineralised system remains open along strike and down dip / plunge.

·      All holes are being systematically logged and marked up for sampling before cutting / sample collection.

First Class is pleased to announce the completion of the final hole of its inaugural drill programme at the Company’s Zigzag Property (the “Property”), located in the Seymour-Falcon corridor in northwestern Ontario, Canada. The drill programme included 9 holes targeting the pegmatite bearing zone and one hole (the tenth, final hole) being a scissor to ZIG-23-06, to confirm the interpreted dip of the structure. The 10-hole, 450-metre drill programme was completed successfully on the 16th December within budget and time schedules

 

Photo 1 Drill rig completing FCM-23-09, step back to FCM-23-05

The drilling targeted the 400m central section of the property which had been subject to a non-mechanised stripping and channel sampling programme reporting up to 2.36% lithium (Li2O) over 5.5m (See RNS 28th November), see figure 1. Historic drill holes also reported an intersection grading 1.08% Li2O over 6.1m from 12.45m and a separate intersection of 399.8ppm Ta2O 5over 2.92m from 15.50m.

 

Figure 1Drilling covered the area of channel sampling and ‘grabs’ on roughly 50 m centres (note historic grid lines are on 200ft (60m) centres).

Visual observations undertaken whilst logging the core have recorded spodumene-bearing pegmatite in all holes which targeted the pegmatite, (see Photo 2-drill hole FCM-23-01) The core is now being logged in detail then it will be ‘marked-up’ for cutting (sampling), it is anticipated that circa 100 samples will be sent for analyses in Thunder Bay. Results from the initial batch are expected in early Q1 2024.

 

A group of rectangular objects in a wooden box Description automatically generated

Photo  2-Shallow intersection of pegmatite hosting spodumene (pale green ‘blades’ in hole ZIG-23-01).

Marc J Sale Chief Executive Officer Commented-

“The completion of the drilling at Zigzag has consolidated the undertaking to shareholders / investors that FCM would bring 4 properties to ‘drill ready status’ and drill one this season. I am extremely pleased with the (visual) indications of the drill core and the robust intersections that I have seen so far. I look forward with positive anticipation to the first results. We are already planning the next stages of exploration.”

For further information, please contact:

 

James Knowles, Executive Chairman

JamesK@Firstclassmetalsplc.com

07488 362641

Marc J Sale, CEO

MarcS@Firstclassmetalsplc.com

07711 093532

 

First Equity Limited

(Financial Adviser & Broker)

 

Jonathan Brown

0207 3742212

Jason Robertson

0207 3742212

#FCM First Class Metals – Zigzag exploration update – drilling commences

First Class Metals PLC (“First Class Metals” “FCM” or the “Company”) the UK listed metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is pleased to announce a that drilling has commenced on  the Zigzag property which is currently focussed on the lithium (Li), tantalum (Ta) rubidium (Rb) and gallium (Ga) potential.

 

Highlights:

·    An Early Exploration Agreement (EEA) has been signed with Whitesand First Nation (WFN).

·    A contract to undertake up to 500m of drilling has been signed with Rodren Drilling a Whitesand FN approved ‘service provider’.

·    Channel sample results identify a >1% Li2O zone on the western portion of the ‘core’ 400m zone. Significant number of channel samples  returned >1% Li2O, including:

Channel 7            2.36% lithium (Li2O) over 5.5m

·    Drill operations have commenced on the Company’s Zigzag hard rock lithium (Ta/ Rb/ Ga) prospect.

 

Marc J. Sale First Class Metals CEO commented:

The signing of the EEA with Whitesand exemplifies the positive relationship FCM is building with the First Nations. This agreement has paved the way for FCM’s inaugural drill program, marking an exciting milestone for our company. We are thrilled to begin drilling at Zigzag, making it the first property where FCM will undertake drilling. This demonstrates our commitment to advancing our exploration efforts and emphasizes our dedication to responsible resource development.

Figure 1 showing the Zigzag property with the recent sampling, both grabs and channels, focussing on the central portion of the claim block, where drilling has commenced.

An Early Exploration Agreement (EEA) has been signed between Whitesand First Nation and First Class Metals.  Under the agreement FCM is allowed to undertake activities requiring and Exploration Permit, as awarded by the Province. FCM has agreed to support the Whitesand community.

Whitesand First Nation Economic Development representative commented:

Whitesand First Nation is looking forward to working with First Class Metals, and the positive relationship that is evolving.  We wish them luck on their drilling program and are excited to see what the New Year brings.

Drilling Plan

The drill programme preparation commenced on Monday with core expected today, this maiden programme will be focussed in the central 400m to explore the areas of high channel sample results, particularly Channel 7.

Initially 7 drillholes of over 50m are planned with the provision for a deeper ‘step-back’ based on visual, encouragement.  The basis for the drilling is the encouraging grab samples and channel sample results previously reported. Nine channels were cut with lengths of under 5m to over 10m, channel lengths were usually controlled by overburden and not necessarily by cessation of pegmatite geology.

Figure 2 showing the location of the channels relative to the ‘core 400m’ zone, drilling will extend further to the east of the channel sample area where >1% Li2O grabs samples were collected.

The results from the channels are very encouraging. It must be stressed that only hand stripping of vegetation was undertaken and often, exemplified by channels 5 and 7, the outcrop persisted but the vegetation cover was too onerous to be removed by hand.

The results have not only vindicated the grab samples in respect to the lithium oxide content but also highlighted again the presence of other important, critical minerals such as tantalum, gallium and rubidium.

A machine in the snow Description automatically generated

Photo 2 Rodren equipment being mobilised to the Zigzag property

For further information, please contact:

James Knowles, Executive Chairman

JamesK@Firstclassmetalsplc.com

07488 362641

Marc J Sale, CEO

MarcS@Firstclassmetalsplc.com

07711 093532

Ayub Bodi, Executive Director

AyubB@Firstclassmetalsplc.com

07860 598086

 

First Equity Limited

(Financial Adviser & Broker)

 

Jonathan Brown

 

0207 3742212

Jason Robertson

 

0207 3742212

     

 

First Class Metals PLC – Background

First Class Metals is focussed on exploration in Ontario, Canada which has a robust and thriving junior mineral exploration sector. Specifically, the Hemlo ‘camp’ is a proven world class address for gold /VMS exploration. This geological terrane has significant production, both base / precious metals and a prolific number of exploration projects and numerous prospector’s ‘showings’.

FCM currently holds 100% ownership of seven claim blocks covering over 180km² along a 150km strike of the Hemlo-Schreiber-Dayohessarah greenstone belt which also contains the >23M oz shear hosted Hemlo gold mine operated by Barrick Gold. Late last year FCM completed the option to purchase the historical high grade (gold) Sunbeam past producing mine

The significant potential of the properties for precious, base and battery metals relate to: ‘nearology’ insomuch that all properties lie close to identified mineral anomalism, for example Palladium One’s RJ and Smoke Lake nickel projects are close to the FCM’s West Pickle Lake drill proven Ni-Cu project. This also demonstrates the second critical asset the properties hold: vector, anomalies, be they geological, geochemical, or geophysical that have demonstrated mineral potential extend on to FCM’s properties.

The inferred shear on the Esa property is being explored by neighbours both to the west and east where it crosses into their properties. Furthermore, the properties have not been extensively explored either historically or more contemporaneously. This is attributable to the overall lack of outcrop. However, modern exploration techniques are better able to ‘see through’ the ground cover and to identify anomalies.

 

Forward Looking Statements

Certain statements in this announcement may contain forward-looking statements which are based on the Company’s expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. Such forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as ‘aim’, ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, or other words of similar meaning. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

#FCM First Class Metals – ZIGZAG LITHIUM-HIGH GRADE CHANNEL SAMPLES

First Class Metals PLC (“First Class Metals” “FCM” or the “Company”) the UK listed metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is pleased to announce a further, significant, update on the progress on the Zigzag property which is currently focussed on the lithium and tantalum potential.

Highlights: 

·    Channel 7            2.36% lithium (Li2O) over 5.5m

including 2.5m at 3.44% Li2O.

·    Channel sample results identify a >1% Li2O zone on the western portion of the ‘core’ 400m zone. Significant number of channel samples return more than >1% Li2O.

·    Prospecting identifies mineralisation in a subparallel zone, assays pending.

Marc J. Sale First Class Metals CEO commented:

“The results from the channel samples have vindicated our enthusiasm to advance the potential of this property. The tenure of the spodumene and therefore the lithium reporting in the central sector of the property gives increased confidence in the prospectivity over the strike extensions. We are eagerly advancing the planning for drilling now the funds have been secured.”

Figure 1 showing the Zigzag property with the recent sampling, both grabs and channels, focussing on the central portion of the claim block.

The channel sampling was based on the visually encouraging results from the prospecting and associated grab samples.

The complete table of the grab samples was reported in a previous news release, however the 10 best ‘grabs’ are reproduced below.

Sample_No.

Caesium

Cs_ppm

Gallium Ga_ppm

Lithium Li_ppm

Rubidium

Rb_ppm

Tantalum

Ta_ppm

F006543

92.6

107

17000

820

75.2

F006545

128

101

16500

1190

115

F006549

77

118

21200

302

80.6

F006573

85

112

17800

536

179

F006574

102

152

29700

404

57.3

F006576

81.7

124

22300

514

467

F006580

70

113

18500

650

145

F006583

36.5

108

20100

255

235

F006586

44.5

117

18300

846

724

F006592

66.9

153

27500

587

54.3

Table 1, showing the 10 highest grab samples along a 400m ‘core’ zone.

Nine channels were cut with lengths of under 5m to over 10m, channel lengths were usually controlled by overburden and not by diminished outcrop. A total of 80 samples were submitted to the laboratory for analysis, these included, where exposed not only the pegmatite but one, one metre sample in the host rock, which is in general mafic volcanics to the north and granitic rocks to the south.

The samples can therefore be easily segregated into four broad categories: mafic, pegmatitic, granitic pegmatites and granite.

Figure 2 showing the location of the channels relative to the ‘core 400m’ zone.

The results from the channels are very encouraging. It must be stressed that only hand stripping of vegetation was undertaken and often, exemplified by channels 5 and 7, the outcrop persisted but the vegetation cover was too onerous to be removed by hand. Accordingly it is felt that with mechanical stripping many of these channels could be extended. Additionally it is also likely that ‘gaps’ in the outcrop continuity might also be exposed as being pegmatite when exposed with mechanical stripping. The current permit allows both stripping and drilling.

The results have not only vindicated the grab samples in respect to the lithium oxide content but also highlighted again the presence of other important, critical minerals such as tantalum, gallium and rubidium.

Channel

Length (metres)

Lithium (Li20%)

Tantalum          (Ta205) ppm

Gallium        (Ga) ppm

Rubidium              (Rb20) ppm

3

2.4

0.81

170

80

2000

Includes

1.00

1.31

170

90

2920

3

3.1

1.52

60

90

1820

Includes

0.9

2.54

100

110

2550

and

0.5

2.05

40

100

950

4

1.8

1.85

220

90

1740

5

2.2

0.96

130

90

1280

Includes

0.8

1.39

100

100

940

6

2.00

1.96

160

110

1170

7

5.5

2.35

150

120

1740

Includes

2.5

3.43

170

140

1270

8

1.8

1.03

110

80

2070

Includes

0.5

1.43

90

90

1050

9

1.9

1.15

290

80

1400

Includes

0.6

2.19

500

80

1010

9

3.7

1.14

150

100

1290

Includes

1.9

1.41

160

100

1710

Photo 1 showing the extent of outcrop exposed by hand stripping. Also not the change in rock type from mafic volcanics (closest) to granitic-pegmatite.

Hand stripping and channel sampling does not allow continuous sampling of the structure as it is obscured by soil, moss and other vegetation. It is believed that once mechanical stripping is undertaken the continuity of outcrops will be further enhanced.

Photo 2 showing sample of the spodumene rich pegmatite

Further prospecting and exploration

Prospecting and soil sample lines were conducted to the south of the ‘main’ pegmatite zone.

A subparallel structure has been identified to the south. Sample results are pending but visual evidence suggest a second pegmatite or a splay may exist to the south of the main zone which has been the current focus of exploration.

For further information, please contact: 

James Knowles, Executive Chairman

JamesK@Firstclassmetalsplc.com

07488 362641

Marc J Sale, CEO

MarcS@Firstclassmetalsplc.com

07711 093532

Ayub Bodi, Executive Director

AyubB@Firstclassmetalsplc.com

07860 598086

 First Equity Limited

(Financial Adviser & Broker) 

Jonathan Brown

0207 3742212

Jason Robertson

0207 3742212

 

First Class Metals PLC – Background

First Class Metals is focussed on exploration in Ontario, Canada which has a robust and thriving junior mineral exploration sector. Specifically, the Hemlo ‘camp’ is a proven world class address for gold /VMSexploration. This geological terrane has significant production, both base / precious metals and a prolificnumber of exploration projects and numerous prospector’s ‘showings’.

FCM currently holds 100% ownership of seven claim blocks covering over 180km² along a 150km strike of the Hemlo-Schreiber-Dayohessarah greenstone belt which also contains the >23M oz shear hosted Hemlo gold mine operated by Barrick Gold. Late last year FCM completed the option to purchase the historical high grade (gold) Sunbeam past producing mine

The significant potential of the properties for precious, base and battery metals relate to: ‘nearology’ insomuch that all properties lie close to identified mineral anomalism, for example Palladium One’s RJ and Smoke Lake nickel projects are close to the FCM’s West Pickle Lake drill proven Ni-Cu project. This also demonstrates the second critical asset the properties hold: vector, anomalies, be they geological, geochemical, or geophysical that have demonstrated mineral potential extend on to FCM’s properties. 

The inferred shear on the Esa property is being explored by neighbours both to the west and east where it crosses into their properties. Furthermore, the properties have not been extensively explored either historically or more contemporaneously. This is attributable to the overall lack of outcrop. However, modern exploration techniques are better able to ‘see through’ the ground cover and to identify anomalies. 

#SVML Sovereign Metals LTD – Lithium-Ion Battery Graphite Program Upscaled

KASIYA LITHIUM-ION BATTERY GRAPHITE PROGRAM SIGNIFICANTLY UPSCALED

·       Bulk sampling program underway at Kasiya to extract 100 tonnes of ore to produce over 1,000kg of natural graphite for lithium-ion battery anode testwork and product qualification

·    The upscaled graphite qualification program will support upcoming project studies with our strategic partner, Rio Tinto

·       Sovereign and Rio Tinto have agreed to collaborate to qualify graphite from Kasiya, with a particular focus on supplying the spherical purified graphite (SPG) segment of the lithium-ion battery anode market

·       Previous testwork confirmed Kasiya’s graphite to have near perfect crystallinity and high purity – both key attributes for suitability in lithium-ion battery feedstock

·      Kasiya’s recent Pre-Feasibility Study (PFS) confirmed it could be one of the world’s largest natural graphite producers at 244kt per annum with the lowest cash operating costs globally at US$404/t and the lowest CO2-footprint 

·        As one of the largest known natural graphite deposits globally, close to existing infrastructure connecting it to global markets, Kasiya is set to become a strategic source of long term, secure supply outside of China

·        This graphite qualification program coincides with news of China’s curbs on exports of natural graphite, a critical mineral for the US, EU, Japan and Australia

Sovereign Metals Limited (ASX:SVM; AIM:SVML) (the Company or Sovereign) is pleased to announce that a bulk sampling program to extract over 100 tonnes of ore from Kasiya is underway. The bulk sampling program is part of the Company’s graphite bulk sample program for qualification, downstream testwork and product development. A major component to graphite sales agreements is customer qualification with graphite produced from this program to be shared with prospective end-users in addition to being used for upscaled downstream test-work.

The Company’s upscaled graphite program comes as China implements curbs on exports of natural graphite under “national security” concerns. Kasiya is one of the world’s largest natural graphite deposits outside of China and has the potential to become a key source of strategic supply to the US, UK, EU, Japan and South Korea. According to industry experts Benchmark Mineral Intelligence, China currently produces 61% of all flake graphite used in the production of lithium-ion battery anodes and accounts for 93% of all graphite anode production globally.

Classification: 3.1 Additional regulated information required to be disclosed under the laws of a Member State

 

ENQUIRIES

Frank Eagar (South Africa/Malawi)
Managing Director

+61(8) 9322 6322

Sam Cordin (Perth)
+61(8) 9322 6322

Sapan Ghai (London)
+44 207 478 3900

 

Nominated Adviser on AIM and Joint Broker

 

SP Angel Corporate Finance LLP

+44 20 3470 0470

Ewan Leggat

Charlie Bouverat

Harry Davies-Ball

 

 

Joint Brokers

 

Berenberg

+44 20 3207 7800

Matthew Armitt

 

Jennifer Lee

 

 

 

Tavistock PR

+44 20 7920 3150

The recently released PFS confirmed Kasiya as a potential major critical minerals project with an extremely low CO2-footprint delivering significant long-term volumes of natural rutile (the highest-grade, purest, natural titanium feedstock) and graphite (a key component of an electric vehicle battery) while generating significant economic returns. Both titanium and natural graphite are critical to several of the world’s economies as well as crucial to decarbonisation solutions required to meet “Net-Zero” and other targets set by policymakers.

BULK SAMPLING PROGRAM

The mechanised drill program will use a custom-made 300mm diameter spiral auger to extract over 100 tonnes of material from across Kasiya’s planned future pits with sampling to a maximum 20m depth (Figure 1).

The sampling program forms part of the Company’s program for graphite qualification, downstream testwork and product development, and is designed to produce over 1,000kg each of flake graphite and natural rutile products.

The bulk sample will be processed at the Company’s laboratory in Lilongwe, Malawi. This will be achieved with the newly installed Kwatani 30-inch single and double-deck vibrating separators for sizing and de-sliming (Figure 2). The sand fraction will then be processed over the new Holman Wilfley 2000 wet shaking table to produce a graphite pre-concentrate and a separate heavy mineral concentrate (HMC) containing the rutile (Figure 3). The graphite pre-concentrate is expected to grade 4-5% Ct whilst the HMC is expected to grade ~30% contained rutile.

A group of men working on a machine Description automatically generated A large auger on the ground Description automatically generated

Figure 1. Mechanised drill with custom-made 300mm diameter spiral auger

A group of people in blue uniforms Description automatically generated A circular object with a round surface Description automatically generated with medium confidence

Figure 2. Installation of the new Kwatani 30-inch single-deck and double-deck vibrating separators for sizing and de-sliming bulk samples at the Company’s Malawi laboratory and metallurgical facility

Figure 3: Holman-Wilfley 2000 Series shaking table to be installed at Sovereign’s Lilongwe laboratory in Malawi.

Final processing will then be completed at commercial metallurgical laboratories in Canada and Australia. The graphite pre-concentrate will undergo traditional flotation and polishing processes to target >96% Ct product for lithium-ion battery anode feedstock. The HMC will undergo gravity spiral cleaner stages followed by electrostatic and magnetic separation stages to produce a +95% TiO2 natural rutile products.

PLANNED DOWNSTREAM TESTWORK

The 1,000kg of flake graphite product produced will be used for downstream test-work and initial product qualification targeting the battery anode sector. Previously reported initial characterisation testwork on Kasiya’s graphite has indicated excellent suitability for use in lithium-ion batteries with very high purity and very high crystallinity being the key features.

Downstream test-work and qualification on the 1,000kg flake graphite product produced will involve the following stages to be completed at recognised international battery sector laboratories;

–      Purification via an optimised HF-free reagent scheme to >99.95% Ct

–      Micronisation

–      Spheronisation

–      Carbon coating

–      Anode production

–      Electrochemical characterisation

Raw flake graphite products plus final CSPG (coated spheronised graphite product) will be provided to potential offtakers for assessment and pre-qualification. Through Sovereign’s well-established experience in graphite, the Company has built a strong understanding of the product’s market and developed relationships with well-established offtakers and customers.

A major component to graphite sales agreements is customer qualification, and this is a key reason for initiating the graphite bulk sample program and scaling up in-country facilities in order to continuously produce bulk samples. The graphite produced from this program will be shared with prospective end-users and is an important next step for Sovereign to qualify the Kasiya graphite product.

