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Sovereign ups capex for Malawi critical minerals project

28th September 2023

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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Australia-based Sovereign Metals has released the results of a prefeasibility study (PFS) for its Kasiya project, which is poised to be the world’s biggest rutile producer at 222 000 t/y and one of the biggest natural graphite producers outside of China at 244 000 t/y.

“The high quality of work completed and the results of the PFS demonstrate that Kasiya is a globally significant project that has the potential to deliver a valuable long-term source of low carbon dioxide products and generate substantial economic returns,” said MD Julian Stephens.

Kasiya is forecast to deliver earnings before interest, taxes, depreciation and amortisation of $415-million a year for an initial 25 years.

The project has an after-tax net present value of $1.6-billion and an after-tax internal rate of return of 28%.

The capital to first production has increased by $265-million from the expanded scoping study to $597-million. This is mainly owing 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.

Operating costs have been estimated at $404/t.

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

Sovereign will conduct an optimisation review in collaboration with its new strategic investor, Rio Tinto, and then progress to a definitive feasibility study.

Rutile and graphite are critical to the world economy, as well as crucial to decarbonisation solutions required to meet net zero targets set by policymakers.

Titanium and natural graphite have been classified as critical raw materials by the US and European Union owing to a combination of their scarceness and China-controlled supply chains.

Sovereign notes that 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.

“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,” the company notes.

Edited by Creamer Media Reporter

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