RUTILE

RUTILE

Overview

The Company’s objective is to develop a large-scale, long life rutile-graphite operation, focusing on developing an environmentally responsible, sustainable and socially uplifting operation.

In June 2022, Sovereign released an Expanded Scoping Study confirming that Kasiya has the potential to be one of the world’s largest and lowest cost producers of natural rutile and natural graphite with a carbon-footprint substantially lower than current alternatives while significantly contributing to the social and economic development of Malawi.

Expanded Scoping Study

Sovereign’s Expanded Scoping Study for Kasiya is based on the updated MRE reported in April 2022, of 1.8Bt containing 18Mt rutile at 1.01% and 23.4Mt graphite at 1.32%. The Study envisages a 25-year mine life during which time both rutile and graphite are produced during two stages of development (Stage 1: 12Mtpa & Stage 2: 24Mtpa).

The Expanded Scoping Study demonstrates Kasiya as a globally significant natural rutile project with exceptional economics, including low capital and operating costs, resulting in a high margin operation.

Kasiya will be a simple and conventional operation using traditional and well-developed processes used across the globe on numerous mineral sands and graphite operations.

The proposed large-scale operation will process soft, friable mineralisation mined from surface. The Project has excellent surrounding infrastructure including bitumen roads, a high-quality rail line connecting to the deep-water of Nacala on the Indian Ocean and hydro-sourced grid power.

Kasiya Deposit

World’s Largest Natural Rutile Deposit

Kasiya’s Mineral Resource Estimate (MRE) is 1.8Bt at 1.01% rutile resulting in over 18Mt tonnes of contained natural rutile.

The updated MRE now places Kasiya as the largest rutile deposit in the world with more than double the contained rutile as its nearest rutile peer, Sierra Rutile.

The MRE has broad zones of very high-grade rutile which occurs contiguously across a very large area of over 180km2. Rutile mineralisation lies in laterally extensive, near surface, flat “blanket” style bodies in areas where the weathering profile is preserved and not significantly eroded.

Overall, the new MRE shows a number of new large, but generally discrete high grade rutile zones, particularly in the southern parts and eastern parts of the resource area. The discovery and delineation of these new high grade mineralised zones has been the dominant factor in the tripling of the resource base.

A Total of 662 Mt (37%) of the total MRE reports to the Indicated category @ 1.05% rutile and 1.43% TGC, with a recovered grade of 1.73% RutEq.
The deposit is expansive with high-grade rutile mineralisation commonly grading 1.2% to 2.0% in the top 3-5m from surface. Moderate grade mineralisation generally grading 0.5% to 1.2% rutile commonly extends from 5m to end of hole where it remains open at depths >10m in numerous drill-defined, N to NE-striking zones.

Natural rutile is a genuinely scarce commodity, with no other known large rutile dominant deposits being discovered in over half a century. Kasiya is now shown to be the largest single rutile deposit in the world (Table 3), with central Malawi now hosting the largest known rutile province in the world.

Current sources of natural rutile are in decline as several operations’ reserves are depleting concurrently with declining ore grades. These include Iluka Resources’ (Iluka) Sierra Rutile and Base Resources’ Kwale operations in Sierra Leone and Kenya respectively. Additionally, there are limited new deposits forecast to come online, meaning supplies of natural rutile are likely to remain in extreme structural deficit.

Graphite Co-Product

One of the largest natural graphite deposits globally

Kasiya’s graphite by-product Mineral Resource Estimate (MRE) is 1.8Bt at 1.32% graphite, containing over 23Mt of graphite

Graphite rich pre-concentrate will be produced from the light fraction of the gravity spiral tails and processed in a separate graphite flotation plant to produce a high-quality flake graphite by-product. Because graphite will be a by-product from rutile production, it will have a very low production cost compared to graphite-only projects, as shown in the Expanded Kasiya Scoping Study.

A very coarse-flake and high-grade graphite product at 96% TGC can be produced via this simple flowsheet. This product has over 60% in the large to super-jumbo fractions (+180mic) with overall graphite recovery from the raw sample to product of 62%.

As well as being very coarse flake, the Kasiya graphite is also highly crystalline and of high purity. These are both important features required for use in lithium-ion battery anodes. The high crystallinity means that the graphite will have high electrical conductivity – a key requirement. High purity means the material will be easier to upgrade to 99.95% TGC, the minimum requirement for lithium-ion battery anodes.

Sustainable and ESG Driven

Sustainability is a vital element of Sovereign’s strategy for Kasiya. The Company is committed to making informed choices that improve our corporate governance, financial strength, operational efficiency, environmental stewardship, community engagement and resource management.

