Sovereign Metals

The Quest for Alpha

Good Morning Team.

I want to talk to you about a hole in the ground in Malawi.

I realise that sentence does not immediately inspire confidence.

But if you want alpha, I got alpha.

This particular hole happens to contain the largest natural rutile deposit ever discovered in the history of human geology.

It also — because nature often decides to be extravagant — contains the second-largest flake graphite deposit on Earth.

Same hole.

One company.

Current market cap: £258 million.

The company is called Sovereign Metals. The ticker is SVML.

It trades on AIM and the ASX, and it has been sitting there, minding its own business, being catastrophically undervalued, while the rest of the market has been busy doing whatever it is the rest of the market does.

I covered it first at around 20p. We’re now above 40p.

In the next few weeks, I think it may well double again.

Below is why I think that.

Let’s dive in.

Let’s Start With What They’ve Actually Found

The deposit is called Kasiya.

It sits across 200 square kilometres of flat, near-surface, laterally consistent geology in Malawi.

That description matters more than it might appear, because the word consistent in geological terms is doing enormous heavy lifting.

Most mineral deposits are, to use the technical term, a nightmare.

They go where they want, they grade where they feel like it, and they routinely make fools of engineers who assumed the drill results from one hole would resemble the drill results from the next hole.

Kasiya is not like that.

Kasiya drills exactly where the geology predicts it will. Every single time. The 2022 resource upgrade increased the Indicated resource by more than 80%, and it came in essentially where the models said it would.

This is the geological equivalent of a dog that does exactly what you tell it.

If you’ve spent any time at all in junior resource, you will understand that this is practically miraculous.

The current Mineral Resource Estimate stands at 1.8 billion tonnes. The mine plan in the DFS uses roughly 30% of that.

The other 70% just sits there. It doesn’t appear in any NPV calculation. It is free optionality in the ground, unpriced, unmodelled and waiting. The market is not paying for it.

The rutile grades at 1.01% across 17.9 million tonnes of contained metal. For context the average grade of rutile found in titanium deposits is 0.1%.

This is 10x higher.

The graphite grades at 1.32% across 24.4 million tonnes. Both are exceptional numbers for deposits of this scale.

And then the deposit also contains a monazite component with heavy rare earth content approximately seven times higher than the world’s five largest rare earth operations combined.

This is being discussed in roughly the same tone as a footnote about stationery procurement.

The Mine Itself Is Absurdly Simple

Here is how you mine Kasiya.

You take large machines.

You scrape the top layer of ground.

You put it through a wet concentration process.

You separate the minerals.

You load them onto a train that Japan is currently spending $7 billion to upgrade, which runs to the deepest natural harbour in southern Africa, which is already operating at 18 million tonnes of capacity per year.

That’s it.

No drilling. No blasting. No crushing.

No milling. No hard rock.

No explosives.

No grinding mills.

No acids, leaching, roasting or smelting.

The carbon footprint per tonne is 0.2 CO2 equivalent — lower than Syrah’s Balama at 0.4, a fraction of the Chinese average of 1.2.

The process is described in the technical literature as ‘dry mining followed by wet concentration,’ which sounds considerably less dramatic than what it is, which is: the lowest-cost, lowest-carbon, largest-scale critical minerals operation ever designed.

The graphite opex sits at $241 per tonne delivered onto a vessel.

Most standalone graphite projects globally are currently loss-making, and ALL graphite projects outside of China are currently loss making at the bottom end of current graphite prices.

Kasiya makes a near 100% margin because the graphite costs are shared with rutile production — the mining equivalent of splitting the bill.

The EBITDA margin is modelled at 64%.

For reference, Apple — the most profitable company in human history, the one that sells you a glass rectangle for £1,000+ — has an EBITDA margin of roughly 33%. Kasiya is modelling twice that.

The DFS Is About To Land. This Is The Moment.

The Definitive Feasibility Study is the most important document in a mining project’s lifecycle. It is the bankable study — the thing you put in front of lenders, offtakers and governments when you want them to give you billions of dollars to build a mine.

Without it, you have a story.

With it, you have a mine.

Sovereign is weeks away from publishing theirs.

The pre-tax NPV from the Optimised PFS is $2.3 billion, with a 27% IRR. Total modelled revenue over the 25-year mine life is $16.4 billion. The post-tax NPV8, depending on whose assumptions you use, sits somewhere between $924 million and $1.56 billion.

