SOVEREIGN Metals said on Monday it intended to raise $40m through a placement of shares with the funds earmarked for the continued development of its rutile and graphite project, Kasiya.
Petra Capital is lead manager and bookrunner for the placement of shares which will be done at a price of A$0.85/share. Shares in Sovereign were at A$0.98/s on the Australian Securities Exchange prior to a trading halt earlier today. On AIM, where they continue to trade, the shares were just over 8% lower at 44p/share.
The funds generated will be applied to the Kasiya Rutile Graphite Project’s development costs including permitting, studies and other costs and working capital and offer costs, the company said in its announcement.
Sovereign Metals said in January that following an optimisation of a previous study it expected to spend $665m building its Kasiya, an 11% increase in capital expenditure over the previous estimate in 2023 of $597m.
The estimated average rutile produced will be 222,000 tons in terms of the optimised study, unchanged from the former study but average graphite production falls slightly to 233,000 tons to 244,000 tons annually. This will be produced at an operating cost of about $423 per ton, Sovereign Metals said.
Kasiya has been described as the world’s highest grade rutile (titanium metals) deposit. It is also the second largest flake graphite deposit.
These twin benefits were clearly factors in attracting Rio Tinto to Sovereign. Rio announced last year it would buy about 35.4 million share options in Sovereign for A$18.5m (equal to 54 Australian cents a share) increasing its shareholding to 19.76% from the 15% beachhead it acquired in Sovereign for A$40.4m in 2023.
Rio Tinto has the option to become the operator of Kasiya once a definitive feasibility study is completed by the joint team.
