Sovereign Study Flags Rare Earths By-Product at Kasiya

Sovereign Metals Limited (ASX:SVM) has released the results of a scoping study into the recovery of a monazite rare earths concentrate as a by-product from its Kasiya project in Malawi, and has renamed the project the Kasiya Critical Minerals Project to reflect a combined rutile, graphite and rare earth product suite. The study assesses the potential incremental recovery of monazite from mineral streams that may be generated by the flowsheet set out in the April 2026 Kasiya rutile and graphite definitive feasibility study, and was prepared to an accuracy level of plus or minus 30%. It contemplates a steady state production target of 2,626 tonnes a year of monazite rare earths concentrate containing 1,485 tonnes a year of total rare earth oxides at 56.6%, comprising 310 tonnes a year of neodymium-praseodymium oxide, 193 tonnes a year of yttrium oxide, 82 tonnes a year of samarium and gadolinium oxides and 36 tonnes a year of dysprosium and terbium oxide, over a potential 23-year life of mine. A maiden monazite mineral resource estimate of 524.4 million tonnes at 0.0132% monazite underpins the production profile.

On the study's base case, which assumes an Argus Media rare earths basket price of US$39.45 per kilogram of concentrate on a CIF Texas basis and payability of 50%, the incremental capital cost to first production is about US$29 million, the incremental pre-tax NPV8 is about US$722 million, the incremental pre-tax internal rate of return is about 151% and payback on incremental capital is about 1.5 years. Incremental steady state annual EBITDA is about US$84 million, and incremental site operating costs are about US$0.90 per kilogram of concentrate, rising to about US$3.68 per kilogram delivered CIF Houston, Texas, on which basis the operating margin is about 90%, with pre-tax unlevered free cash flow of about US$1.8 billion over the life of mine. A Western Supply Case using payability of 60% and a basket price of US$47.34 per kilogram gives an incremental pre-tax NPV8 of US$883 million and an internal rate of return of about 172%. Sovereign said the study is based on low-level technical and economic assessments and is not sufficient to support the estimation of ore reserves for the additional products, that variability testwork and marketing and offtake discussions are commencing, and that a pre-feasibility study is to be completed in 2027.