Kasiya Indicated Resource for Scoping Study

SOVEREIGN METALS LIMITED

NEWS RELEASE

KASIYA INDICATED RESOURCE TO SUPPORT SCOPING STUDY

Sovereign Metals Limited (the Company or Sovereign) is pleased to announce its JORC Mineral Resource Estimate (MRE) upgrade for Kasiya - another major technical milestone for the Company's flagship, large, high-grade rutile deposit in Malawi. Over 50% of the total resource has now been upgraded to the Indicated category.

·        MRE upgrade re-affirms Kasiya as a globally significant, potentially long-life future source of natural rutile  

·          High degree of confidence confirmed with >50% of the total MRE now in the Indicated category

·          MRE contains ~3.1Mt of rutile in the Indicated category and ~2.8Mt of rutile in the Inferred category

·       MRE also contains ~4.0Mt of graphite in the Indicated category and ~3.5Mt of graphite in the Inferred category - a valuable by-product

·         Substantial additional resource growth is expected in the near future with the current MRE covering just 49km² or 38% of the total 129km² (Kasiya 89km² + Nsaru 40km²) drill-defined rutile-mineralised footprint.

Sovereign's Managing Director Dr Julian Stephens commented:

"It is really pleasing to achieve an Indicated resource upgrade of such magnitude in under six months since our maiden MRE at Kasiya. Sovereign is already well advanced to deliver a further considerable resource and classification upgrade for Kasiya and the new Nsaru deposit in early 2022."

ENQUIRIES

The Kasiya updated MRE is presented below (Table 1). The MRE has broad zones of very high-grade rutile which occur contiguously across large areas.

Rutile mineralisation lies in laterally extensive, near surface, flat "blanket" style bodies in areas where the weathering profile is preserved and not significantly eroded. At Kasiya, high-grade mineralisation commonly grading 1.2% to 2.0% rutile occurs 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, NE-striking zones.

Table 1 - Kasiya Mineral Resource Estimate at 0.7% Rutile Cut-off

Cut-off: 0.7% rutile, includes topsoil, TGC = total graphitic carbon

Sovereign now has a total of ~129km² of drilled, high-grade rutile mineralisation (Kasiya 89km² + Nsaru 40km²). The area covered by the Kasiya Indicated component is just 23km² of the 129km² drilled, mineralised footprint.  Further core drilling results are expected in the coming months and are expected to contribute to additional Indicated tonnage at Kasiya.

Most peripheral and extensional mineralisation at Kasiya previously drilled on an 800m x 800m drill spacing has now been infilled to 400m x 400m spacing. These samples have been dispatched from Malawi and are in transit to Australian laboratories for final analysis. The results are expected to contribute to additional Inferred tonnage at Kasiya.

Infill and extensional hand auger and core drilling at the nearby Nsaru deposit is now also complete with all samples well advanced through processing at Australian laboratories. It is anticipated that these results will contribute to a component of the Nsaru maiden MRE being classified in the Indicated category. 

Kasiya's high-grade, NE-striking rutile corridors that extend to depth beyond 15m continue to present a significant target for the Company and have been marked for detailed 200 x 200m infill drilling to test short range variability of the mineralisation. The results of this program will inform the need for additional infill into the future, and for targeting drilling to depths of ~25m which will offer potential significant additional tonnage.

Expansion of the Kasiya MRE and a maiden Nsaru MRE is advancing with completion expected in Q1 2022.

The Kasiya MRE has been prepared by independent consultants, Placer Consulting Pty Ltd (Placer) and is reported in accordance with the JORC Code (2012 Edition).

As per ASX Listing Rule 5.8 and the 2012 JORC reporting guidelines, a summary of the material information used to estimate the MRE is detailed below.

Geology

Regional Geology

The greater part of Malawi is underlain by crystalline Precambrian to lower Paleozoic rocks referred to as the Malawi Basement Complex. In some parts these rocks have been overlain unconformably by sedimentary and volcanic rocks ranging in age from Permo-triassic to Quaternary. The Basement complex has undergone a prolonged structural and metamorphic history dominated by uplift and faulting resulting in the formation of the Malawi Rift Valley.

