• Sovereign Metals has met or exceeded specifications for another two graphite markets
  • Results can now be used for offtake discussions into fast-growing markets
  • Further builds the company’s confidence in becoming a world leading supplier of low-cost graphite

 

Special Report: Sovereign Metals has proven its capability to meet demands for another two key markets from the fast-developing Kasiya rutile and natural graphite project in Malawi.

Testwork on the Sovereign Metals (ASX:SVM) project’s graphite either met or exceeded specifications required for use in the expandable and expanded graphite markets.

The results can now be used for customer engagement and potential offtake to another two markets, where demand from flame retardants and gaskets, seals, and brake linings is approaching 100,000t a year and expanding at a compound annual growth clip of 6-8%.

With a high content in the rocks, graphite is relatively simple geologically, but selling an end product is a bit more complicated than a gold miner trucking bars to the Perth Mint, with multiple different end markets requiring products with different chemical properties.

SVM has already shown it can supply material suited for the two largest natural graphite markets, battery anodes and refractories, used in steelmaking.

Sovereign managing director and CEO Frank Eagar said the continuous downstream application testing had now shown suitability for three key natural graphite markets.

“The high-growth anode materials for graphite fines; the stable and large refractory materials market for coarse flake and the growing expandable and expanded graphite markets for medium to coarse flake,” Eager said.

“These results along with our industry-low cost position, offers Kasiya the potential to become the world’s dominant natural graphite supplier, whilst remaining a primary rutile project.”

 

Profitable prefeasibility

Sovereign planted the flag on intentions to develop Kasiya after an updated prefeasibility study showed low costs and robust returns.

The optimised study, taking in input from major shareholder Rio Tinto, found the project could deliver a respective net present value and internal rate of return of $3.67bn and 27%.

Like most critical minerals, the graphite sector is largely controlled within Chinese borders, and SVM’s estimated US$241/t incremental cost for producing a 96% concentrate would make it the lowest-cost producer for all other comers.

Per Benchmark Mineral Intelligence, the 94-95% graphite concentrate used in expandable/expanded markets was last priced at US$1140 a tonne.

And while a dive in lithium prices cast a pall over the wider battery metals industry, there are certain signs that graphite, the most widely used anode material, could be the first to bounce back.

 

 

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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