Sovereign Metals Limited

ANNUAL REPORT FOR THE FINANCIAL YEAR ENDED - 30 JUNE 2022

abn 71 120 833 427

CORPORATE DIRECTORY

The Directors of Sovereign Metals Limited present their report on the Group consisting of Sovereign Metals Limited ("the Company" or "Sovereign" or "Parent") and the entities it controlled at the end of, or during, the year ended 30 June 2022 ("Group").

OPERATING AND FINANCIAL REVIEW

Sovereign is focused on the exploration and development of its Kasiya rutile project in Malawi. The recent Expanded Scoping Study (ESS) confirmed Kasiya as a large-scale, long-life operation with a low-cost profile and future significant source of critical raw materials.

This globally significant project has the potential to become a major producer in both the natural rutile and graphite markets whilst contributing significantly to the economy of Malawi.

Kasiya is a greenfields discovery in central Malawi which is now the largest natural rutile deposit and one of the largest flake graphite deposits in the world. Sovereign is aiming to develop an environmentally and socially sustainable operation to supply the highly sought-after natural rutile and graphite to global markets.

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 that occurs from surface in an area with excellent access and water availability. The Project has high quality surrounding infrastructure including hydro-sourced grid power, bitumen roads and recently upgraded rail lines connecting to the deep water of ports of Nacala and Beira on the Indian Ocean.

Highlights and advancements during and subsequent to the end of the financial year include:

Development and Exploration

·        Exploration activities culminated in the Company's maiden rutile Mineral Resource Estimate (MRE) of 644Mt at 1.01% rutile (0.7% cut-off) including a high-grade component of 137Mt at 1.41% rutile (1.2% cut-off).

·        Signification exploration activities continued the Company's project area during the period resulting substantial expansion of the mineralisation area.

·        MRE upgraded to support Scoping Study with over 50% of the MRE classified as Indicated.

·        Initial Scoping Study confirmed Kasiya as a globally significant natural rutile project, Kasiya is the largest undeveloped rutile deposit in the world and is highly strategic in a market characterised by extreme supply deficit.

·        The Initial Scoping Study demonstrated outstanding results including:

-    a 12Mtpa operation producing 122kt rutile and 80kt graphite per annum over a 25 year mine life

-    exceptional economics including a post-tax NPV₈ of US$861m and post-tax IRR of 36%

-    a large-scale operation with a low-cost profile resulting from the deposit's near surface nature, grade and excellent existing infrastructure 

-    a low carbon operation with the project to be powered by 100% renewables (hydro and solar)

·        MRE update confirmed Kasiya as the largest rutile deposit ever discovered with 1.8 Billion tonnes @ 1.01% rutile and 1.32% graphite (Indicated + Inferred) equating to 18 million tonnes contained rutile and 23 million tonnes contained graphite.

·        The updated MRE confirmed Kasiya as the world's largest rutile deposit and one of the largest flake graphite deposits globally.

·        ESS results confirm Kasiya as an industry-leading major source of critical raw materials as 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.

·        The ESS demonstrated outstanding results including:

-    a two-stage development (stage 2 self-funded) with full production at 24Mtpa operation producing 265kt rutile and 170kt graphite per annum with a 25 year mine life

-    exceptional economics including a post-tax NPV₈ of US$1,537m and post-tax IRR of 36%

-    a large-scale operation with a low-cost profile resulting from the deposits near surface nature, grade, conventional processing and excellent existing infrastructure.

-    conservative assumptions applied with long-term prices used discounted against current spot prices

-    Highly strategic project and a potential major source of raw materials deemed critical to the decarbonisation of the global economy.

·        Pre-Feasibility Study (PFS) commenced with a 12,000m drilling program drilling underway and key globally recognised consultants appointed.

Sales and Offtake Marketing

·        Offtake MoU for supply of 25,000 tonnes of natural rutile per annum to Hascor into the premium priced welding sector.

·        Offtake MoU and Market Alliance with major Japanese global trading and investment company, Mitsui & Co Ltd (Mitsui). The MoU establishes a marketing alliance and potential offtake for 30,000 tonnes of natural rutile per annum. The alliance will allow Sovereign to leverage off Mitsui's extensive network and their market-leading understanding of the titanium industry and global logistics.

Corporate

·        Commencement of trading on the AIM market of the London Stock Exchange. The dual listing has increased the Company's profile in the northern hemisphere and facilitated the participation of UK and other European investors in Sovereign's growth.

·        Former Rio Tinto executive, Mr Nigel Jones joins Sovereign board as Non-Executive Director and Chairman of the ESG Committee.

·        Institutional Placement for A$15m at an issue price of A$0.67 from UK, European and North American institutional investors with the Placement corner-stoned by Thematica Future Mobility UCITS Fund, a European green energy fund which offers exposure to companies to benefit from the transition to clean and sustainable energy solutions.

Natural Rutile Market

·        Demand for high-grade titanium dioxide feedstocks continued to remain strong, and along with supply shortages leading to continued rutile price appreciation, with realised prices of +US$1,500/t recorded in the June 2022 quarter and spot price currently +US$2,200/t.

·        Natural rutile market is in structural deficit with current global supply estimated to decline 45% in the next three years with graphite demand set to soar as electric vehicle production is forecast to increase 12-fold by 2040.

Expanded Scoping Study

In June 2022, the Company announced the Expanded Scoping Study that confirmed Kasiya will 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.

