Sovereign Metals (ASX:SVM) is set to receive a $40.4 million investment from Rio Tinto (ASX:RIO) to advance the Kasiya Rutile-Graphite Project in Malawi.
Sovereign, which has a $233.08 million market capitalisation, says Rio Tinto Mining and Exploration has agreed to purchase 83,095,592 new fully paid ordinary SVM shares at $0.486 per share for aggregate proceeds of $40.4 million. This will give Rio Tinto a 15% interest in Sovereign Metals.
Rio Tinto’s subscription price reflects a 10% premium to Sovereign’s 45-day volume weighted average price (VWAP) as of market close on 14 July 2023.
In addition, Rio Tinto has been granted options to obtain about 34.55 million further shares in Sovereign within 12 months of the initial subscription, which could result in Rio Tinto’s shareholding in the company increasing to 19.99%.
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Commenting on the investment, Sovereign Metals Chairman Ben Stoikovich says: “This landmark agreement with Rio Tinto, 1 of the world’s largest and most accomplished global mining companies, is confirmation of Kasiya’s place as 1 of the most significant critical mineral discoveries in recent times.
“this is yet another step towards unlocking significant benefits from development of the Kasiya Project for Malawi”
The significant supply of 2 critical minerals and takes us all a step closer to supply chain decarbonisation and achieving net-zero.
Furthermore, this is yet another step towards unlocking significant benefits from development of the Kasiya Project for Malawi.”
Sovereign is using the proceeds from the investment to fund the advancement of Kasiya, including the progression of a Definitive Feasibility Study (DFS) focused on the development of the mine.
Under the investment agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of the project, including Sovereign’s graphite co-product, with a focus on spherical purified graphite for the lithium-ion battery anode market.
Sovereign Metals is an ASX-listed company focused on its large ground holding in Malawi, which hosts its flagship Kasiya Project.
Write to Aaliyah Rogan at Mining.com.au
Images: Sovereign Metals Ltd