Sovereign’s recent initial graphite characterisation testwork conducted by an independent German industrial minerals specialist demonstrated superior qualities and excellent suitability for its use in lithium-ion batteries. Further downstream testwork is planned that will use the graphite concentrate produced from this current bulk sampling program.

A close-up of a microscope Description automatically generated

Figures 4 & 5: SEM micrograph of Kasiya graphite flotation concentrate from previous testwork

INDUSTRY DEVELOPMENTS

On 20 October 2023, Reuters reported, effective 1 December 2023, that China would require export permits for some graphite products including natural graphite and natural graphite products critical to EV production. China is the world’s top graphite producer and exporter and also refines more than 90% of the world’s graphite into the material that is used in virtually all EV battery anodes.

China’s commerce ministry said the move on graphite was “conducive to ensuring the security and stability of the global supply chain and industrial chain, and conducive to better safeguarding national security and interests”.

Competent Person Statement

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. 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.

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.

#FCM First Class Metals PLC – Half-year Report

I.     Operational Highlights

In early May FCM announced that field work had been initiated on its projects in Canada, with three exploration teams deployed:

 

·    Channel Sampling of the Rare Earth Element (REE) Diatreme at McKellar underway.

·    Sunbeam historic review widened to encompass detailed core review from historical drill holes. Grades up to 93.3g/t Gold (Au).

·    Field base set up and exploration soon to commence on the North Hemlo and Esa properties to follow up on the successes of 2022.

 

A property wise summary of the exploration work conducted in the first six months of 2023 is enumerated as follows:

 

North Hemlo

·    The Dead Otter Lake area is situated 20.5km North of the iconic Barrick Hemlo 23m oz producing gold mine.

·    The main event of significance is the Identification of a +3km long gold (‘Au’) and molybdenum (‘Mo’) anomalous trend – named the Dead Otter Lake trend (‘DOT’), which is situated to the southeast of the historic Dead Otter Lake occurrence. Grab samples recorded up to 19.6g/t Au along the trend.  Sampling has extended anomalous Au/Mo mineralisation for +3km to the SE from the historic showing (3.7 g/t Au, 0.59% Mo). The mineralised structure closely mimics the granite contact. The 19.6 g/t Au sample, in the extreme SE of the trend could be where one of potentially two subparallel arcuate structures intersects the trend.

·    The Exploration currently in progress at North Hemlo is with a clear focus on drill preparation. Visible gold has been observed in multiple grab samples from the Dead Otter Trend.

·    Exploration permit has been submitted to the Provincial authorities, reflecting our confidence in our exploration progress and our commitment to fulfilling all necessary regulatory requirements.

 

In May, FCM signed an exclusivity agreement for an Option cum Earn-In arrangement with Ongold a private company in respect to its claims contiguous to North Hemlo.

Zigzag

·    The signing of the Earn-in Agreement with Nuinsco Resources Limited (“Nuinsco”) completes the process outlined in the ‘Exclusivity Agreement’ announced on the 12th of December 2022 for the Zigzag hard rock lithium property in NW Ontario.

·    The project funding was also announced in the same news release, James Goozee a High Net Worth Individual (“HNWI”) who is a battery metals focussed investor took the full £300,000 private subscription at 16p per share.

·    Historic grades reported at surface were up to 1.68% lithium (Li20) over 7.9m and 0.168% tantalum (Ta205) over 2.54m. The claim group covers the historic Tebishogeshik occurrence as well as other mineralised occurrences.

·    The pegmatite hosting the deposit is reported to be more than 800m in length and 20m thick at surface.

·    Sampling by Nuinsco returned strongly anomalous lithium, tantalum, and rubidium, peaking at 3.55% Li20 with significant tantalum and rubidium results at 836 ppm Ta₂O5, and 4,003 ppm Rubidium Rb₂2O.

·    Exploration Permit already in place, allowing for exploration activities which may include stripping, trenching, and drilling.

·    The property is located 10.5km from the Green Technology Metals Limited (ASX: GT1) Seymour Project and several other hard rock lithium properties. It is also close to nearby current and future planned key infrastructure.

·    Zigzag Lithium-Initial reconnaissance trip with the property completely under the cover of snow returns grades of Lithium (Li) up to 1.00% and Tantalum (Ta) up to 198 ppm.

 

Sunbeam

·    The historic data and core reviews have been completed.

·    Extensive prospecting, sampling, and mapping programs were conducted, this includes rediscovery of a 3m wide quartz vein on the Pettigrew Trend with over 200 samples collected.

·    Project being prepared for stripping / channel sampling in order to identify preferred drill locations.

 

West Pickle Lake (‘WPL’)

·    First Class Metals is delighted to report assay results from the West Pickle Lake massive sulphide discovery.

·    These drill results reinforce both the high-grade nature of the West Pickle Lake Zone and the potential for tonnage as reported in hole TK22-114, the widths and grades are similar to the Palladium One RJ Zone approx. 2.5km to the East and further develops the theory of the chonolith / feeder dykes in the area to host significant mineralisation.

 

Selected highlights reported by Palladium One from the West Pickle Zone:

               

 

TK-22-072 2.0% Ni, 0.9% Cu, 0.04% Co, 0.36 g/t Total Precious Metals (“TPM”) (Pt+Pd+Au) over 4.1 meters of massive and semi-massive sulphides in hole

Including 5.3 Ni%, 1.5% Cu, 0.12% Co, 0.67 g/t TPM over 1.5 meters

ThesTK-22-073 7.2% Ni, 2.0% Cu, 0.10% Co, 0.56 g/t Total Precious Metals (“TPM”) (Platinum (Pt) + Palladium (Pd) + Gold (Au)) over 2.6 meters of massive sulphides in hole.

Including 10.3% Ni, 2.9% Cu, 0.15% Co, 0.80 g/t TPM over 1.8 meters

TK-22-074 3.9% Nickel (Ni), 2.5% Copper (Cu), 0.05% Co, 0.55 g/t Total Precious Metals (“TPM”) (Pt+Pd+Au) over 2.0 meters of massive and semi-massive sulphides in hole

Including 8.1% Ni, 2.8% Cu, 0.11% Co, 1.05 g/t TPM over 0.9 meters

TK22-114 0.6% Ni, 0.4% Cu, 0.01% Co, 0.08 g/t Total Precious Metals (“TPM”) (Pt+Pd+Au) over 28.2 meters

Including 2.0% Ni, 0.6% Cu, 0.04% Co, 0.12 g/t TPM over 3.2 meters

TK22-118 0.43% Ni, 0.26% Cu, 0.01% Co, 0.06 g/t TPM over 27.0 meters.

Including 2.0% Ni, 0.7% Cu, 0.04% Co, 0.14 g/t TPM over 1.0 meters

TK22-116 1.5% Ni, 0.7% Cu, 0.02% Co, 0.30 g/t TPM over 8.0 meters.

Including 10.0% Ni, 4.47% Cu, 0.14% Co, 2.13 g/t TPM over 1.0 meters

·    Hole TK22-76 drilled just off the 100% owned FCM North Hemlo Property boundary by Palladium One intercepts 46.3m of anomalous nickel mineralisation in an east west trending structure, further proving up Palladium One’s property wide feeder dyke/chonolith geological model.

·    West Pickle mineralised strike length increased to over 600 meters, remains open to the east and west.

·    To date a total of 32 holes, totalling 6,766 meters have been drilled in the vicinity of the West Pickle Discovery.

Esa

·    Total of 478 soil samples were collected from 11 predominantly subparallel, north – south soil lines in 2022.

·    An intermittent 4km anomalous zone has been identified corresponding to the surface expression of the inferred shear.

·    Multiple 10-95 ppb gold (Au) and key pathfinder elements including molybdenum (Mo), antimony (Sb) and arsenic (As).

·    Anomalous trends identified by the soil sampling as well as the background magnetics highlighting NE structures intersecting the shear, including: Hemlo ‘look alike’ angular boulder identified, which reported 0.7ppm Au which is considered significant.

·    Extensive soil sampling campaign completed to build on the successful 2022 program with 539 samples now awaiting assay results.

 

McKellar

“McKellar Trend” – Volcanic Massive Sulphide (“VMS”) conceptual trend supported by reconnaissance and assay results, extending over 550m, open ‘along strike’ in both directions.

·    Over 100 grab samples taken with highlights including 4.82% Zinc (Zn) 80 g/t Silver (Ag)

·    Work programme further proves up conceptual VMS model and extension of historical high grade metal occurrences across the property.

·    Eight contiguous claims have been staked, adjoining the southern boundary of the McKellar property.

·    McKellar has a proven potential for Rare Earth Elements (“REE”), confirmed by sawn channel sampling of diatreme verifies historical findings and further evidenced REE system.

 

Enable

·    Field work identified a new gold (Au) with significant silver (Ag) ‘showing’ on the property.

·    The historic West Perch Lake showing of ~2ppm Au confirmed and expanded.

·    An exploration permit application is being drafted which will allow ‘mechanical exploration’ including drilling.

·    The winter 2023 exploration campaign was completed with a programme of lake sediment sampling.

 

Sugar Cube

·    In Q1 2023 a geophysics survey consisting of 578 line km comprising a helicopter borne low level 100m line spacing magnetic as well as electromagnetic (EM) survey was completed.

 

 

 

 

 

 

II.    Operational Overview

 

North Hemlo & Esa

 A map of a mine Description automatically generated

Figure showing the relative location of North Hemlo (including OnGold), Esa and Magical in respect to the Williams gold mine and the district scale shears associated with mineralisation

North Hemlo

Overview

The Flagship North Hemlo property historically comprised of three claim areas: Pezim I, Pezim  II, and Wabikoba, which weren’t contiguous. However, the addition of the Hemlo North block, acquired from Power Metals Plc., brought North Hemlo together as one cohesive block.

 

The property now extends across 448 claims covering ~98km². Note: 33 claims are effectively under a Joint Venture agreement with Palladium One and FCM’s ownership is reduced to 20%.

 

There were limited historical showings on the property, the most important being the gold / molybdenum showing at Dead Otter Lake.  The geology / geophysical signature of the Dotted Lake / Fairservice prospect continues onto the North Hemlo block. Furthermore, the JV – Earn-in with Palladium One has significantly enhanced the base, battery, and critical metal potential of the block.

 

Further potential is derived from the arcuate inferred shears which mimic the shear hosting the Hemlo gold mine.

 

In May, FCM signed exclusivity agreement for an Option cum Earn-In arrangement with Ongold a private company in respect to its 163 claims, covering 34 km² contiguous to the north of the North Hemlo property.

 

 

An Exploration permit, required for ‘invasive’ exploration such as trenching, stripping and drilling, has been drafted and after discussion with the First Nations submitted to the Ontario Provincial Mining authority for review.

 

 Esa

 

Overview

 

The Esa property contains 86 claims, covers 20.6km², and is located approximately 11km northeast from the Barrick Hemlo gold mine, immediately south of FCM’s North Hemlo property.

 

The claim block is dissected by a geological / geophysical feature, which adds significant merit to the block’s potential.  This structure is considered one of three subparallel, arcuate trends contained in the Hemlo ‘north limb’, which mirror the Hemlo trend to the south. Re-interpretation of geophysical data further enhanced the property’s prospectivity. Extensive exploration was conducted along this feature in 2022, and further soils sampling and prospecting conducted in 2023.

The assessment credits generated during the year will maintain the property in good standing through 2023.

 

An Exploration permit, required for ‘invasive’ exploration such as trenching, stripping, and drilling has been drafted and after discussion with the First Nations submitted to the Ontario Provincial Mining authority for review.

 

Work Conducted in 2023

 A team was mobilised in early May to continue the exploration at Esa, focusing on the anomalous soil sample results as well as the 0.7ppm boulder identified in the central eastern sector as detailed in the recent news release.

A Further 534 soil samples and 5 rock chip samples have been collected, both subparallel to the shear – orthogonal to the north striking magnetic features- as well as in the areas of higher Au anomalism in the previous programme. Results have not yet been received.

 Exploration at North Hemlo project started later in the month when the snow cover thawed. To advance the prospect towards drill ready status, the intention is to follow up the encouraging sampling on the Dead Otter Lake trend which has returned anomalous gold results along its 3km plus strike up to 19.6 g/t Au. Over the winter months ninety-six lake sediment samples as well as a number of rock samples were collected from North Hemlo, with very positive results being reported.

Discussions are ongoing with drill companies to undertake a maiden drilling programme at Esa and or North Hemlo. To this end the Application for an Exploration permit has been submitted to the Provincial authorities.

 

 

 

Sunbeam

 

Overview

 

The Sunbeam Gold Property includes the historic Sunbeam Mine. This was a high-grade underground gold mine which operated from 1898 to 1905. The core of the Property consists of 104 unpatented mining claims covering 20.2km² in the Ramsay-Wright Township in North-western Ontario.

 

The Option to purchase was signed with Nuinsco in October 2022. Nuinsco holds the claims through an underlying agreement with several prospectors who held the claims. In February 2023, FCM made a second payment to Nuinsco, and the claim ownership was transferred to FCMC for the central Sunbeam area. The third and final payment, (in total Cdn$700,00), was made in June. The Sunbeam extended (English Option extending over 24.8km²) is still part of an Option agreement with Nuinsco and the claim owner, which FCM has assumed.

 

 Work conducted in 2023

Historic data and core reviews completed alongside extensive prospecting, sampling, and mapping program which includes rediscovery of a 3m wide quartz vein on the Pettigrew Trend. Mechanical stripping and then a targeted, systematic channel sampling programme has been undertaken at potential drill locations at the Pettigrew and Roy occurrences. Trail access for a drill rig into the same areas was also completed.

 McKellar

Overview

The McKellar property, originally comprising 58 claims, covers ~10.1km² and is situated in prime geological terrain within the Coldwell complex. Located to the west of Generation Mining’s Palladium Project, McKellar is roughly 25 kilometres from the town of Marathon, the main service centre for Barrick’s Hemlo mine. McKellar has a number of historic ‘showings’ with significant values in both base (battery) and precious metals. McKellar was the second largest of the claim blocks that formed the Power Metals Resources PLC claim acquisition. Field work conducted in 2022 generated assessment credits that cover the property into 2023. Eight contiguous claims were ‘staked’ in February 2023 in the southern area of the claim block, extending the total claim area to 12.3km².

 An exploration permit, required for ‘invasive’ exploration such as trenching, stripping and drilling has been drafted and after discussion with the First Nations, summited to the Provincial authorities.

 Work conducted in 2023

In 2023, 18 sawn channel samples of approximately 1m were collected across the exposed diatreme, which historically reported REE. In addition, local scale prospecting resulted in 5 grab samples also being collected for assay.

 

Results of the 2023 programme (highest two samples) and other assayed samples from the diatreme area are included in the table below.

 

Element

Historical assay results for selected elements (including REE’s), McKellar Creek Diatreme:

FCM recent 2023 sampling showing two highest values, all ppm

Gold Au

25 ppb

N/A

Platinum Pt

17 ppb

N/A

Neodymium Nd

300 ppm

259, 205

Lanthanum La

400 ppm

362, 253

Beryllium Be

2.8 ppm

5 all others BLD

Cerium Ce

513 ppm

653, 503

Yttrium Y

214 ppm

287, 193

Strontium Sr

1280 ppm

1410, 1360

Thorium Th

180 ppm

145, 140

U308

38 ppm

U:     32.8 23.4

Table showing historic as well as FCM generated sample results from the McKellar diatreme

 Zigzag

Overview

The 6-unit claim group spans approximately 1.2km and covers the historic Tebishogeshik lithium occurrence as well as other mineralized sites. The claims are a part of an ‘Option’ Agreement with Nuinsco signed in March 2023. Nuinsco, whilst not the registered owners, hold an Option to Purchase agreement with the claim owner. By virtue of this agreement, FCM has committed to a four-year work programme as well as staged payments to Nuinsco, which can be accelerated. At the fulfilment of these obligations, FCM will own the claim option on an 80:20 arrangement with Nuinsco. At this point a JV would be entered into between FCM and Nuinsco for the further development of the mining claims. Should either party not wish to contribute to the JV they would be diluted as per an agreed dilution formula. If either Nuinsco or FCM is diluted to 10% ownership their entire remaining ownership would be automatically converted into an NSR.

 Work conducted in 2023

During a winter reconnaissance of the Zigzag property in order to assess access the team identified an old trench for which sample information was not available. Four samples were collected from the in-situ debris flanking the trench. The results, tabulated below validate previous sampling, with values up to 1.0% (10,000ppm):

Sample number

Lithium (Li) ppm

Tantalum (Ta) ppm

A1104880

1390

184

A1104881

5070

84.7

A1104882

10000

139

A1104883

1180

198

Table showing Zigzag grab sampling results

Sugar Cube

 The Sugar Cube claim block of 205 claims, covering ~43km², is contiguous to the north-west of Silver Lake’s 1.6Moz+ Sugar Zone gold mine. Sugar Cube was one of the ‘seed’ properties that formed the pre-IPO company portfolio.

 

Work Conducted in 2023

Whilst virtually no ground-based exploration was conducted in 2022, in Q1 2023 a 578 line km geophysics survey comprising a helicopter borne low level 100m line spacing magnetic as well as electromagnetic (EM) survey was completed, which will provide sufficient credits to maintain this entire block through 2023

 

The survey data was processed by the contractor then passed to Paterson Grant Watson (PGW) who undertook a detailed interpretation. This interpretation will determine future field work to ‘ground-truth’ any identified anomalies.

Other Properties:

 

FCMC Inc. holds a further 85 claims totalling 18km² in three Properties in the Hemlo area, (Enable, Coco East and Magical), however, either no work was conducted, or no work reported in the public domain associated with these Properties.

 

III.   Corporate and Financial Highlights

 

The start of 2023 has witnessed several corporate actions by the Company as the business positions itself to exploit the remarkable team and network it has developed. FCM now moves into a period of development that will see a major upturn in work across its portfolio of assets. 

    

·      On 7th February 2023 the Company announced the 2nd Instalment of the Sunbeam option was completed with a payment of CAD$150,000 made to Nuinsco.  

  

·      On 9th March 2023 the Company announced the Earn-In into the Zigzag Lithium project, which included a cash payment of $50,000 on signing and the issue of CAD$25,000 equivalent in ordinary shares.  

  

·      On 15th March 2023, the Company announced that it had received notice of an exercise of a total of 600,000 warrants with an exercise price of 12.5p, raising gross proceeds of £75,000 for the Company. Admission of the shares took place on the 21st of March 2023.  

  

·      On 29th March 2023 we announced receipt of the final payment of CAD$140,000 of the 2022/3 Ontario Junior Exploration Grant (“OJEP”) for work completed on the North Hemlo property. 

  

·      On 26th June 2023 the Company announced the placing, subscription, and exercise of warrants of 10,491,700 ordinary shares raising gross proceeds £1,049,170 all at the price of 10p per share. Admission of these shares took place on or before 10th July 2023.  

  

·      The Annual General Meeting (“AGM”) of the Company was held on 29th June 2023, at which all resolutions were duly passed.  

  

James Knowles, Chairman commented: 

  

The first half of 2023 has been an exciting time for First Class Metals. Following on from the IPO in July 2022 and successful inaugural field season we looked to develop our diverse portfolio of precious and base metal focused assets in Ontario further.  

 

With fieldwork planned and in operation across Sunbeam, North Hemlo, Esa, Enable and Zigzag the year started with a very active program. Behind the field work the Company’s board progressed drilling permits and amendments to existing permitted properties.  

 

With the addition of the Zigzag Lithium project ‘earn-In’ we now have exposure to a key battery metal project, located in an area of Ontario which holds numerous other developing hard rock lithium projects and future processing infrastructure.

 

The progress of the Company during the period has been tremendous and with the successful completion of our fund raise, on 26th June 2023, First Class Metals is funded to continue to drive through the exciting planned workstreams ahead. 

 

 I would like to take this opportunity thank and congratulate our teams and partners in Canada for their hard work and results and to state that we very much look forward to continuing to push this exciting portfolio of assets onwards. 

 

 

IV.   Financial Review

 

Funding

At the period end, the Group was funded through investment from its shareholders following successful post-IPO fund raising events. A sum of £1,186,478.20 was raised through warrant conversion and private placement.