Highlights of the ESS

·           Significant increase in NPV and EBITDA from the 2021 Initial Scoping Study with lower operating costs for a relatively small increase in Capex to first production

·           Potential to become a major producer in both the natural rutile and graphite markets with steady state production of 265,000 tonnes of rutile and 170,000 tonnes of graphite over a 25-year mine life

·           Low capital costs to first production due to exceptional existing infrastructure offering significant cost reductions and providing optionality and scalability

·           Low operating cost and high margins due to deposit size, zero strip ratio with soft, friable high-grade mineralisation from surface, amenability to hydro-mining, conventional processing, enviable deposit location and low transport costs

·           Extremely favourable market fundamentals as rutile (titanium) and natural graphite deemed critical raw materials for the US and EU based on economic importance and supply risk

·           Natural rutile market in structural deficit with current global supply estimated to decline 45% in the next three years with graphite demand set to soar as electric vehicle production is forecast to increase 12-fold by 2040

·           Natural ESG benefits for Kasiya:

-    Substantially reduced CO₂ emissions for both rutile and graphite compared to current alternatives, including substantial Scope 3 emissions reductions for pigment production from rutile compared to alternative feedstocks

-    Significant social and economic benefits for Malawi including job creation, fiscal returns, training and continued community social initiatives

·           Study based on conservative commodity price estimates. Long-term rutile price (real) of US$1,254/t versus current spot price of +US$2,200/t¹ and long-term natural graphite basket price (real) of US$1,085/t versus current equivalent spot price of US$1,223/t²

Sources:

1. Ruidow 

2. RefWin & Asian Metals: Basket: +3295 (5.4%) US$1,950, +595 (25.1%) US$1,490, +895 (30.9%) US$1,250, +195 (10.9%) US$1,000 & -195 (27.7%) US$900

The Study envisages a 25-year mine life during which time both rutile and graphite are produced during two stages:

Stage 1           Years 0-5: 12Mt of ore processed per annum to produce approximately 145,000 tonne of natural rutile and 85,000 tonnes of flake graphite per annum.

Stage 2       Years 6-25: Additional 12Mt capacity for total 24Mt of ore processed per annum to produce approximately 265,000 tonnes of natural rutile and 170,000 tonnes of flake graphite per annum. Stage 2 will be funded from cashflows from Stage 1.

Overview of the ESS

Sovereign is aiming to develop an environmentally and socially sustainable operation to be the largest supplier of highly sought-after natural rutile to global markets and an important low-cost natural graphite supplier.

The proposed large-scale operation will process soft, friable mineralisation from surface. The operation will primarily employ conventional hydro-mining to produce a slurry that is pumped to a Wet Concentration Plant (WCP) where the material is sized. A Heavy Mineral Concentrate (HMC) is produced via processing the sand fraction through a series of gravity spirals. The HMC is transferred to the dry Mineral Separation Plant (MSP) where premium quality rutile is produced via electrostatic and magnetic separation.

Graphite rich concentrate is collected from the gravity spirals and processed in a separate graphite flotation plant, producing a high purity and high value coarse-flake graphite product.

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. At full production, rutile and graphite products will be railed directly from a purpose-built rail dry port at the mine site eastward via the Nacala Logistics Corridor (NLC) to the deep-water port of Nacala or southward via the Sena Rail Line to the deep-water port of Beira.

Low Carbon Advantage for Two Critical Raw Materials

Natural Rutile - critical to lowering the Titanium industry's carbon footprint

Like many other industries globally, the titanium dioxide pigment industry is targeting reduced carbon emissions, reduced energy consumption and a move toward renewable energy and waste minimisation. A shift towards a greater percentage of natural rutile feedstock offers the titanium pigment industry a simple and short lead-time opportunity to significantly lower its carbon intensity and total environmental impact.

Sovereign's natural rutile product is expected to have substantially lower Global Warming Potential (GWP) (Scope 1, 2 and 3 scope emissions) when compared to other titanium feedstock alternatives produced by upgrading ilmenite (i.e., synthetic rutile and titania slag). Using natural rutile from Kasiya as titanium feedstock for the chloride pigment process would significantly reduce Scope 1, 2 and 3 greenhouse gas emissions.

Titanium feedstock is a key component of various industrial and consumer products. Therefore, utilising natural rutile such as from Kasiya as direct use titanium feedstock could hold the solution to developing low-carbon footprint products including low carbon paints.

Natural Graphite - a significant component in lithium-ion batteries for electric vehicles

The lithium-ion battery sector is the main emerging market for flake graphite. Greater capacity batteries, such as those required for electric vehicles, are expected to drive significant demand for graphite over the coming years. It is forecast the battery sector will drive the largest demand for graphite by 2028, with graphite making up to 50% of the composition of a lithium-ion battery.

Currently, China is the world's largest supplier of natural flake graphite. In 2020, leading data provider and market intelligence publisher Benchmark Mineral Intelligence reported that China produced 86% of all lithium-ion battery anodes from natural and synthetic graphite and 100% of all the world's natural graphite anodes.

Sovereign's natural flake graphite concentrate has significantly lower greenhouse gas emissions than the Chinese produced natural flake graphite concentrate from the Heilongjiang Province. Each tonne of Sovereign's natural graphite is estimated to have a GWP of 0.2 tonnes CO2e - 5x lower than producing natural flake graphite concentrate in the Heilongjiang Province, China and 103x lower than production of synthetic graphite.

The significantly lower GWP for Kasiya graphite is due to the fact that it is hosted in soft, friable saprolite material which will be mined via hydro methods (high pressure water monitors) powered by renewable energy sources - hydro power from the Malawi grid and on-site solar power. This is opposed to the production in Heilongjiang Province, China where hard-rock ore requires drilling, blasting, excavation, trucking, crushing, and grinding - overall high CO2e activities.

Low-Cost Operation

Kasiya's low operating costs are achieved through deposit size and grade, zero strip ratio, location and excellent existing operational infrastructure. Central Malawi boasts hydropower and an extensive sealed road network. The Kasiya Rutile Project is strategically located in close proximity to the capital city of Lilongwe, providing access to a skilled workforce and industrial services.

The existing quality logistics routes to the Indian Ocean deep-water ports of Nacala and Beira for the export of products to global markets provides significant capital cost savings for Kasiya compared to many other undeveloped minerals projects.

The soft, friable and high-grade mineralisation occurring from surface results in no waste stripping requirement and the amenability to hydro-mining means the mining cost component is kept relatively low.