The Project aims to meet the requirements of international guidelines and standards, including the IFC Performance Standards on Environmental and Social Sustainability (IFC, 2012), the World Bank Group Environmental, Health and Safety Guidelines (WBG, 2007), the Equator Principles (Equator Principles Association, 2020) and the International Council on Mining & Metals (ICMM) principles for future studies and development phases of the Kasiya project.

The Kasiya project will be designed considering both the Equator Principles and Scope 1, 2 and 3 emissions under the Green House Gas protocol so that the design meets high Environmental, Social and Governance (ESG) standards from the outset.

• Access to hydro-generated grid power and a solar power system to be installed on site will ensure low carbon power supply for the project and the use of predominantly rail rather than road transport for rutile and graphite products will further help give the mine a low carbon footprint.

• The Scoping Study contemplates that the operation will use a closed, zero discharge process water circuit and tailings storage facility designed for chemically benign tailings during operations which will be rehabilitated and restored progressively.

• Sovereign continues to undertake several initiatives to assist in the development of Malawi and its local communities. The Company aims to become an industry leader in social responsibility having successfully worked with communities in Malawi over the last decade who remain highly supportive and are well positioned to benefit from the development of new mining projects.

Conventional Proven Processing

Metallurgical test-work with over 1 tonne of saprolite material demonstrated that very high-quality rutile meeting or exceeding typical market specifications can be produced.

Standout attributes include;

    • Rutile product grade of 96.0% TiO2 at a recovery of over 98%
    • Highly favourable grain size distribution (d50 = 145 micron)
    • Exceptionally low uranium and thorium levels
    • Exceptionally low chromium levels
    • Exceptionally low zirconium levels

Continued engagement with potential rutile off-takers in the pigment and welding industries – highly favourable feedback on chemical and physical specifications received

HUGE ENVIRONMENTAL BENEFITS

The lack of supply of natural rutile, due to its genuine scarcity, prompted the titanium industry to develop energy and carbon intensive processes to upgrade ilmenite (low-grade titanium mineral) to high-grade titanium feedstock products that can be used as substitutes for natural rutile (i.e. synthetic rutile and titania slag).

Natural rutile requires no upgrading for direct use as titanium pigment feedstock, eliminating the upgrading step required for ilmenite, resulting in zero additional CO2 emissions. Up to 2.8 tonnes CO2 eq. for each tonne of natural rutile utilised could be saved compared to the upgrading/beneficiation of ilmenite, via smelting and chemical processes, to high-grade titanium feedstocks like titania slag and synthetic rutile.
The downstream processes (i.e. pigment production) rely heavily on the use of upgraded titanium feedstocks such as synthetic rutile and titania slag, each having an associated substantial environmental impact.

Due to growing environmental pressures, and with the significant carbon footprints of numerous industry players related to pyrometallurgical ilmenite upgrading operations, Sovereign’s natural rutile product is well positioned to impact the titanium supply chain with the ability to potentially displace and reduce the use of carbon and waste-intensive upgraded alternative titanium feedstocks.

Strong Rutile Market

Natural rutile is the purest, highest-grade natural form of titanium dioxide (TiO2) and is the preferred feedstock in manufacturing titanium pigment and producing titanium metal. Titanium pigments are used in paints, coatings and plastics. Titanium also has specialty uses including in welding, aerospace and military applications.

The global titanium feedstock market is over 7.4Mt of titanium dioxide with the majority of this been consumed by the pigment industry. Natural rutile’s high purity classifies it as a high-grade titanium feedstock. The high-grade titanium feedstock market consumes approximately 2.6Mt of contained titanium dioxide with strong demand driven from the pigment, welding and metal industries.

The rutile market fundamentals continue to be robust with current and forecast pricing remaining very strong. In 2021, the market has rebounded strongly with pigment plant utilisation rates returning to pre-pandemic levels. Major producers have noted that very strong demand in the welding market is outstripping supply.

High-grade titanium feedstock supply is tight with limited new projects coming online in the short to medium term.

A resurgence in demand for titanium pigment and from the welding sector combined with concurrent supply shortages has led the CIF China spot prices sharply upwards toward US$2,200 per tonne. In the quarter ended 31 December 2021, Iluka achieved rutile prices of US$1,350 per tonne with the majority of Iluka’s sales under take-or-pay contracts.

Extreme supply-side tightness will be exacerbated by new production suspensions recently announced by a number of major high-grade titanium feedstock producers

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