 

Current Assets

At 30th June 2023, the Group had trade and other receivables of £157,632 (Dec 2022: £226,217, June 2022: £31,177).

 

Liquidity, cash and cash equivalents

At 30th June 2023, the Group held £844,131 (Dec 2022: £712,715, 30 June 2022: £227,683) of cash and cash equivalents, all of which are denominated in pound sterling.

 

Going concern

The financial information has been prepared on the basis that the Group will continue as a going concern.

As a junior exploration company, the Directors are aware that the Company must seek funds from the market to meet its investment and exploration plans and to maintain its listing status.

The Group’s reliance on a successful fund raising presents a material uncertainty that may cast doubt on the Group’s ability to continue to operate as planned and to pay its liabilities as they fall due.

The Company successfully raised £1,186,478.20 in the period ended 30th June 2023 through a combination of issuing new shares and warrant conversions.

The Directors are aware of the reliance on fund raising within the next 12 months and the material uncertainty this presents but having reviewed the Group’s working capital forecasts they believe the Group is well placed to manage its business risks successfully providing the fund raising is successful.

 

 

Statement of Directors’ Responsibilities

The Directors are responsible for preparing this report and the financial statements in accordance with applicable United Kingdom law and regulations and UK adopted International Financial Reporting Standards (“IFRS”).

 

Company law requires the Directors to prepare financial statements for each financial period which present fairly the financial position of the Company and the financial performance and cash flows of the Company for that period. In preparing those financial statements, the Directors are required to:

 

• select suitable accounting policies and then apply them consistently;

• make judgements and estimates that are reasonable and prudent;

• present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;

• state whether applicable IFRS standards have been followed, subject to any material departures disclosed and explained in the financial statements;

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business; and

• provide additional disclosures when compliance with the specific requirements in IFRS standards is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.

 

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Company financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

 

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that comply with that law and those regulations, and for ensuring that the Annual report includes information required by the Listing Rules of the Financial Conduct Authority.

 

The financial statements are published on the Company’s website https://www.firstclassmetalsplc.com/. The work carried out by the Auditor does not involve consideration of the maintenance and integrity of this website and accordingly, the Auditor accepts no responsibility for any changes that have occurred to the financial statements since they were initially presented on the website. Visitors to the website need to be aware that legislation in the United Kingdom covering the preparation and dissemination of the financial statements may differ from legislation in their jurisdiction.

 

The Directors confirm that to the best of their knowledge the Company financial statements give a true and fair view of the assets, liabilities, financial position of the Company.

 



 

V.    Half yearly accounts

Consolidated Income Statement for the Period from 1 January 2023 to 30 June 2023

6 months to
 30 June
 2023
 £
 Unaudited

6 months to
30 June
 2022
 £
 Unaudited

12 months to
 31 December
 2022
 £
 Audited

Revenue

Cost of sales

Gross loss

Administrative expenses

(693,460)

(159,790)

(693,583)

Operating loss

(693,460)

(159,790)

(693,583)

Finance income

2,058

12

461

Finance costs

(53,298)

(7,918)

Net finance cost

(51,240)

12

(7,457)

Loss before tax

(744,700)

(159,778)

(701,040)

Loss for the period

(744,700)

(159,778)

(701,040)

Profit/(loss) attributable to:

Owners of the company

(744,700)

(159,778)

(701,040)

 

Loss for the period

(744,700)

(159,778)

(701,040)

Items that may be reclassified subsequently to profit or loss

Foreign currency translation (losses)/gains

(84)

123,772

98

Total comprehensive (loss)/income for the period

(744,784)

(36,006)

(700,942)

Total comprehensive (loss)/income attributable to:

Owners of the company

(744,784)

(36,006)

(700,942)

Loss per share:

(1.06)p

(0.17)p

(1.31)p

 



 

Consolidated Statement of Financial Position as at 30 June 2023

Note

30 June
 2023
 £
 Unaudited

30 June
 2022
 £
 Unaudited

31 December
 2022
 £
 Audited

Assets

Non-current assets

Property, plant and equipment

5

1,169

812

Mineral property exploration and evaluation

4

2,914,105

1,751,778

2,256,720

2,915,274

1,751,778

2,257,532

Current assets

Trade and other receivables

7

157,632

31,177

226,217

Cash and cash equivalents

8

844,131

227,683

712,715

1,001,763

258,860

938,932

Total assets

3,917,037

2,010,638

3,196,464

Equity and liabilities

Equity

Share capital

9

(79,551)

(50,944)

(69,049)

Share premium

(4,470,806)

(1,486,947)

(3,395,168)

Equity reserve

(22,201)

(10,258)

Foreign currency translation reserve

(14)

(98)

Retained earnings

1,614,079

204,700

869,379

Equity attributable to owners of the company

(2,958,493)

(1,333,191)

(2,605,194)

Non-current liabilities

Other non-current financial liabilities

(15,353)

Current liabilities

Trade and other payables

12

(459,558)

(377,448)

(357,325)

Loans and borrowings

10

(498,986)

(300,000)

(218,592)

(958,544)

(677,448)

(575,917)

Total liabilities

(958,544)

(677,448)

(591,270)

Total equity and liabilities

(3,917,037)

(2,010,639)

(3,196,464)

 



 

Consolidated Statement of Changes in Equity for the Period from 1 January 2023 to 30 June 2023

Unaudited

Share capital
 £

Share premium
 £

Equity reserve
 £

Foreign currency translation
 £

Retained earnings
 £

Total equity
 £

At 1 January 2023

69,049

3,395,168

10,258

98

(869,379)

2,605,194

Loss for the period

(744,700)

(744,700)

Other comprehensive income

(84)

(84)

Total comprehensive income

(84)

(744,700)

(744,784)

New share capital subscribed

10,502

1,075,638

1,086,140

Other equity reserve movements

11,943

11,943

At 30 June 2023

79,551

4,470,806

22,201

14

(1,614,079)

2,958,493

 

Unaudited

Share capital
 £

Share premium
 £

Equity reserve
 £

Foreign currency translation
 £

Retained earnings
 £

Total equity
 £

At 1 January 2022

943

1,536,947

(168,339)

1,369,551

Loss for the period

(36,006)

(36,006)

Other comprehensive income

Total comprehensive income

1,536,947

(204,345)

(1,333,545)

New share capital subscribed

50,000

(50,000)

Other equity reserve movements

At 30 June 2022

50,943

1,486,947

(204,345)

(1,333,545)

 

Audited

Share capital
 £

Share premium
 £

Equity reserve
 £

Foreign currency translation
 £

Retained earnings
 £

Total equity
 £

At 1 January 2022

943

1,536,947

(168,339)

1,369,551

Loss for the period

(701,040)

(701,040)

Other comprehensive income

98

98

Total comprehensive income

98

(701,040)

(700,942)

New share capital subscribed

68,106

1,858,221

1,926,327

Other equity reserve movements

10,258

10,258

At 31 December 2022

69,049

3,395,168

10,258

98

(869,379)

2,605,194

Consolidated Statement of Cash Flows for the Period from 1 January 2023 to 30 June 2023

Note

6 months to
 30 June
 2023
 £
 Unaudited

6 months to
 30 June
 2022
 £
 Unaudited

12 months to
 31 December 2022
 £
 Audited

Cash flows from operating activities

Loss for the period

(744,700)

(36,006)

(701,040)

Adjustments to cash flows from non-cash items

Depreciation and amortisation

266

(123,771)

162

Foreign exchange loss/(gain)

80,474

(29,831)

Finance income

(2,058)

(12)

(461)

Finance costs

53,298

934

7,918

(612,720)

(158,855)

(723,252)

Working capital adjustments

Decrease/(increase) in trade and other receivables

7

68,585

(1,985)

(176,917)

Increase in trade and other payables

12

102,233

270,866

266,096

Net cash flow from operating activities

(441,902)

110,026

(634,073)

Cash flows from investing activities

Interest received

2,058

461

Acquisitions of property plant and equipment

(624)

(974)

Acquisition of mineral property exploration and evaluation

4

(729,823)

(572,081)

(1,013,050)

Net cash flows from investing activities

(728,389)

(572,081)

(1,013,563)

Cash flows from financing activities

Proceeds from issue of ordinary shares, net of issue costs

1,098,083

1,593,549

Proceeds from other borrowing draw downs

280,394

300,000

587,180

Foreign exchange loss/(gain)

123,771

Repayment of other borrowing

(15,353)

(23,747)

Net cash flows from financing activities

1,363,124

423,771

2,156,982

Net increase in cash and cash equivalents

192,833

(38,284)

509,346

Cash and cash equivalents at 1 January

712,715

267,244

267,244

Effect of exchange rate fluctuations on cash held

(61,417)

(1,277)

(63,875)

Cash and cash equivalents at 30 June

844,131

227,683

712,715

Notes to the Financial Statements for the Period from 1 January 2023 to 30 June 2023

1

General information

The Company is a public company limited by share capital, incorporated and domiciled in England and Wales.

The principal activity of the Company was that of a holding company.

 

The principal activity of the Group was that of the exploration of gold and other semi-precious metals as well as battery metals critical to energy storage and power generation solutions.

The Company’s ordinary shares are traded on the London Stock Exchange (LSE) under the ticker symbol FCM.

The address of its registered office is:

Suite 16 Freckleton Business Centre

Freckleton Street

Blackburn

Lancashire BB2 2AL

United Kingdom

These unaudited interim results comprise the Company and its subsidiary, First Class Metals Canada Inc.

 

The Company’s interim report and accounts for the six months ended 30 June 2023 have been prepared using the recognition and measurement principles of International Accounting Standards in conformity with the requirements of the Companies Act 2006.

 

These interim financial statements for the six months ended 30 June 2023 should be read in conjunction with the financial statements for the year ended 31 December 2022, which have been prepared in accordance with International Financial Reporting Standards (“IFRSs”) as applied in accordance with the provisions of the Companies Act 2006. The interim report and accounts do not include all the information and disclosures required in the annual financial statements. 

 

The interim report and accounts have been prepared in accordance with IAS34 (interim financial statements) and on the basis of the accounting policies, presentation and methods of computation as set out in the Company’s December 2022 Annual Report and Accounts, except for those that relate to new standards and interpretations effective for the first time for periods beginning on (or after) 1 January 2023 and will be adopted in the 2023 annual financial statements. 

 

The financial information is presented in Pounds Sterling, rounded to the nearest pound and has been prepared under the historical cost convention.

 

The interim report and accounts do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. These interim financial statements were approved by the Board of Directors on 28 September 2023. The results for the six months to 30 June 2023 and the comparative results for the six months to 30 June 2021 are unaudited.  The figures for the year ended 31 December 2022 are extracted from the audited statutory accounts of the Company for that period.

 

 

 

 

 

Going Concern

The Directors have confirmed their intention to support the Company whilst it is in the process of raising funds to achieve its business plans. The Directors consider that sufficient resources are available to support the Company’s operations for the foreseeable future and therefore believe that the going concern basis of preparation is appropriate.


2  Loss per share

6 months ended

30 June 2023

6 months ended

30 June 2022

12 months ended 31 December 2022

(unaudited)

(unaudited)

(audited)

Loss from operations

£

(744,700)

(36,006)

(701,040)

Weighted average number of shares

70,410,322

21,673,976

53,456,619

Basic and fully diluted loss per share

Pence

(1.06)

(0.17)

(1.31)

 

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

 

There are potentially issuable shares all of which relate to share warrants issued as part of placings in 2022. However, due to the losses for the year the impact of the potential additional shares is anti-dilutive and has therefore not been recognised in the calculation of the fully diluted loss per share. 

3

Earnings per share

The calculation of the basic and diluted earnings per share (EPS) has been based on the loss attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding.

4

Mineral property exploration and evaluation

Mineral property exploration and evaluation
 £

Cost or valuation

At 1 January 2022

1,179,697

Additions

1,013,050

Foreign exchange movements

63,973

At 31 December 2022

2,256,720

At 1 January 2023

2,256,720

Additions

729,823

Foreign exchange movements

(72,438)

At 30 June 2023

2,914,105

Amortisation

At 30 June 2023

Carrying amount

At 30 June 2023

2,914,105

At 1 January 2022

1,179,697

5

Property, plant and equipment

Group

Furniture, fittings and equipment
 £

Cost

Additions

974

At 31 December 2022

974

At 1 January 2023

974

Additions

624

At 30 June 2023

1,598

Depreciation

Charge for year

162

At 31 December 2022

162

At 1 January 2023

162

Charge for the period

267

At 30 June 2023

429

Carrying amount

At 30 June 2023

1,169

At 31 December 2022

812

6

Investments

Group subsidiaries

Details of the group subsidiaries as at 30 June 2023 are as follows:

Name of subsidiary
 

Principal activity
 

Registered office
 

Proportion of ownership interest and voting rights held
 2023

2022

First Class Metals Canada Inc.*

Mining of other non-ferrous metal ores

55 York Street
Suite 401
Toronto
ON M5J 1R7

Canada

100%

100%

* indicates direct investment of the company

7

Trade and other receivables

30 June
 2023
 £

30 June
 2022
 £

31 December
 2022
 £

Accrued income

85,979

Prepayments

60,479

8,220

67,919

Other receivables

97,153

22,957

72,319

157,632

31,177

226,217

 

8

Cash and cash equivalents

30 June
 2023
 £

30 June
 2022
 £

31 December
 2022
 £

Cash at bank

844,131

227,683

712,715

9

Share capital

Allotted, called up and fully paid shares

30 June
 2023

31 December
 2022

No.

£

No.

£

Ordinary shares of £0.001 each

79,551,294

79,551

69,048,707

69,049

10

Loans and borrowings

 

30 June
 2023
 £

30 June
 2022
 £

31 December
 2022
 £

Current loans and borrowings

Finance lease liabilities

13,433

Convertible debt

498,986

300,000

205,159

498,986

300,000

218,592

The group’s exposure to market and liquidity risks, including maturity analysis, relating to loans and borrowings is disclosed in note 15 “Financial risk review”.

In October 2022, the company has access to a drawdown facility of £1,000,000, of which £500,000 was drawn down as of June 30, 2023.

 

11

Leases

Lease liabilities maturity analysis

A maturity analysis of lease liabilities based on undiscounted gross cash flow is reported in the table below:

30 June
 2023
 £

30 June
 2022
 £

31 December
 2022
 £

Less than one year

13,433

12

Trade and other payables

30 June
 2023
 £

30 June
 2022
 £

31 December
 2022
 £

Trade payables

183,257

161,062

82,006

Accrued expenses

269,562

32,051

236,810

Social security and other taxes

4,875

3,535

7,667

Outstanding defined contribution pension costs

1,864

Other payables

180,800

30,842

459,558

377,448

357,325

13

Financial risk review

Group

Principle risks & uncertainties are detailed in the most recent Annual report (page 41 & 42) which can be found on the company’s website and remain unchanged. This Annual Report can be found at: 2022+Annu\al+Report+&+Financial+Statements.pdf (squarespace.com) 

 

In addition, this note presents information about the group’s exposure to financial risks and the group’s management of capital.

 

Capital risk management

The Group’s objectives when managing capital are: (a) To maintain a flexible capital structure which optimizes the cost of capital at acceptable risk; (b) To meet external capital requirements on debt and credit facilities; (c) To ensure adequate capital to support long-term growth strategy; and (d) To provide an adequate return to shareholders. The Group continuously monitors and reviews the capital structure to ensure the objectives are met. Management defines capital as the combination of its indebtedness and equity balances, as disclosed in note 13, and manages the capital structure within the context of the business strategy, general economic conditions, market conditions in the power industry and the risk characteristics of assets. The Group’s objectives in managing capital and the definition of capital remain unchanged throughout the period. External factors, such as the economic environment, have not altered the Group’s objectives in managing capital.

 

 

 

Credit risk

The group’s definition of credit risk is Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. At present the Group does not have any customers and its risk on cash and bank is mitigated by holding of the funds in an “A” rated bank.

Liquidity risk

The group’s definition of liquidity risk is Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due. The Group manages liquidity risk by maintaining adequate cash balances.

Market risk

The group’s definition of market risk is Market risk is the risk that changes in market prices, such as commodity prices, will affect the Group’s earnings. The objective of market risk management is to identify both the market risk and the Group’s option to mitigate this risk.

A majority of the Group’s operating costs will be incurred in US and Canadian dollars, whilst the Group has raised capital in £ Sterling. The Group will incur exploration costs in US and Canadian Dollars, but it has raised capital in £ Sterling. Fluctuations in exchange rates of the US Dollar and Canadian Dollar against £ Sterling may materially affect the Group’s translated results of operations. In addition, given the relatively small size of the Group, it may not be able to effectively hedge against risks associated with currency exchange rates at commercially realistic rates. Accordingly, any significant adverse fluctuations in currency rates could have a material adverse effect on the Group’s business, financial condition and prospects to a much greater extent than might be expected for a larger enterprise.

Interest rate risk is the risk that the fair value of the future cash flows of a financial instrument will fluctuate because of changes in market rates of interest. As the Group has no significant interest bearing assets or liabilities, the group’s operating cash flows are substantially independent of changes in market interest rates. Therefore, the Group is not exposed to significant interest rate risk.

14

Post balance sheet events

In July FCM announced that it has signed an agreement with OnGold Investment Corp (“OnGold”) in respect to the  Pickle Lake Property, McGill Township in Ontario . The property consists of 163 single cell mining claims, comprising 3,455ha (hectares). Contiguous to both First Class Metals, North Hemlo Property and Palladium One (TSXV:PDM) Tyko Project. Eleven high priority targets defined on the property from previous operators work program. Winter Lake Sediment sampling by FCM across the area as part of the due diligence process returned gold grades of up to 103ppb gold (Au) which is deemed to be extremely high for the wider area.

 

15

Related party transactions

Parties are considered to be related if one party has the ability (directly or indirectly) to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered related if they are subject to common control or common significant influence. Related parties may be individuals or corporate entities.

During the period, the Group incurred consultancy and travel expenses in relation to the intangible assets from Specialist Exploration Services (Scotland) Limited, a company controlled by a common director. The services were for £53,850.46 (Dec 2022: £121,965) of which £7,350 (Dec 2022: £7,000) was outstanding at the year end.

On the 26th Of June 2023 Marc J Sale subscribed to £37,500 shares in a private placement totalling 375,000 shares. The shares will be held in the name of Specialist Exploration Services Scotland Ltd which is a UK registered company controlled by Mr Marc J Sale.

#SVML Sovereign Metals LTD – Kasiya Pre-Feasibility Study Results

PFS CONFIRMS KASIYA AS A MAJOR CRITICAL MINERALS PROJECT DELIVERING INDUSTRY-LEADING ECONOMIC RETURNS AND SUSTAINABILITY METRICS

ECONOMIC HIGHLIGHTS

US$1,605M

28%

US$415M

After Tax NPV8

After Tax IRR

Ave. Annual EBITDA

 

US$16Bn

US$404/t

US$597M

Total Revenue
(initial modelled 25 years LOM)

Operating Cost
(FOB Nacala per tonne of product)

Capex to 1st Production

PFS HIGHLIGHTS

·    “Market Leader” Position in Two Critical Minerals:

o Positioned to become the world’s largest rutile producer at 222kt per annum for an initial 25 year life-of-mine (LOM)

o Potentially one of the world’s largest natural graphite producers outside of China at 244kt per annum

o Natural rutile facing significant global supply deficit forecast to widen further considerably in the next 5 years1

o Natural graphite market moving into deficit as demand rapidly grows in the lithium-ion battery and electric vehicle (EV) sectors

o Initial Probable Ore Reserves declared of 538Mt, representing conversion of only 30% of the total Mineral Resource

o Substantial production rate and mine life upside exists as the PFS modelling was limited to only 25 years

·    Highly Compelling Cost Profile:  

o Cash operating costs of US$404/t of product will position Kasiya as the lowest cost producer of rutile and graphite globally

o Increased capital to first production from the Expanded Scoping Study, is primarily due to bringing forward capital items previously planned for Stage 2 including a rail spur, full-scale water dam, integrated power and optimised graphite production, as well as generally enhanced engineering and global cost inflation

·    Industry-Redefining Environmental and Social Advantages:

o Extremely low CO2-footprint operation incorporating climate-smart attributes including hydro-mining with renewables power solution

o CO2 emissions expected to be lowest in class versus existing and planned operations and versus alternative synthetic products

o Low-impact operation with mineralisation at surface, zero-strip ratio, low reagent usage, simple process flowsheet and progressive land rehabilitation

·    Strong Support from the Government of Malawi:

o Government of Malawi has applauded the timely investment by Rio Tinto and marked it as a milestone towards realising the country’s aspirations of growing the mining sector as a priority industry

o PFS demonstrates Kasiya’s potential to provide significant socio-economic benefits for Malawi including fiscal returns, job creation, skills transfer and sustainable community development initiatives

o With mining being one of the key pillars for growth under Malawi’s economic development strategy (Agriculture, Tourism, Mining – ATM Policy) and the potential for Kasiya to be a project of national significance, the Government has constituted an Inter-ministerial Project Development Committee to work alongside the Company to assist in the permitting processes  

·    Optimisation with Strategic Investor Rio Tinto to Commence:

o Advancing into an optimisation phase prior to moving to the Definitive Feasibility Study (DFS) with support from the Company’s strategic investor, Rio Tinto

o Formal establishment of the Technical Committee with Rio Tinto  

Managing Director, Dr Julian Stephens commented: The release of the Kasiya PFS marks another important step towards unlocking a major source of two critical minerals required to decarbonise global supply chains and to achieve Net-Zero.