Kasiya is located on the Lilongwe Plain which is underlain by the Basement Complex paragneisses and orthogneisses which are part of the Mozambique Belt. The bulk of the gneisses are semi-pelitic but there are bands of psammitic and calcareous rocks that have been metamorphosed under high pressure and temperature conditions to granulite facies. Interspersed within the paragneiss units are lesser orthogneisses, often cropping-out as conspicuous tors, as well as amphibolites, pegmatites and minor mafic to ultramafic intrusions.  Foliation and banding in the gneisses have a broad north-south strike over the general area. Thick residual soils and pedolith with some alluvium overlie the gneisses and include sandy, lateritic and dambo types. 

Project Geology

Sovereign's tenure covers 2,882km² over an area to the north, west and south of Malawi's capital city covering the Lilongwe Plain. The topography is generally flat to gently undulating and the underlying geology of the is dominated by paragneiss with pelitic, psammitic and calcareous units.

A particular paragneiss unit is rich in rutile and graphite and is the primary source of both of these minerals in the area. This area was deeply weathered during the Tertiary and rutile concentrated in the upper part of the weathering profile forming residual placers, such as the Kasiya Deposit. Once this material is incised and eroded, it is transported and deposited into wide, regional braided river systems forming alluvial heavy mineral placers such as the Bua Channel.

Kasiya Deposit Geology

The high-grade rutile deposit at Kasiya is best described as a residual placer, or otherwise known as eluvial heavy mineral deposit. It is formed by weathering of the primary host rock and concentration in place of heavy minerals, as opposed to the high-energy transport and concentration of heavy minerals in a traditional placer.

The highly aluminous nature (kyanite) and the presence of carbon (graphite) in the host material suggest that the protolith was of meta-sedimentary origin. The protolith likely started with a 0.5-1.5Ga basin that also experienced consistent influx of titanium minerals.

These sedimentary rocks were subject to granulite facies metamorphism under reduced conditions in the Pan-African Orogeny at circa 0.5-0.6Ga. The reduced environment, relatively high titanium content and low iron content, resulted in rutile being the most stable titanium mineral under these conditions. Slow exhumation and cooling then resulted in in crystallisation of paragneisses containing coarse rutile and graphite.

The final and most important stage of enrichment came as tropical weathering during the Tertiary depleted the top ~10m of physically and chemically mobile minerals. This caused significant volume loss and concurrent concentration of heavy resistate minerals including rutile and kyanite.

Rutile mineralisation lies in laterally extensive, near surface, flat "blanket" style bodies in areas where the weathering profile is preserved and not significantly eroded. The Kasiya deposit continue to confirm widespread, high-grade mineralisation commonly grading 1.2% to 2.0% rutile 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, NE-striking zones.

Graphite generally occurs in broad association with rutile, however, it is depleted in the top 3-5m and therefore can often show an inverse grade relationship with rutile in the near-surface zones. At depths generally greater than 5m graphite is not depleted, and rutile is not particularly enriched, so a more stable grade relationship exists.

Metallurgical results show that a very coarse-flake graphite by-product can be recovered from rutile gravity tails.

Drilling Techniques

Spiral hand-auger (HA) drilling and Push-tube core (PT) drilling has been used extensively at the Kasiya Deposit by Sovereign to define mineralisation and to obtain quantitative rutile and graphite (TGC) assay information in the upper sections of the weathering profile.

A total of 507 hand auger holes for 4,820m were drilled at the Kasiya Rutile Deposit to obtain samples for quantitative determination of recoverable rutile and TGC.

An initial 30 push-tube core holes, for 359.4m, were drilled at the Kasiya Rutile Deposit to obtain samples for validation of hand auger drilling results and for bulk density test work.

The subsequent infill drilling programme, designed to support the resource estimate update was completed by push tube coring. A total of 182 core holes for 1,855.3m were included in the updated MRE.

The drilling programs to date show a mineralised envelope, defined nominally by >0.5% rutile, of approximately 89km² with numerous areas of high-grade rutile defined. An additional 40km² rutile mineralised envelope has been drill-defined at the nearby Nsaru Deposit.

HA drilling was executed by Sovereign field teams using a manually operated enclosed-flight Spiral Auger (SP / SOS) system and produced by Dormer Engineering in Queensland, Australia. The HA bits are 62mm and 75mm in diameter with 1m long steel rods. Each 1m of drill advance is withdrawn and the contents of the auger flight removed into bags and set aside. An additional 1m steel rod is attached and the open hole is re-entered to drill the next metre. This is repeated until the drill hole is terminated often due to the water table being reached, and more rarely due to bit refusal. The auger bits and flights were cleaned between each metre of sampling to avoid contamination. 