One of the highest Revenue : Cost of Sales Ratios in the Mineral Sands Industry

The revenue-to-cash cost ratio of 3.0x positions Kasiya in the first quartile compared to other undeveloped mineral sands operations. The production of high value natural rutile and graphite provides strong margins with a cash margin of over 67% for the life of the operation.

The Study has applied conservative pricing assumptions for both products which still results in a strong position on the revenue to cost ratio. This supports the robustness of the Kasiya operation and its strong profitability during different pricing environments and the revenue stability of two different products with different demand drivers.

Lowest Cost Flake Graphite Project in the World

Benchmarking the co-product production cost of graphite from Kasiya based on the Study results against peer flake graphite projects positions Kasiya as the lowest operating cost graphite project in the world. Kasiya has an average life-of-mine FOB (Nacala) operating cost of US$320 per tonne of product (rutile plus graphite). On an incremental cost basis reflecting graphite production as a co-product to primary rutile production, the operating cost is US$140 per tonne of graphite produced (FOB Nacala).

Kasiya - The Largest Rutile Deposit in the World

In April 2022, the Company announced its updated MRE for Kasiya which confirmed it as a Tier 1 natural rutile deposit and a potential major source of low CO₂ footprint critical minerals natural rutile and graphite.

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. Additionally, the graphite by-product MRE at Kasiya places it as one of the largest flake graphite deposits in the world.

* RutEq. Formula: Rutile Grade x Recovery (98%) x Rutile Price (US$1,308/t) + Graphite Grade x Recovery (62%) x Graphite Price (US$1,085/t) / Rutile Price (US$1,308/t). All assumptions are taken from this Study ** Any minor summation inconsistencies are due to rounding

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 1.76% 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.

Graphite is generally depleted near surface in the top 3-5m with grades commonly in the 0.1% to 0.5% total graphitic carbon (TGC) range. Graphite grades generally increase with depth to about 8m, then remain constant ranging from 1% to 8% TGC. A number of higher-grade graphite zones at depth have been identified which are generally associated with higher grade rutile at surface. Some of these zones have graphite grades at depth >8m in the 4% to 8% TGC range and represent very significant coarse flake graphite tonnages.

The highlighted cut-off of 0.70% presents 1.8 billion tonnes at a rutile grade of 1.01% with high-grade components providing over 352 Mt at a rutile grade of 1.44% at a 1.20% cut-off (Table 3). The overall recovered rutile equivalent grade for the MRE at the global 0.7% cut-off is 1.67% RutEq. (Table 2).

Corporate

Board Appointment

In February 2022, the Company appointed leading international mining executive, Mr Nigel Jones, as Non-Executive Director of Sovereign Metals and Chairman of the ESG Committee. Mr Jones has over 30 years of mining industry experience with 22 years in a number of senior roles at Rio Tinto Group, where most recently, Mr Jones was Managing Director of Rio Tinto's Simandou iron ore project, one of the world's largest proposed mining developments.

In this role, he was accountable for all aspects of the project's development, including its complex environmental, social and governance (ESG) strategy. Such aspects included impacts on natural ecosystems, biodiversity, and community and government relations.

Mr Jones was also a member of the senior leadership team of the Energy and Minerals product group, which incorporated Rio Tinto's titanium dioxide feedstock businesses in Canada and southern Africa. Prior roles in Rio Tinto included Head of Business Development, Head of Business Evaluation and Managing Director of the group's Marine operations.

Dual-Listing and Placements

Sovereign completed a placement for A$15 million (gross proceeds) from UK, European and North American institutional investors to subscribe for 22,210,268 new ordinary shares of the Company at an issue price of A$0.67 plus a one-for-two unlisted option with an exercise price of A$0.80 and 12 month expiry.

Thematica Future Mobility UCITS Fund, a Luxembourg-based green energy fund with a strong emphasis on Critical Raw Materials and ESG, was the cornerstone participant in the well-supported Placement which will fund exploration and development activities at Kasiya.

Sprott Capital Partners LP acted as exclusive financial advisor with affiliates of the Sprott Group (Sprott) participating in the Placement. Sprott is a leading North American-based asset management firm with an enviable track record of identifying and funding successful early stage resource projects.

In December 2021, the Company's securities commenced trading on the AIM Market of the London Stock Exchange. The completion of the dual listing aims to raise the Company's profile in the northern hemisphere and facilitate the participation of UK and other European investors in Sovereign's growth. Sovereign successfully secured £1 million gross proceeds (~A$1.9 million) from UK investors following its listing on the AIM market of the London Stock Exchange.

During and since the end of the financial year, the Company raised a further $5.2 million through the exercise of 19,311,500 options.

Results of Operations

The net loss of the Group for the year ended 30 June 2022 was $13,719,731 (2021: $5,067,300). Significant items contributing to the year end loss include the following:

·      Exploration and evaluation expenses of $8,072,133 (2021: $2,884,311) in relation to the Group's projects in Malawi. This is attributable to the Group's accounting policy of expensing exploration and evaluation expenditure incurred by the Group subsequent to acquisition of the rights to explore and up to the completion of feasibility studies;

·      Share-based payments expenses totalling $2,941,985 (2021: $1,263,007) relating to performance rights and incentive options. The fair value of performance rights and incentive options are recognised over the vesting period of the incentive security; and

·      Business development expenses of $1,964,460 (2021: $873,751) which includes the Group's investor relations activities including but not limited to public relations costs, marketing and digital marketing, broker fees, travel costs, conference fees, business development consultant fees and costs of the Group's AIM listing.

Financial Position

As at 30 June 2022, the Group had a net current asset surplus of $17,453,618 (2021: $7,440,390). The Group had cash and cash equivalents of $18,892,741 as at 30 June 2022 (2021: $7,957,660) and borrowings of nil (2021: $nil). The Group had net assets of $25,161,138 at 30 June 2022 (2021: $15,076,255), an increase of $10,084,883 or approximately 67% compared with the previous year. The increase is largely driven by the loss incurred for the financial year offset by the amounts raised through the placements and exercise of options.

Business Strategies and Prospects for Future Financial Years

The objective of the Group is to create long-term shareholder value through the discovery, development and acquisition of technically and economically viable mineral deposits.