The Project benefits from existing high-quality infrastructure and inherent ESG advantages. Natural rutile has a far lower carbon footprint compared to other titanium feedstocks used in the pigment industry, and natural graphite is a key component in lithium-ion batteries – crucial to de-carbonising the global economy.

The high-quality of work completed and the results of the PFS demonstrates that Kasiya is a globally significant project that has the potential to deliver a valuable long-term source of low-CO2 products and generate substantial economic returns with a forecast average EBITDA of US$415 Million per annum for the initial 25 years modelled. The Project is well positioned to be a large scale, multi-generational asset with significant opportunity for further upside as only 30% of the current mineral resource (MRE) is utilised in the PFS model.

Kasiya’s compelling economics demonstrate the potential for industry-leading returns, even against the backdrop of global cost inflation.

The Company is looking forward to conducting an optimisation review in collaboration with new strategic investor, Rio Tinto and progressing to the Definitive Feasibility Study.”

 

ENQUIRIES

Dr Julian Stephens (Perth)
Managing Director

+61(8) 9322 6322

Sam Cordin (Perth)
+61(8) 9322 6322

Sapan Ghai (London)
+44 207 478 3900

 

Nominated Adviser on AIM and Joint Broker

 

SP Angel Corporate Finance LLP

 

Ewan Leggat

Charlie Bouverat

Harry Davies-Ball

+44 20 3470 0470

 

 

Joint Brokers

 

Berenberg

+44 20 3207 7800

Matthew Armitt

 

Jennifer Lee

 

 

 

Tavistock PR

+44 20 7920 3150

 

To view the announcement in full, please refer to the announcement at http://sovereignmetals.com.au/announcements/.

 

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.

Source:

 1. TZ Minerals International Pty Ltd (TZMI)

 

KASIYA PFS OUTCOMES

Sovereign Metals Limited (the Company or Sovereign) is pleased to announce the results of the Pre-Feasibility Study (PFS or Study) for the Company’s Kasiya Rutile-Graphite Project (Kasiya or the Project) in Malawi.

The PFS confirmed Kasiya as potentially a major critical minerals project with an extremely low CO2-footprint delivering major volumes of natural rutile and graphite while generating significant economic returns.   

The PFS is an Association for the Advancement of Cost Engineering International (AACEI) Class 3 estimate with an accuracy of -20% and +25%.

Table 1: Key Outcomes

Outcome

 

Unit

Kasiya

NPV8 (real post-tax)

US$

US$1,605M

NPV10 (real post-tax)

US$

US$1,205M

IRR (post-tax)

%

28%

Capital Costs to First Production (Stage 1)

US$

US$597M

Expansion Capital (Stage 2)

US$

US$287M

Plant relocation

US$

US$366M

Operating Costs

US$/t mined

US$8.74

Operating Costs

US$/t product

US$404

Revenue to Cost Ratio

X

2.8

NPV8 / Capital Costs to First Production

X

2.7

Throughput (Average LOM)

Mtpa

21.5

Modelled Life

years

25

Annual Production (Average LOM) – rutile

ktpa

222

Annual Production (Average LOM) – graphite

ktpa

244

Total Revenue (LOM)

US$

US$16,121M

Annual Revenue (Average LOM)

US$

US$645M

Annual EBITDA (Average LOM)

US$/year

US$415M

Payback – from start of production

years

4.3 years

 

LARGE-SCALE, LONG-LIFE AND HIGH-MARGIN OPERATION

Kasiya, located in central Malawi, is the largest natural rutile deposit and second largest flake graphite deposit in the world. Sovereign is aiming to develop a low-CO2 and sustainable operation to supply highly sought-after natural rutile and graphite to global markets.

Kasiya has a geological benefit with both natural graphite and rutile hosted in soft, friable saprolite material at surface that can be mined, beneficiated, and purified with a considerably lower carbon footprint than hard-rock operations or synthetic graphite and synthetic rutile production.

A diagram of a graphite product Description automatically generated

Figure 1: High-level schematic of the planned Kasiya Rutile-Graphite Project

The proposed large-scale operation will process 24 million tonnes of ore per annum to produce approximately 245kt of natural rutile and 288kt of natural graphite per annum once at steady state.

The rutile-graphite rich mineralisation will be extracted from surface utilising cost-effective hydro-mining to depths averaging 15m. Ore is transported as slurry via a pumping network to a Wet Concentration Plant (WCP) where a low-energy requirement, chemical-free process produces a Heavy Mineral Concentrate (HMC). The HMC is transferred to the dry Mineral Separation Plant (MSP) where premium quality rutile (+95% TiO2) 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, high crystallinity and high value coarse-flake graphite product.

The Project has excellent surrounding infrastructure including sealed roads, a high-quality rail line connecting to the deep-water port of Nacala on the Indian Ocean and hydro-sourced grid power. For the duration of the operation, 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 port of Nacala.

Based on the build-out strategy, the operation will commence in the southern section of the Ore Reserve with a 12Mtpa throughput plant which will be expanded from Year 6 to increase the throughput to 24Mtpa. As the southern mineralisation is exhausted, a new plant will be constructed in the north and the second stage WCP moved in order to continue to support 24Mtpa throughput.

CRITICAL RAW MATERIALS

Both rutile and graphite are critical to the world economy as well as crucial to decarbonisation solutions required to meet “Net-Zero” and other targets set by policymakers. Titanium and natural graphite have been classified as critical raw materials by the US and EU due to a combination of their scarceness and China-controlled supply chains.

Current sources of natural rutile are in decline as several operations’ reserves are depleting concurrently with declining ore grades. These include Sierra Rutile’s (SRL) Mine Area 1 in Sierra Leone and Base Resources’ Kwale operations in Kenya.

Global rutile supply is projected to decline sharply beyond 2023, following the scheduled closures of Base Resource’s Kwale and SRL operations unless mine life extension is approved (Source: TZ Minerals International Pty Ltd (TZMI). There are limited new deposits forecast to come online, and hence supply of natural rutile is likely to remain in structural deficit for the long term, even with Kasiya at full production.

A graph of a mountain Description automatically generated

Figure 2: Previous and forecast global natural rutile supply 2018-2033
*Supply profile only reflects existing operations
(source: TZMI)

Demand for high quality flake graphite and natural rutile is growing due to global decarbonisation requirements and current and future predicted supply deficits. Per Benchmark Mineral Intelligence, the demand for anodes grew by 46% in 2022 compared to only 14% growth in natural flake graphite supply.

Figure 3: Graphite demand / supply showing market deficit beginning 2024E

Source: Macquarie Research (March 2023)

LOW-COST OPERATION

Kasiya’s low operating costs are achieved through deposit size and grade, zero strip ratio from surface, location and excellent existing operational infrastructure. Kasiya is strategically located in close proximity to Malawi’s capital city Lilongwe, providing access to a skilled workforce and industrial services.

Products will be exported to global markets via the deep water port of Nacala along the existing Nacala Logistics Rail Corridor (NLC). This existing infrastructure provides significant capital cost savings for Kasiya compared to many other undeveloped minerals projects.

Kasiya has an average life-of-mine FOB (Nacala) operating cost of US$404 per tonne of product produced (rutile plus graphite).

One of the highest Revenue : Cost of Sales Ratios in the Mineral Sands Industry

The revenue-to-cash cost ratio of 2.8x positions Kasiya in the first quartile compared to other undeveloped mineral sands operations. The production of high value natural rutile and graphite delivers strong cashflows with a cash margin of over 64% 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 metric. 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.

 A graph of different colored rectangular shapes Description automatically generated with medium confidence

Figure 4: Revenue to cost ratio of Kasiya and other selected mineral sands projects

Lowest Cost Flake Graphite Project in the World

Graphite is produced at Kasiya via obtaining a graphite rich concentrate from the gravity spirals as part of the rutile processing. The graphite rich concentrate is then processed in a separate standard graphite flotation plant, producing a high purity, high crystallinity and high value coarse-flake graphite product.

On an incremental cost basis reflecting graphite production as a co-product to primary rutile production, the operating cost is US$182 per tonne of graphite produced (FOB Nacala).

 A graph of a graph Description automatically generated

Figure 5: Actual and forecast graphite production (non-Chinese)

 

LOW CO2 ADVANTAGE

Kasiya has the potential to provide two products that both have very favourable low carbon in-use advantages. Benchmark Life Cycle Assessment (LCA) studies for natural rutile and natural graphite produced from Kasiya* have the potential for a substantially reduced carbon footprint compared to other titanium feedstocks and natural graphite products in the market.

Natural rutile (~95% TiO2) is the cleanest, purest natural mineral form of TiO2 with the other major source being ilmenite (~50% TiO2). The genuine scarcity of natural rutile prompted the titanium industry to develop upgraded titanium feedstock products from ilmenite that can be used as substitutes for natural rutile (i.e. synthetic rutile and titania slag).

Two energy and carbon intensive processes are used by major market participants to produce the upgraded synthetic rutile and titania slag. Both methods use ilmenite (~FeTiO3) as the raw feedstock and are essentially processes for the removal of iron oxide. The downstream pigment production process relies heavily on the use of these upgraded titanium feedstocks, each having an associated substantial environmental impact.

A screenshot of a computer screen Description automatically generated

Figure 6: Natural rutile versus synthetic rutile and titania slag flowchart

Natural rutile produced at Kasiya has a fraction of the GWP of the alternative feedstocks. The Global Warming Potential (GWP) for natural rutile concentrate from Kasiya (0.1 t CO2e per tonne) is significantly lower than producing titania slag in South Africa (2.0 t CO2e per tonne) and producing synthetic rutile via the Becher process in Australia (3.3 t CO2e per tonne).

The Scope 1 and 2 emissions comparing the carbon footprint of these three production routes are shown in Figure 6. The higher GWP for synthetic rutile is mainly due to the use of coal and other reagents for the upgrading of lower grade ilmenite to the final synthetic rutile feedstock product.

* LCA conducted on inputs from the Expanded Scoping Study released July 2022.

 

Chart Description automatically generated

Figure 7:  GWP impact of natural rutile production from Kasiya as a titanium feedstock vs. alternatives
(Source: Minviro)

Kasiya has the lowest GWP compared with currently known and planned future natural graphite projects:

·      Up to 60% lower than currently reported GWP of graphite producers and developers, including suppliers to Tesla Inc.

·      3x less polluting than proposed Tanzanian natural graphite production from hard rock sources

·      6x less polluting than current Chinese natural graphite production which accounts for up to 80% of current global graphite supply

Figure 8: Global Warming Potential per tonne of graphite product (CO2e/t)

(Note: All figures are cradle-to-gate except for Syrah Resources which includes transportation to the port of Nacala; transportation of Kasiya’s graphite to the port of Nacala would add an estimated incremental 0.04CO2e to its GWP)

Industry’s interaction with supply chain participants indicates the progression towards higher proportions of natural graphite used in battery anodes will be supported by its lower cost and superior environmental credentials. The environmental footprint of EVs will become an increasingly important market consideration as EV penetration accelerates, noting that synthetic graphite has a carbon footprint orders of magnitude higher than flake graphite because it is made from needle coke produced from oil and coal refining via energy intensive processes.

Leading EV producer Tesla Inc.’s (Tesla) “Master Plan 3” outlines its proposed path to reach a sustainable global energy economy through end-use electrification and sustainable electricity generation and storage.  In the plan, Tesla suggests that the world would need to produce 10.5Mt of graphite per year and estimates US$104 Billion of new graphite mining investment is required to achieve its target (source: Tesla Master Plan 3 (April 2023)).

STRONG GOVERNMENT SUPPORT

The Malawian government identifies mining as one of the sectors that could potentially generate economic growth for the country. The country has several significant mineral resources that could be sustainably mined to contribute to Malawi’s economic goals.

Kasiya has the potential to deliver significant social and economic benefits for Malawi including fiscal returns, job creation, skills transfer and sustainable community development initiatives.

The Government of Malawi strongly supports Sovereign and its development of the Kasiya project. Malawi’s Minister of Mines and Minerals, The Honourable Monica Chang’anamuno, recently publicly applauded the timely investment by Rio Tinto and marked it as a milestone towards realising the country’s aspirations of growing the mining industry as promoted in the Malawi Vision 2063, which isolates mining as a priority industry.

With mining being one of the key pillars for growth under Malawi’s economic development strategy (Agriculture, Tourism, Mining – ATM Policy) and the potential for Kasiya to be a project of national significance, the Government has constituted an Inter-ministerial Project Development Committee to work alongside the Company to assist in the permitting processes.

INVESTMENT BY RIO TINTO

In July 2023, Rio Tinto made an investment in Sovereign resulting in an initial 15% shareholding and options expiring within 12 months of initial investment to increase their position to 19.99%. Under the Investment Agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of Kasiya including with respect to Sovereign’s graphite co-product, with a primary focus on spherical purified graphite for the lithium-ion battery anode market.   

The Company is planning to commence optimisation phase prior to advancing to the DFS. Sovereign is soon to establish a Technical Committee and commence the working relationship with Rio Tinto after the publication of this Study.

DISCLOSURES, DISCLAIMERS, MODIFYING FACTORS & SOURCES

 

DISCLOSURES & DISCLAIMERS

 

Competent Person Statements

The information in this announcement that relates to Production Targets and Ore Reserves is based on and fairly represents information provided by Mr Ross Cheyne, a Competent Person, who is a Fellow Member of The Australasian Institute of Mining and Metallurgy. Mr Cheyne is employed by Orelogy Consulting Pty Ltd, an independent consulting company. Mr Cheyne has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Cheyne consents to the inclusion in the Announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to Processing, Infrastructure and Capital and Operating Costs is based on and fairly represents information compiled or reviewed by Mr Tomasz Tomicki, a Competent Person, who is a Fellow Member of The Australasian Institute of Mining and Metallurgy. Mr Tomicki is employed by DRA Pacific Pty Ltd, an independent consulting company. Mr Tomicki has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activities undertaken. Mr Tomicki, consents to the inclusion in the Announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to Metallurgy – rutile is based on and fairly represents information compiled or reviewed by Mr Tomasz Tomicki, a Competent Person, who is a Fellow Member of The Australasian Institute of Mining and Metallurgy. Mr Tomicki is employed by DRA Pacific Pty Ltd, an independent consulting company. Mr Tomicki has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activities undertaken. Mr Tomicki, consents to the inclusion in the Announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to Metallurgy – graphite is based on and fairly represents information compiled or reviewed by Mr John Fleay, a Competent Person, who is a Fellow Member of The Australasian Institute of Mining and Metallurgy. Mr Fleay is employed by DRA Pacific Pty Ltd, an independent consulting company. Mr Fleay has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activities undertaken. Mr Fleay, consents to the inclusion in the Announcement of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to the Mineral Resource Estimate is extracted from the announcement entitled ‘Kasiya Indicated Resource Increased by over 80%’ dated 5 April 2023 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. The original 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 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.

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.

 

Qualified Person

 

Information disclosed in this announcement has been reviewed by Dr Julian Stephens (B.Sc (Hons), PhD, MAIG), Managing Director, a Qualified Person for the purposes of the AIM Rules for Companies.

 

SUMMARY OF MATERIAL ASSUMPTIONS

Material assumptions used in the estimation of the production target and associated financial information are set out in the following table.

Table 2: Assumptions 

Assumption

Input

Maximum accuracy variation – Capital costs 

-20%/+25%

Maximum accuracy variation – Operating costs

-20%/+25%

Minimum LoM

25 years

Annual average throughput (tonnes) – Stage 1

12,000,000

Annual average throughput (tonnes) – Stage 2

24,000,000

Annual throughput (tonnes) – LoM average

21,600,000

Head grade – rutile

1.03%

Recovery – rutile

100%

Product grade (TiO2) – rutile

96%

Head grade – graphite

1.66%

Recovery – graphite

67.5%

Product grade (TGC) – graphite

96%

Annual production (average LoM) – rutile (tonnes)

222,000

Annual production (average LoM) – graphite (tonnes)

244,000

USD:AUD

0.67

USD:MWK

0.0010

USD:ZAR

0.0549

Sales Price – rutile (average LoM)

US$1,484/t

Sales Price – graphite (average LoM)

US$1,290/t

Government Royalty

5% of gross revenue

Vendor Royalty

2% of gross profit

Community Development Fund

0.45% of gross revenue

Stage 1 Capital

US$572m

Stage 2 Capital (expansion to 24Mtpa)

US$287m

Plant Relocation

US$366m

Sustaining Capital

US$470m

Operating Costs including royalties (LoM) – FOB Nacala

US$404/t

Corporate Tax Rate

30%

Rent Resource Tax (RRT)

15% after-profits

Discount Rate

8%

 

ORE RESERVE STATEMENT

 

Orelogy Consulting Pty Ltd (Orelogy) was responsible for the mine planning component of the PFS for Kasiya. As such Orelogy have developed an Ore Reserve estimate for Kasiya in accordance with the guidelines of the JORC Code 2012.

The Kasiya MRE released by Sovereign in on 5 April 2023 was used as the basis for the PFS Ore Reserve estimate. Mineral Resources were converted to Ore Reserves in line with the material classifications which reflect the level of confidence within the resource estimate. The Ore Reserve reflects that portion of the Mineral Resource which can be economically extracted by open pits utilising a combination of hydro mining and bulldozer methodologies. The Ore Reserve considers the modifying factors and other parameters detailed in the relevant sections of the PFS report, including but not limited to the mining, metallurgical, social, environmental, approvals, tenure, statutory and financial aspects of the project.

In line with the JORC 2012 guidelines, the Kasiya Probable Ore Reserve is based on Indicated classified Mineral Resources. There is no Measured classified Mineral Resource at Kasiya and consequently no Proved Ore Reserve.

The reported MRE is inclusive of the Ore Reserve.

The Ore Reserve includes an allowance for mining dilution and ore loss on the basis that all material within the shell is classified and extracted as ore.

The open pit geometries developed for the purposes of mine planning, and which define the subsequent Ore Reserve, are based on Whittle pit shells edited to comply with practical mining requirements and identified exclusion zones.

The information that relates to Ore Reserves was compiled by Mr Ross Cheyne of Orelogy who takes overall responsibility for the Ore Reserve as Competent Person (see Competent Persons Statement above). Mr Cheyne is a Fellow of The Australasian Institute of Mining and Metallurgy and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as Competent Person in terms of the JORC (2012 Edition).

A site visit was undertaken by Mr Ryan Locke in, a Principal Consultant with Orelogy, as a nominated representative of the Competent Person.

The Ore Reserve estimate is summarised in Table 3 below, along with the associated cut-off grade used to define the shell.

