Sovereign Metals : Scoping Study Confirms Globally Significant Rutile Project

The Company has concluded it has a reasonable basis for providing the forward looking statements included in this announcement and believes that it has a reasonable basis to expect it will be able to fund the development of the Project. Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.

Sovereign Metals Limited | ASX : SVM AIM: SVML

T: [phone] | F: [phone] | E: [e-mail] | www.sovereignmetals.com.au

Level 9, 28 The Esplanade, PERTH WA 6000 | ABN: 71 120 833 427

Scoping Study Parameters - Cautionary Statements

onlySovereign Metals Limited (the Company or Sovereign) is pleased to announce the results of the initial scoping study (Scoping Study or Study) for the Company's Kasiya Rutile Project (Kasiya or the Project) in Malawi.

useThe Scoping Study referred to in this announcement has been undertaken to determine the potential viability of an open pit mine, rutile and graphite processing plant constructed onsite at the Kasiya project in Malawi and to reach a decision to proceed with more definitive studies. The Scoping Study has been prepared to an accuracy level of ±30%. The results should not be considered a profit forecast or production forecast.

The Scoping Study is a preliminary technical and economic study of the potential viability of the Kasiya

project. In accordance with the ASX Listing Rules, the Company advises it is based on low-leveltechnical personalnd economic assessments that are not sufficient to support the estimation of ore reserves. Further evaluation work including infill drilling and appropriate studies are required before Sovereign will be able

to estimate any ore reserves or to provide any assurance of an economic development case.

Approximately 60% of the total production target is in the Indicated Mineral Resource category with 40% in the Inferred Mineral Resource category. Approximately 100% of the scheduled throughput over the first six years of production is in the Indicated Mineral Resource category, with 0% in the Inferred Mineral Resource category. The Company has concluded that it has reasonable grounds for disclosing a production target which includes a modest amount of Inferred material. However, there is a low level of geological confidence associated with Inferred mineral resources and there is no certainty that further exploration work (including infill drilling) on the Kasiya deposit will result in the determination of additional Indicated Mineral Resources or that the production target itself will be realised.

The Scoping Study is based on the material assumptions outlined elsewhere in this announcement. These include assumptions about the availability of funding. While Sovereign considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or

Forthat the range of outcomes indicated by the Scoping Study will be achieved.

To achieve the range outcomes indicated in the Scoping Study, additional funding will likely be required. Investors should note that there is no certainty that Sovereign will be able to raise funding when needed. It is also possible that such funding may only be available on terms that dilute or otherwise affect the value of the Sovereign's existing shares. It is also possible that Sovereign could pursue other 'value realisation' strategies such as sale, partial sale, or joint venture of the Project. If it does, this could materially reduce Sovereign's proportionate ownership of the Project.

KASIYA SCOPING STUDY CONFIRMS GLOBALLY SIGNIFICANT

NATURAL RUTILE PROJECT

16 December 2021

Positioned for growth

Exceptional Economics

HIGHLIGHTS

onlyThe Scoping Study confirms Kasiya as a globally significant natural rutile project. Kasiya is the largest undeveloped

rutile deposit in the world and therefore is highly strategic in a market characterised by extreme supply deficit.

This initial Scoping Study develops the concept for a multi-decade mine providing a stable supply of a highly sought- after rutile (TiO2) and graphite whilst contributing significantly to the economy of Malawi.

use	•	Scoping Study demonstrates globally significant & strategic project with low capital costs
		& high returns
	•	Positioned as one of the world's best undeveloped titanium minerals projects

For personal

• The life-of-mine inventory covers just 38% of the drill defined mineralised footprint
• Substantial additional resource growth expected in early 2022 to enable the Study to be enhanced

Sustainable and ESG Driven

• Significant contribution to Malawi via fiscal returns, employment, training & social development
• Low carbon footprint operation - hydro & solar power supply

Critical raw materials reducing carbon emissions

• Low carbon - natural rutile can displace carbon, energy & waste intensive alternatives
• Graphite is a major mineral required for lithium-ion batteries for electric vehicles which are key components required for the clean energy transition

Rutile market in structural supply deficit

• Current supply declining with very limited additional production in the pipeline
• The current severe structural supply deficit in natural rutile is forecast to continue to widen in the medium & long term

Strong relationships

• Significant support from the government of Malawi for the development of Kasiya
• Highly supportive community to benefit from project development
• Establishing relationships with off-takers with significant interest already received

SOVEREIGN METALS LTD A NEW FORCE IN RUTILE

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Figure 1: 3D schematic of the proposed Kasiya rutile and graphite processing plant.

