NEWS RELEASE I 19 FEBRUARY 2025

KASIYA'S GRAPHITE SUITABLE FOR REFRACTORY USE

Sovereign Metals Limited (ASX:SVM; AIM:SVML; OTCQX: SVMLF) (Sovereign or the Company) is pleased to announce that testwork completed on graphite from the Company's Kasiya Rutile-Graphite Project (Kasiya or the Project) has confirmed Kasiya's graphite has the key characteristics required for use in refractory applications. The comprehensive testwork programs were completed by ProGraphite GmbH (ProGraphite) and Dorfner Anzaplan (DA) in Germany and demonstrated that Kasiya graphite concentrate contains very low sulphur levels and the absence of other impurities of concern, providing a competitive advantage over other current and potential sources of graphite supply.

Managing Director and CEO Frank Eagar commented: "The refractories market is the second largest end-user of natural graphite and requires larger, coarser graphite flakes with specific chemical and physical properties. We know that almost 70% of Kasiya's graphite meets the size requirements for refractory applications. Today's results confirm that our graphite product also meets or exceeds the key chemical and physical properties required to sell into the refractory market.

Combining these results with the excellent results for anode materials testing highlights the premium quality of Kasiya graphite concentrate and provides a very strong foundation for sales and marketing discussions."

Kasiya Graphite Testwork Update

Sovereign has now completed testwork programs to confirm the suitability of graphite from Kasiya as a product for the two largest end-use markets for natural flake graphite i.e. refractory applications and anode material for use in lithium-ion batteries. Together, these two sectors account for over three-quarters of global natural graphite demand (see Figure 1).

Graphite products for refractory applications typically require larger flake sizes than the smaller graphite flake products used to produce battery anode materials. Larger flake size graphite products tend to attract significantly higher prices than smaller flake products.

In Q4 2024, Syrah Resources Limited (the world's largest, publicly listed natural graphite producer outside of China) reported a price for smaller flake graphite concentrate to be used for battery anode production of US$564 per tonne (CIF) based on third-party sales. In December 2024, large flake graphite used in the refractory sector achieved prices of up to US$1,193/t (based on data from Benchmark Mineral Intelligence).

The incremental cost of producing a tonne of graphite from Kasiya under Sovereign's recently announced Optimised Prefeasibility Study is US$241/t (see ASX announcement "Kasiya - Optimised PFS Results" dated 22 January 2025).

Figure 1: Uses of Graphite (Source: European Advanced Carbon and Graphite Association)

Refractory Application Testwork Results Summary

Flake graphite concentrate generated from Kasiya samples were tested for traditional, refractory applications at two leading European laboratories ProGraphite and DA, with the following findings:

Customer Engagement and Offtakes

The global refractory market is an estimated €20 Billion worldwide industry and is the largest traditional market for natural flake graphite. Natural flake graphite is added to refractories to improve performance.

Refractories are used to line furnaces and vessels to support high-temperature processing across a wide range of industries, including iron and steel production, non-ferrous metals, cement and lime, glass, and chemicals.

According to the global leader in refractories, RHI Magnesita NV, steel production is the major consumer of refractories, accounting for 60% of global demand. Each tonne of steel requires approximately 10-15kg of refractories.

Other key companies in the refractories market include Vesuvius plc, Krosakai Harima Corporation, Puyang Refractories Group, Chosun Refractories Co, Imerys SA, Shinagwa Refractories, Saint-Gobain, Morgans Advanced Materials and Calderys. 

The successful assessment of Kasiya coarse flake for refractory applications will be used for customer engagement and offtake discussions.

Competent Person Statement

The information in this report that relates to Metallurgical Testwork is based on information compiled by Dr Surinder Ghag, PhD., B. Eng, MBA, M.Sc., who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM). Dr Ghag is engaged as a consultant by Sovereign Metals Limited. Dr Ghag has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which 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'. Dr Ghag 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 report that relates to Exploration Results is based on information compiled by Mr Malcolm Titley, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Titley consults to Sovereign Metals Limited and is a holder of ordinary shares and unlisted performance rights in Sovereign Metals Limited. Mr Titley 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 Titley 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 operating costs is extracted from an announcement dated 22 January 2025, which is available to view at 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 original announcement; b) all material assumptions and technical parameters underpinning the Production Target, and related forecast financial information derived from the Production Target included in the original 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 presentation have not been materially modified from the original announcement.

