Sovereign Metals could have the “world’s largest” natural rutile deposit in Malawi, with drilling showing its Kasiya and Nsaru deposits could be a single mineral sands monster.

Kasiya is already the best and largest discovery in the past 50 years of the rare material, a high grade titanium dioxide feedstock used in the pigment and welding markets.

But only 49km2 of the defined mineralised envelope has been included in Sovereign’s (ASX:SVM) resource estimate to date.

High-grade drill results released today have expanded the total envelope by 28% to 165km2.

Very. Big. Deal.

That’s a big deal ahead of a major resource upgrade and updated scoping study.

Drilling encountered the highest-grade rutile results to date at the Nsaru deposit to the south and a new extension to the east of the main Kasiya deposit.

Uncovering numerous extensions and new blocks of mineralisation is not only expected to significantly add to the updated mineral resource in both the indicated and inferred categories.

It has also shown Kasiya and Nsaru links into a single coherent high grade body of near surface rutile and graphite, which could be the world’s largest.

“The results of the latest drilling program have surpassed all of our expectations.

“Not only did we encounter the highest rutile grades to date, but the coalescing of the Kasiya and Nsaru deposits supports our belief that we have the single largest rutile deposit in the world on our hands,” Sovereign MD Dr Julian Stephens said.

“We are looking forward to announcing the updated Mineral Resource Estimate in the coming weeks.”

Here come the highlights

Some of the startling drill results released today include:

  • 11m at 1.34% including 2m at 3% rutile
  • 8m at 1.36% inc. 2m at 2.66% rutile
  • 12m at 1.46% inc. 4m at 2.42% rutile
  • 12m at 1.27% inc. 3m at 2.16% rutile
  • 7m at 1.84% inc. 4m at 2.71% rutile; and,
  • 13m at 1.48% inc. 5m at 2.23% rutile

Kasiya currently boasts a resource estimate of 605Mt at 0.98% rutile at a 0.7% cut-off. High grade mineralisation is typically found in the top 3-5m from surface at 1.2-2% rutile.

The commodity has seen massive price rises due to a large structural supply deficit, which is only forecast to grow in the years ahead.

Kasiya is the only major new deposit of scale identified in decades and Sovereign is walking into a high value market.

Such is the fever from customers downstream they have already signed a 25,000tpa supply MoU with metal powder producer Hascor to deliver bagged rutile for welding applications.

The bagged rutile market is trading at large premiums right now, with Q1 2022 sales completed at a price of around US$2100-2200/t, many times the cost of production.

Open at depth and growing, hole upon hole 

While the results announced today are important for Sovereign, they are by no means the end of the line for Kasiya-Nsaru, which keeps growing hole by hole.

Many of the high grade zones remain open at depth at the limit of current drilling.

Sovereign thinks rutile mineralisation will likely occur to the base of its saprolite zone, estimated to lie at a depth of around 25m. Those deeper zones will be key targets for the planned 2022 aircore drilling program.

Coarse flake graphite, a key by product at Kasiya and a major component of products several industrial markets especially electric vehicle batteries, runs through the holes in broad association with rutile mineralisation.

Sovereign estimates its graphite grades average about 1% total graphitic content through the mineralised area.

Enlarging scope

Under the existing scoping study from December, Kasiya is expected to generate after-tax net present value (NPV) and internal rate of return (IRR) – both measures of profitability – of US$861m ($1.2bn) and 36% respectively, at a capital cost of just US$332m.

Sovereign noted this is based on throughput of 12 million tonnes to produce 122,000t of rutile and 80,000t of graphite per annum at an operating cost of US$352 per tonne to generate annual earnings before interest, taxes, depreciation, and amortisation (EBITDA) of US$161m.

With a mine life of 25 years, those are all metrics likely to be enhanced with the growing scale of the Kasiya resource.

The new resource estimate is expected to be delivered soon, with an updated scoping study slated for release in the second quarter of 2022.

 

 

 

This article was developed in collaboration with Sovereign Metals, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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