Table 3:  Ore Reserve for the Kasiya Deposit as of September 2023

Classification

Tonnes
(Mt)

Rutile Grade
(%)

Contained Rutile
(Mt)

Graphite Grade (TGC) (%)

Contained Graphite
(Mt)

Proved

Probable

538

1.03%

5.5

1.66%

8.9

Total

 538

1.03%

5.5

1.66%

8.9

Pit Optimisation

An open pit optimisation utilising Whittle™ software was carried out on the Kasiya deposit using Indicated Mineral Resources only (in line with the JORC 2012 guidelines). The latest parameters available were used to determine the economic extent of the open pit excavation. The process plant production parameters were supplied by Sovereign with an initial rate of 12Mtpa and a ramp up in production from years 5 – 7 to annual rate of 24Mtpa.

 

The intention to hydro-mine the majority of the defined Ore Reserve means that there is no ability to selectively mine and all material will be extracted and sent as plant feed. Therefore, all material within the “shell” will be extracted and fed to the plant as ore and any interstitial waste and/or sub-economic grade material will be likewise treated as diluent material. However, due to the relatively homogenous and continuous nature the orebody, the quantities of this material will be relatively small and therefore a simple 5% dilution was applied within the Whittle™ tool.

For the production schedule on which the Ore Reserve is based all material within the shell was treated as “ore” to ensure the appropriate dilution was captured.

Mineable Pit Geometries

Based on the cut-off grades applied the mining areas was further interrogated to determine the potential recoverable mining inventory. The interrogation process applied the following constraints to determine the bulk mining boundaries:

·      A minimum depth of 5m for the hydro mining method.

·      Removal of any small, isolated pits.

·      Pit extents limited to mineable areas and to remain outside of identified exclusion areas wherever reasonably possible. Sovereign identified all local village areas and areas of cultural or environmental significance within the potential mining envelope that should not be disturbed during the mining phase of the Project.

MODIFYING FACTORS

The Modifying Factors included in the JORC Code (2012) have been assessed as part of the Pre-Feasibility Study, including mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and government factors. The Company has received advice from appropriate experts when assessing each Modifying Factor.

A summary assessment of each relevant Modifying Factor is provided below.

Mining – refer to section entitled ‘Mining’ in the full Announcement at http://sovereignmetals.com.au/announcements/.

The Company engaged independent consultants, Orelogy and Fraser Alexander to carry out the pit optimisations, mine design, scheduling, mining cost estimation and Ore Reserves for the Study. The proposed mining method is hydro mining with minor bulldozer assistance. This is considered appropriate for this style of shallow, soft and friable saprolite-hosted rutile and graphite mineralisation. This methodology is used across numerous mineral sands operations, particularly in Africa, and is well suited for this style of mineralisation.

Rutile

The Company completed bulk rutile testwork programs at the globally recognised AML in Perth, Australia. The latest program was supervised by Sovereign’s Head of Development, Paul Marcos. Mr Marcos is a metallurgist and process engineer and a mineral sands industry veteran. Bulk test-work programs have confirmed premium grade rutile can be produced via a simple and conventional process flow sheet.

Processing engineering was completed by DRA Global who developed the process plant design and associated cost estimate for the Study. An average product grade of 96% TiO2 and 100% recovery to product factor has been applied.

Graphite

The Company has conducted graphite testwork across ALS Laboratory in Perth and SGS Lakefield in Canada. Veteran graphite metallurgist Oliver Peters, MSc, P.Eng., MBA (Consulting Metallurgist for SGS and Principal Metallurgist of Metpro Management Inc.) was engaged to supervise and consult on the testwork programs. Mr Peters has over 25 years’ experience in metallurgy on graphite and other commodities. He has operated numerous graphite pilot plants and commissioned a number of full-scale processing facilities.

DRA’s Senior Engineer, Stewart Calder and Manager Metallurgy, John Fleay supervised and advised on sample selection, testwork scope and results from the latest testwork programs. Both consultants are considered to have the appropriate capabilities and similarities with the material and the early stage of the project.

Processing engineering was completed by DRA Global who developed the process plant design and associated cost estimates for the PFS. Overall average graphite recovery applied in the model was 67.5%.  Gravity recovery ranges between 73.6% to 86.2%, averaging 77.9% and flotation plant recovery ranges between 89.2% and 96.1%, averaging 91.4%. Total Graphite (TGC) recovery average is 72.5%. Overall concentrate grades average 96% C(t) with over 57% of the graphite flake product being larger than 180µm.

Rutile & Graphite

It is acknowledged that laboratory scale test-work will not always represent actual results achieved from a production plant in terms of grade, chemistry, sizing and recovery. Further test-work will be required to gain additional confidence on specifications and recoveries that will be achieved at full-scale production.

Overall, the process flow-sheet is conventional for both rutile and graphite with no novel features or equipment incorporated.

Infrastructure – refer to sections entitled ‘Infrastructure’, and ‘Transport and  Logistics’ in the full Announcement at http://sovereignmetals.com.au/announcements/.

Kasiya is located approximately 40km northwest of Lilongwe, Malawi’s capital, and boasts excellent access to services and infrastructure. The proximity to Lilongwe gives the project a number of benefits, including access to a large pool of professionals and skilled tradespeople, as well as industrial services.

The Company appointed JCM to design a preliminary IPP solution for Kasiya. JCM is a Canada-headquartered IPP which develops, constructs, owns and operates renewable energy and storage projects in emerging markets across the globe. JCM provided an estimated, levelized cost of energy (LOCE) on a Power Purchase Agreement (PPA).

Logistics cost estimates, including rail and port infrastructure and handling, were provided by Thelo DB, Nacala Logistics and Grindrod based on market data, suppliers’ quotations, industry databases, industry contacts and consultants’ existing knowledge of southern African transport infrastructure and freight markets. All consultants are independent with substantial experience in the management of transport logistics studies in southern Africa.

Marketing – refer to sections entitled ‘Marketing Strategy’ in the full Announcement at http://sovereignmetals.com.au/announcements/.

Rutile

The Company engaged market leading TZMI to provide a bespoke marketing report to support the Study. TZMI is a global, independent consulting and publishing company specialising in technical, strategic and commercial analyses of the opaque (non-terminal market) mineral, chemical and metal sectors.

TZMI’s assessment has confirmed that, based upon their high-level view on global demand and supply forecasts for natural rutile, and with reference to the specific attributes of Kasiya, there is a reasonable expectation that the product will be able to be sold into existing and future rutile markets.

Given the premium specifications of Kasiya’s natural rutile, the product should be suitable for all major natural end-use markets including TiO2 pigment feedstock, titanium metal and welding sectors.

In July 2023, Rio Tinto made an investment in Sovereign resulting in an initial 15% shareholding and options expiring within 12 months of initial investment to increase their position to 19.99%. Under the Investment Agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of Kasiya. Also, included under the Investment Agreement, Rio Tinto has the option to become the operator of Kasiya on commercial arm’s-length terms.

In the event, Rio Tinto elect to be the operator of the Project and for so long as Rio Tinto remain the operator, Rio Tinto shall have exclusive marketing rights to market 40% of the annual production of all products from the Project as identified in the DFS on arm’s-length terms.

Rio Tinto’s option over operatorship and 40% marketing rights lapse if not exercised by the earlier of (i) 90 days after the Company announces its DFS results or 180 days after the announcement of the DFS if Rio Tinto’s advises it needs additional time to consider the exercise of the Rio Tinto’s Option or (ii) Rio Tinto ceasing to hold voting power in the Company of at least 10%.

Graphite

The Company engaged Fastmarkets, a specialist international publisher and information provider for the global steel, non-ferrous and industrial minerals markets, to prepare a marketing report for graphite.

Fastmarkets’ assessment has confirmed that based upon their high-level view on global demand and supply forecasts for natural flake graphite, and with reference to the specific attributes of Sovereign’s projects, there is a reasonable expectation that the product from Sovereign’s projects will be able to be sold into existing and future graphite markets. Given the extremely low-cost profile and high-quality product, it is expected that output from Kasiya will be able to fill new demand or substitute existing lower quality / higher cost supply.

Project considerations taken by Fastmarkets in forming an opinion about the marketability of product include:

–          Low capital costs (incremental)

–          Low operating costs

–          High quality concentrate specifications

Industry participants confirm that the highest value graphite concentrates remain the large, jumbo and super-jumbo flake fractions, primarily used in industrial applications such as refractories, foundries and expandable products. These sectors currently make up the significant majority of total global natural flake graphite market by value.

Fastmarkets have formed their opinion based solely upon project information provided by Sovereign Metals to Fastmarkets and have not conducted any independent analysis or due diligence on the information provided.

As noted above, Rio Tinto recently made an investment in Sovereign. The Company and Rio Tinto will work together to qualify Kasiya’s graphite product with a particular focus on supplying the spherical purified graphite segment of the lithium-ion battery anode market. Rio Tinto has set up a battery materials business in 2021, including its recently announced plans to set up a battery testing plant in Melbourne, Australia.

Economic – also refer to sections entitled ‘Cost Estimations’ and ‘Financial & Economic Analysis’ in the full Announcement at http://sovereignmetals.com.au/announcements/.

Capital estimates for the procress plant have been prepared by DRA global, together with input from the Company and other contributing consultants using combinations of cost estimates from suppliers, historical data, benchmarks and other independent sources. The accuracy of the initial capital cost estimate for the Project is ±20%.

Capital costs include the cost of all services, direct costs, contractor indirects, EPCM expenses, non-process infrastructure, sustaining capital and other facilities used for the mine. Capital costs make provision for mitigation expenses and mine closure and environmental costs.

Working capital requirements (including contingency) for plant commissioning and full ramp-up have been included in the headline capital estimate reported under construction, owner’s and start-up costs.

Mining costs have been estimated by Fraser Alexander, a regional leader in hydro-mining and materials handling. Mining costs have been built up from first principles based on equipment, vendor, and contractor quotations, local unit cost rates, and benchmarked costs.

Labor costs have been developed based on a first-principles build-up of staffing requirements with labour rates benchmarked in Malawi and expatriate rates benchmarked for professionals from South Africa and other jurisdictions.

A Government royalty of 5% (applied to revenue) and a vendor profit share of 2% (applied to gross profit) has been included in all project economics. A 0.45% royalty (applied to revenue) has been applied for the community development fund.

Rehabilitation and mine closure costs are included within the reported operating cost and sustaining capital figures.

A detailed financial model and discounted cash flow (DCF) analysis has been prepared by the Company in order to demonstrate the economic viability of the Project. The financial model and DCF were modelled with conservative inputs to provide management with a baseline valuation of the Project.

The DCF analysis demonstrated compelling economics of the prospective Project, with an NPV (ungeared, after-tax, at an 8% discount rate) of US$1,605 million,  and an (ungeared) IRR of 28%.

Sensitivity analysis was performed on all key assumptions used. The robust project economics insulate the Kasiya Project from variation in market pricing, capital expense, or operating expenses. With a rutile and graphite concentrate price 30% lower than the PFS prices the Project still displays a positive NPV (ungeared, after-tax, 8% discount rate) of US$636 million and IRR of 17%.

Payback period for the Project is 4.3 years from the start of production. The payback period is based on free-cash flow, after taxes.

Sovereign estimates the total capital cost to construct the mine to be US$597m (which includes a contingency of 17% of direct and indirect costs).

Key parameters are disclosed in the body of the announcement, and include:

–          Life of Mine: 25 years

–          Discount rate: 8%

–          Tax rate: 30%

–          Resource Rent Tax (RRT) of 15% after tax profit

–          Royalty rate: 5% royalty (Government), 2% of gross profit (Original Project Vendor) and 0.45% Community Development Fund.

–          Pricing:  Rutile average price of US$1,484 per tonne and Graphite average basket price of US$1,290 per tonne

The financial model has been prepared internally by the Company using inputs from the various expert consultants and has been reviewed by BDO Australia – Perth, an independent leading accountancy, tax and advisory services firm to validate the functionality and accuracy of the model.

The Company engaged the services of advisory firm, Argonaut PCF Limited (Argonaut), with regards to project economics. Argonaut is a financial advisory firm which specialises in multiple sectors, including metals and oil & gas. Argonaut is well regarded as a specialist capital markets service provider and has raised project development funding for companies across a range of commodities including the industrial and speciality minerals sector. Following the assessment of a number of key criteria, Argonaut has confirmed that, on the basis that a DFS arrives at a result that is not materially negatively different than the PFS as noted above, all in-country government and regulatory approvals are received, commercial offtake agreements are in place for the majority of rutile and graphite production for at least the first five years of mine life, and that there has not been any material adverse change in financial condition, results of operations, business or prospects of the Company/or political and business environment in Malawi and/or financial or capital markets in general, Sovereign should be able to raise sufficient funding to develop the Project.

In July 2023, Rio Tinto made an investment in Sovereign resulting in an initial 15% shareholding and options expiring within 12 months of initial investment to increase their position to 19.99%. Under the Investment Agreement, is has been agreed with Rio Tinto that if Sovereign is raising debt finance for the development of the Project, Sovereign and Rio Tinto will negotiate, in good faith, financing arrangements in order to put in place an acceptable mine construction funding package.

Since initial exploration of the Kasiya Project in November 2019, the Company has completed extensive drilling, sampling, metallurgical test-work, geological modelling and defined an Indicated and Inferred Mineral Resource Estimate. Over this period, with these key milestones being attained and the Project de-risked, the Company’s market capitalisation has increased from approximately A$18m to over A$236m. As the Project continues to achieve key milestones, which can also be significant de-risking events, the Company’s share price could be anticipated to increase.

The Company is debt free and is in a strong financial position, with approximately A$45m cash on hand (31 August 2023). The current financial position means the Company is soundly funded to continue into a DFS phase to further develop the Project.

In July and August 2023, Rio Tinto invested $40.6m to become a strategic investor of the Company. The investment proceeds will be used to advance Kasiya and represents a significant step towards unlocking the Project for a major new supply of low-CO2-footprint natural rutile and flake graphite. Under the Investment Agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of Kasiya including with respect to Sovereign’s graphite co-product, with a primary focus on spherical purified graphite for the lithium-ion battery anode market. 

The Company’s shares are listed on the ASX and AIM which are premier markets for growth companies and provides increased access to capital from institutional and retailed investors in Australia and the UK.

Sovereign has an experienced and high-quality Board and management team comprising highly respected resource executives with extensive technical, financial, commercial and capital markets experience. The directors have previously raised more than A$2bn from capital markets for a number of exploration and development companies.

 

As a result, the Board has a high level of confidence that the Project will be able to secure funding in due course, having particular regard to:

1.    Required capital expenditure;

2.    Sovereign’s strategic partner relationship with Rio Tinto;

3.    Sovereign’s market capitalisation;

4.    Recent funding activities by directors in respect of other resource projects;

5.    Recently completed funding arrangements for similar or larger scale development projects;

6.    The range of potential funding options available;

7.    The favourable key metrics generated by the Kasiya Project;

8.    Ongoing discussions for potential offtake agreements; and

9.    Investor interest to date.

Environmental, Social, Legal and Governmental – refer to section entitled ‘Environmental & Social Impact’ in the full Announcement at http://sovereignmetals.com.au/announcements/.

 

Sovereign is committed to conduct its activities in full compliance to the requirements of national regulations, its obligations under international conventions and treaties and giving due consideration to international best practices and policies. The Company has appointed an experienced environmental consultant to manage the ESIA process, and environmental and social baseline studies have commenced with appropriately qualified independent experts. The Company has also completed a high-level risk assessment to identify major environmental and social risks which could affect the development of the Project, along with mitigating strategies to allow identified risks to be addressed early in the project design phase.

The Company has embarked on several community engagement exercises in the area and there is a general positive acceptance of the Project. Social responsibility/RAP costs totalling US$92m have been included in this Study, as well as a 0.45% revenue royalty for the community development fund.

Based on the current assessments and commenced ESIA, the Company believes there are no environmental issues currently identified that cannot be appropriately mitigated in accordance with standard practices adopted for the development of mining projects.

Subject to further positive technical studies, Sovereign intends to apply for a ML to secure mineral deposits for mining. Under the Mines Act there are certain requirements, milestones and approvals required prior to submission of a ML application. At this point of Kasiya’s development, the Company notes no known issues or impediments obtaining a ML under normal course of business.

Under the current Mines Act, The Government of Malawi shall have the right, but not the obligation, to acquire, directly or through a Government nominee, without cost, a free equity ownership interest of up to ten percent (10%) in any mining project that will be subject to a large-scale mining licence (>5Mt mined per annum or >US$250m Capex).

As previously noted by the Company, the Government of Malawi has proposed a new Mines and Minerals Bill (2023) (New Bill) which has been passed by the Malawian Parliament and received Presidential Assent, though awaits publication in the Malawi Gazette before coming into force. If approved, the New Bill will replace the current Mines Act. The New Bill introduces amendments to improve transparency and governance of the mining industry in Malawi. Sovereign notes the following updates in the New Bill which may affect the Company in the future: (i) ELs may be granted for an initial period of 5 years with the ability to extend by 3 years on two occasions (total 11 years); (ii) the Malawian Government maintains a right to free equity ownership (as discussed above) for large-scale mining licences but the New Bill proposes to remove the free government equity ownership percentage with the right to be a negotiation matter; and (iii) A new Mining and Regulatory Authority will be responsible for implementing the objectives of the New Bill.

In a Press Release issued on 20 July 2023, the Government of Malawi has publicly applauded the timely investment by Rio Tinto and marked it as a milestone towards realising the country’s aspirations of growing the mining industry as promoted in the Malawi Vision 2063, which identifies mining as a priority industry.

The Government’s statement confirms its commitment to ensuring the growth of the mining sector through deliberate initiatives aiming at establishing a conducive investment environment in the sector.

 

APPENDIX 1 – JORC CODE, 2012 EDITION – TABLE 1

SECTION 1 – SAMPLING TECHNIQUES AND DATA

Criteria

 JORC Code explanation

Commentary

Sampling Techniques

Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

 

Hand Auger (HA) samples are composited based on regolith boundaries and sample chemistry generated by hand-held XRF (pXRF). Each 1m of sample is dried and riffle-split to generate a total sample weight of 3kg for analysis, generally at 2 – 5m intervals. This primary sample is then split again to create a 3kg composite to provide a 1.5kg sample for both rutile and graphite analyses.

Infill Push-Tube (PT) core drilling is sampled routinely at 2m intervals by compositing dried and riffle-split half core. A consistent, 1.5kg sample is generated for both the rutile and graphite determination.

Air-Core (AC) samples are composited based on expertly logged regolith boundaries. Each 1m of sample is dried and riffle-split to generate a total sample weight of 3kg for analysis, generally at 2m intervals. This primary sample is then split again to provide a 1.5kg sample for both rutile and graphite analyses.

Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

 

Drilling and sampling activities are supervised by a suitably qualified company geologist who is present at all times. All drill samples are geologically logged by the geologist at the drill site/core yard.

Each sample is sun dried and homogenised. Sub-samples are carefully riffle split to ensure representivity. The 1.5kg composite samples are then processed.

An equivalent mass is taken from each sample to make up the composite. A calibration schedule is in place for laboratory scales, sieves and field XRF equipment.

Placer Consulting Pty Ltd (Placer) Resource Geologists have reviewed Standard Operating Procedures (SOPs) for the collection and processing of drill samples and found them to be fit for purpose and support the resource classifications as applied to the Mineral Resource Estimate (MRE). The primary composite sample is considered representative for this style of rutile mineralisation.

 

Aspects of the determination of mineralisation that are Material to the Public Report. In cases where ‘industry standard’ work has been done this would be relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information.

 

 

Logged mineralogy percentages, lithology/regolith information and TiO2% obtained from pXRF are used to assist in determining compositing intervals. Care is taken to ensure that only samples with similar geological characteristics are composited together.

Drilling Techniques

Drill type (e.g. core, reverse circulation, openhole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, facesampling bit or other type, whether core is oriented and if so, by what method, etc).

 

A total of 1,357 HA holes for 12,643m have been drilled to date at the Kasiya Rutile Deposit to obtain samples for quantitative determination of recoverable rutile and Total Graphitic Carbon (TGC).