At the current market cap of £258 million — roughly US$325 million — investors are paying approximately 21 to 35 cents on the dollar for the conservatively modelled post-tax value.

The most bearish independent analysis of this project implies the stock is worth three times its current price.

The trajectory of every study Sovereign has published is worth noting.

Scoping study, then PFS, then Optimised PFS — each one came in better than the last. The Optimised PFS upgraded the NPV from $1.6 billion to $2.3 billion. The DFS has been developed under the joint oversight of the Sovereign–Rio Tinto Technical Committee.

The world’s largest titanium producer has been sitting at the table checking every assumption. That is not a standard level of quality control for a junior miner - it’s institutional-grade due diligence embedded into the document itself.

The geotechnical programme completed more than 400 individual subsurface tests across all key infrastructure locations.

Consistent stratigraphy across the entire project site.

Mining fleet finalised.

All workstreams engineered to meet the requirements of the IFC, export credit agencies, and development finance institutions.

This document is designed to unlock several billion dollars in construction financing.

And it lands basically alongside an upgraded Mineral Resource Estimate.

About That MRE Upgrade

The MRE upgrade expected in the near term is exploratory in nature — designed to convert Inferred material into Indicated, expanding the total known resource base.

This is not a reclassification of existing material. It is new resource definition, adding to the inventory that will eventually feed the mine plan.

The current MRE already has over 66% classified as Indicated. The upgrade targets the Inferred portion — material that is geologically understood but not yet drilled out to the density required for Indicated status.

Every previous resource upgrade at Kasiya has come in at or above expectations. If the expanded MRE increases total resources by even 50% — materially below the 80% increase seen in the 2022 upgrade — mine life extends well beyond the currently modelled 25 years.

The numbers behind that extension are worth sitting with. Each additional year of production at DFS rates adds approximately $35 million to the NPV8.

But the more visceral figure is the free cash flow: every extra year of mining generates an estimated $250–300 million in cash.

Each additional year of mine life is worth roughly the entire current market cap — not in modelled project value, but in hard cash.

The Measured classification — the highest confidence category under JORC, and the threshold many institutional mandates require — comes later, as part of the DFS.

That is the second catalyst.

The MRE upgrade establishes the scale.

The DFS establishes the confidence.

Together they unlock a different class of investor entirely.

Now Let’s Talk About The Geopolitics.

China controls approximately 70% of global graphite supply.

China has all but banned its export to the United States.

The US has no domestic graphite production worth mentioning.

In July 2025, the US Department of Commerce imposed preliminary anti-dumping duties of 93.5% on Chinese anode graphite imports. Combined with existing tariffs, the total effective rate reached 160%. Chinese graphite that cost American battery manufacturers around $3,700 per tonne was suddenly costing them $9,300.

Then, on 11 February 2026 — a fortnight ago — the DOC issued its final determination. The 93.5% anti-dumping rate was maintained. The countervailing duty was increased to 66.68%.

Total effective penalties on Chinese natural graphite anode material: approximately 220%.

This is a final determination. It stays in force for a minimum of five years pending only the ITC injury determination in March 2026, and the preliminary injury finding was already affirmative.

The wall between Chinese graphite and American battery manufacturers is not only expensive and inconvenient, it is permanent, legally designated and politically irreversible.

The two largest Chinese graphite anode producers — BTR and CATL — were found by the Department of Commerce to be unable to demonstrate independence from the Chinese Communist Party.

This is now a national security designation, not just a tariff. Any US manufacturer sourcing from these companies is not only paying more, they are having a conversation with their board about whether they are supplying a foreign adversary with revenue.

Meanwhile, Kasiya’s all-in graphite opex is $241 per tonne.

Meanwhile, graphite and titanium are both on the USGS 2025 Critical Minerals list.

Meanwhile, NATO formally designated titanium as a defence-critical strategic mineral in December 2024, after noticing — somewhat belatedly — that the bloc was substantially dependent on Russian titanium supply, which had until recently looked like a perfectly sensible arrangement.

Meanwhile, China and Russia together control over 70% of global titanium sponge capacity. The US ceased domestic titanium sponge production in 2020. It depends on Japan for 92% of its supply.

