Definitive feasibility study results for Kasiya Rutile Mine in Lilongwe project that the mine would generate $16.2 billion (about K28.35 trillion) revenue for an initial life of mine (LOM) of 25 years, up from K18 trillion from its pre-feasibility study in 2023.
Released on Thursday by developers Sovereign Metals, the study shows that the mine’s annual EBITDA (earnings before interest, taxes, depreciation and amortisation) is projected at $476 million (about K833 billion) and operation cash of $452 million (about K791 billion).
Rutile’s average price is projected at $1 670 (about K2.9 million) per tonne while graphite average basket price is $1 288 (about K2.3 million) per tonne, with a cash operating cost of $450 per tonne (about K787 500).
Reads the statement in part: “Until such time Sovereign Metals has sight of what actual fiscal terms would apply to the Kasiya Project in terms of its own fiscal stability agreement with the Government of Malawi, results for the definitive feasibility study have been reported on a pre-tax basis only.
“This analysis considered the impact of key fiscal variables, including RRT [resource rent tax], SPT [supernormal profits tax], and capital allowances, on project returns, with the resulting post-tax NPV percent estimated to range between $1.065 billion and $1.448 billion.”
Rutile average price is at $1 484 per tonne while that of graphite is $1 290 per tonne, with a cash operating cost of $404/t.
The study says the products will be transported by rail from the dry port at the mine site to the container terminal at the Port of Nacala on the Indian Ocean at an estimated cost of $117 ((about K205 000) per tonne.
Says the study: “The Project’s payback period is 6.2 years from the start of production. The payback period is based on unlevered, pre-tax free cash flow.
“Sovereign estimates the total capital cost to construct the mine to be $727 million [which includes a contingency of $43 million].”
Sovereign Metals managing director and chief executive officer Frank Eagar said the completion of this definitive feasibility study marks a defining milestone for Kasiya and for the global titanium and graphite supply chains.
He said delivering this definitive feasibility study reflects the calibre of partnerships with Rio Tinto’s technical expertise, alignment with IFC Performance Standards and off-take interest driven by US and Japanese supply chain security priorities.
“The successful completion of large-scale field trials, combined with the expertise of our experienced owner’s team and the technical support provided by Rio Tinto, reinforces Kasiya’s potential to be a long-life, low-cost, and reliable source of two critical and globally strategic minerals.
“Kasiya is not simply a mining project, it is a globally strategic asset,” he said.
Meanwhile, the feasibility study has positioned the mine to become the world’s largest producer of both natural rutile at 222 kilotonne per annum (ktpa) and natural flake graphite (275ktpa).
This comes after Globe Metals and Mining said its Kanyika Niobium Mine in Mzimba District could rake in $6.9 billion (about K12.2 trillion) in net revenue over 24 years, confirming the mine’s potential ahead of production in 2028.
In an interview, geoscience expert in minerals, mining and metals Ignatius Kamwanje said most mining companies look at economic trends on the international stock exchange when coming up with a definitive feasibility study.
“They do the definitive feasibility study to update the already existing resource to attract more investors on the stock exchange for off-take, equity or joint ventures. By updating the definitive feasibility study, they are making more money.
“If you look at the fiscal regime for mining, Malawi’s equity is low, and even the community development agreement (CDA) at 0.45 percent of annual [output]. As such, if the definitive feasibility study is being updated, the government should also be able to revise that upwards,” he said.
In his State of the Nation Address in February, President Peter Mutharika said he had directed ministries of Finance and Mining to enhance Malawi’s capacity for negotiating mining contracts.
Already, Sovereign Metals has signed non-binding off-take memorandums of understanding (MoUs) covering over 50 percent (70 000 metric tonnes MT) of stage 1 rutile production with Mitsui & Co., a Japanese trading and investment firm.
It also signed roughly 35 percent or 40 000 MT per annum of graphite concentrate off-take deal with Traxys Traxys North America.
Kasiya Mine is positioned to become one of the world’s largest rutile producers at 222 kilotonne per annum (kt/a) for an initial 25 years, but also potentially one of the world’s largest natural graphite producers outside of China at 244kt/a.
