THIS IS AN ADVERTISING PROMOTION
Sovereign Metals (SVML:AIM) is aiming to develop an environmentally and socially sustainable operation to supply highly sought-after natural rutile and graphite to global markets. The company recently dual listed on AIM and a few days later released a Scoping Study on its large Kasiya Rutile Project in Malawi.
The Scoping Study confirms Kasiya as a globally significant natural rutile project. Kasiya is the largest undeveloped rutile deposit in the world and therefore is highly strategic in a market characterised by extreme supply deficit. This initial Scoping Study develops the concept for a multi-decade mine providing a stable supply of a highly sought-after rutile (TiO2) and graphite whilst contributing significantly to the economy of Malawi.
WHAT IS RUTILE
Natural rutile is the purest, highest-grade natural form of titanium dioxide (TiO2) mineral and is the preferred feedstock in manufacturing titanium pigment and producing titanium metal. Titanium pigments are used in paints, coatings and plastics. Titanium minerals are also used in specialty applications including welding, aerospace and military.
The global titanium feedstock market is over 7.7Mt of titanium dioxide with the majority of this been consumed by the pigment industry. Natural rutile’s high purity classifies it as a high-grade titanium feedstock. The high-grade titanium feedstock market consumes approximately 2.8Mt of contained titanium dioxide with strong demand driven from the pigment, welding and metal industries.
Natural rutile is a genuinely scarce commodity with no other large rutile dominant deposits having been discovered in the last half century Natural rutile is a genuinely scarce commodity with no other large rutile dominant deposits having been discovered in the last half century.
Supply of natural rutile from current sources is in decline as several operations’ reserves are depleting concurrently with declining ore grades. These include Iluka Resources’ (Iluka) Sierra Rutile and Base Resources’ Kwale operations in Kenya.
Recent announcements by Iluka advising of the potential suspension of operations at Sierra Rutile may cause significant additional product to be removed from the market in the near to medium term. Additionally, there are limited new deposits forecast to come online, and hence supply of natural rutile is likely to remain in structural deficit.
LOW CARBON ADVANTAGE
Like many other industries globally, the titanium dioxide pigment industry is targeting reduced carbon emissions, reduced energy consumption and a move toward renewable energy and waste minimisation.
Natural rutile (+95% TiO2) is the cleanest, purest natural form of titanium dioxide. However, due to natural rutile’s scarcity, the principal source mineral for titanium has been ilmenite (~50% TiO2). Ilmenite requires energy and carbon intensive upgrading for use as titanium pigment feedstock.
Conversely, natural rutile requires no upgrading once mined and processed, resulting in zero additional CO2 emissions. For each tonne of natural rutile utilised up to 2.8 tonnes CO2 eq. could be saved compared to the upgrading/beneficiation of ilmenite, via smelting and chemical processes, to high-grade titanium feedstocks like titania slag and synthetic rutile.
KEY TAKEAWAYS FROM THE SCOPING STUDY
The scoping study sets out a 25 year life of mine project for a capital outlay of US$332m and delivering an NPV of $861 million and IRR of 36%. Annual average EBITDA (earnings before interest, tax, depreciation and amortisation is estimated at $161 million and yet the Study only takes into account 38% of the mineralization zone so far.
The proposed large-scale operation will process soft, friable mineralisation mined from surface. The Project has excellent surrounding infrastructure including bitumen roads, a high-quality rail line connecting to the deep-water of Nacala on the Indian Ocean and hydro-sourced grid power.
LOW-COST OPERATION IN A STRUCTURALLY DEFICIENT COMMODITY
Kasiya’s low costs are achieved through deposit size and grade, location and infrastructure. Central Malawi boasts excellent existing infrastructure including hydropower and an extensive sealed road network. The Kasiya Rutile Project is strategically located in close proximity to the capital city of Lilongwe, providing access to a skilled workforce and industrial services.
The existing quality logistics route to the Indian Ocean deep-water port of Nacala, via the Nacala Logistics Corridor, for the export of products to global markets provides significant capital cost savings compared to many other undeveloped projects. The soft, friable and high-grade mineralisation occurring from surface results in no waste stripping requirement and the amenability to hydro-mining means the mining cost component is kept relatively low.
POSITIONED FOR GROWTH
The current mining inventory for the Scoping Study covers only 49km2 or 38% of the total drill-defined area of high-grade rutile mineralisation of 129km2. The company expects to be able to materially increase the overall Mineral Resource Estimate tonnage in early 2022 which will enable the Study options to be reviewed in terms of potential for scale ups or mine life extensions beyond the current 25 years.
SUSTAINABLE AND ESG DRIVEN PROJECT
Sustainability is a vital element of Sovereign’s strategy for Kasiya. The company is committed to making informed choices that improve our corporate governance, financial strength, operational efficiency, environmental stewardship, community engagement and resource management.
Access to hydro-generated grid power and a solar power system to be installed on site will ensure low carbon power supply for the project and the use of predominantly rail rather than road transport for rutile and graphite products will further help give the mine a low carbon footprint.
The Scoping Study contemplates that the operation will use a closed circuit zero discharge process water circuit and a tailings storage facility designed to store chemically benign tailings during operations which will be rehabilitated and restored progressively.
NEXT STEPS
The company is targeting a number of significant milestones over the next two quarters which include: an updated mineral resource estimate with substantial growth of the Indicated and Inferred JORC MRE base expected including addition of the Nsaru deposit; a revised Life Cycle Assessment (LCA) based on the Scoping Study results to quantify the environmental impacts with a specific focus on carbon footprint and a Scoping Study update based on the expected new resource base planned for mid-2022.
DISCLAIMER: This article was written by Sovereign Metals and published by Shares under a commercial agreement. It is not a recommendation to buy or sell the shares. The article originally appeared in Shares’ Spotlight report on 23 December 2021.