PT drilling is undertaken using a drop hammer Dando Terrier MK1 and a drop hammer DL650. The drilling generated 1-metre runs of 83mm PQ core in the first 2m and then transitioned to 72mm core for the remainder of the hole. Core drilling is oriented vertically by spirit level.

The hand auger collars are spaced at nominally 400m along the 400m spaced drill-lines with the push-tube holes similarly spaced at an offset, infill grid. The resultant 200m by 200m drill spacing (to the strike orientation of the deposit) is deemed to adequately define the mineralisation in the MRE.

The push-tube twin and density sample holes are selectively placed throughout the deposit to ensure a broad geographical and lithological spread for the analysis. 

Drilling and sampling are carried out on a regular diamond grid. There is no apparent bias arising from the orientation of the drill holes with respect to the orientation of the deposit.

Placer has reviewed SOPs for HA and PT drilling and found them to be fit for purpose and support the resource classifications as applied to the MRE.

Sampling Techniques

HA samples were obtained at 1m intervals generating on average approximately 2.5kg of drill sample. HA samples are manually removed from the auger bit and sample recovery visually assessed in the field. As samples become wet at the water table and recovery per metre declines the drill hole is terminated.

HA samples are collected on a metre by metre basis. Each 1m sample is sun dried, logged, weighed and pXRF analysed. Hand auger samples are composited based on regolith boundaries and sample chemistry, generated by hand-held XRF analysis. Each 1m of sample is dried and riffle-split to generate a total sample weight of 3kg for analysis, generally at 2 - 5m intervals. This primary sample is then split again to provide a 1.5kg sample for both rutile and graphite analyses.

PT samples were predominantly HQ. Half core 1m samples were sun dried, logged, weighed and pXRF analysed. Samples are then composited over 2m intervals. An equal mass is taken from each contributing metre to generate a 1.5kg composite sample.  Individual recoveries of core samples were recorded on a quantitative basis. Core recovery was >95%.   

This sampling and compositing method is considered appropriate and reliable based on accepted industry practice.     

Sample analysis methodology

Rutile

Heavy mineral concentrates (HMC) were generated onsite via wet-tabling or at Diamantina Laboratories in Perth via heavy liquid separation.

The Malawi onsite laboratory sample preparation methods are considered quantitative to the point where a HMC is generated.

The HMC is then subject to magnetic separation at Allied Mineral Laboratories Perth (AML) in Perth by Carpco magnet @ 16,800G (2.9Amps) into a magnetic (M) and non-magnetic (NM) fraction.

The NM fractions were sent to either ALS Perth or Intertek Perth for quantitative XRF analysis. Intertek samples received the standard mineral sands suite FB1/XRF72. ALS Samples received XRF_MS.

QEMSCAN of the NM fraction shows dominantly clean and liberated rutile grains and confirms rutile is the only titanium species in the NM fraction. Recovered rutile is therefore defined and reported here as: TiO₂ recovered in the +45 to -600um range to the NM concentrate fraction as a % of the total primary, dry, raw sample mass divided by 95% (to represent an approximation of final product specifications). i.e recoverable rutile within the whole sample.

Graphite

A portion of each sample is dissolved in dilute hydrochloric acid to liberate carbonate carbon. The solution is filtered using a filter paper and the collected residue is then dried to 425°C in a muffle oven to drive off organic carbon. The dried sample is then combusted in an Eltra CS-800 induction furnace infra-red CS analyser to yield total graphitic or elemental carbon (TGC).

The graphitic carbon content is determined by eliminating other carbon forms from the total carbon content. The addition of acid to the sample liberates carbon dioxide thus removing carbonate carbon. Soluble organic carbon will also be removed. Insoluble organic carbon is removed by heating the samples at 425°C in an oxidising environment. The "dried" carbon-bearing sample that is analysed in the resistance furnace is considered to contain only graphitic carbon. 

QAQC

Sovereign uses internal and externally sourced wet screening reference material inserted into samples batches at a rate of 1 in 20. The externally sourced, certified standard reference material for HM and Slimes assessment is provided by Placer Consulting.

An external laboratory raw sample check duplicate is sent to laboratories in Perth, Australia as an external check of the full workflow. These duplicates are produced at a rate of 1 in 20. 