A PT infill drilling programme, designed to support this resource estimate upgrade, was completed. An additional 234 core holes for 2,368.5m were included in the updated MRE. The total PT holes contributing to the updated MRE are 488 for 4,669m.

A total of 182 AC holes for 4,404m were completed in six locations across the Kasiya deposit deemed likely to fall into mining pit areas. The results are included in this updated MRE.

Placer has reviewed SOPs for HA, PT and AC drilling and found them to be fit for purpose and support the resource classifications as applied to the MRE. Sample handling and preparation techniques are consistent for PT and coring samples.

Two similar designs of HA drilling equipment are employed. HA drilling with 75mm diameter enclosed spiral bits (SOS) with 1m long steel rods and with 62mm diameter open spiral bits (SP) with 1m long steel rods.  Drilling is oriented vertically by eye.

Each 1m of drill sample is collected into separate sample bags and set aside.  The auger bits and flights are cleaned between each metre of sampling to avoid contamination.

Core-drilling is undertaken using a drop hammer, Dando Terrier MK1. The drilling generated 1m runs of 83mm PQ core in the first 2m and then transitioned to 72mm core for the remainder of the hole. Core drilling is oriented vertically by spirit level.

AC drilling was completed by Thompson Drilling utilising a Smith Capital 10R3H compact track-mounted drill. The drilling is vertical and generates 1m samples with care taken in the top metres to ensure good recoveries of the high-grade surface material. Each 1m sample bag is immediately transported back to Sovereign’s field laydown yard where they await processing.

 

Drill Sample Recovery

Method of recording and assessing core and chip sample recoveries and results assessed.

 

Samples are assessed visually for recoveries. The configuration of drilling and nature of materials encountered results in negligible sample loss or contamination.

HA and PT drilling is ceased when recoveries become poor once the water table has been reached. Water table and recovery information is included in lithological logs.

Core drilling samples are actively assessed by the driller and geologist onsite for recoveries and contamination.

AC drilling recovery in the top few metres are moderate to good. Extra care is taken to ensure sample is recovered best as possible in these metres. Recoveries are recorded on the rig at the time of drilling by the geologist. Drilling is ceased when recoveries become poor or once Saprock or refusal has been reached.

 

Measures taken to maximise sample recovery and ensure representative nature of the samples.

 

The Company’s trained geologists supervise drilling on a 1 team 1 geologist basis and are responsible for monitoring all aspects of the drilling and sampling process.

For PT drilling, core is extruded into core trays; slough is actively removed by the driller at the drilling rig and core recovery and quality is recorded by the geologist.

AC samples are recovered in large plastic bags. The bags are clearly labelled and delivered back to sovereign’s laydown yard at the end of shift for processing.

 

Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

 

No relationship is believed to exist between grade and sample recovery. The high percentage of silt and absence of hydraulic inflow from groundwater at this deposit results in a sample size that is well within the expected size range.

No bias related to preferential loss or gain of different materials is observed.

 

Logging

Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation mining studies and metallurgical studies.

 

Geologically, data is collected in detail, sufficient to aid in Mineral Resource estimation.

All individual 1m HA intervals are geologically logged, recording relevant data to a set log-chief template using company codes. A small representative sample is collected for each 1m interval and placed in appropriately labelled chip trays for future reference.

All individual 1m PT core intervals are geologically logged, recording relevant data to a set log-chief template using company codes.

Half core remains in the trays and is securely stored in the company warehouse.

All individual AC 1-metre intervals are geologically logged, recording relevant features.

data to a set log-chief template using company codes. A small representative sample is collected for each 1-metre interval and placed in appropriately labelled chip trays for future reference.

 

Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc.) photography.

 

All logging includes lithological features and estimates of basic mineralogy. Logging is generally qualitative.

The PT core is photographed dry, after logging and sampling is completed.

 

The total length and percentage of the relevant intersection logged

 

 

100% of samples are geologically logged.

Sub-sampling techniques and sample preparation

If core, whether cut or sawn and whether quarter, half or all core taken.

 

 

Due to the soft nature of the material, core samples are carefully cut in half by hand tools.

 

If non-core, whether riffled, tube sampled, rotary split, etc. and whether sampled wet or dry.

HA, PT and AC hole samples are dried, riffle split and composited. Samples are collected and homogenised prior to splitting to ensure sample representivity. ~1.5kg composite samples are processed.

An equivalent mass is taken from each primary sample to make up the composite.

The primary composite sample is considered representative for this style of mineralisation and is consistent with industry standard practice.

 

 

For all sample types, the nature, quality and appropriateness of the sample preparation technique.

 

Techniques for sample preparation are detailed on SOP documents verified by Placer Resource Geologists.

Sample preparation is recorded on a standard flow sheet and detailed QA/QC is undertaken on all samples. Sample preparation techniques and QA/QC protocols are appropriate for mineral determination and support the resource classifications as stated.

 

 

Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

 

The sampling equipment is cleaned after each sub-sample is taken.

Field duplicate, laboratory replicate and standard sample geostatistical analysis is employed to manage sample precision and analysis accuracy.

 

Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.

 

Sample size analysis is completed to verify sampling accuracy. Field duplicates are collected for precision analysis of riffle splitting. SOPs consider sample representivity. Results indicate a sufficient level of precision for the resource classification.

Whether sample sizes are appropriate to the grain size of the material being sampled.

 

 

The sample size is considered appropriate for the material sampled.

Quality of assay data and laboratory tests

The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

Rutile

The Malawi onsite laboratory sample preparation methods are considered quantitative to the point where a heavy mineral concentrate (HMC) is generated.

Final results generated are for recovered rutile i.e, the % mass of the sample that is rutile that can be recovered to the non-magnetic component of a HMC.

Heavy liquid separation (HLS) of the HM is no longer required and a HM result is not reported in the updated MRE. The HMC prepared via wet-table, gravity separation at the Lilongwe Laboratory provides an ideal sample for subsequent magnetic separation and XRF.

All 8,855 samples (not incl. QA) included in the MRE update received the following workflow undertaken on-site in Malawi;

·      Dry sample in oven for 1 hour at 105

·      Soak in water and lightly agitate

·      Wet screen at 5mm, 600µm and 45µm to remove oversize and slimes material

·      Dry +45µm -600mm (sand fraction) in oven for 1 hour at 105

7,904 of the 8,855 samples received the following workflow undertaken on-site in Malawi

·      Pass +45µm -600mm (sand fraction) across wet table to generate a HMC.

·      Dry HMC in oven for 30 minutes at 105

Bag HMC fraction and send to Perth, Australia for quantitative chemical and mineralogical determination.

951 of the 8,855 samples received the following workflow undertaken at Perth based Laboratories (superseded).

·      Split ~150g of sand fraction for HLS using Tetrabromoethane (TBE, SG 2.96g/cc) as the liquid heavy media to generate HMC. Work undertaken at Diamantina Laboratories.

4,738 of the 8,855 samples received magnetic separation undertaken at Allied Mineral Laboratories in Perth, Western Australia.

·      Magnetic separation of the HMC by Carpco magnet @ 16,800G (2.9Amps) into a magnetic (M) and non-magnetic (NM) fraction.

4,117 of the 8,855 samples received magnetic separation undertaken on-site in Malawi. 

·      Magnetic separation of the HMC by Mineral Technologies Reading Pilot IRM (Induced Roll Magnetic) @ 16,800G (2.9Amps) into a magnetic (M) and non-magnetic (NM) fraction.

All 8,855 routine samples received the following chemical analysis in Perth, Western Australia.

·      The routine NM fractions are sent to ALS Metallurgy Perth for quantitative XRF analysis. Samples receive XRF_MS and are analysed for:  TiO2, Al2O3, CaO, Cr2O3, Fe2O3, K2O, MgO, MnO, SiO2, V2O5, ZrO2, HfO2.

Graphite

8,078 graphite samples are processed at Intertek-Genalysis Johannesburg and Perth via method C72/CSA.

A portion of each test sample is dissolved in dilute hydrochloric acid to liberate carbonate carbon. The solution is filtered using a filter paper and the collected residue is the dried to 425°C in a muffle oven to drive off organic carbon. The dried sample is then combusted in a Carbon/ Sulphur analyser to yield total graphitic or TGC.

An Eltra CS-800 induction furnace infra-red CS analyser is then used to determine the remaining carbon which is reported as TGC as a percentage.

For geophysical tools, spectrometers, handheld XRF instruments, etc., the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

 

 

Acceptable levels of accuracy and precision have been established. No pXRF methods are used for quantitative determination.

Nature of quality control procedures adopted (e.g. standards, blanks, duplicate, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.

 

Sovereign uses internal and externally sourced wet screening reference material inserted into samples batches at a rate of 1 in 20. The externally sourced, certified standard reference material for HM and Slimes assessment is provided by Placer Consulting.

An external laboratory raw sample duplicate is sent to laboratories in Perth, Australia as an external check of the full workflow. These duplicates are produced at a rate of 1 in 20.

Accuracy monitoring is achieved through submission of certified reference materials (CRM’s). ALS and Intertek both use internal CRMs and duplicates on XRF analyses.

Sovereign also inserts CRMs into the sample batches at a rate of 1 in 20.

Three Rutile CRMs are used by Sovereign and range from 35% – 95% TiO2.

Three Graphite CRMs are used by Sovereign and range from 3% – 25% TGC.

Analysis of sample duplicates is undertaken by standard geostatistical methodologies (Scatter, Pair Difference and QQ Plots) to test for bias and to ensure that sample splitting is representative.  Standards determine assay accuracy performance, monitored on control charts, where failure (beyond 3SD from the mean) may trigger re-assay of the affected batch.

Examination of the QA/QC sample data indicates satisfactory performance of field sampling protocols and assay laboratories providing acceptable levels of precision and accuracy.

Acceptable levels of accuracy and precision are displayed in geostatistical analyses to support the resource classifications as applied to the estimate.

 

 

Verification of sampling & assaying

The verification of significant intersections by either independent or alternative company personnel.

 

Results are reviewed in cross-section using Datamine Studio RM software and any spurious results are investigated.  The deposit type and consistency of mineralisation leaves little room for unexplained variance. Extreme high grades are not encountered.

 

The use of twinned holes.

Twinned holes are drilled across a geographically dispersed area to determine short-range geological and assay field variability for the resource estimation.  Twin drilling is applied at a rate of 1 in 20 routine holes. Twin paired data in all drill methods represent ~4% of the database included in the updated MRE. Substantial comparative data between different drilling types and test pit results are also available but not referenced in the MRE.

Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

All data are collected electronically using coded templates and logging software. This data is then imported to a cloud hosted Database and validated automatically and manually.

A transition to electronic field and laboratory data capture has been achieved.

 

Discuss any adjustment to assay data.

 

Assay data adjustments are made to convert laboratory collected weights to assay field percentages and to account for moisture.

QEMSCAN of the NM fraction shows dominantly clean and liberated rutile grains and confirms rutile is the only titanium species in the NM fraction.

Recovered rutile is defined and reported here as: TiO2 recovered in the +45 to -600um range to the NM concentrate fraction as a % of the total primary, dry, raw sample mass divided by 95% (to represent an approximation of final product specifications). i.e recoverable rutile within the whole sample.

 

Location of data points

Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

 

A Trimble R2 Differential GPS is used to pick up the collars. Daily capture at a registered reference marker ensures equipment remains in calibration.

No downhole surveying of any holes is completed. Given the vertical nature and shallow depths of the holes, drill hole deviation is not considered to significantly affect the downhole location of samples.

 

 

Specification of the grid system used.

WGS84 UTM Zone 36 South.

 

Quality and adequacy of topographic control.

The digital terrane model (DTM) was generated by wireframing a 20m-by-20m lidar drone survey point array, commissioned by SVM in March 2022. Major cultural features were removed from the survey points file prior to generating the topographical wireframe for resource model construction. The ultra-high resolution 3D drone aerial survey was executed utilising a RTK GPS equipped Zenith aircraft with accuracy of <10cm ground sampling distance (GSD). Post-processing includes the removal of cultural features that do not reflect material movements (pits, mounds, etc)

The DTM is suitable for the classification of the resources as stated.

 

Data spacing & distribution

Data spacing for reporting of Exploration Results.

The HA collars are spaced at nominally 400m along the 400m spaced drill-lines with the PT holes similarly spaced at an offset, infill grid. The resultant 200m-by-200m drill spacing (to the strike orientation of the deposit) is deemed to adequately define the mineralisation in the MRE.

The AC collars are spaced on a 200m x 200m grid which is deemed to adequately define the mineralisation.

The PT twin and density sample holes are selectively placed throughout the deposit to ensure a broad geographical and lithological spread for the analysis. 

 

Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

The drill spacing and distribution is considered to be sufficient to establish a degree of geological and grade continuity appropriate for the Mineral Resource estimation.  

Kriging neighbourhood analysis completed using Supervisor software informs the optimal drill and sample spacing for the MRE. Based on these results and the experience of the Competent Person, the data spacing and distribution is considered adequate for the definition of mineralisation and adequate for Mineral Resource Estimation.

 

Whether sample compositing has been applied.

Individual 1m auger intervals have been composited, based on lithology, at 2 – 5m sample intervals for the 1,357 HA holes. 488 PT core holes have been sampled at a regular 2m interval to provide greater control on mineralisation for the Indicated Resource.

Individual 1m intervals have been composited, based on lithology, at a max 2m sample interval for the 182 AC holes.

The DH Compositing tool was utilised in Supervisor software to define the optimal sample compositing length. A 2m interval is applied to the MRE.

 

Orientation of data in relation to geological structure

Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known considering the deposit type

 

Sample orientation is vertical and approximately perpendicular to the orientation of the mineralisation, which results in true thickness estimates, limited by the sampling interval as applied. Drilling and sampling are carried out on a regular square grid. There is no apparent bias arising from the orientation of the drill holes with respect to the orientation of the deposit.

 

If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

 

 

There is no apparent bias arising from the orientation of the drill holes with respect to the orientation of the deposit.

Sample security

The measures taken to ensure sample security

Samples are stored in secure storage from the time of drilling, through gathering, compositing and analysis.  The samples are sealed as soon as site preparation is complete.

A reputable international transport company with shipment tracking enables a chain of custody to be maintained while the samples move from Malawi to Australia. Samples are again securely stored once they arrive and are processed at Australian laboratories. A reputable domestic courier company manages the movement of samples within Perth, Australia.

At each point of the sample workflow the samples are inspected by a company representative to monitor sample condition. Each laboratory confirms the integrity of the samples upon receipt. 

Audits or reviews

The results of any audits or reviews of sampling techniques and data

 

The CP Richard Stockwell has reviewed and advised on all stages of data collection, sample processing, QA protocol and Mineral Resource Estimation. Methods employed are considered industry best-practice.

Perth Laboratory visits have been completed by Mr Stockwell. Field and in-country lab visits have been completed by Mr Stockwell in May 2022. A high standard of operation, procedure and personnel was observed and reported.

Sovereign Metals Managing Director Julian Stephens and Exploration Manager Samuel Moyle have been onsite in Malawi numerous times since the discovery of the Kasiya Deposit.

 

SECTION 2 – REPORTING OF EXPLORATION RESULTS

Criteria

Explanation

Commentary

Mineral tenement & land tenure status

Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environment settings.

The Company owns 100% of the following Exploration Licences (ELs) and Licence Applications (APLs) under the Mines and Minerals Act 2019, held in the Company’s wholly-owned, Malawi-registered subsidiaries: EL0561, EL0492, EL0609, EL0582, EL0545, EL0528, EL0657 and APL0404.

A 5% royalty is payable to the government upon mining and a 2% of net profit royalty is payable to the original project vendor.

No significant native vegetation or reserves exist in the area. The region is intensively cultivated for agricultural crops.

The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

The tenements are in good standing and no known impediments to exploration or mining exist.

Exploration done by other parties

 

Acknowledgement and appraisal of exploration by other parties.

Sovereign Metals Ltd is a first-mover in the discovery and definition of residual rutile and graphite resources in Malawi. No other parties are, or have been, involved in exploration.

 

Geology

Deposit type, geological setting and style of mineralisation

The rutile deposit type is considered a residual placer formed by the intense weathering of rutile-rich basement paragneisses and variable enrichment by elluvial processes.

Rutile occurs in a mostly topographically flat area west of Malawi’s capital, known as the Lilongwe Plain, where a deep tropical weathering profile is preserved. A typical profile from top to base is generally soil (“SOIL” 0-1m) ferruginous pedolith (“FERP”, 1-4m), mottled zone (“MOTT”, 4-7m), pallid saprolite (“PSAP”, 7-9m), saprolite (“SAPL”, 9-25m), saprock (“SAPR”, 25-35m) and fresh rock (“FRESH” >35m).

The low-grade graphite mineralisation occurs as multiple bands of graphite gneisses, hosted within a broader Proterozoic paragneiss package. In the Kasiya areas specifically, the preserved weathering profile hosts significant vertical thicknesses, from near surface, of graphite mineralisation.

 

Drill hole information

A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: easting and northings of the drill hole collar; elevation or RL (Reduced Level-elevation above sea level in metres of the drill hole collar); dip and azimuth of the hole; down hole length and interception depth; and hole length

All intercepts relating to the Kasiya Deposit have been included in public releases during each phase of exploration and in this report. Releases included all collar and composite data and these can be viewed on the Company website.

There are no further drill hole results that are considered material to the understanding of the exploration results. Identification of the broad zone of mineralisation is made via multiple intersections of drill holes and to list them all would not give the reader any further clarification of the distribution of mineralisation throughout the deposit.

 

If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case

No information has been excluded.

Data aggregation methods

In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high-grades) and cut-off grades are usually Material and should be stated.

All results reported are of a length-weighted average of in-situ grades. The resource is reported at a range of bottom cut-off grades in recognition that optimisation and financial assessment is outstanding.

A nominal bottom cut of 0.7% rutile is offered, based on preliminary assessment of resource product value and anticipated cost of operations.

Where aggregate intercepts incorporate short lengths of high-grade results and longer lengths of low-grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

No data aggregation was required.

The assumptions used for any reporting of metal equivalent values should be clearly stated.

Rutile Equivalent (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)).

Commodity Prices:

·      Rutile price: US$1,484/t

·      Graphite price: US$1,290/t

Metallurgical Recovery to Product:

·      Rutile Recovery: 100%

·      Graphite Recovery: 67.5%

All assumptions taken from this Study and with discussion and Modifying Factors included in this document.

Relationship between mineralisation widths & intercept lengths

These relationships are particularly important in the reporting of Exploration Results.

The mineralisation has been released by weathering of the underlying, layered gneissic bedrock that broadly trends NE-SW at Kasiya North and N-S at Kasiya South. It lies in a laterally extensive superficial blanket with high-grade zones reflecting the broad bedrock strike orientation of ~045° in the North of Kasiya and 360° in the South of Kasiya.

 

If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

The mineralisation is laterally extensive where the entire weathering profile is preserved and not significantly eroded. Minor removal of the mineralised profile has occurred in alluvial channels. These areas are adequately defined by the drilling pattern and topographical control for the resource estimate.

If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘down hole length, true width not known’.

Downhole widths approximate true widths limited to the sample intervals applied. Mineralisation remains open at depth and in areas coincident with high-rutile grade lithologies in basement rocks, is increasing with depth. Graphite results are approximate true width as defined by the sample interval and typically increase with depth.

 

Diagrams

Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported. These should include, but not be limited to a plan view of the drill collar locations and appropriate sectional views.

Refer to figures in this report and in previous releases. These are accessible on the Company’s webpage.

Balanced reporting

Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high-grades and/or widths should be practiced to avoid misleading reporting of exploration results.

All results are included in this report and in previous releases. These are accessible on the Company’s webpage.

Other substantive exploration data

Other exploration data, if meaningful and material, should be reported including (but not limited to: geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

Limited lateritic duricrust has been variably developed at Kasiya, as is customary in tropical highland areas subjected to seasonal wet/dry cycles. Lithological logs record drilling refusal in just under 2% of the HA/PT drill database. No drilling refusal was recorded above the saprock interface by AC drilling.

Slimes (-45 µm) averages 46wt% in the Indicated Resource at a 0.7% rutile bottom cut. Separation test work conducted at AML demonstrates the success in applying a contemporary mineral sands flowsheet in treating this material and achieving excellent rutile recovery.