To date, the Group has not commenced production of any minerals. To achieve its objective, the Group currently has the following business strategies and prospects over the medium to long term:

·           Complete a Pre-Feasibility Study to establish a cost profile and determine the potential economics of the Kasiya rutile project;

·           Conduct further exploration programs across rutile targets identified on the Group's tenements; and

·           Continue to examine other new business development opportunities in the resources sector, both locally and overseas.

All of these activities are inherently risky and the Board is unable to provide certainty that any or all of these developments will be able to be achieved.  The material business risks faced by the Group that are likely to have an effect on the Group's future prospects, and how the Group manages these risks, include:

·           The Group's exploration properties may never be brought into production - The exploration for, and development of, mineral deposits involves a high degree of risk. Few properties which are explored are ultimately developed into producing mines. To mitigate this risk, the Company will undertake systematic and staged exploration and testing programs on its mineral properties and, subject to the results of these exploration programs, the Company will then progressively undertake a number of technical and economic studies with respect to its projects prior to making a decision to mine. However there can be no guarantee that the studies will confirm the technical and economic viability of the Company's mineral properties or that the properties will be successfully brought into production;

·           The Group's activities will require further capital - The exploration and any development of the Group's exploration properties will require substantial additional financing.  Failure to obtain sufficient financing may result in delaying or indefinite postponement of exploration and any development of the Group's properties or even a loss of property interest. There can be no assurance that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favourable to the Group;

·           The Group is subject to sovereign risk of the Republic of Malawi - The Group's operations in the Republic of Malawi are exposed to various levels of political, economic and other risks and uncertainties.  The Republic of Malawi is a developing country and there can be no assurances that the risks of operating in the Republic of Malawi will not directly impact the Group's operations;

·           The Group may be adversely affected by fluctuations in commodity prices and/or foreign exchange - The price of rutile, graphite and other commodities fluctuates widely and is affected by numerous factors beyond the control of the Group. Future production, if any, from the Group's mineral properties will be dependent upon the price of graphite and other commodities being adequate to make these properties economic. Current and planned development activities are predominantly denominated in US dollars and the Group's ability to fund these activities may be adversely affected if the Australian dollar continues to fall against the US Dollar. The Group currently does not engage in any hedging or derivative transactions to manage commodity price or foreign exchange risk.  As the Group's operations change, this policy will be reviewed periodically going forward; and

·           Global financial conditions may adversely affect the Group's growth and profitability - Many industries, including the mineral resource industry, are impacted by these market conditions.  Some of the key impacts include contraction in credit markets resulting in a widening of credit risk, devaluations and high volatility in global equity, commodity, foreign exchange and precious metal markets, and a lack of market liquidity. Due to the current nature of the Group's activities, a slowdown in the financial markets or other economic conditions may adversely affect the Group's growth and ability to finance its activities.

DIRECTORS

The names of Directors in office at any time during or since the end of the financial year are:

Current Directors

Mr Benjamin Stoikovich              Chairman

Dr Julian Stephens                      Managing Director

Mr Ian Middlemas                        Non-Executive Director

Mr Mark Pearce                            Non-Executive Director

Mr Nigel Jones                             Non-Executive Director (appointed 10 February 2022)

Unless otherwise disclosed, Directors held their office from 1 July 2021 until the date of this report.

CURRENT DIRECTORS AND OFFICERS

Benjamin Stoikovich

Chairman

Qualifications - B.Eng, M.Eng, M.Sc, CEng, CEnv

Mr Stoikovich is an experienced mining executive and corporate finance professional residing in London. Mr Stoikovich is currently the Chief Executive Officer (CEO) of GreenX Metals Limited (ASX: GRX) and was formerly a Director of the Mining and Metals Corporate Finance Division of Standard Chartered Bank in London, with extensive experience in financing the development of African mining projects and exposure to the mineral sands sector.

Mr Stoikovich started his career as a mining engineer with BHP Billiton in Australia, gaining broad experience across mine operations management and qualifying as a mine manager. He holds a post graduate degree in Environmental Engineering and UK professional designation as a Chartered Environmentalist (CEnv) with wide ranging experience of managing the environmental, social and sustainability aspects of mining projects across the life-cycle and the Environmental, Social and Governance (ESG) requirements of the investment community. Mr Stoikovich was appointed a Director of the Company on 13 October 2020. During the three year period to the end of the financial year, Mr Stoikovich held directorships in GreenX Metals Limited (June 2013 - present). 

Julian Stephens

Managing Director

Qualifications - B.Sc (Hons), PhD, MAIG

Dr Stephens originally identified and secured the Malawi properties acquired by Sovereign in 2012. He has since been closely involved with the subsequent exploration and development of these projects, including the discovery of the Kasiya rutile deposit.

Dr Stephens has extensive experience in the resources sector having spent in excess of 25 years in board, executive management, senior operational and economic geology research roles for a number of companies. He has spent over a decade working on African projects, particularly projects in Malawi. Dr Stephens holds a PhD from James Cook University, Queensland and is a member of the Australian Institute of Geoscientists.
Dr Stephens was appointed a Director of Sovereign Metals Limited on 22 January 2016 and subsequently appointed Managing Director on 27 June 2016. During the three year period to the end of the financial year, Dr Stephens did not hold any other directorships in publicly listed companies.

Ian Middlemas 

Non-Executive Director

Qualifications - B.Com, CA

Mr Middlemas is a Chartered Accountant and holds a Bachelor of Commerce degree.  He worked for a large international Chartered Accounting firm before joining the Normandy Mining Group where he was a senior group executive for approximately 10 years. He has had extensive corporate and management experience, and is currently a director of a number of publicly listed companies in the resources sector. 

