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(Sharecast News) - Sovereign Metals said on Thursday that a definitive feasibility study for its Kasiya rutile-graphite project in Malawi had confirmed strong economics and the potential to become a globally significant supplier of two critical minerals.
The AIM-traded firm said the study outlined a 25-year initial mine life generating total revenue of $16.2bn, with steady-state annual EBITDA of $476m and pre-tax free cash flow of $452m.
It said the project carried a pre-tax net present value of $2.2bn at an 8% discount rate and an internal rate of return of 23%, with capital expenditure to first production estimated at $727m, implying an NPV-to-capex ratio of 3.0x.
At full production, Kasiya was expected to produce 222ktpa of natural rutile and 275ktpa of natural flake graphite, positioning Sovereign as a potential global leader in both markets.
Operating costs were forecast at $450 per tonne, supporting margin resilience across commodity cycles, with graphite production costs estimated at $216 per tonne, making it one of the lowest-cost producers globally.
The company said the project benefits from a large, free-dig orebody requiring no drilling or blasting, alongside established infrastructure including hydropower, rail and access to the port of Nacala.
It said the feasibility study was conducted with oversight from a joint technical committee with Rio Tinto and incorporates data from pilot mining trials, which validated the proposed dry mining method and rehabilitation approach.
Sovereign added that non-binding offtake agreements already covered more than 50% of stage one rutile production with Mitsui and over 35% of coarse flake graphite sales with Traxys, supporting the project's bankability.
A collaboration agreement with the World Bank's International Finance Corporation was also in place as a potential co-lead arranger for project financing.
The group said both titanium and graphite are classified as critical minerals by the US and EU, with Kasiya positioned to address supply constraints in Western markets, particularly as global rutile supply declined and graphite production remained dominated by China.
It said the study also highlights potential upside from heavy rare earth elements, including dysprosium, terbium and yttrium, recovered via monazite concentrate, with evaluation work ongoing.
"The completion of this DFS marks a defining milestone for Kasiya and for the global titanium and graphite supply chains," said chief executive Frank Eagar.
"Kasiya is not simply a mining project - it is a globally strategic asset."
At 1457 BST, shares in Sovereign Metals were up 12.33% at 41p.
Reporting by Josh White for Sharecast.com.
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