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.

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this announcement via Regulatory Information Service ('RIS'), this inside information is now considered to be in the public domain.

Appendix 1: Detailed Refractory Application Testwork Results

High purity graphite concentrate with little impurities

Kasiya concentrate was determined to have high purity (98%) with no observable natural mineral impurities observed (see Figure 2). Talc, which is not an impurity of concern for refractory applications, was determined to be the minor impurity on analysis of the ash remaining from combusting the graphite.

Figure 2: Kasiya Flake Graphite SEM highlighting clean flakes

High grade, large flakes within graphite concentrate

Natural flake graphite for refractory applications requires high oxidation resistance. Particle size and grade are the two key determinants of oxidation resistance.

There are three different size fractions applicable to refractory graphite products: +300 microns, +180 microns and +150 microns. All three size fractions for Kasiya graphite concentrate demonstrate very high grade, highlighting coarse Kasiya flakes suitability for refractory applications.

High melting temperature for flake ash residue

Flake ash is the residue from combusting (burning) graphite. A high flake ash melting temperature is required for refractory applications.

Flake ash from coarse Kasiya flake (>180 microns) has a melting temperature of 1,373°C, above that for flake ash of commercial reference material (>1250°C), and hemisphere temperature of 1,393°C and flow temperature of 1,429°C (Figure 3) i.e. flake ash from coarse Kasiya concentrate exceeds the melting characteristics specification.

Figure 3: Flake ash from Kasiya coarse flake melting testing

High oxidation resistance of graphite concentrate

As reported in the Company's ASX Announcement dated 21 November 2024, entitled "Positive Initial Test Results For Use Of Kasiya Graphite In Refractories", and as expected from the high purity of Kasiya coarse fractions (Table 2), Kasiya's coarse flake has excellent resistance to oxidation. ProGraphite had confirmed Kasiya coarse flake exhibits:

No oxidation below 400°C, only a 6.4% mass loss after four hours at 650°C, and a very low oxidation rate of 1.6% per hour at 650°C.

Comparative testing at DA showed that only a coarse commercial reference material (>300 microns) had a greater resistance than Kasiya coarse flake (>180 microns).

Low levels of volatiles in concentrate

DA measured volatiles content at 0.2%, which is comparable or better than commercial reference materials; ProGraphite measured volatile content at 0.19%-0.26% for various size fractions, significantly lower than what is considered "high volatiles content" at ~0.5% or higher.

High volatiles content can damage the refractory, indicating that Kasiya coarse flake meets this specification.

Low levels of problematic mineral impurities

Sulphur content was measured at 0.03% at DA, noting that Kasiya graphite sulphur levels are low compared to commercial reference material from other sources.

Calcium carbonates (calcite, dolomite) act as a flux, lowering the melting point of other minerals and releasing CO₂ when exposed to high temperatures. Consequently, low levels are required in graphite used for refractory applications.  Calcium carbonates were not detected in testing of Kasiya concentrate via a range of methods. Other alkalis (sodium, potassium) which can also be reactive in refractory applications were also at low levels.

Low levels of "springback" from compression

Springback is an assessment of the extent of graphite to increase its volume after compression. A low springback is preferred for shape retention e.g. in producing refractory bricks.

Springback of Kasiya graphite was observed to be low and in line with results from Chinese graphite's, decreasing with particle size (see Table 3).

Conclusion

Testing of the broad range of criteria on the suitability of natural graphite concentrates for refractory applications confirmed that coarse Kasiya concentrate has the characteristics required for refractory applications - it has high purity, high oxidation resistance, high ash melting temperatures, low levels of volatiles, sulphur and calcium carbonates, and low springback.

Appendix 2: JORC CODE, 2012 EDITION - TABLE 1

SECTION 1 - SAMPLING TECHNIQUES AND DATA

SECTION 2 - REPORTING OF EXPLORATION RESULTS