Mr Middlemas was appointed a Director of Sovereign Metals Limited on 20 July 2006.  During the three year period to the end of the financial year, Mr Middlemas has held directorships in Constellation Resources Limited (November 2017 - present), Apollo Minerals Limited (July 2016 - present), GCX Metals Limited (October 2013 - present), Berkeley Energia Limited (April 2012 - present), GreenX Metals Limited (August 2011 - present), Salt Lake Potash Limited (Administrators Appointed) (Receivers and Managers Appointed) (January 2010 - present), Equatorial Resources Limited (November 2009 - present), Odyssey Gold Limited (September 2005 - present), Piedmont Lithium Limited (September 2009 - December 2020), Peregrine Gold Limited (September 2020 - February 2022) and Cradle Resources Limited (May 2016 - July 2019).

Mark Pearce 

Non-Executive Director

Qualifications - B.Bus, CA, FCIS, FFin

Mr Pearce is a Chartered Accountant and is currently a director of several listed companies that operate in the resources sector.  He has had considerable experience in the formation and development of listed resource companies. Mr Pearce is also a Fellow of the Institute of Chartered Secretaries and a member of the Financial Services Institute of Australasia.

Mr Pearce was appointed a Director of Sovereign Metals Limited on 20 July 2006.  During the three year period to the end of the financial year, Mr Pearce has held directorships in Constellation Resources Limited (July 2016 - present), GreenX Metals Limited (August 2011 - present), Equatorial Resources Limited (November 2009 - present), GCX Metals Limited (June 2022 - present), Peregrine Gold Limited (September 2020 - February 2022), Odyssey Gold Limited (September 2005 - August 2020), Apollo Minerals Limited (July 2016 - February 2021) and Salt Lake Potash Limited (August 2014 - October 2020).

Nigel Jones

Non-Executive Director

Qualifications - MA

Mr Jones has over 30 years of mining industry experience with 22 years in a number of senior roles at Rio Tinto Group, where most recently, Mr Jones was Managing Director of Rio Tinto's Simandou iron ore project, one of the world's largest proposed mining developments.

In this role, he was accountable for all aspects of the project's development, including its complex environmental, social and governance (ESG) strategy. Such aspects included impacts on natural ecosystems, biodiversity, and community and government relations.

Mr Jones was also a member of the senior leadership team of the Energy and Minerals product group, which incorporated Rio Tinto's titanium dioxide feedstock businesses in Canada and southern Africa. Prior roles in Rio Tinto included Head of Business Development, Head of Business Evaluation and Managing Director of the group's Marine operations.

Mr Jones was appointed a Director of Sovereign Metals Limited on 10 February 2022. During the three year period to the end of the financial year, Mr Jones held directorships in Berkeley Energia Limited (June 2017 - November 2020). 

Mr Dylan Browne

Company Secretary

Qualifications - B.Com, CA, AGIA ACG

Mr Browne is a Chartered Accountant and Associate Member of the Governance Institute of Australia (Chartered Secretary) who is currently Company Secretary for a number of ASX and European listed companies that operate in the resources sector. He commenced his career at a large international accounting firm and has since been involved with a number of exploration and development companies operating in the resources sector, based in London and Perth, including Berkeley Energia Limited, Apollo Minerals Limited, Prairie Mining Limited and Papillon Resources Limited. Mr Browne successfully listed Prairie on the Main Board of the London Stock Exchange and the Warsaw Stock Exchange in 2015 and oversaw Berkeley's listings on the Main Board LSE and the Madrid, Barcelona, Bilboa and Valencia Stock Exchanges. Mr Browne was appointed Company Secretary of the Company on 29 April 2021. 

PRINCIPAL ACTIVITIES

The principal activities of the Group during the year consisted of mineral exploration, identification and appraisal of resource projects.  No significant change in the nature of these activities occurred during the year.

DIVIDENDS

No dividends have been declared, provided for or paid in respect of the financial year ended 30 June 2022 (30 June 2021: nil).

LOSS PER SHARE

CORPORATE STRUCTURE

Sovereign Metals Limited is a company limited by shares that is incorporated and domiciled in Australia. The Company has prepared a consolidated financial report including the entities it incorporated and controlled during the financial year.

CONSOLIDATED RESULTS

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no significant changes in the state of affairs of the Group during the year not otherwise disclosed in this report.

SIGNIFICANT POST BALANCE DATE EVENTS

There are no other matters or circumstances which have arisen since 30 June 2022 that have significantly affected or may significantly affect:

·      the operations, in financial years subsequent to 30 June 2022 of the Group;

·      the results of those operations, in financial years subsequent to 30 June 2022 of the Group; or

·      the state of affairs, in financial years subsequent to 30 June 2022 of the Group.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group's operations are subject to various environmental laws and regulations under the relevant government's legislation. Full compliance with these laws and regulations is regarded as a minimum standard for all operations to achieve.

Instances of environmental non-compliance by an operation are identified either by external compliance audits or inspections by relevant government authorities.

There have been no significant known breaches by the Group during the financial year.

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS

The Company has entered into Deeds of Indemnity with the Directors indemnifying them against certain liabilities and costs to the extent permitted by law.

The Group has paid, or agreed to pay, a premium in respect of Directors' and Officers' Liability Insurance and Company Reimbursement policies for the 12 months ended 30 June 2022 and 2021, which cover all Directors and officers of the Group against liabilities to the extent permitted by the Corporations Act 2001. The policy conditions preclude the Group from any detailed disclosures including the premium amount paid.

To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young, as part of the terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst & Young during or since the financial year.

INFORMATION ON DIRECTORS' INTERESTS IN SECURITIES OF SOVEREIGN

As at the date of this report, the Directors' interests in the securities of the Company are as follows:

Notes:

(i)         "Ordinary Shares" means fully paid ordinary shares in the capital of the Company;

(ii)        "Performance Rights - Feasibility Study Milestone" means an unlisted performance right that converts to one Share in the capital of the Company upon satisfaction of the relevant milestone; and

(iii)       "Performance Rights - Decision to Mine Milestone" means an unlisted performance right that converts to one Share in the capital of the Company upon satisfaction of the relevant milestone.