Sample quality (representivity) is established by geostatistical analysis of comparable sample intervals.

Several generations of QEMSCAN analysis of the NM performed at ALS Metallurgy fraction shows dominantly clean and liberated rutile grains and confirms rutile is the only titanium species in the NM fraction.

 

Further work

The nature and scale of planned further work (e.g. test for lateral extensions or depth extensions or large-scale step-out drilling).

Further AC drilling will allow the definition of a more extensive saprock-interface basement and should continue to deliver additional resources below the HA/PT-drilled regions.

A greater understanding of the lithological character and extent of those basement units, where high-grade (>1%) rutile persists at the saprock interface, may assist in focussing further resource definition and exploration targeting. 

Further metallurgical assessment is suggested to characterise rutile quality and establish whether any chemical variability is inherent across the deposit.

Trialling drill definition at a 100m spacing is suggested for Measured Resource assessment.

 

Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

Refer to diagrams in the body of this report and in previous releases. These are accessible on the Company’s webpage.

 

 

SECTION 3 – ESTIMATION AND REPORTING OF MINERAL RESOURCES

Criteria

JORC Code explanation

Commentary

 

Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

Data are manually entered into database tables according to SOPs and conforming to company field names and classifications. These are then migrated to Datashed5 cloud-hosted database managed internally by the Company with validation and quarantine capability. Relevant tables from the database are exported to csv format and forwarded to Placer for independent review.

Data validation procedures used.

Validation of the primary data include checks for overlapping intervals, missing survey data, missing assay data, missing lithological data, missing and mis-matched (to Lithology) collars.

Statistical, out-of-range, distribution, error and missing data validation is completed by Placer on data sets before being compiled into a de-surveyed drill hole file and interrogated in 3D using Datamine Studio RM software.

All questions relating to the input data are forwarded to the client for review and resolution prior to resource estimation.

Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

 

Perth Laboratory visits have been completed by the Competent Person, Mr Richard Stockwell. Field and in-country lab visits were complete over a 1-week period in May 2022. A high standard of operation, procedure and personnel was observed and reported.

If no site visits have been undertaken indicate why this is the case.

Not applicable

Confidence in (or conversely, the uncertainty of) the geological interpretation of the mineral deposit.

 

There is a high degree of repeatability and uniformity in the geological character of the Kasiya Deposit demonstrated by lithological logging of AC, PT core and HA samples. Satellite imagery and airborne geophysical data provided guidance for interpreting the strike continuity of the deposit.

Drill hole intercept logging and assay results (AC, PT and HA), stratigraphic interpretations from drill core and geological logs of drill data have formed the basis for the geological interpretation. The drilling exclusively targeted the SOIL, FERP, MOTT and SAPL weathering horizons, with no sampling of the SAPR and below the upper level of the fresh rock (FRESH) domain.

Nature of the data used and of any assumptions made.

 

No assumptions were made.

The effect, if any, of alternative interpretations on Mineral Resource estimation.

No alternative interpretations on Mineral Resource Estimation are offered.

The use of geology in guiding and controlling Mineral Resource estimation.

 

The mineral resource is constrained by the drill array plus one interval in each of the X, Y and Z axes.

The topographical DTM constrains the vertical extent of the resource. Rutile, enriched at surface by deflation and elluvial processes, is constrained internally by a hard boundary at the base of the SOIL and FERP horizons that overly the (generally less-mineralised) MOTT and SAPL horizons. In this way, continuity of rutile, observed in surface drilling results, is honoured between drill lines rather than being diluted by averaging with underlying, lower-grade material.

The base to mineralisation is arbitrarily designated at effective drill depth plus one (average sample width) interval in the Z orientation in HA/PT drilling. The effective drill depth is where HA drilling intersects the static water table, rather than being a true depth to un-mineralised basement. Deeper drilling using the AC method has shown rutile enrichment persists to bedrock and a material resource increase is anticipated upon application of this method to a broader area.

A base to mineralisation of BOH plus 2.7m (-2.7 RL) is retained for this estimate, where drilled by HA/PT methods. This basement horizon is interpreted on 200m north sections and accounts for artifacts of ineffective drilling terminating in soil or ferp horizons. It is applied consistently to both Indicated and Inferred resource areas.

AC drilling has accurately defined depth to basement at the saprock interface, which has been modelled where intersected in the updated MRE.

The factors affecting continuity both of grade and geology.

Rutile grade is generally concentrated in surface regolith horizons. Deposit stratigraphy and weathering is consistent along and across strike. Rutile grade trend is oriented at 45 degrees at Kasiya North and 360 degrees at Kasiya South, which mimics the underlying basement source rocks and residual topography. Rutile varies across strike as a result of the layering of mineralised and non-mineralised basement rocks.

The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

The Kasiya mineralised footprint strikes NE – SW and currently occupies an area of about 201km2.

Depth to basement is described previously.

The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

 

Datamine Studio RM and Supervisor software are used for the data analysis, variography, geological interpretation and resource estimation. Key fields are interpolated into the volume model using a range of parameters and interpolation methods to establish best fit for the deposit. For the Kasiya MRE update, the Inverse Distance weighting (power 4) method was seen to perform a superior interpolation of informing data and replication of the high-value and thin, surface (SOIL/FERP) grade distribution. This was assisted by the (customary) application of a Dynamic Anisotropy search, informed by the results of variography, Suitable limitations on the number of samples and the impact of those samples, was maintained.

Extreme grade values were not identified by statistical analysis, nor were they anticipated in this style of deposit.  No top cut is applied to the resource estimation.

Interpolation was constrained by hard boundaries (domains) that result from the geological interpretation.

The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

This is the fourth MRE for the Kasiya Deposit.

Bulk-scale test work has been completed and results support the view of the Competent Person that an economic deposit of readily separable, high-quality rutile is anticipated from the Kasiya Deposit. The recovery of a coarse-flake graphite by-product was achieved by the test work.

The assumptions made regarding recovery of by-products.

A graphite co-product was modelled as recoverable TGC.

Estimation of deleterious elements or other non-grade variables of economic significance (e.g. sulphur for acid mine drainage characterisation).

No significant deleterious elements are identified. A selection of assay, magnetic separation and XRF results are modelled and are reported.

In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

 

The average parent cell size used is equivalent to the average drill hole spacing within the Indicated Resource (200m*200m).  Cell size in the Z-axis is established to cater for the composite sample spacing and definition of the Topsoil domain. This resulted in a parent cell size of 200m x 200m x 3m for the volume model with 5 sub-cell splits available in the X and Y axes and 10 in the Z axis to smooth topographical and lithological transitions. Both parent cell and sub-cell interpolations were completed and reported. The sub-cell interpolation was again applied to this MRE as it better reflected the geological interpretation and a reasonable graduation of informing data through intermediate cell areas.

A Topsoil horizon has been defined at 0.3m thickness throughout the Indicated Resource area to support anticipated ore reserve calculation and mining studies. Topsoil is disclosed separately but remains in the MRE in recognition of advanced rehabilitation studies in the PFS by Agreenco.

Any assumptions behind modelling of selective mining units.

No assumptions were made regarding the modelling of selective mining units.  The resource is reported at an Indicated level of confidence and is suitable for optimisation and the calculation of a Probable Reserve.

Any assumptions about correlation between variables.

 

No assumptions were made regarding the correlation between variables.

Description of how the geological interpretation was used to control the resource estimates.

 

Interpolation was constrained by hard boundaries (domains) that result from the geological interpretation.

Discussion of basis for using or not using grade cutting or capping.

Extreme grade values were not identified by statistical analysis, nor were they anticipated in this style of deposit.  No top cut is applied to the resource estimation.

The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

Validation of grade interpolations was done visually In Datamine by loading model and drill hole files and annotating, colouring and using filtering to check for the appropriateness of interpolations.

Statistical distributions were prepared for model zones from both drill holes and the model to compare the effectiveness of the interpolation. Distributions of section line averages (swath plots) for drill holes and models were also prepared for each zone and orientation for comparison purposes.

The resource model has effectively averaged informing drill hole data and is considered suitable to support the resource classifications as applied to the estimate.

Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

Tonnages are estimated on a dry basis. No moisture content is factored.

The basis of the adopted cut-off grade(s) or quality parameters applied.

The resource is reported at a range of bottom cut-off grades in recognition that optimisation and financial assessment is outstanding.

A nominal bottom cut of 0.7% rutile is offered, based on preliminary assessment of resource value and anticipated operational cost.

Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

Hydro-mining has been determined as the optimal method of mining for the Kasiya Rutile deposit. The materials competence is loose, soft, fine and friable with no cemented sand or dense clay layers rendering it amenable to hydro-mining. It is considered that the strip ratio would be zero or near zero.

Dilution is considered to be minimal as mineralisation commonly occurs from surface and mineralisation is generally gradational with few sharp boundaries.

Recovery parameters have not been factored into the estimate.  However, the valuable minerals are readily separable due to their SG differential and are expected to have a high recovery through the proposed, conventional wet concentration plant.

The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.

Rigorous metallurgical testwork on rutile and graphite recoverability and specifications has been completed on numerous bulk samples since 2018.

Rutile recovered to product is modelled at 100% and graphite recovered to product is modelled at 67.5%.

Both products have best-in-class chemical and physical specifications.

Refer to text for further details.

 

Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

A large portion of the Mineral Resource is confined to the SOIL, FERP and MOTT weathering domains, and any sulphide minerals have been oxidised in the geological past. Therefore, acid mine-drainage is not anticipated to be a significant risk when mining from the oxidised domain.

 

The Kasiya deposit is located within a farming area and has villages located along the strike of the deposit. Sovereign holds regular discussions with local landholders and community groups to keep them well informed of the status and future planned directions of the project. Sovereign has benefited from maintaining good relations with landowners and enjoys strong support from the community at large.

Kasiya is in a sub-equatorial region of Malawi and is subject to heavy seasonal rainfall, with rapid growth of vegetation in season. Substantial vegetation or nature reserve is absent in the area.

Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

Density was calculated from 310 full core samples taken from geographically and lithologically-diverse sites across the deposit. Density is calculated using a cylinder volume wet and dry method performed by Sovereign in Malawi and calculations verified by Placer Consulting.

Density data was loaded into an Excel file, which was flagged against weathering horizons and mineralisation domains. These results were then averaged, by domain and applied to the MRE.

The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vughs, porosity, etc.), moisture and differences between rock and alteration zones within the deposit.

As above.

Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.

An average density of 1.65 t/m3 was determined for the total weathering profile.

This incorporates and average density of 1.39 t/m3 for the SOIL domain, 1.58 t/m3 for the FERP domain, 1.66 t/m3 for the MOTT domain, 1.69 t/m3 for the PSAP domain, 1.97 t/m3 for the SAPL domain, and 1.95 t/m3 for the LAT domain. Density data are interpolated into the resource estimate by the nearest neighbour method.

The basis for the classification of the Mineral Resources into varying confidence categories.

 

Classification of the MRE is at an Indicated and Inferred category. Minor regions of unclassified material occur in sparsely drilled, typically extraneous regions of the mineralised area. These are excluded from the resource inventory.  

Inferred classification is attributed to those areas with drilling spaced at 400m x 400m. Indicated classification is attributed to those areas with drilling spaced at 200m x 200m.

Whether appropriate account has been taken of all relevant factors (i.e. relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

All available data were assessed and the competent person’s relative confidence in the data was used to assist in the classification of the Mineral Resource.

Whether the result appropriately reflects the Competent Person’s view of the deposit

Results appropriately reflects a reasonable and conservative view of the deposit.

The results of any audits or reviews of Mineral Resource estimates.

Independent audit of the MRE construction was contracted to Datamine Australia by Placer prior to delivery to SVM. A third party is engaged by SVM for a further verification of the MRE.

Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

Substantial additional mineralisation was expected to occur below the effective depth of HA and PT drilling. This has been confirmed by the deeper AC drilling.

A high-degree of uniformity exists in the broad and contiguous lithological and grade character of the deposit. Drilling technique have been expertly applied and data collection procedures, density assessments, QA protocols and interpretations conform to industry best practice with few exceptions.

Assay, mineralogical determinations and metallurgical test work conform to industry best practice and demonstrate a rigorous assessment of product and procedure. The development of a conventional processing flowsheet and marketability studies support the classification of the Kasiya Resource.

The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

The estimate is global.

 

These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

No production data are available to reconcile model results.

 

SECTION 4 – ESTIMATION AND REPORTING OF ORE RESERVES

 

Criteria

Explanation

Commentary

Mineral Resource estimate for conversion to Ore Reserves

 

Description of the Mineral Resource estimate used as a basis for the conversion to an Ore Reserve.

 

Clear statement as to whether the Mineral Resources are reported additional to, or inclusive of, the Ore Reserves.

The Minerals Resource Estimate (“MRE”) declared on 5 April 2023 underpins the Ore Reserve. Sovereign engaged independent geological and mining consultants Placer to complete the MRE for the Kasiya deposit.

The principal resource geologist Mr Richard Stockwell is highly experienced with more than 25 years in resource estimation and mine geology. Mr Richard Stockwell is a Competent Person for the purposes of the MRE as defined and in accordance with the JORC Code 2012.

The MRE as reported in this document is inclusive of the Ore Reserve declared in this document. The Ore Reserve does not include Inferred Mineral Resources.

Site visits

Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

Site visits have been carried out by the following personnel:

·        Mr Ryan Locke, as representative for the Competent Person Mr Ross Cheyne for the JORC Reserve Estimate has been to site on multiple site visits prior to and since the discovery of the Kasiya Deposit.

·        Mr Richard Stockwell, the Competent Person for the JORC Mineral Resource Estimate and a representative of Placer Consulting Pty Ltd has conducted one site visit.

·        Mr Samuel Moyle, the Competent Person for Exploration Results and Exploration Manager of Sovereign Metals Ltd has conducted multiple site visits since the discovery of the Kasiya deposit;

Study status

The type and level of study undertaken to enable Mineral Resources to be converted to Ore Reserves.

The Code requires that a study to at least Pre-Feasibility Study level has been undertaken to convert Mineral Resources to Ore Reserves. Such studies will have been carried out and will have determined a mine plan that is technically achievable and economically viable, and that material Modifying Factors have been considered.

The technical and financial information in this release is at PFS-level enabling the declaration of Ore Reserves. The studies carried out have determined a mine plan that is technically achievable and economically viable with all material Modifying Factors having been considered.

The Ore Reserve was underpinned by a mine plan detailing mining locations, ore and waste quantities; plant feed quantities and plant head grades. Scheduling was undertaken in annual and quarterly periods.

Mine planning activities included an updated pit optimisation, development of mineable pit geometries, scheduling, mining cost estimation and financial analysis in order to confirm the ability to economically mine the Kasiya Ore Reserve.

Modifying factors considered during the mine planning process included pit slope design criteria, mining costs, mining dilution and ore loss, processing recoveries, processing costs, selling costs, general and administration costs and product price.

Cut-off parameters

The basis of the adopted cut-off grade(s) or quality parameters applied.

Pit cut-off grades varied between 0.7% and 0.9% rutile with cut-offs selected to provide the most tonnage whilst minimising the pit footprint to have as little environmental/social impact as possible.

The selected cut-off grades are above the final project breakeven cut-off grade of approximately 0.40% rutile.

Mining factors or assumptions

 

The method and assumptions used as reported in the Pre-Feasibility or Feasibility Study to convert the Mineral Resource to an Ore Reserve (i.e. either by application of appropriate factors by optimisation or by preliminary or detailed design).

The choice, nature and appropriateness of the selected mining method(s) and other mining parameters including associated design issues such as pre-strip, access, etc.

The assumptions made regarding geotechnical parameters (e.g. pit slopes, stope sizes, etc.), grade control and pre-production drilling.

The major assumptions made and Mineral Resource model used for pit and stope optimisation (if appropriate).

The mining dilution factors used.

The mining recovery factors used.

Any minimum mining widths used.

The manner in which Inferred Mineral Resources are utilised in mining studies and the sensitivity of the outcome to their inclusion.

The infrastructure requirements of the selected mining methods.

The Kasiya MRE released by Sovereign in on 5 April 2023 was used as the basis for the PFS Ore Reserve estimate. Mineral Resources were converted to Ore Reserves in line with the material classifications which reflect the level of confidence within the resource estimate. The Ore Reserve reflects that portion of the Mineral Resource which can be economically extracted by open pits utilising a combination of hydro mining and limited truck/shovel methodologies. The Ore Reserve considers the modifying factors and other parameters detailed in the relevant sections of the PFS report, including but not limited to the mining, metallurgical, social, environmental, approvals, tenure, statutory and financial aspects of the project.

In line with the JORC 2012 guidelines, the Kasiya Probable Ore Reserve is based on Indicated classified Mineral Resources. There is no Measured classified Mineral Resource at Kasiya and consequently no Proved Ore Reserve. Inferred classified material is not included in the Ore Reserve and therefore is not considered for mining.

The reported MRE is inclusive of the resources converted to Ore Reserves.

The Ore Reserve includes an allowance for mining dilution and ore loss on the basis that all material within the shell is classified and extracted as ore.

The open pit geometries developed for the purposes of mine planning, and which define the subsequent Ore Reserve, are based on Whittle pit shells edited to comply with practical mining requirements and identified exclusion zones.

Selection of Mining method

The mining options were evaluated in detail during the PFS to determine the best suited mining method for the operation. The criteria for selection were based not only on capital and operating cost, but ESG considerations and infrastructure requirements. Sovereign performed testwork on ROM material and conducted an independent assessment and trade-off analysis for all possible mining methods. The outcomes of this work resulted in hydro mining being determined as the optimal method for mining the Kasiya rutile- graphite deposit. Due to the consistent particle size distribution through the reserve, favourable operating and capital costs, low carbon footprint and air pollution (low dust and no diesel emissions) as well as the support of infrastructure and water availability within the project designated footprint.

Hydro-mining is defined as the excavation of material from its in-situ state using pressurised water. A stream of high-pressure water is directed at the ore with the purpose of mechanically breaking and softening the material so that it can be carried away by the created gravitational slurry flow. The mineralisation at Kasiya is largely homogenous and has relatively consistent physical properties throughout the MRE and contained Ore Reserve. The material competence is described as loose and friable, soft and well weathered with no cemented particles or dense clay layers. The particle size distribution (PSD) is favourable for hydro-mining due to its high content of -45µm fines and the fines component effectively increases the viscosity of the slurry created, which enhances the slurry’s ability to carry sand and heavy mineral particles.

Hydro mining is a proven technology and has been successfully applied on heavy mineral sand operations in Africa.  Hydro mining for the PFS is based on the block-mine and top-down methodologies. The top-down operational method has advantages in terms of safety, achieving and maintaining design slurry densities, achieving and maintaining design production rates and ease of planning and control.

Sovereign Mining engaged Fraser Alexander, a highly experienced mining contractor and consultancy specialising in hydro-mining to provide engineering and cost inputs for hydro-mining in the PFS.

Dry mining methods are required where hydro mining is inefficient and will be required to push approximately 11% of the Ore Reserve. These are the “basin” of the hydro mining areas which need selective “floor clean-up” mining.

Pit Optimisation

An open pit optimisation utilising Whittle™ software was carried out on the Kasiya deposit using Indicated Mineral Resources only (in line with the JORC 2012 guidelines). The latest parameters available were used to determine the economic extent of the open pit excavation. The process plant production parameters were supplied by Sovereign with an initial rate of 12mtpa and a ramp up in production from years 5 – 7 to an annual rate of 24Mtpa.

The intention to hydro-mine the majority of the defined Ore Reserve means that there is no ability to selectively mine and all material will be extracted and sent as plant feed. Therefore, all material within the “shell” will be extracted and fed to the plant as ore and any interstitial waste and/or sub-economic grade material will be likewise treated as diluent material. However, due to the relatively homogenous and continuous nature the orebody, the quantities of this material will be relatively small and therefore a simple 5% dilution was applied within the Whittle™ tool to approximate this assumption.

For the PFS, an overall slope angle of 20 degrees has been applied within the optimisation, in line with a conservative stable angle for a mineral sands operation.