Meanwhile, sovereign has already received endorsement from the Japanese titanium producers that Kasiya’s rutile is on spec for them.

Meanwhile, natural rutile supply is forecast to fall by 52% between 2024 and 2033 as existing deposits deplete and grades decline. No large rutile-dominant deposit has been discovered in over 50 years.

Sovereign Metals is the largest undeveloped source of both graphite and titanium feedstock on Earth.

Do you see the shape of this yet?

Project Vault, The State Department, and a Plane Journey

On 2 February 2026, President Trump launched Project Vault — a $12 billion public-private initiative to establish America’s first Strategic Critical Minerals Reserve. It is modelled on the Strategic Petroleum Reserve, except instead of oil it’s the minerals that everything else is made of.

Three trading houses were appointed to procure for Project Vault: Hartree Partners, Mercuria Americas and Traxys.

Within 72 hours of the launch, Sovereign Metals signed an MoU with Traxys to market Kasiya’s graphite — 40,000 tonnes per annum initially, rising to 80,000 tonnes.

72 hours.

The speed of that signing was not accidental. These conversations had been happening for months before the public announcement. The MoU was sitting in a drawer, ready to be signed the moment the political cover existed to sign it publicly.

The end-users already signed into Project Vault include Boeing, General Motors, GE Vernova, Western Digital and Google. Sovereign is now one contractual step away from supplying the US government’s own strategic reserve, with Boeing as a named end-user, through a trading house whose appointment was announced by the President of the United States.

When the Traxys agreement was signed, there was a US Department of State Senior Advisor in the room.

That person did not fly to Cape Town for the weather.

(It was raining.)

Senior State Department officials have precise and considered reasons for every public appearance they make. A Senior Advisor from State doesn’t attend a mining company’s offtake signing unless the US government has decided — at a policy level, not a commercial level — that this mine needs to exist and that the US government’s presence at the table is part of making it happen.

And who is this Senior Advisor? According to public disclosures, Chris Kulukundis is second-in-command to Massad Boulos - both of whom who are spearheading the US Government’s Minerals Taskforce - the same taskforce and individuals who signed the US-DRC minerals deal. (Boulos also just happens to be Tiffany Trump’s father in law).

The World Bank Built Them A Power Station. Japan Is Building Them A Railway.

In December 2025, the International Finance Corporation — the private-sector arm of the World Bank — signed a 36-month Collaboration Agreement granting it the right to act as primary lender and mandated co-lead arranger for Kasiya’s construction financing.

The IFC committed a record $71.7 billion to private-sector projects in FY2025.

It does not pre-commit to projects it expects will not reach a Final Investment Decision. The due diligence it performs before signing this type of agreement makes most investment bank processes look like a hurried Google search.

Construction financing has been pre-approved before the DFS is complete.

The mortgage exists.

It has been approved.

We are simply awaiting the survey.

The IFC’s Environmental and Social Performance Standards, embedded into the DFS process, will make Kasiya bankable to the institutional standards required by pension funds, sovereign wealth funds, and multilateral co-financiers who would otherwise never touch a pre-production African miner regardless of how good the geology was.

The IFC stamp opens doors.

Very large, very heavy, very expensive doors.

The World Bank also provided a $350 million grant (yes - GRANT!) to develop the Mpatamanga Hydropower Storage Project in Malawi, materially increasing national power capacity. And who do you think is going to be the largest industrial customer of this extra power capacity?

That’s right.

Kasiya requires 56MW at full production. The 60MW Salima solar plant is already commissioned. The Nkhoma substation is already equipped to connect Kasiya to grid power. Sovereign’s entire power requirement at full production can be met from existing renewable infrastructure.

The World Bank is, in effect, doing a portion of Sovereign’s infrastructure planning for them. This is not a coincidence. This is what happens when a project becomes strategically important to the institutions that shape global development finance.

And then there’s Japan.

Japan launched a $7 billion infrastructure investment programme targeting the Nacala Logistics Corridor — the transport artery through which Kasiya’s production flows to port.

The Nacala port is the deepest natural harbour in southern Africa. It handles 18 million tonnes of cargo per year. It is already operating. Mitsui co-controls the Nacala railway. Mitsui has also in the past signed an MoU with Sovereign though this was never renewed. Maybe it’s being refreshed with all this new impetus from Japan.

