Sovereign Metals Limited · ASX:SVM
Sovereign Metals — Investor Presentation (June 2022)
40 slides from Sovereign Metals's investor presentation, June 2022
Slide 1: June 2022 Presentation
JUNE 2022 | AIM: SVML | ASX: SVM | ABN: 71 120 833 427
Slide 2: Disclaimers & Disclosures
DISCLAIMERS & DISCLOSURES AUTHORISATION STATEMENT This presentation has been approved and authorised for release by the Company’s Managing Director, Dr Julian Stephens. DISCLAIMER NOTICE This presentation has been prepared as a summary only and does not contain all information Sovereign Metals Limit
Slide 3: Expanded Scoping Study Outcomes
SOVEREIGN METALS LIMITED EXPANDED SCOPING STUDY OUTCOMES EXCEPTIONAL ECONOMICS CONFIRM KASIYA AS AN INDUSTRY-LEADING SOURCE OF CRITICAL RAW MATERIALS
Slide 4: Kasiya Expanded Scoping Study Results
Kasiya Expanded Scoping Study Results Key Economic Results US$1,537M 36% US$12,038M US$323M US$320/t US$372M Ave. Annual Operating Cost Capex to 1st After Tax NPV8 After Tax IRR LOM Revenue Production EBITDA per tonne of product Two stage approach Annual Production – Rutile 242ktpa* • Stage 1: 12Mtp
Slide 5: Expanded Scoping Study Highlights
Expanded Scoping Study Highlights • Potential to become a major producer in both the natural rutile and graphite markets • Low capital costs to first production due to exceptional existing available infrastructure offering significant cost reductions and providing optionality and scalability • Low o
Slide 6: Kasiya Mineral Resource Estimate
Kasiya Mineral Resource Estimate Kasiya Mineral Resource Estimate at 0.7% Rutile Cut-off Total Containe Mineral Material Rutile Rutile TGC d RutEq. Resource Tonnes Grade Tonnes Tonnes Graphite Grade1 Category (millions) (%) (millions) (millions) (TGC) (%) Indicated 662 1.05% 6.9 1.43% 9.5 1.76% Infe
Slide 7: Simple Geology
Simple Geology High grade mineralisation from surface • Rutile & graphite mineralisation lies in laterally extensive flat “blanket” style bodies • All mineralisation occurs in a single, large, and coherent deposit with much of the high- grade material occurring within the top ~5 metres from surface
Slide 8: Efficient Mine Plan
Efficient Mine Plan • Targeted mine plan to minimise footprint and impact • Over 60% of inventory taken from Indicated resources • Key infrastructure centrally located 8
Slide 9: Simple Mining
Homogenous, soft, friable saprolite Simple Mining Hydro-mining a proven mining technique • Kasiya’s mineralisation largely homogenous and relatively consistent with material conducive to hydro-mining • Long history of successful hydro-mining of heavy mineral deposits across southern Africa • Numerou
Slide 10: Simple Processing
Simple Processing Premium-grade rutile produced via conventional flowsheet • Robust metallurgy now confirmed from two distinct bulk test work programs • Significant interest from Tier 1 rutile off-takers ‒ First rutile offtake MoU signed with US-based welding product distributor Hascor International
Slide 11: Premium Rutile Product
Premium Rutile Product Kasiya Peer Comparisons 98% Recovery Sierra Rutile Base Resources Constituent Product (Iluka) (Kwale) TiO2 % 96.0 96.3 96.2 ZrO2+HfO2 % 0.21 0.78 0.72 SiO2 % 0.90 0.62 0.94 Fe2O3 % 0.94 0.38 1.25 Al2O3 % 0.90 0.31 0.23 Cr2O3 % 0.14 0.19 0.17 V2O5 % 0.70 0.58 0.52 Nb2O5 % 0.40
Slide 12: Premium Graphite Specifications
Premium Graphite Specifications 35% 30% Weight 25% Particle Size Carbon Distribution Flake Category 20% Tyler Mesh Micron (μ) (%) (% w/w) 15% +32 +500 96.0 5.4 Super Jumbo 10% 5% -32 +48 -500 +300 96.6 25.1 Jumbo 0% +32 -32 +48 -48 +80 -80 +100 -100 +150 -150 +200 -200 -48 +80 -300 +180 96.7 30.9 La
Slide 13: Simple Progressive Rehabilitation
Simple Progressive Rehabilitation Socially responsible and sustainable Example of progressive rehabilitation of a mineral sands mine Example of progressive rehabilitation of a mineral sands mine • In-pit disposal minimises disturbance • Progressive returning of land to communities • Efficient closur
Slide 14: Sustainable, Low Carbon and Reliable Power Solution for Kasiya