2.6

US$352/t

25 years

(per tonne product)

NPV8/CAPEX

OPERATING COST

MINE LIFE

US$332m

12Mt

CAPITAL COST

ANNUAL

THROUGHPUT

US$861m

36%

(after-tax)

(after-tax)

NPV8

IRR

US$5.96/t

(per tonne mined)

OPERATING COST

US$161m

(Annual average LoM)

EBITDA

EXCEPTIONAL ECONOMICS

onlyThe Scoping Study demonstrates Kasiya as a globally significant natural rutile project with exceptional economics, including low capital and operating costs, resulting in a high margin operation.

For usepersonal

SOVEREIGN METALS LTD A NEW FORCE IN RUTILE

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For personal use only

Managing Director, Julian Stephens

"To have achieved this fantastic Scoping Study milestone for the Kasiya Rutile Project within just 20 months of the initial discovery is a huge result for Sovereign and a testament to the dedication and hard work of our Malawi and Australia-based team.

The Kasiya Rutile Project is the largest undeveloped natural rutile resource in the world and is therefore highly strategic in an environment of severe global supply deficit.

We believe that Kasiya is also just the beginning of the story in the new Central Malawi Rutile Province. We will expand our resource significantly early next year with the addition of the Nsaru Rutile Deposit and potentially other regional prospects.

The project benefits from world-class existing infrastructure and natural ESG advantages. Natural rutile has a far lower carbon footprint compared to other titanium feedstocks used in the pigment industry, and the vast majority of power will be supplied by renewable hydro and solar. Furthermore, natural graphite is a significant component in lithium-ion batteries and is an important mineral underpinning the energy transition.

The future development of the Kasiya Rutile Project will bring substantial benefits to Malawi in terms of GDP, royalties, taxes, employment and training, local business opportunities and community development."

ENQUIRIES
Dr Julian Stephens (Perth)	Sam Cordin (Perth)	Sapan Ghai (London)
Managing Director	[phone]	[phone]
[phone]

Figure 2: High-levelschematic of the proposed Kasiya Rutile Project

OVERVIEW

onlySovereign is aiming to develop an environmentally and socially sustainable operation to supply highly sought-after natural rutile and graphite to global markets.

The proposed large-scale operation will process soft, friable mineralisation mined from surface. The Project has excellent surrounding infrastructure including bitumen roads, a high-quality rail line connecting to the deep-water of Nacala on the Indian Ocean and hydro-sourced grid power.

usepersonalThe operation will primarily employ conventional hydro-mining to produce a slurry that is pumped to a Wet Concentration Plant (WCP) where the material is sized. A Heavy Mineral Concentrate (HMC) is produced via processing

the sand fraction through a series of gravity spirals. The HMC is transferred to the dry Mineral Separation Plant (MSP) where premium quality rutile is produced via electrostatic and magnetic separation.

Graphite rich concentrate is collected from the gravity spirals and processed in a separate graphite flotation plant, roducing a coarse-flake graphite product.

The rutile and graphite products will be trucked a short distance via existing bitumen roads to the Kanengo rail terminal from where they will be railed via the Nacala Logistics Corridor (NLC) to the deep-water port of Nacala on the eastern

Forseaboard of Mozambique.

LOW-COST OPERATION

Kasiya's low costs are achieved through deposit size and grade, location and infrastructure. Central Malawi boasts excellent existing infrastructure including hydropower and an extensive sealed road network. The Kasiya Rutile Project is strategically located in close proximity to the capital city of Lilongwe, providing access to a skilled workforce and industrial services.

The existing quality logistics route to the Indian Ocean deep-water port of Nacala, via the NLC, for the export of products to global markets provides significant capital cost savings compared to many other undeveloped projects.

The soft, friable and high-grade mineralisation occurring from surface results in no waste stripping requirement and the amenability to hydro-mining means the mining cost component is kept relatively low.

SOVEREIGN METALS LTD A NEW FORCE IN RUTILE

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