Aim- and ASX-listed Sovereign Metals says the results of a definitive feasibility study (DFS) for its Kasiya rutile/graphite project in Malawi confirm the potential for the company to redefine titanium metal and graphite supply chains.

The results position the company to become the world’s largest producer of both natural rutile (222 000 t/y) and natural flake graphite (275 000 t/y).

They also indicate that Sovereign would be the lowest-cost graphite producer globally, including China, at or beyond prefeasibility stage.

Titanium and graphite are both designated as critical minerals by the EU and the US.

The results highlight a free-dig orebody requiring no pre-strip, drilling or blasting with a simple low-energy processing flowsheet; and established infrastructure, including hydropower energy and heavy-haul rail and port infrastructure, for the export of mine material.

The DFS builds on the outcomes of the optimised prefeasibility study and on empirical data from the pilot mining and rehabilitation programme.

It was undertaken in accordance with a scope of work approved by, and with technical input and oversight from, the Sovereign-Rio Tinto Technical Committee and, where applicable, conforms to the World Bank Group’s International Finance Corporation (IFC) Performance Standards to enhance the bankability of the project.

Sovereign says the DFS reveals “outstanding” financial returns, including steady-state yearly earnings before interest, taxes, depreciation and amortisation of $476-million and free cash flow (pre-tax, unlevered) of $452-million.

It also estimates total revenue of $16.2-billion over a 25-year initial mine life, with potential for mine life extensions; a pre-tax net present value (NPV) of $2.2-billion; and a NPV:capital expenditure (capex) ratio of 3.0x. Capex to first production is estimated at $727-million.

Operating costs are indicated at $450/t, which the company says underpins strong margin resilience across commodity cycles.

“The completion of this DFS marks a defining milestone for Kasiya and for the global titanium and graphite supply chains.

“To deliver a DFS of this quality, depth and confidence, rarely achieved by a pre-production company, reflects the calibre of partnerships that Sovereign has assembled around this project, [with] Rio Tinto’s technical expertise, alignment with IFC Performance Standards under our collaboration agreement and offtake interest driven by US and Japanese supply chain security priorities,” Sovereign CEO and MD Frank Eagar says.

“The successful completion of large-scale field trials, combined with the expertise of our experienced owner's team and the technical support provided by Rio Tinto, reinforces Kasiya’s potential to be a long-life, low-cost, and reliable source of two critical and globally strategic minerals. Kasiya is not simply a mining project – it is a globally strategic asset,” he adds.

Heavy rare earth potential was not included in the DFS, with evaluation of this under way.

Monazite concentrate has been recovered from the rutile processing circuit with exceptionally elevated levels of heavy rare earths dysprosium, terbium and yttrium, Sovereign points out.

It highlights a potential third revenue stream at minimal incremental cost, with all three elements subject to Chinese export restrictions.

A dedicated monazite evaluation programme is now under way to assess scale, recovery and economic potential.