Accuracy monitoring is achieved through submission of certified reference materials (CRM's). ALS and Intertek both use internal CRMs and duplicates on XRF and TGC analyses. Sovereign also inserts CRMs into all sample batches at a rate of 1 in 20.

Analysis of sample duplicates is undertaken by standard geostatistical methodologies (Scatter, Pair Difference and QQ Plots) to test for bias and to ensure that sample splitting is representative. Standards determine assay accuracy performance, monitored on control charts, where failure (beyond 3SD from the mean) may trigger re-assay of the affected batch.

Precision and accuracy assessment has been completed on all alternate workflow methodologies and a consistent method has been recommended by Placer Resource Geologists. Examination of the QA/QC sample data indicates satisfactory performance of field sampling protocols and assay laboratories providing acceptable levels of precision and accuracy. Rutile determination by alternate methods showed no observable bias.

Acceptable levels of accuracy and precision are displayed in geostatistical analyses to support the resource classifications as applied to the estimate.

Classification

The hand auger collars are spaced at nominally 400m along the 400m spaced drill-lines with the push-tube holes similarly spaced at an offset, infill grid. The resultant 200m by 200m drill spacing (to the strike orientation of the deposit) is deemed to adequately define the mineralisation in the MRE.

The push-tube twin and density sample holes are selectively placed throughout the deposit to ensure a broad geographical and lithological spread for the analysis. 

Variography and kriging neighbourhood analysis completed using Supervisor software informs the optimal drill and sample spacing for the MRE. Based on these results and the experience of the Competent Person, the data spacing and distribution is considered adequate for the definition of mineralisation and adequate for mineral resource estimation.

The mineral resource and classification remain conservative. Substantial additional resource material is expected to occur below the effective depth of drilling (water table). High grade sample results are constrained tightly by search and estimation parameters, which are likely to be contiguous upon application of closer-spaced drilling.

A high-degree of uniformity exists in the broad and contiguous lithological and grade character of the deposit. Open-hole drilling and infill core drilling techniques have been expertly applied and data collection procedures, density assessments, QA protocols and interpretations conform to industry best practice with few exceptions.

Assay, mineralogical determinations and metallurgical test work conform to industry best practice and demonstrate a rigorous assessment of product and procedure. The development of a conventional processing flowsheet and marketability studies support the classification of the Kasiya Resource.

Estimation Methodology

Datamine Studio RM and Supervisor software is used for the resource estimation with key fields being interpolated into the volume model using the Inverse Distance weighting (power 2) method. Dynamic Anisotropy search ellipses, informed by variography and kriging neighbourhood analysis, were used to search for data during the interpolation and suitable limitations on the number of samples and the impact of those samples, was maintained.

Interpolation was constrained by hard boundaries (domains) that result from the geological interpretation. The construction of an upper (Soil/Ferp) domain reduces the dilution of resource grade from the underlying, less mineralised (Mott/Sap) domain. A Topsoil horizon has been defined at 0.3m thickness throughout the Indicated Resource area to support anticipated ore reserve calculation and mining studies. Topsoil is disclosed separately but remains in the MRE in recognition of advanced investigations by SVM on topsoil generation.

The average parent cell size used was approximately equivalent to the average drill hole spacing within the Indicated Resource (200m*200m).  Cell size in the Z-axis was established to cater for the composite sample spacing and definition of the Topsoil domain. This resulted in a parent cell size of 200m x 200m x 3m for the volume model with 5 sub-cell splits available in the X and Y axes and 10 in the Z axis to smooth topographical and lithological transitions. A sub-cell interpolation was applied for the MRE.

Extreme grade values were not identified by statistical analysis, nor were they anticipated in this style of deposit. No top cut is applied to the resource estimation.

Validation of grade interpolations was done visually In Datamine by loading model and drill hole files and annotating, colouring and using filtering to check for the appropriateness of interpolations.

Statistical distributions were prepared for model zones from both drill holes and the model to compare the effectiveness of the interpolation. Distributions of section line averages (swath plots) for drill holes and models were also prepared for each zone and orientation for comparison purposes.

The resource model has effectively averaged informing drill hole data and is considered suitable to support the resource classifications as applied to the estimate.

Density is calculated by the water immersion technique using core from geographically and lithologically diverse sample sites throughout the project. This methodology delivers an accurate density result that is interpolated in the MRE for each host material type.