SHARE OPTIONS AND PERFORMANCE RIGHTS

At the date of this report the following options and rights have been issued by the Company over unissued capital:

·      11,105,125 $0.80 unlisted Options that expire on 13 May 2023;

·      5,070,000 Performance Rights subject to the Feasibility Study Milestone that expire on 31 December 2023; and

·      7,370,000 Performance Rights subject to the Decision to Mine Milestone that expire on 31 October 2025.

During the year ended 30 June 2022 and up to the date of this report, 23,896,500 ordinary shares have been issued as a result of the exercise of options and conversion of performance rights.

MEETINGS OF DIRECTORS

The following table sets out the number of meetings of the Company's Directors held during the year ended 30 June 2022, and the number of meetings attended by each Director.

The Board as a whole currently performs the functions of an Audit Committee, Risk Committee, Nomination Committee and Remuneration Committee. However this will be reviewed should the size and nature of the Company's activities change.

The ESG Committee was established to support the Company's ongoing commitment to environmental, health and safety, corporate social responsibility, corporate governance, sustainability and other public policy matters relevant to the Company.  

REMUNERATION REPORT (AUDITED)

This Remuneration Report, which forms part of the Directors' Report, sets out information about the remuneration of Key Management Personnel ("KMP") of the Group.

Details of KMP

The KMP of the Group during or since the end of the financial year is as follows:

Directors

Mr Benjamin Stoikovich              Chairman

Dr Julian Stephens                      Managing Director

Mr Ian Middlemas                        Non-Executive Director

Mr Mark Pearce                            Non-Executive Director

Mr Nigel Jones                             Non-Executive Director (appointed 10 February 2022)

Other KMP

Mr Paul Marcos                            Head of Project Development (KMP effective 1 July 2021)

Mr Sam Cordin                             Business Development Manager

Unless otherwise disclosed, the KMP held their position from 1 July 2021 until the date of this report.

Remuneration Policy

The Group's remuneration policy for its KMP has been developed by the Board taking into account the size of the Group, the size of the management team for the Group, the nature and stage of development of the Group's current operations, and market conditions and comparable salary levels for companies of a similar size and operating in similar sectors.

In addition to considering the above general factors, the Board has also placed emphasis on the following specific issues in determining the remuneration policy for KMP:

·           the Group is currently focused on undertaking exploration, appraisal and development activities;

·           risks associated with small cap resource companies whilst exploring and developing projects; and

·           other than profit which may be generated from asset sales, the Company does not expect to be undertaking profitable operations until sometime after the commencement of commercial production on any of its projects.

Executive Remuneration

The Group's remuneration policy is to provide a fixed remuneration component and a performance based component (options, performance rights and a cash bonus, see below).  The Board believes that this remuneration policy is appropriate given the considerations discussed in the section above and is appropriate in aligning executives' objectives with shareholder and business objectives.

Fixed Remuneration

Fixed remuneration consists of base salaries, as well as employer contributions to superannuation funds and other non-cash benefits. Fixed remuneration is reviewed annually by the Board.  The process consists of a review of company and individual performance, relevant comparative remuneration externally and internally and, where appropriate, external advice on policies and practices.

Performance Based Remuneration - Short Term Incentive

Some executives are entitled to an annual cash bonus upon achieving various key performance indicators ("KPI's"), as set by the Board.  Having regard to the current size, nature and opportunities of the Company, the Board has determined that these KPI's will include measures such as the successful completion of business development activities (e.g. project acquisition and capital raisings) and exploration activities (e.g. completion of exploration programs within budgeted timeframes and costs).  The Board assesses performance against these criteria annually.

During the 2022 financial year, a total bonus sum of $230,000 (2021: $65,000), representing 100% of KMP entitlement,  was paid to executives after achievement of KPIs set by the Board. For the 2022 year, the KPI areas of focus included: (a) completion of successful drilling programs at the Kasiya Rutile Project ("Kasiya"); (b) successfully admitting the Company's shares to the AIM market of the London Stock Exchange; (c) announcement of upgraded resources at Kasiya in December 2021 and April 2022; (d) announcement of a positive scoping study at Kasiya; (e) announcement of initial offtake MoU for Kasiya; (f) announcement of a positive expanded scoping study at Kasiya in June 2022; and (g) completion of successful capital raisings in January and April 2022. Specific KPIs are set and weighted individually for each KMP and are designed to drive successful business outcomes. No cash bonuses were forfeited during the financial year.

Performance Based Remuneration - Long Term Incentive

The Group has a long-term equity incentive plan ("Incentive Plan") comprising the grant of Performance Rights and/or Incentive Options to reward KMP and key employees and contractors for long-term performance. To achieve its corporate objectives, the Group needs to attract, incentivise, and retain its key employees and contractors. The Board believes that grants of Performance Rights and/or Incentive Options to KMP will provide a useful tool to underpin the Group's employment and engagement strategy.

(i)         Performance Rights

The Group has an Incentive Plan that provides for the issuance of unlisted performance share rights ("Performance Rights") which, upon satisfaction of the relevant performance conditions attached to the Performance Rights, will result in the issue of an Ordinary Share for each Performance Right. Performance Rights are issued for no consideration and no amount is payable upon conversion thereof. The Incentive Plan enables the Group to: (a) recruit, incentivise and retain KMP and other key employees and contractors needed to achieve the Group's business objectives; (b) link the reward of key staff with the achievement of strategic goals and the long-term performance of the Group; (c) align the financial interest of participants of the Plan with those of Shareholders; and (d) provide incentives to participants of the Incentive Plan to focus on superior performance that creates Shareholder value.

Performance Rights granted under the Incentive Plan to eligible participants will be linked to the achievement by the Group of certain performance conditions as determined by the Board from time to time. These performance conditions must be satisfied in order for the Performance Rights to vest. Upon Performance Rights vesting, Ordinary Shares are automatically issued for no consideration. If a performance condition of a Performance Right is not achieved by the expiry date then the Performance Right will lapse.

