Kasiya Rutile Mine gets K29 billion injection
Rio Tinto Mining and Exploration, an Anglo-Australian company, is investing A$40.4 million (about K29 billion) in Sovereign Metals Limited which is exploring the Kasiya Rutile Mine prospect, resulting in an initial 15 percent shareholding.
An announcement from Sovereign on July 17, said Rio Tinto has agreed to initially subscribe for and purchase 83 095 592 new fully paid ordinary shares, but it has also been offered with 34 549 598 options to increase its shareholding by 4.99 percent within 12 months.
It reads: “Rio Tinto’s investment represents a significant step towards unlocking a major new supply of low-CO2-footprint natural rutile and flake graphite.
“Under the Investment Agreement, Rio Tinto will provide assistance and advice on technical and marketing aspects of Kasiya including with respect to Sovereign’s graphite co-product, with a primary focus on spherical purified graphite for the lithium ion battery anode market.”
It said the proceeds will be used to fund the advancement of Kasiya, including progressing a Definitive Feasibility Study (DFS) focused on the development of a world class, low carbon dioxide footprint mine capable of supplying to the titanium pigment, titanium metal and lithiumion battery industries.
Sovereign’s chairperson Ben Stoikovich said in a statement that the injection was a landmark agreement, but also confirmation of Kasiya’s place as one of the most significant critical mineral discoveries in recent times.
He said: “The experience and expertise that Rio Tinto brings will truly set Kasiya apart as a potentially globally significant supply of two critical minerals and take 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. We welcome Rio Tinto as a major shareholder of Sovereign and look forward to working with Rio Tinto as our strategic partner in the development of Kasiya.”
Initial completion is expected to occur on or around 21 July 2023, according to the statement.
In an interview yesterday, Secretary for Mining Joseph Mkandawire said government is only involved from the stage where the companies applyfor mining development agreements.
However, he said it has a static 10 percent free-carry stake in all mining activities that take place.
“When they are doing exploitation we don’t come in, but when they have applied to go into mining, we discuss the Mining Development Agreement (MDA) and government has 10 percent stake-what we call free-carry.
“At this point, it’s just private companies, we will come in later as government,” said Mkandawire briefly.
With the investment, when Sovereign is raising debt finance for the development of the project, Sovereign and Rio Tinto will negotiate, in good faith financing arrangements in order to put in place an acceptable mine construction funding package.
“Sovereign and Rio Tinto will work together to qualify Kasiya’s graphite product with a particular focus on supplying the spherical purified graphite segment of the lithium-ion battery anode market,” added the Sovereign statement.
Earlier, Natural Resources Justice Network chairperson Kossam Munthali said there is need for government to properly negotiate such deals for the benefit of the people.
He said: “I hope government will do a better job in ensuring that we get better deals from such developments.”
Kasiya in Lilongwe has the largest rutile deposit in the world with 1.8 billion tonnes of indicated and inferred resource at 1.01 percent.
