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Sovereign is betting that its ultra-large-scale and high-grade Kasiya rutile project in Malawi can meet the expected growth in demand for natural rutile.
Natural rutile is the rarest and highest-grade source of titanium. It is favored by pigment manufacturers due to its lower carbon footprint and lower impurity content.
It is also used in the titanium metal industry and as a welding component to make it consistent with industrial sectors and buildings.
Therefore, it is widely expected that continued stimulus in construction and industrial infrastructure will drive demand.
However, the global supply of rutile is in a structural gap, the output of mature mines has fallen, and there is a lack of major rutile discoveries discovered in the past 20 years to fill the gap.
This has led to the development of high-energy, high-carbon methods to convert ilmenite into synthetic rutile or titanium slag.
Although these methods meet the demand for titanium oxide to a certain extent, Sovereign Metals (ASX:SVM) believes that its large-scale, high-grade and surface Kasiya rutile project will provide pigment manufacturers and other titanium oxide consumers with more attractive The choice of force.
The use of natural rutile can also reduce emissions from the global titanium pigment industry by replacing and drastically reducing the use of carbon-intensive upgrade alternatives.
A life cycle assessment study conducted by the British consulting company Minviro Ltd found that for every ton of natural rutile instead of ilmenite, ilmenite can save up to 2.8 tons of carbon dioxide equivalent using smelting and chemical processes.
The flagship Kasiya project was discovered about 15 months ago and quickly delineated in an area of 66 square kilometers.
It is worth noting that extremely high-grade mineralization usually occurs from the surface to an average depth of about 4m to 10m.
Managing Director Julian Stephens told Stockhead that Kasiya rutile mineralization may be deeper than it has been defined.
"This is the capacity of the drilling equipment we mainly use, but there are very strong signs that mineralization will occur about 25m vertically," he pointed out.
"However, we have such an extensive high-level rutile footprint on the surface, so we focus on defining and developing what we have discovered so far, rather than drilling deeper."
The processing of Kasiya rutile is also a simple process, without the use of hazardous materials, acids, alkalis or high-energy components.
The first stage involves the use of low-energy processing plants to wash, decompose and desludge materials, which is essentially the removal of ultra-fine waste to produce sand.
The sand is then passed through a gravity spiral to produce a heavy mineral concentrate, which will undergo magnetic separation to remove magnetic particles, such as iron-rich minerals and electrostatically remove other impurities, thereby producing high-end rutile products.
The size and simplicity of producing rutile make Kasiya a game changer in the titanium industry.
"It does provide (consumers) an opportunity to replace synthetic rutile, titanium slag and other inferior substitutes invented to make up for the shortage of natural rutile," Stephens added.
Sovereign's projects and processes allow the production of titanium oxide products of approximately 96% purity that meet three key factors.
First, its purity exceeds 95%, allowing it to enter the high-end market; secondly, its key impurity content is low, and the third factor is that the size of the product is very favorable.
"If you check all these boxes, then your product can be used in all major markets that may attract huge demand and allow you to sell in all these markets," Stephens explained.
Although Kasiya is already an extensive deposit, the company recently discovered the Nsaru deposit during initial large-spacing drilling in the same geological area as Kasiya, just a few kilometers northwest.
Nsaru has high-grade rutile mineralization from the surface, up to 5.5 kilometers in width, and currently has a strike length of about 9 kilometers, opening to the north and south in its widest area.
So far, Nsaru’s drilling and mineralization area is approximately 25 square kilometers, plus Kasiya’s 66 square kilometers footprint, and the total mineralized area is approximately 91 square kilometers.
Investors in the northern hemisphere also supported the company and its projects, promising to place US$8 million in new shares at a price of 40 cents per share.
The placement includes a free add-on option, which can be exercised at 50c, and the validity period for each two shares subscribed is 12 months.
The proceeds from the placement will be used to fund exploration and development activities in the Rutile Province of Malawi.
Sovereign focuses on obtaining initial resources for Kasiya, and it hopes to use it extensively based on the footprint it has been able to define.
The company will then quickly advance the project to a scoping study, where mining and tailings studies are already underway.
This will in turn lead to a pre-feasibility study.
Metallurgical variability testing of three independent samples representing different weathering layer units of Kasiya is in the final planning stage.
In addition, the success of the initial drilling prompted Sovereign to launch a more systematic drilling program aimed at reducing Nsaru's drilling spacing to at least 800m x 400m in order to incorporate the results into future mineral resource estimates.
The company will also continue to conduct gradual and extended drilling in Kasiya, Nsaru and wider surrounding areas to identify extension areas and discover new regional mineralization areas.
In addition, it will investigate and test potential coarse flake graphite by-products from Kasiya.
The current market for rutile is about 700,000 tons, and it is expected to grow to 1 ton by 2025. This alone accounts for only 10% of the entire titanium dioxide market.
"There is a lot of moving space and moving space," Stephens added.
"We are quite optimistic about this, and we have had open dialogues with many end users, which makes us believe that the market is there.
"We are unlikely to be limited in terms of market size-our goal is to fill the huge growing market gap for natural rutile."
This article was developed in cooperation with the Stockhead advertiser Sovereign Metals at the time of publication.
This article does not constitute financial product recommendations. Before making any financial decisions, you should consider obtaining independent advice.
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October 21, 2021
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