During the financial year, 3,975,000 Performance Rights were granted under the Plan of which 2,775,000 were to KMP. No Performance Rights held by KMP lapsed during the financial year. 2,145,000 Performance Rights (representing 100% of the Performance Rights in this class) held by KMP relating to the Scoping Study Milestone converted to 2,145,000 ordinary shares during the financial year as the Group announced the results of its positive Scoping Study for the Kasiya Project. Since the Plan's inception, 18,075,000 Performance Rights have been issued under the Plan in total.

The vesting conditions of the Performance Rights are performance conditions as follows:

a.   Scoping Study Milestone means announcement of a positive Scoping Study for the Malawi Rutile Project in accordance with the provisions of the JORC Code, all of which converted during the financial year;

b.   Feasibility Study Milestone means announcement of a positive Feasibility Study for the Malawi Rutile Project in accordance with the provisions of the JORC Code; and

c.   Decision to Mine Milestone means announcement of a Decision to Mine for the Malawi Rutile Project.

(ii)        Incentive Options

The Group has an Incentive Plan that provides for the issuance of unlisted incentive options ("Incentive Options") as part of remuneration and incentive arrangements in order to attract and retain services and to provide an incentive linked to the performance of the Group. The Board's policy is to grant Incentive Options to KMP with exercise prices at or above market share price (at the time of agreement). As such, the Incentive Options granted to KMP are generally only of benefit if the KMP performs to the level whereby the value of the Group increases sufficiently to warrant exercising the Incentive Options granted. Other than service-based vesting conditions (if any) and the exercise price required to exercise the Incentive Options, there are no additional performance criteria on the Incentive Options granted to KMP, as given the speculative nature of the Group's activities and the small management team responsible for its running, it is considered that the performance of the KMP and the performance and value of the Group are closely related. The Group prohibits executives from entering into arrangements to limit their exposure to Incentive Options granted as part of their remuneration package.

During the financial year, no Incentive Options were granted to KMP. 6,375,000 Incentive Options were exercised by KMP during the financial year utilising the cashless exercise facility. No Incentive Options held by KMP lapsed during the financial year.

Remuneration Policy for Non-Executive Directors

The Board policy is to remunerate Non-Executive Directors at market rates for comparable companies for time, commitment and responsibilities. Given the current size, nature and risks of the Company, incentive options and performance rights have been used to attract and retain Non-Executive Directors.  The Board determines payments to the Non-Executive Directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required.

The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by shareholders at a General Meeting.  Director's fees paid to Non-Executive Directors accrue on a daily basis. Fees for Non-Executive Directors are not linked to the performance of the economic entity.  However, to align Directors' interests with shareholder interests, the Directors are encouraged to hold shares in the Company and Non-Executive Directors have received incentive options and performance rights in order to secure their services and as a key component of their remuneration.

Fees for the Chairman are $36,000 per annum (2021: $36,000) and fees for Non-Executive Directors' are $73,000 (£40,000) to $20,000 per annum (2021: $20,000). Effective 1 July 2022, fees for the Chairman have been increased to £50,000 per annum. These fees cover main board activities only. Non-Executive Directors may receive additional remuneration for other services provided to the Company, including but not limited to, membership of committees including the ESG Committee. The Chair of the ESG Committee currently receives £10,000 (2021: Nil) for chairing the ESG Committee.

Relationship between Remuneration of KMP and Shareholder Wealth

During the Company's exploration and development phases of its business, the Board anticipates that the Company will retain earnings (if any) and other cash resources for the exploration and development of its resource projects.  Accordingly the Company does not currently have a policy with respect to the payment of dividends and returns of capital. Therefore there was no relationship between the Board's policy for determining, or in relation to, the nature and amount of remuneration of KMP and dividends paid and returns of capital by the Company during the current and previous four financial years.

The Board did not determine, and in relation to, the nature and amount of remuneration of the KMP by reference to changes in the price at which shares in the Company traded between the beginning and end of the current and the previous four financial years. However, as noted above, a number of KMP have received incentive options which generally will only be of value should the value of the Company's shares increase sufficiently to warrant exercising the incentive options, and performance rights which are linked to the achievement of certain performance conditions.

Relationship between Remuneration of KMP and Earnings

As discussed above, the Company is currently undertaking exploration and development activities, and does not expect to be undertaking profitable operations (other than by way of material asset sales, none of which is currently planned) until sometime after the successful commercialisation, production and sales of commodities from one or more of its projects. Accordingly the Board does not consider earnings during the current and previous four financial years when determining, and in relation to, the nature and amount of remuneration of KMP.

General

In addition to a focus on operating activities, the Board is also focused on finding and completing new business and other corporate opportunities. The Board considers that the prospects of the Company and resulting impact on shareholder wealth will be enhanced by this approach. Accordingly, the Board may pay a bonus or issue securities to KMP (executive or non-executive) based on their success in generating suitable new business or other corporate opportunities. A bonus may be paid or an issue of securities may also be made upon the successful completion of a new business or corporate transaction.

Where required, KMP receive superannuation contributions, equal to 10% of their salary, and do not receive any other retirement benefit. From time to time, some individuals have chosen to sacrifice part of their salary to increase payments towards superannuation. Effective 1 July 2022, the superannuation contribution rate is 10.5%.

All remuneration paid to KMP is valued at cost to the Company and expensed. Incentive options are valued using the Black Scholes option valuation methodology. The value of these incentive options is expensed over the vesting period. The fair value of performance rights granted is estimated as at the date of grant using the share price at the grant date. The value of the performance right is expensed over the vesting period.

Remuneration of KMP

Details of the nature and amount of each element of the remuneration of each KMP of the Company for the year ended 30 June 2022 and 30 June 2021 are as follows:

Notes:

(i)          In addition to Non-Executive Directors fees, Selwyn Capital Limited, an entity associated with Mr Stoikovich, was paid, or is payable, A$124,703 (2021: $59,437) for additional services provided in respect of corporate and business development activities which is included in Mr Stoikovich's salary and fee amount.

(ii)         Appointed as a Director on 10 February 2022. Mr Jones currently receives director fees of £40,000 per annum and and an additional fee of £10,000 per annum to chair the ESG Committee.