Density data are interpolated into the resource estimate by geological domain. An average density of 1.39 t/m³ for the soil (SOIL) domain, 1.60 t/m³ for the ferruginous pedolith (FERP) domain, 1.65 t/m³ for the mottled (MOTT) domain, 1.68 t/m³ for the pallid saprolite (PSAP) domain, 1.63 t/m³ for the saprolite (SAPL) domain, and 1.93 t/m³ for the laterite (LAT) domain were calculated. Density data are interpolated into the resource estimate by the nearest neighbour method.

Cut-off Grades

All results reported are of a length-weighted average of in-situ grades. The resource is reported at a range of bottom cut-off grades in recognition that optimisation and financial assessment is outstanding.

A nominal bottom cut of 0.7% rutile is offered, based on preliminary assessment of resource product value and anticipated cost of operations. No graphite top or bottom cuts are applied.

Mining and Metallurgy Factors

Hydro-mining has been determined as the optimal method of mining for the Kasiya Rutile deposit. The material is loose, soft, fine and friable with no cemented sand or dense clay layers rendering it amenable to hydro-mining. It is considered that the strip ratio would be zero or near zero.

Dilution is considered to be minimal as mineralisation commonly occurs from surface and mineralisation is generally gradational with few sharp boundaries.

Recovery parameters have not been factored into the estimate. However, the valuable minerals are readily separable due to their SG differential and are expected to have a high recovery through the proposed, conventional wet concentration plant.

Sovereign have announced three sets of metallurgical results to the market (24 June 2019 and 9 September 2020, 7^th December 2021), relating to the Company's ability to produce a high-grade rutile product with a high recovery via simple conventional processing methods. Sovereign engaged AML to conduct the metallurgical test work and develop a flowsheet for plant design considerations. The work has shown a premium quality rutile product ranging from 95.0% to 97.2% TiO₂ with low impurities could be produced with recoveries of about 94% to 100% and with favourable product sizing at d₅₀ of 118µm (97.2% product).

Gravity separation was effective at concentrating graphite to a "light mineral pre-concentrate" due to its low specific gravity (~2.2 t/m³) at circa 6.3% TGC.

A program at SGS Lakefield in Canada was undertaken in order to confirm that the graphite gravity pre-concentrate can be upgraded into a coarse flake graphite by-product via a conventional graphite flotation flowsheet.

The test-work was extremely successful, and a very coarse-flake graphite concentrate at 96.3% TGC was produced. Greater than 60% of the graphite concentrate is in the large to super-jumbo fractions, suggesting a high combined basket value. The overall graphite recovery from the raw sample to product was 62%.

Table 2 - Kasiya Mineral Resource Estimate Summary at varying Rutile Cut-off grades and classifications

Competent Person's Statement

The information that relates to Mineral Resources is based on, and fairly represents, information compiled by Mr Richard Stockwell, a Competent Person, who is a fellow of the Australian Institute of Geoscientists (AIG). Mr Stockwell is a principal of Placer Consulting Pty Ltd, an independent consulting company. Mr Stockwell has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Stockwell consents to the inclusion of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Exploration Results is based on information compiled by Mr Samuel Moyle, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Moyle is the Exploration Manager of Sovereign Metals Limited and a holder of ordinary shares, unlisted options and performance rights in Sovereign. Mr Moyle has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Moyle consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to Metallurgical test-work Results - Rutile & Graphite is extracted from the announcement dated 7 December 2021. The announcement is available to view on www.sovereignmetals.com.au. Sovereign confirms that a) it is not aware of any new information or data that materially affects the information included in the announcement; b) all material assumptions included in the announcement continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons' findings are presented in this report have not been materially changed from the announcement.

Information disclosed in this announcement has been reviewed by Dr Julian Stephens (B.Sc (Hons), PhD, MAIG), Managing Director, a Qualified Person for the purposes of the AIM Rules for Companies.

Forward Looking Statement

This release may include forward-looking statements, which may be identified by words such as "expects", "anticipates", "believes", "projects", "plans", and similar expressions. These forward-looking statements are based on Sovereign's expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Sovereign, which could cause actual results to differ materially from such statements. There can be no assurance that forward-looking statements will prove to be correct.  Sovereign makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

SECTION 1 - SAMPLING TECHNIQUES AND DATA

SECTION 2 - REPORTING OF EXPLORATION RESULTS

SECTION 3 - ESTIMATION AND REPORTING OF MINERAL RESOURCES

Glossary