Sovereign Metals Ltd (ASX:SVM, OTCQX:SVMLF, AIM:SVML, FRA:SVM) told investors it will keep direct control of the Kasiya rutile-graphite project in Malawi and sharpen its US critical minerals strategy after Rio Tinto declined an option to become project operator.
Rio Tinto told Sovereign the decision reflected a change in corporate strategy and a strategic review of its iron and titanium business.
And, Sovereign said, the move did not reflect any change in Kasiya’s fundamentals, economics or strategic importance.
It means Sovereign benefits entirely from Rio's $60 million investment in the project, and now advances as the singular project owner.
Also, Rio’s rights also lapse in relation to exclusive product marketing (over 40% of production), consent and pre-emption rights. And,
Sovereign plans to advance commercial and financing workstreams directly, with Kasiya positioned as a non-Chinese source of titanium feedstock, natural graphite and a heavy rare earth concentrate by-product for US and allied supply chains.
The company intends to progress rutile and graphite offtake memoranda of understanding with Mitsui & Co and Traxys North America toward binding agreements, subject to negotiation.
It also plans to draw on its collaboration with the International Finance Corporation as part of a development financing strategy for Kasiya.
Rio remains a major shareholder in the company, holding 18.2%, and retains a board nomination right whilst it holds at least 15%.