(iii)         Mr Cordin's role was reduced to 60% during the period 1 October 2020 to 30 June 2021.

Incentive Option and Peformance Right Holdings of KMP

Notes:

(i)       As at date of appointment.

Incentive Securities Granted to KMP

Details of unlisted incentive securities granted by the Company to KMP of the Group during the past two financial years are as follows:

Notes:

(i)      The fair value of the unlisted performance rights as at grant date is consistent with the closing share price of the Company as at that date.

(ii)     Each unlisted performance right converts into one ordinary share of Sovereign Metals Limited subject to the performance conditions being met; and

(iii)    The vesting conditions are performance conditions as follows:

a.       Scoping Study Milestone means announcement of a positive Scoping Study for the Malawi Rutile Project in accordance with the provisions of the JORC Code.

b.       Feasibility Study Milestone means announcement of a positive Feasibility Study for the Malawi Rutile Project in accordance with the provisions of the JORC Code.

c.       Decision to Mine Milestone means announcement of a Decision to Mine for the Malawi Rutile Project.

The performance rights will also immediately vest if a change of control event or financing event occurs in respect of the shares and/or assets of the Company.

Details of the value of options and rights granted, lapsed or converted for each Key Management Person of the Company or Group during the financial year are as follows:

Notes:

(i)    Determined at the time of exercise or conversion at the intrinsic value.

Loans to/from KMP

No loans were provided to or received from KMP during the year ended 30 June 2022 (2021: Nil). 

Ordinary Shareholdings of KMP

Notes:

(i)    As at date of appointment.

Other Transactions with KMP

Selwyn Capital Limited ("Selwyn"), a company associated with Mr Stoikovich is engaged under an agreement to provide consulting services to the Company, on a rolling 12-month term that either party may terminate with one month written notice. Selwyn receives a daily rate of £800 (increased to £1,000, effective 1 July 2022) under the consulting agreement. These services provided during the financial year amounted to AUD$124,703 (2021: AUD$59,437).

Apollo Group Pty Ltd, a company of which Mr Mark Pearce is a Director and beneficial shareholder, was paid, or is payable, $300,000 (2021: $210,000) for the provision of serviced office facilities, administration services and additional consulting services provided during the year. The amount is based on a monthly retainer due and payable in advance and able to be terminated by either party with one month's notice. Effective 1 July 2022, the monthly fee has been increased to $29,000.

Employment Contracts with KMP

Dr Julian Stephens, Managing Director, has a letter of appointment confirming the terms and conditions of his appointment as Managing Director of the Company dated 27 June 2016. The contract specifies the duties and obligations to be fulfilled by the Managing Director. The contract has a rolling annual term and may be terminated by the Company by giving 3 months' notice. No amount is payable in the event of termination for neglect or incompetence in regards to the performance of duties. As agreed by the Board, Dr Stephens' annual salary was increased to $300,000 plus superannuation with an annual bonus of up to $100,000 payable in two equal instalments upon successful completion of KPIs as determined by the Board. Effective 1 July 2022, Dr Stephens' annual salary has increased to $350,000 plus superannuation with an annual bonus of up to $120,000 payable in two equal instalments upon successful completion of KPIs as determined by the Board.

Mr Paul Marcos, Head of Project Development, has a letter of employment confirming the terms and conditions of his appointment dated 14 May 2021. The contract specifies the duties and obligations to be fulfilled by the Head of Project Development. The letter of employment has no fixed term and can be terminated by either party by giving 3 months' notice. No amount is payable in the event of termination for neglect or incompetence in regards to the performance of duties. Mr Marcos receives a salary of $250,000 plus superannuation with an annual bonus of $50,000 payable upon successful completion of KPIs as determined by the Board. Effective 1 July 2022, as agreed by the Board, Mr Marcos' annual salary has increased to $270,000 plus superannuation.

Mr Sam Cordin, Business Development Manager, has a letter of employment confirming the terms and conditions of his appointment dated 9 August 2018. The contract specifies the duties and obligations to be fulfilled by the Business Development Manager. The letter of employment has no fixed term and can be terminated by either party by giving 3 months' notice. No amount is payable in the event of termination for neglect or incompetence in regards to the performance of duties. As agreed by the Board, Mr Cordin's annual salary was increased to $180,000 plus superannuation with an annual bonus of up to $40,000 payable in two equal instalments upon successful completion of KPIs as determined by the Board. Effective 1 July 2022, Mr Cordin's annual salary has increased to $205,000 plus superannuation with an annual bonus of up to $50,000 payable in two equal instalments upon successful completion of KPIs as determined by the Board.

All Directors have a letter of appointment confirming the terms and conditions of their appointment as a Director.

End of Remuneration Report

PROCEEDINGS ON BEHALF OF COMPANY

No person has applied for leave of court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a part for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. The Company was not a party to any such proceedings during the year.

NON-AUDIT SERVICES

During the financial year, the Company's current auditor, Ernst & Young (or by another person or firm on the auditor's behalf) provided non-audit services relating to income tax preparation and advice, totalling $14,214. The Company's former auditor, Deloitte Touche Tohmatsu provided no non-audit services (2021: nil).

AUDITOR'S INDEPENDENCE DECLARATION

The lead auditor's independence declaration for the year ended 30 June 2022 has been received and can be found on page 27 of the Directors' Report.

This report is made in accordance with a resolution of the Directors made pursuant to section 298(2) of the Corporations Act 2001.

For and on behalf of the Directors

JULIAN STEPHENS

Managing Director

29 September 2022

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2022

The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes in the full version of the Annual Report available at www.sovereignmetals.com.au.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2022

The above Consolidated Statement of Financial Position should be read in conjunction with the
accompanying notes in the full version of the Annual Report available at www.sovereignmetals.com.au.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2022

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes in the full version of the Annual Report available at www.sovereignmetals.com.au.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2022

The above Consolidated Statement of Changes in Equity should be read in conjunction with the
accompanying notes in the full version of the Annual Report available at www.sovereignmetals.com.au.