Sustainable, Low Carbon and Reliable Power Solution for Kasiya • Hybrid hydro-generated grid 60MW Salima Solar Power Plant in Malawi recently constructed and power and solar power system commissioned by JCM • JCM Power appointed to design preliminary IPP solution - currently commissioning two solar
Slide 15: Exceptional Logistics: Nacala Logistics Corridor and Sena Rail Line
Exceptional Logistics: Nacala Logistics Corridor and Sena Rail Line provide Kasiya access to global markets 15
Slide 16: Conservative Commodity Prices Applied
Conservative Commodity Prices Applied Rutile Price Assumption Long 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 term TZMI Forecast Price – Base (real) $1,336 $1,334 $1,314 $1,336 $1,328 $1,311 $1,287 $1,255 $1,221 $1,180 $1,180 Bulk sales (pigment inducement price) $1,336 $1,334 $1,314 $1,336 $
Slide 17: Operating Costs
Operating Costs Low operating cost and high margins due to deposit size, zero strip ratio of soft, friable high-grade mineralisation from surface, Logistics amenability to hydro-mining, conventional processing, deposit location and low transport costs 14% Mining 30% US$/t US$/t US$/t US$/t G&A 10% R
Slide 18: Capital Costs
Capital Costs Low capital costs to first production due to exceptional existing available infrastructure offering significant cost reductions and providing optionality and scalability Stage 1 Stage 2 Mining (1%) Description US$m US$m Direct Mining $2.4 $2.4 Plant – Graphite Plant – Rutile $93.6 $93.
Slide 19: One of the Highest Revenue-to-Cash Cost Ratios in the Industry
Kasiya: One of the Highest Revenue-to-Cash Cost Ratios in the Industry • 3.0x revenue-to-cash- cost ratio • Cash margin of over 67% for the life of the operation • Kasiya revenue based on long-term rutile price (real) of US$1,254/t versus current spot price of +US$2,200/t & long- term natural graphi
Slide 20: Lowest Cost Flake Graphite Project in the World
Lowest Cost Flake Graphite Project in the World • Average life-of-mine FOB (Nacala) operating cost of US$320/t of product (rutile + graphite) • Incremental operating cost of US$140/t reflecting graphite production as a co- product Source: See Appendices 20
Slide 21: Robust Fundamentals for all Environments
Robust Fundamentals for all Environments 21
Slide 22: Lowest Cost Flake Graphite Project in the World
Lowest Cost Flake Graphite Project in the World • Average life-of-mine FOB (Nacala) operating cost of US$320/t of product (rutile + graphite) • Incremental operating cost of US$140/t reflecting graphite production as a co- product Source: See Appendices 22
Slide 23: Aiming to develop a sustainable operation supplying natural rutile and graphite
Sovereign is aiming to develop an environmentally and socially sustainable operation to be a major supplier of highly sought-after natural rutile and graphite to global markets NATURAL RUTILE NATURAL GRAPHITE The purest, highest-grade natural form of titanium Lightweight material with high thermal a
Slide 24: Kasiya: One Project - Two Critical Raw Materials
Kasiya: One Project - Two Critical Raw Materials Titanium and natural graphite classified as critical raw materials by the US and EU Key drivers: • Scarceness of supply • China-controlled supply chains • Decarbonisation /Energy Transition Source: European Commission - Critical Raw Materials for Stra
Slide 25: Kasiya: Largest Rutile Deposit Ever Discovered
Kasiya: Largest Rutile Deposit Ever Discovered • First significant rutile- dominant deposit discovered in over 50 years • More than double the rutile resource of nearest peer • High-grade mineralisation commonly grading 1.2% to 2.0% rutile in the top 3-5m from surface Source: Sovereign Metals 25
Slide 26: One of the Largest Flake Graphite Resources in the World
Kasiya: One of the Largest Flake Graphite Resources in the World • Graphite occurs in broad association with rutile • Kasiya graphite is highly crystalline and of high purity – important features required for use in lithium- ion battery anodes • Comprehensive bulk scale metallurgy and downstream tes
Slide 27: Expected Global Rutile Supply From Existing Operations
Expected Global Rutile Supply From Existing Operations Natural Rutile entered supply deficit in 2017 Source: TZMI 27