 

Mineable Pit Geometries

Based on the cut-off grades applied, the optimization shells were further were further refined to develop a mineable geometry. The process applied the following constraints:

–      A minimum depth of 5m for the hydro mining method.

–      Removal of any small, isolated pits.

–      Pit extents limited to mineable areas and to remain outside of identified exclusion areas wherever reasonably possible. Sovereign identified all local village areas and areas of cultural or environmental significance within the potential mining envelope that should not be disturbed during the mining phase of the Project.

Metallurgical factors or assumptions

The metallurgical process proposed and the appropriateness of that process to the style of mineralisation.

Whether the metallurgical process is well-tested technology or novel in nature.

The nature, amount and representativeness of metallurgical test work undertaken, the nature of the metallurgical domaining applied and the corresponding metallurgical recovery factors applied.

Any assumptions or allowances made for deleterious elements.

The existence of any bulk sample or pilot scale test work and the degree to which such samples are considered representative of the orebody as a whole

For minerals that are defined by a specification, has the ore reserve estimation been based on the appropriate mineralogy to meet specifications?

Rutile

Sovereign completed bulk rutile testwork programs at the globally recognised AML in Perth, Australia. The latest program was supervised by Sovereign’s Head of Development, Paul Marcos. Mr Marcos is a metallurgist and process engineer and a mineral sands industry veteran. Bulk test-work programs have confirmed premium grade rutile can be produced via a simple and conventional process flow sheet.

Processing engineering was completed by DRA Global who developed the process plant design and associated cost estimate for the Study. An average product grade of 96% TiO2 with 100% recovery to rutile product was assumed for the PFS.

Graphite

Sovereign has conducted graphite testwork across ALS Laboratory in Perth and SGS Lakefield in Canada. Veteran graphite metallurgist Oliver Peters, MSc, P.Eng., MBA (Consulting Metallurgist for SGS and Principal Metallurgist of Metpro Management Inc.) was engaged to supervise and consult on the testwork programs. Mr Peters has over 25 years’ experience in metallurgy on graphite and other commodities. He has operated numerous graphite pilot plants and commissioned a number of full-scale processing facilities.

DRA’s Senior Engineer, Stewart Calder and Manager Metallurgy, John Fleay supervised and advised on sample selection, testwork scope and results from the latest testwork programs. Both consultants are considered to have the appropriate capabilities and similarities with the material and the early stage of the project.

An average product grade of 96% Ct with 67.5% recovery to product was assumed for the PFS.

Rutile & Graphite

It is acknowledged that laboratory scale test-work will not always represent actual results achieved from a production plant in terms of grade, chemistry, sizing and recovery. Further test-work will be required to gain additional confidence of specifications and recoveries that will be achieved at full-scale production.

Overall, the process flow-sheet is conventional for both rutile and graphite with no novel features or equipment incorporated.

Environmental

 

The status of studies of potential environmental impacts of the mining and processing operation. Details of waste rock characterisation and the consideration of potential sites, status of design options considered and, where applicable, the status of approvals for process residue storage and waste dumps should be reported.

An Environmental Impact Assessment (ESIA) is currently commencing with reference to applicable Malawian and international environmental and social permitting and baseline requirements for the Kasiya Project.

Sovereign is committed to conduct its activities in full compliance to the requirements of national regulations, its obligations under international conventions and treaties and giving due consideration to international best practices and policies. Sovereign has appointed an experienced environmental consultant to manage the ESIA process, and environmental and social baseline studies have commenced with appropriately qualified independent experts. Sovereign has also completed a high-level risk assessment to identify major environmental and social risks which could affect the development of the Project, along with mitigating strategies to allow identified risks to be addressed early in the project design phase.

Sovereign has embarked on several exercises with the communities in the area and there is a general positive acceptance of the Project.

Based on the current assessments and commenced ESIA, the Competent Person believes there are no environmental issues currently identified that cannot be appropriately mitigated in accordance with standard practices adopted for the development of mining projects.

Infrastructure

The existence of appropriate infrastructure: availability of land for plant development, power, water, transportation (particularly for bulk commodities), labour, accommodation; or the ease with which the infrastructure can be provided, or accessed.

Kasiya is located approximately 40km northwest of Lilongwe, Malawi’s capital, and boasts favourable access to services and infrastructure. The proximity to Lilongwe gives the project access to a large pool of professionals and skilled tradespeople, as well as industrial services.

Sovereign appointed JCM to design a preliminary IPP solution for Kasiya. JCM is a Canada-headquartered IPP which develops, constructs, owns and operates renewable energy and storage projects in emerging markets across the globe. JCM provided an estimated, levelized cost of energy (LOCE) on a Power Purchase Agreement (PPA).

Logistics cost estimates, including rail and port infrastructure and handling, were provided by Thelo DB, Nacala Logistics and Grindrod based on market data, suppliers’ quotations, industry databases, industry contacts and the consultant’s existing knowledge of southern African transport infrastructure and freight markets.

The above consultants are independent with appropriate experience in the management of transport logistics studies in southern Africa.

Costs

The derivation of, or assumptions made, regarding projected capital costs in the study.

The methodology used to estimate operating costs.

Allowances made for the content of deleterious elements.

The derivation of assumptions made of metal or commodity price(s), for the principal minerals and co- products.

Derivation of transportation charges.

The basis for forecasting or source of treatment and refining charges, penalties for failure to meet specification, etc.

The allowances made for royalties payable, both Government and private.

Capital estimates for the procress plant have been prepared by DRA Global, together with input from Sovereign  and other contributing consultants using combinations of cost estimates from suppliers, historical data, benchmarks and other independent sources. The accuracy of the initial capital cost estimate for the Project is -20% and +25%.

Capital costs include the cost of all services, direct costs, contractor indirects, EPCM expenses, non-process infrastructure, sustaining capital and other facilities used for the mine. Capital costs make provision for mitigation expenses and mine closure and environmental costs.

Working capital requirements (including contingency) for plant commissioning and full ramp-up have been included in the headline capital estimate reported under construction, owner’s and start-up costs.

Mining costs have been estimated by Fraser Alexander, a regional leader in hydro-mining and materials handling. Mining costs have been built up from first principles based on equipment, vendor, and contractor quotations, local unit cost rates, and benchmarked costs.

Labor costs have been developed based on a first-principles build-up of staffing requirements with labor rates benchmarked in Malawi and expatriate rates benchmarked for professionals from South Africa and other jurisdictions.

A Government royalty of 5% (applied to revenue) and a vendor profit share of 2% (applied to gross profit) has been included in all project economics. A 0.45% royalty (applied to revenue) has been applied for the community development fund.

Rehabilitation and mine closure costs are included within the reported operating cost and sustaining capital estimates.

Revenue factors

The derivation of, or assumptions made regarding revenue factors including head grade, metal or commodity price(s) exchange rates, transportation and treatment charges, penalties, net smelter returns, etc.

The derivation of assumptions made of metal or commodity price(s), for the principal metals, minerals and co-products.

Sales pricing for both products is based on current market analysis by an independent party (see below)

Market assessment

The demand, supply and stock situation for the particular commodity, consumption trends and factors likely to affect supply and demand into the future.

A customer and competitor analysis along with the identification of likely market windows for the product.

Price and volume forecasts and the basis for these forecasts.

Sovereign obtained independent market assessments for both products.

Rutile

Sovereign engaged market leading TZMI to provide a bespoke marketing report to support the Study. TZMI is a global, independent consulting and publishing company which specialises in technical, strategic and commercial analyses of the opaque (non-terminal market) mineral, chemical and metal sectors.

TZMI’s assessment has confirmed that, based upon their high-level view on global demand and supply forecasts for natural rutile, and with reference to the specific attributes of Kasiya, there is a reasonable expectation that the product will be able to be sold into existing and future rutile markets.

Given the premium specifications of Kasiya’s natural rutile, the product should be suitable for all major natural end-use markets including TiO2 pigment feedstock, titanium metal and welding sectors.

Graphite

Sovereign engaged Fastmarkets, a specialist international publisher and information provider for the global steel, non-ferrous and industrial minerals markets, to prepare a marketing report for graphite.

Fastmarkets’ assessment has confirmed that based upon their high-level view on global demand and supply forecasts for natural flake graphite, and with reference to the specific attributes of Sovereign’s projects, there is a reasonable expectation that the product from Sovereign’s projects will be able to be sold into existing and future graphite markets. Given the extremely low-cost profile and high-quality product, it is expected that output from Kasiya will be able to fill new demand or substitute existing lower quality / higher cost supply.

Project considerations taken by Fastmarkets in forming an opinion about the marketability of product include:

–           Low capital costs (incremental)

–           Low operating costs

–           High quality concentrate specifications

Industry participants confirm that the highest value graphite concentrates remain the large, jumbo and super-jumbo flake fractions, primarily used in industrial applications such as refractories, foundries and expandable products. These sectors currently make up the significant majority of total global natural flake graphite market by value.

Fastmarkets have formed their opinion based solely upon project information provided by Sovereign Metals to Fastmarkets and have not conducted any independent analysis or due diligence on the information provided.

Economic

The inputs to the economic analysis to produce the net present value (NPV) in the study, the source and confidence of these economic inputs including estimated inflation, discount rate, etc

NPV ranges and sensitivity to variations in the significant assumptions and inputs.

Key parameters are disclosed in the body of the announcement, and include:

–           Life of Mine: 25 years

–           Discount rate: 8%

–           Tax rate: 30%

–           Resource Rent Tax (RRT) of 15% after tax profit

–           Royalty rate: 5% royalty (Government), 2% of gross profit (Original Project Vendor) and 0.45% Community Development Fund.

–           Pricing:  Rutile average price of US$1,484 per tonne and Graphite average basket price of US$1,290 per tonne

The PFS financial model has been prepared internally by Sovereign using inputs from the various expert consultants and has been reviewed by BDO Australia – Perth, an independent leading accountancy, tax and advisory services firm to validate the functionality and accuracy of the model.

NPV sensitivity to costs and price were assessed utilising the Project financial model developed by Sovereign. As is the case for most commodity-based projects, the NPV is most sensitive to changes in price, with a +/-30% price variation generating a           +/-60% variation in project value. It is moderately sensitive to operating cost changes, with a +/-30% cost change producing a -/+ 18% fluctuation in value. Approximately 4% of this value change is attributable to mining costs, 5% to logistics costs and the remaining 9% to processing/labour/G&A related costs. The project is less sensitive to capital cost changes, with a +/-30% variation in capital affecting NPV by -/+10%.

Social

The status of agreements with key stakeholders and matters leading to social license to operate.

Sovereign expects to enter into a Community Development Agreement (“CDA”) with the surrounding communities. Significant engagement with these communities has occurred over the exploration phases and is ongoing ahead of negotiation of the CDA which is expected to be concluded during the DFS stage.

Other

To the extent relevant, the impact of the following on the project and/or on the estimation and classification of the Ore Reserves:

Any identified material naturally occurring risks.

The status of material legal agreements and marketing arrangements.

The status of government agreements and approvals critical to the viability of the project, such as mineral tenement status and government and statutory approvals. There must be reasonable grounds to expect that all necessary Government approvals will be received within the timeframes anticipated in the Pre-Feasibility or Feasibility study. Highlight and discuss the materiality of any unresolved matter that is dependent on a third party on which extraction of the reserve is contingent.

No identifiable naturally occurring risks have been identified to impact the Kasiya Ore Reserve.

Sovereign has no existing binding offtake agreement in place.

Sovereign is yet to apply for a Mining Licence (“ML”) covering the footprint of the project, however it is not anticipated for there to be any objections in obtaining the necessary government approvals.

Classification

The basis for the classification of the Ore Reserves into varying confidence categories. Whether the result appropriately reflects the Competent Person’s view of the deposit. The proportion of Probable Ore Reserves that have been derived from Measured Mineral Resources (if any).

The Kasiya PFS Ore Reserves comprise Indicated Mineral Resource material converted to “Probable” reserves.

In line with JORC 2012 guidelines, Inferred Mineral Resource material has not been included.

100% of the Kasiya PFS Ore Reserve is in the Probable Reserves category.

Audit or reviews

The results of any audits or reviews of Ore Reserve estimates.

No external audits or reviews have been carried out to date.

 

#FCM First Class Metals PLC – Zigzag Lithium Update & Issue of Equity

First Class Metals PLC (“First Class Metals” “FCM” or the “Company”) the UK metals exploration company seeking economic metal discoveries across its extensive Canadian Schreiber-Hemlo, Sunbeam and Zigzag land holdings is pleased to announce the launch of systematic exploration campaign at the Zigzag Lithium project in the Province of Ontario Canada. (“Zigzag” or the “Project”).

 

Highlights:

·      The Zigzag project is considered highly prospective for the discovery of economic pegmatite hosted lithium mineralisation. Historically several outcropping lenses of a potentially cohesive lithium-tantalum bearing pegmatite has been sampled across the property with encouraging results.

Historic grades at surface up to 1.68% lithium (Li20) over 7.9m and 0.168% tantalum (Ta205) over 2.54m. The claim group covers the historic Tebishogeshik occurrence.

Sampling by Nuinsco returned highly anomalous lithium (Li), tantalum (Ta), and rubidium (Rb), peaking at 3.55% Li20 , 836 ppm Ta₂O5, and 4,003 ppm rubidium Rb2O.

-Several shallow historic drill holes along the occurrence have returned encouraging results, including, (in separate drill holes) an intersection grading 1.08% Li2O over 6.1m and a separate intersection of 399.8ppm Ta2O5 over 2.92m. 

·      First pass limited sampling whilst achieving access  returned samples with a peak of 1.7% Li20 and 346ppmTantalum, 104 ppm Niobium and >3000ppm Rubidium.

·      Currently an experienced geological team is on the project, undertaking a prospecting and mapping of the known exposures.

·      In parallel with this initial systematic sampling programme the team has initiated a sawn channel sampling programme along strike at intervals across the exposed pegmatite outcrop.

·      Marc J Sale CEO visited the project in the last week to oversee the commencement of operations.

·      A further thirty-nine grab samples have been collected and are at the laboratory for assay and will be reported as soon as available.

A map of a city Description automatically generated

Figure 1-Historical drill holes and sampling results from the Zigzag project.

Marc J Sale First Class Metals CEO Commented:

“The initial, non-systematic grab samples collected by FCM, myself included, have demonstrated and validated the potential indicated by the historic samples from the Zigzag showing. Having visited the property and walked the outcrop I am confident that drilling will support the tenor of assays reported to date. Whilst we await further assays, FCM has embarked on a prospecting and systematic sampling programme including sawn channel sampling of ‘exposed’ outcrop in the central zone. I am confident that further outcrops in this zone and along strike will be identified. The focus of the current, ongoing programme is to bring Zigzag to a drill ready status in a ‘fast track,’ but diligent manner.’

 

Photograph of pegmatite sample exhibiting significant spodumenes crystals Li [AlSi2O6]

2023 Sample Results to date:

Sample

 

 

 

 

Number

Lithium (Li) %

Tantalum (Ta) ppm

Niobium (Nb) ppm

Rubidium (Rb) ppm

A1104880

1.39

184

104

884

A1104881

0.51

85

48

2770

A1104882

1.0

139

81

855

A1104883

0.012

198

88

3750

Sample-1

0.07

346

72

1140

Sample-2

0.41

219

79

1130

Sample-3

0.196

79

54

361

F006543

1.7

75

41

820

F006544

1.63

235

90

1200

F006545

1.65

115

60

1190

Table of the sample results to date. Note these are ‘non-systematic samples collected during access appraisal. (Values rounded for clarity).

 

 

Background & Location

The project is less than 100km from Armstrong in northwest Ontario in the Seymour Lake area (See figure 2 ), a district already proved to be prospective for hard rock, pegmatite hosted lithium. Existing infrastructure currently in place in the local area is expected to be further bolstered in the future by the planned Jackfish Hydro project and a spodumene Process Plant at the Green Technology Metals, Seymour site which is just over 10km away.

The six-unit claim group includes a mapped structure of 800m (Tebishogeshik occurrence) and is wholly contained within the claim block, the lithium-tantalum mineralization is pegmatite-hosted with significant rubidium and niobium mineralisation also reported. All of which are ‘critical minerals’ as identified by the 1Canadian and United Kingdom Governments.

Previous workers of the Tebishogeshik occurrence have identified Li2O and Ta2O5 mineralization along the entire strike of the known outcrop from sampling at surface, grading up to 1.68% Li2O over 7.9m and 0.168% Ta2O5 over 2.54m in separate channels samples. Several shallow historic drill holes along the known outcrop have returned significant intersections, including, (in separate drill holes) an intersection grading 1.08% Li2O over 6.1m and  399.8ppm Ta2O5 over 2.92m. Both intersections were less than 20m down hole. The structure is open along strike and to depth and remains to be fully evaluated.

Lithium-ion battery production capacity pipeline globally to 2030 increases up to 8.1 TWh and North American EV battery production is forecast to reach 1 TWh annually by 2030. Even if production from known current assets were to double against planned capacities, expected North American demand alone would exceed supply by 40%.

1 Minister Wilkinson Releases Canada’s $3.8-billion Critical Minerals Strategy to Seize Generational Opportunity for Clean, Inclusive Growth – Canada.ca

 

A map of a mining area Description automatically generated with medium confidence

Figure 2-Location of the Zigzag property within a ‘key’ area for Ontario’s rapidly expanding lithium industry.

 

Issue of Equity & Total Voting Rights

159,735 new ordinary shares are being issued to Nuinsco Resources Limited in respect of the year one Zigzag ‘option to earn in’ (2see news release 9th March), they will rank pari passu with the Company’s existing issued ordinary shares. The issue price is 11.15p which represents $30,000CAD, being the consideration for the year one share element fees of the option.

The Company intends to allot and issue these new ordinary shares under its existing authorities on a non-pre-emptive basis.

The Company will be making its application to admit the new ordinary shares to the Official List of the FCA and to trading on the Main Market (Standard List) of the LSE. Admission is expected to occur on the 20th of September 2023.

2https://polaris.brighterir.com/public/first_class_metals/news/rns/story/x8eolox

 

For further information, please contact:

 

James Knowles, Executive Chairman

JamesK@Firstclassmetalsplc.com

07488 362641

Marc J Sale, CEO

MarcS@Firstclassmetalsplc.com

07711 093532

Ayub Bodi, Executive Director

AyubB@Firstclassmetalsplc.com

07860 598086

 

First Equity Limited

(Financial Adviser & Broker)

 

Jonathan Brown

0207 3742212

Jason Robertson

0207 3742212

 

First Class Metals PLC – Background

 

First Class Metals is focussed on exploration in Ontario, Canada which is considered a top global destination for exploration with a robust and thriving junior mineral exploration sector. Specifically, the Hemlo ‘camp’ is a proven world class address for gold /VMS exploration. This geological terrane has significant production, both base / precious metals and a prolific number of exploration projects and numerous prospector’s ‘showings’.

 

FCM currently holds 100% ownership of seven claim blocks covering over 180km² along a 150km strike of the Hemlo-Schreiber-Dayohessarah greenstone belt which also contains the >23M oz shear hosted Hemlo gold mine operated by Barrick Gold. Late last year FCM completed the option to purchase the historical high grade (gold) Sunbeam past producing mine

 

The significant potential of the properties for precious, base and battery metals relate to: ‘nearology’ insomuch that all properties lie close to identified mineral anomalism, for example Palladium One’s RJ and Smoke Lake nickel projects are close to the FCM’s West Pickle Lake drill proven Ni-Cu project. This also demonstrates the second critical asset the properties hold: vector, anomalies, be they geological, geochemical, or geophysical that have demonstrated mineral potential extend on to FCM’s properties.

 

The inferred shear on the Esa property is being explored by neighbours both to the west and east where it crosses into their properties. Furthermore, the properties have not been extensively explored either historically or more contemporaneously. This is attributable to the overall lack of outcrop. However, modern exploration techniques are better able to ‘see through’ the ground cover and to identify anomalies.

 

Forward Looking Statements

 

Certain statements in this announcement may contain forward-looking statements which are based on the Company’s expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. Such forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as ‘aim’, ‘anticipate’, ‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’, ‘believe’, or other words of similar meaning. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Given these risks and uncertainties, prospective investors are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

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