Sovereign Metals Adds US$722M NPV With US$29M Rare Earths Bolt-On at Kasiya

Kasiya adds rare earths to its critical minerals lineup — and the numbers are compelling

Sovereign Metals has completed a scoping study confirming its Kasiya Critical Minerals Project in Malawi can produce a monazite rare earth concentrate (REC) as a by-product of its existing rutile-graphite operation, with near-zero incremental mining cost and a headline pre-tax incremental NPV8 of approximately US$722M from just approximately US$29M of incremental capital to first production. The project has been formally renamed the Kasiya Critical Minerals Project, reflecting its expanded product suite. This is not a new mine — it is a third product stream bolted onto an already DFS-stage development, assessed with input from Rio Tinto.

Key headline metrics from the study:

1. Incremental pre-tax NPV8: approximately US$722M (Base Case); approximately US$883M (Western Supply Case)
2. Incremental IRR: approximately 151% (Base Case)
3. Payback on incremental capital: approximately 1.5 years
4. Incremental capital to first production: approximately US$29M
5. Steady-state annual EBITDA uplift: approximately US$84M
6. Operating margin: approximately 90%
7. Total integrated Kasiya pre-tax NPV: approximately US$2.9Bn

Frank Eagar, Managing Director and CEO

“The Kasiya DFS already defines one of the world’s largest natural rutile and flake graphite developments. This Study shows the same resource can potentially deliver rare earths and deliver them cheaply. For ~US$29 million of initial capital, using infrastructure the DFS has already designed and costed, we can potentially add ~US$722 million of pre-tax value at a ~151% rate of return, with payback in around 18 months.

Mineral-reliant industries in the United States are worth over US$4 trillion a year – more than an eighth of the entire U.S. economy – and rare earths sit at the centre of them. Last year the U.S. doubled its rare earth production to almost 9,000 tonnes – and still imported 67% of what it consumed. For heavy rare earths like dysprosium, terbium and yttrium, the U.S. produces none at commercial scale and remains completely dependent on imports. That is why Washington is putting stockpiles, price floors and offtake vehicles in place.

Kasiya can potentially provide the supply this effort requires: five of the seven rare earths under Chinese export controls, for at least 23 years, from a project already at the definitive feasibility stage. And because rutile and graphite carry the cost base, our rare earths do not need high rare earth prices or floor prices to be viable.

We will now take these results into our discussions with potential partners and progress the integration of rare earths into Kasiya’s definitive development case.”

What Kasiya’s rare earth circuit actually produces — and why it matters

The monazite REC is recovered from the non-conductor tailings stream already generated by the DFS mineral separation plant (MSP). There is no additional mining, no changes to the rutile or graphite flowsheet, and no standalone rare earths project to build. The upstream cost base — free-dig mining, ore transport, scrubber, wet concentration and electrostatic separation — is already attributed to rutile and graphite production under the DFS. The only incremental processing is a spiral gravity separation and flotation circuit treating the non-conductor stream, together with product packaging and storage.

A concentrate built for Western supply chain gaps

At steady state, the project is expected to produce approximately 2,626tpa of monazite REC containing approximately 1,485tpa of total rare earth oxides (TREO) at 56.6% TREO grade. The basket includes rare earths with direct relevance to Western defence, energy and technology supply chains:

• NdPr: 310tpa — primary input to NdFeB permanent magnets used in EVs, wind turbines, industrial robotics and defence systems
• DyTb: 36tpa — heat-resistant magnet additives critical for EVs, robotics and high-temperature defence applications
• Yttrium: 193tpa — military radar, jet-engine thermal-barrier coatings and precision lasers; equivalent to approximately 35% of average annual U.S. consumption, which is 100% import-reliant
• Samarium + Gadolinium: approximately 82tpa — samarium used in Patriot, Tomahawk and AMRAAM missile guidance systems; gadolinium used in MRI contrast imaging and nuclear reactor control

Five of the seven rare earths placed under Chinese export controls since April 2025 are present in Kasiya’s concentrate.

Kasiya’s TREO basket composition compares favourably against the two largest non-Chinese rare earth producers on both the proportion of strategically important elements and their underlying value:

Source: Figure 4 of the ASX announcement; price data per average REO prices during LOM.

Understanding the rare earth supply chain — and where Kasiya fits

A rare earth concentrate (REC) is a processed material containing multiple rare earth oxides in combined form, typically sold to downstream separation facilities that split it into individual elements for further refining into metals, alloys and magnets. China accounts for most global mined production of rare earths and effectively all commercial separation capacity — creating a critical dependency for Western manufacturers across defence, energy and advanced technology.

In April 2025, China introduced export controls over seven medium and heavy rare earths, including dysprosium, terbium, yttrium, samarium and gadolinium — all present in Kasiya’s concentrate. In October 2025, China extended controls to five additional rare earths. These restrictions have sharpened the urgency of Western efforts to develop alternative feedstock sources.

The Western rare earth supply chain comprises four stages: primary mining and concentrate production; separation into individual rare earth oxides; conversion to metals and alloys; and magnet manufacturing. Western governments are investing across all four, but availability of heavy rare earth feedstock is a key choke point. Western primary production is dominated by light rare earth deposits, with only trace quantities of dysprosium, terbium and yttrium — the elements most critical for high-performance applications.

Kasiya’s by-product structure is unusual and strategically significant. Because rutile and graphite carry the cost base, the REC does not depend on high rare earth prices to remain economically viable — a point that distinguishes it from standalone rare earth projects where ore extraction costs fall entirely on the rare earth revenue line.

To illustrate the downside resilience, the study applies U.S. government floor prices as a third scenario (the “U.S. Floor Price Case”). Since July 2025, guaranteed minimum prices have become a standard feature of U.S. rare earth supply arrangements: a US$110/kg floor for NdPr established with MP Materials and repeated with Lynas; and the first Western floor prices for heavy rare earths, at US$575/kg for dysprosium and US$2,050/kg for terbium, established via a Serra Verde arrangement. Even applying these floors — with 2025 average prices for yttrium, samarium and gadolinium — the study indicates the circuit could generate approximately US$183M of incremental pre-tax NPV8 at a 43% IRR. These floor prices arise under U.S. Government arrangements with third parties and are applied as a downside assumption only. Kasiya is not party to any such arrangement.

Maiden resource, clear roadmap, and what comes next

Maiden monazite Mineral Resource Estimate

The study is underpinned by a maiden monazite Mineral Resource Estimate (MRE) — the first-ever monazite MRE for the project. The MRE is 524.4Mt at 0.0132% monazite, classified 74% Indicated and 26% Inferred, constrained to the existing DFS open pits. Because the monazite sits within pits the DFS has already designed, no additional mining is required to access it.

Next steps toward integration

Sovereign has confirmed the following next steps:

1. Variability testwork — confirm monazite recoveries and concentrate quality across the DFS mine schedule
2. Product qualification — REC samples from Sovereign’s Lilongwe facilities to prospective customers for evaluation
3. Marketing — offtake discussions with Western processors and government procurement programmes
4. Pre-Feasibility Study — rare earths integrated into Kasiya’s definitive development case, with completion targeted for 2027
5. Resource development — assessment of whether there can be Inferred conversion and extension of the monazite MRE beyond the existing DFS pits

The company holds approximately A$25.1M in cash as at 30 June 2026 (unaudited) and is debt-free, providing a funded pathway to the Pre-Feasibility Study.

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