Japan is spending $7 billion to upgrade Sovereign’s supply chain because Japan — which processes over 60% of all non-sanctioned aerospace-grade titanium globally and depends on Kasiya’s geology for its own strategic interests — needs this mine to work.

Toho Titanium, one of the world’s most demanding aerospace-grade titanium processors and a key supplier into the Boeing and Airbus commercial and defence aircraft value chains, completed full qualification of Kasiya rutile last year. Confirmed suitable for high-performance titanium metal production.

No conditions.

So to recap the infrastructure situation: the port exists, the railway is being upgraded at someone else’s expense, the power is either already connected or being built by the World Bank, and the financing is pre-approved by the IFC.

In a sector where projects routinely die because the road to the port doesn’t exist or the grid can’t support the load, Sovereign has had most of its infrastructure problems solved by parties who need the mine to exist more than they need Sovereign to pay for it.

Rio Tinto: The Longest Courtship in Mining History

Rio Tinto holds close to 18.5% of Sovereign. This is nearly the maximum permissible without triggering a mandatory takeover offer under ASX rules. Rio increased its stake after the PFS. It was previously at 19.9% before the last equity raise knocked it down slightly.

Rio Tinto is buying as much of this company as it legally can without committing to buy all of it.

Rio Tinto is the world’s largest titanium feedstock producer. It is facing declining grades across existing operations. It has nothing in its development pipeline that comes close to replacing what it will lose over the next decade. The world’s largest titanium producer and the world’s largest titanium deposit are in what might be described as a relationship of considerable mutual dependency.

Rio’s involvement in the DFS goes well beyond a financial stake. Rio’s subject matter experts are actively involved in mine design, environmental workstreams, processing configuration, and project layout review. They are not a passive investor. They are doing the technical work of a future operator.

When the DFS lands, a precise and consequential clock starts ticking: Rio Tinto has 180 days to elect whether to become operator of Kasiya.

After which, one of two excellent development pathways becomes confirmed. If Rio elects to operate, the world’s largest mining company builds and funds the mine.

If it doesn’t (its new CEO doesn’t yet understand selling the difficulty associated in selling its titanium unit, when Rio itself is the market leader), then the IFC, Project Vault, and Japan’s infrastructure investment provide a completely independent development pathway.

Both outcomes lead to the same mine being built.

The uncertainty is about which logos appear on the hard hats. The market is pricing this as existential uncertainty about the mine itself.

Those are materially different things.

One Argonaut research report stated that Rio Tinto’s endgame is to become 100% owner of Kasiya. Rio will not invest hundreds of millions in construction without taking control.

If it takes operatorship, the logical conclusion of the relationship is acquisition. Historically, mining M&A for assets of this strategic importance trades at significant premiums to the pre-announcement share price.

Actually Rare Earths

During metallurgical testwork, Sovereign confirmed that Kasiya contains a monazite component with heavy rare earth content approximately seven times higher than the world’s five largest rare earth operations.

Dysprosium. Terbium. Yttrium. All on the USGS Critical Minerals list. All directly relevant to electric motor magnets and defence systems. All currently dominated by Chinese supply chains.

The monazite can be recovered from the existing processing stream at near-zero incremental capital expenditure. The infrastructure is already being built for the rutile and graphite. Rare earth recovery is a bolt-on. A very large, very geopolitically important bolt-on that happens to cost almost nothing because the mine is already there.

Sovereign is a three-commodity story — rutile, graphite, and rare earths — from one mine, at one capex number.

The monazite discovery has received so little market attention that it is essentially unpriced.

A standalone rare earth discovery of this significance would re-rate most companies immediately and dramatically. Sovereign has it buried in the footnotes of a project already exceptional on two separate world-class resources. When the market eventually prices the rare earths in — and it will — it will be additive to a re-rating already overdue on everything else.

The Graphite Quality, Since We’re Here

Kasiya’s graphite is high-purity, highly crystalline, with over 60% in the large to super-jumbo fractions above 180 microns.

It achieves the minimum 99.95% TGC purity required for battery anodes without hydrofluoric acid — which is both cheaper and considerably less likely to create a chemical incident.

Germany’s Prographite GmbH independently confirmed that Kasiya graphite achieves premium performance metrics for coated spherical purified graphite, the highest-value form used in battery anodes. This is not a hope.

