Interview with Sapan Ghai, CCO of Sovereign Metals Ltd.

Our previous interview: https://www.cruxinvestor.com/posts/sovereign-metals-asxsvm-kasiya-project-to-capitalize-on-chinas-squeeze-on-graphite-supply-4276

Recording date: 28th November 2023

Giant Graphite and Titanium Deposit Poised for Development
Sovereign Metals is progressing its massive Kasiya project towards production to capture surging global demand for graphite and titanium. Kasiya’s exceptional size and quality give it “strategic” potential to supply these critical ingredients for clean energy technologies according to company executives.

With construction targeted within five years, Kasiya aims to produce over 250,000 tonnes per annum of high-purity graphite and titanium. “We’d be producing more graphite and titanium than anyone else,” said Chief Commercial Officer Sapan Ghai. Initial studies point to globally competitive production costs for these essential minerals.

Strong Economics and Returns
Development costs are forecast at a relatively modest $600 million based on a starter operation, with expansions to follow. Financial modelling shows 25 years of operations generating approximately $400 million in average annual EBITDA. “Forget the NPVs,” Ghai emphasised, “for 25 years this thing would be throwing off over $400 million per year.”

The project’s estimated 67% EBITDA margins demonstrate resilience to weaker commodity pricing. Conservative assumptions have been used, with graphite prices 60% below the levels consultants suggested were viable.

De-Risked Development Plan
Sovereign has completed initial studies and is undertaking further fieldwork and analysis to identify optimisation opportunities. The company aims to finalise a definitive feasibility study in 2025 to pave the way for construction.

Rio Tinto is providing technical input plus the option to assume operatorship when production begins. Ghai said its involvement significantly de-risks funding and development given Rio’s backing. The Malawi government is also highly supportive as it banks on mining to reduce aid dependence.

Massive Scalability Over 70-Year Life
Kasiya’s current defined resource covers just 30% of the land holding, signalling exceptional upside. “I’d still have 70% of the mineralization to go,” noted Ghai on the opportunities for staged expansions over 70-plus years even with the currently envisioned 250,000 tonne per annum throughput.

Sovereign is also evaluating additional clean technology products using graphite and titanium that could provide further diversified revenue streams from the sheer mineral volumes Kasiya offers.

Supply Security in Strategic Minerals
With few competing graphite or titanium projects that can match its enormous scale, low-costs and strategic backing, Kasiya is considered a globally important emerging supply hub. Product from the mine will help supply chain security for Europe, the United States and other jurisdictions focused on onshoring production.

Its advantages have sparked high investor interest, with the company likely to achieve substantial re-ratings as Kasiya transitions into one of only a handful of major producers of these niche minerals worldwide.
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View Sovereign Metals' company profile: https://www.cruxinvestor.com/companies/sovereign-metals

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