Slide 28: Graphite forecast to be in extreme deficit
Graphite forecast to be in extreme deficit: Li-Ion batteries the growth driver FORECAST GRAPHITE MARKET BALANCE 400,000 12,500,000 -300,000 -1,000,000 -1,700,000 10,000,000 -2,400,000 -3,100,000 7,500,000 -3,800,000 -4,500,000 5,000,000 -5,200,000 -5,900,000 -6,600,000 2,500,000 -7,300,000 -8,000,00
Slide 29: Natural Rutile – the purest natural form of titanium
Natural Rutile – the purest natural form of titanium HIGH GRADE CHLORIDE PIGMENT FEEDSTOCK (+80% TiO2) SUPPLY BY TYPE ~2.7Mt TiO2 Market Size (2020) Natural Direct use Rutile material Natural Rutile 10% +US$2,200/t * UGS 11% Syn-Rutile Upgraded via energy and 27% carbon intensive processes: Titania
Slide 30: Natural rutile – a lower carbon footprint alternative
Natural rutile – a lower carbon footprint alternative Scope 1 & 2 Scope 3 SAVING UP TO 2.8 TONNES CO2 eq. per tonne Source: Minviro Ltd; Sovereign Metals 30
Slide 31: Natural Rutile – critical to lowering the Titanium industry's carbon footprint
Natural Rutile – critical to lowering the Titanium industry’s carbon footprint • Titanium dioxide pigment and titanium metal industries targeting reduced carbon emissions • Natural rutile produced at Kasiya has significantly lower GWP compared to alternative feedstocks • Natural rutile from Kasiya c
Slide 32: Life Cycle Assessment shows Carbon Emissions Reduction Potential
Life Cycle Assessment shows Carbon Emissions Reduction Potential Scope 1 & 2 Per Tonne Of Titanium Feedstock Type Produced Scope 3 Emissions Per Tonne Of Titanium Dioxide Pigment Produced 3.3t CO2e 35-53% 7.7t CO2e lower Scope 3 global warming 20 -33x potential 6.2t CO2e lower Scope 1&2 global warmi
Slide 33: Chinese Graphite Dominance Threatens Electric Vehicle Ambitions
Chinese Graphite Dominance Threatens Electric Vehicle Ambitions 155kt Global Warming Potential impact of producing one tonne of graphite Average annual natural graphite production from Kasiya 20.6 t CO2e Emissions Up to 50% Proportion of graphite in composition of a lithium-ion battery 0.2 1.1 99% t
Slide 34: Malawi
Malawi Stable, Transparent Jurisdiction Looking to Benefit From Mining Member country of the Commonwealth GDP per capita of US$636 Attracting significant investment Malawi remains one of the poorest countries in the world despite making significant economic and structural reforms to sustain economic
Slide 35: ESG
Low Carbon Project • Power from hydro- powered grid, solar plant and battery storage Advancing • Progressive Community Rehabilitation Decarbonising Infrastructure Products • Significantly lower • New community GWP of Kasiya’s centre ESG natural rutile and • Commissioning natural graphite water bores
Slide 36: Upcoming news flow & next steps
CAPITAL STRUCTURE Upcoming news flow & next steps 470,725,023 11,255,125 Shares on Issue 1 Unlisted Options 1 (Exercise price: $0.80) Continued product marketing and agreements regarding potential offtake 12,440,000 A$228m / £123m Performance Rights Un-Diluted Market (milestone vesting Capitalisatio
Slide 37: Thank you
SOVEREIGN METALS LIMITED Thank you 37
Slide 38: Appendix - Peer Sources
Appendix - Peer Sources MINERAL SANDS PEER INFORMATION Reference Company Project Stage of Development Revenue to Cost ratio Source Ilmenite -Madagascar Base Resources Toliara FS Complete 3.5 ASX Announcement: https://wcsecure.weblink.com.au/pdf/BSE/02426235.pdf Ilmentie – Western Australia Strandlin
Slide 39: Appendix - Peer Sources
Appendix - Peer Sources RUTILE MINERAL RESOURCES INFORMATION Ref Company Project Status Source 1 Iluka Resources Sierra Rutile Production & Development Iluka Resources Limited’s 2021 Annual Report (released on ASX 24/02/2022) Iluka Resources Limited Annual Ore Reserve and Resources as at 31 December
Slide 40: Appendix - Peer Sources
Appendix - Peer Sources GRAPHITE RESOURCE INFORMATION Ref Company Project Project Status Source 1 Syrah Resources Balama Production Syrah Resources Limited’s 2021 Annual Report (released on ASX 24/02/2022) 2 Volt Resources Bunyu FS Complete Volt Resources Limited’s 2021 Annual Report (released on AS