It is a tested result.

The EU’s Critical Raw Materials Act lists graphite and titanium as strategic raw materials and mandates supply chain diversification.

The US tariff regime is the leading edge of a broader Western policy realignment that will play out across multiple jurisdictions over the next five years.

Sovereign is positioned for a structural shift in how the Western world decides to source the materials that everything it makes depends on.

The Jurisdiction Risk, Addressed

The standard objection to any African mining story is jurisdiction. It is a fair objection.

However.

The answer here is: the World Bank has committed to finance construction in Malawi. Japan has committed $7 billion to upgrade the infrastructure. The Malawian President has addressed the United Nations General Assembly to describe Kasiya as the centrepiece of his country’s economic development. Malawi introduced a raw mineral export ban in 2025 and Sovereign is exempt because it plans to process in-country — meaning the government has explicitly endorsed Sovereign’s export pathway while eliminating potential competition from unprocessed material.

If that coalition of institutional validation — the World Bank, Japan’s government, the IFC, the US State Department, and the President of Malawi at the UN — does not resolve the jurisdiction risk for you, I would gently ask what would?

The Register, The Overhang, and Why It Doesn’t Matter

Sprott holds approximately 5.6% of Sovereign. Directors and management hold more than 10%. T. Rowe Price is in the register, as are other major institutional names. Australian HNW investors hold around 20%. The register is dominated by long-term, informed holders with large positions.

Last year’s A$40 million placement at A$0.85 created an overhang of investors sitting at a cost basis above the current price. This is a technical problem, not a fundamental one.

The catalyst that clears it forever — the DFS, followed immediately by Rio’s 180-day operator decision clock — is now weeks away. Overhang problems resolve when the story forces them to.

The DFS delay from Q4 2025 to Q1 2026 was punished by the market.

But the companies that rush feasibility studies are the ones who come back 18 months later with cost overruns and an apologetic press release.

And the delay this time was to make it World Bankable.

The Numbers

Let me just lay this out plainly.

Post-tax NPV8: between $924 million and $1.56 billion depending on assumptions.

Market cap: approximately $325 million. Investors are paying 21 to 35 cents on the dollar for a conservatively modelled post-tax value, on a project backed by the IFC, Rio Tinto, the US State Department, Japan, and the World Bank, containing the world’s largest rutile deposit, the second-largest graphite deposit, and a rare earth resource seven times larger than the world’s five biggest operations combined.

Average annual EBITDA: $415 million over 25 years. At a standard 6x EV/EBITDA multiple — conservative for a low-cost, long-life, critical minerals producer — that implies a production-stage enterprise value of approximately $2.5 billion. The current enterprise value is approximately $325 million.

What Happens Next, And When

The DFS lands in the coming weeks, alongside the MRE upgrade.

In the same month, the ITC is expected to issue its final injury determination on Chinese graphite — if affirmative (the preliminary finding was affirmative), the 220% duties become permanent for five years minimum.

When the DFS lands, Rio Tinto’s 180-day operator election window opens. By mid-2026, one of two excellent development pathways becomes confirmed.

Permitting and Front End Engineering and Design run through 2026 to 2027.

Construction commences late 2027 or 2028.

First production: 2029 to 2030.

That is within the investment horizon of most institutional investors. The path from announcement to production is not complicated to model.

Invest today? You’ll likely recoup your investment every year from the day production starts.

The Bottom Line

The State Department Senior Advisor flew to Cape Town.

The World Bank signed the financing agreement.

Japan is spending $7 billion on the road.

Boeing is in the offtake chain.

Rio Tinto holds nearly 20% and has a formal right to become the operator of the world’s most important undeveloped mineral deposit.

The US government has decided, at the highest levels of policy, that Kasiya needs to exist.

No large rutile deposit has been found in 50 years. None is coming. Kasiya is the supply.

Rutile cannot be replaced in defence applications.

The rest of the industry is running on borrowed time and declining grades, and the people running it know it.

Sovereign Metals is inevitable.

Kasiya contains the future of Western defence, the battery supply chain, and the rare earths that power the motors of everything modern civilisation runs on.

It is being backed by the World Bank, Japan, the US State Department, and the largest mining company on Earth.

This train is leaving the station.