GRAPHITE

MALINGUNDE GRAPHITE PROJECT

Overview

In 2015, Sovereign’s in-country geological team made a new and significant graphite discovery using hand auger drilling techniques in an area of no outcrop. The deposit is located at Malingunde, just 15km SW of Lilongwe, Malawi’s capital city, and has access to enviable infrastructure. It is 25km from operating rail, 20km from a major power sub-station and has plentiful fresh water sources nearby.

The Malingunde deposit is hosted within weathered, soft saprolite (clay) material. Saprolite-hosted flake graphite mining operations, similar to those in China and Madagascar, usually have significant cost and environmental advantages over hard rock mining operations due to:

• Low mining costs: Free-digging material with very low strip ratios.
• Low processing costs: Simple processing, generally with no primary crushing and grinding circuit resulting in large capital and operating cost advantages.
• The preservation of coarse flakes in the weathering profile due to graphite’s chemically inert properties; and
• The absence of sulphides offers substantial tailings and waste management advantages.

In 2018 Sovereign delivered a Pre-Feasibility Study (PFS), highlighting that the Project has capital and operating costs per unit at the very bottom of the graphite supply cost-curve.

Malingunde Pre-Feasibility Study

The results of the Pre-Feasibility Study further demonstrate the potential for the Malingunde Project to support a very low capital and operating cost operation with annual graphite concentrate production of approximately 52,000 tonnes over an initial mine life of 16 years:

• Total operating costs of approximately US$323 per tonne concentrate (FOB Nacala Port) – at the very bottom of the graphite supply cost curve and the lowest of any reported ASX-listed peer company.
• Total capital cost of US$49 million, for production of ~52,000 tonnes of concentrate per annum – lowest capital intensity of all peers.
• Very rare combination of low capital and operating costs at a realistic scale of production.
• Payback of under 3 years using conservative graphite pricing assumptions.
• Very low mining costs with the soft saprolite being free-dig with a low strip ratio of 1:1.
• Simple process flow sheet with no primary crush or grind, leading to low processing costs and lower capital requirements. Simple plant design uses “off the shelf equipment” allowing rapid and cost effective initial construction whilst allowing for future expansion options.
• High quality product with excellent concentrate grades and a very large proportion in the SuperJumbo and Jumbo categories.
• Project generates significant cash margins even in severe downside global graphite price scenarios.

The production target generated by the Study is approximately 9.5Mt @ 9.5% TGC over a ~16 year mine life.

Click here to view Malingunde Pre-Feasibility Study Announcement

Click here to view Malingunde Pre-Feasibility Study Presentation

Geology & resource

Saprolite is the very soft, graphite-bearing, clay-rich oxide material that is formed from intense weathering of the original bedrock.

The Malingunde deposit is located on the Lilongwe Plain which is underlain by a paragneiss basement rock package containing extensive graphitic units. This area has a largely preserved, deep tropical weathering profile containing significant thicknesses of saprolite. Because graphite is inert during the weathering process, it is preserved whilst most of the silicate gangue minerals are altered to clays.

The Malingunde deposit is large and high grade, with visually coarse and jumbo flake graphite identified throughout. Saprolite-hosted mineralisation has been identified in drilling over 3.4km of strike with cumulative across strike widths locally exceeding 200m and averaging about 120m. Grades of mineralised saprolite average around 8% TGC (nominal 5% TGC cut-off) with a number of coherent higher grade zones well above 10% TGC identified.

The maiden Mineral Resource Estimate (MRE) for the Malingunde deposit confirms it as world’s largest reported saprolite-hosted graphite resource. The total MRE is 65.1Mt @ 7.1% TGC at a 4% TGC lower cut-off grade and comprises:

• 28.8Mt of saprolite @ 7.1% TGC;
• 17.0Mt of saprock @ 7.0% TGC;
• 19.3Mt of fresh rock @ 7.0% TGC.

At an increased 7.5% TGC lower cut-off grade, the saprolite-only resource is 8.9Mt @ 9.9% TGC

Sovereign controls a very large over 4,000km2 tenement package, with the majority being prospective for saprolite-hosted flake graphite potential. Exploration to date has only “scratched the surface” of this potential, and current datasets suggest that there is potentially several hundred kilometres of cumulative strike length of saprolite-hosted graphite mineralisation in the area.

Metallurgy

Bench-scale metallurgical test-work conducted in 2017 showed high grade concentrates with excellent flake distribution could be produced with a simple process flowsheet.

• Combined concentrate grade across all flake size fractions of 98.6% C(t).
• ~71% of material in the +149µm medium, large and jumbo flake size fractions.

The overall consistency of the test-work results across 18 separate flotation tests indicates robust metallurgical behaviour which significantly de-risks the processing component for a potential future flake graphite operation at Malingunde.

The process flowsheet incorporates an upfront scrubber (similar to a trommel) to wash and disaggregate the graphite flakes from the host material prior to flotation. This provides significant capital & operational cost benefits over traditional hard-rock crushing and milling equipment.

OTHER DEPOSITS

The Company has identified several separate graphite deposits across its land holding in Malawi. These are a combination of hard rock deposits, and soft, free-dig, weathered saprolite-hosted deposits. Early work 2012-2015 focused on outcropping, hard rock deposits, whilst later work 2015-2019 focused on the soft, saprolite-hosted deposits. The graphite potential in central Malawi is immense.