Communicators

August 7, 2019 – Sovereign Metals Limited (“the Company” or “Sovereign”) is pleased to report favourable and highly commercial rutile product particle size distribution following further analysis of the outstanding 96.0% TiO2 rutile product announced on 24 June 2019 (ASX: “Outstanding Metallurgy from Emerging Rutile Province”).

HIGHLIGHTS:

-         QEMSCANTM analysis has demonstrated that rutile produced from Sovereign’s Malawi project has highly favourable grain size distribution with a d50 of 123µm - comparable to other leading natural rutile products in the market

-         Sizing results show Sovereign’s product likely to be suitable for all major natural rutile end-use markets, including the chloride pigment, titanium metal and welding flux markets

-         Previous chemical analysis showed that this rutile product was very high-quality at 96.0% TiO2

-         The rutile concentrate was produced using conventional mineral sands processing methods and resulted in a recovered rutile grade of 1.16%

-         The product exceeds typical market chemical specifications and has many parameters at best-in-class levels

-         An accelerated exploration work program focussing on rutile is underway across Sovereign’s extensive land holdings in Malawi

Sovereign’s Managing Director Dr Julian Stephens commented:

“These initial QEMSCANTM results have confirmed the ability to produce a natural rutile product to commercial specifications in terms of both chemical composition and particle size distribution. Sovereign’s rutile product compares favourably to other leading natural rutile products in the market and is likely to be suitable for all major end-user applications including chloride pigment, titanium metal and welding flux. This is a highly encouraging result and we look forward to continuing the accelerated exploration and metallurgical programs.”

ENQUIRIES

Dr Julian Stephens (Perth)

Managing Director

+61(8) 9322 6322

Sam Cordin (Perth)

+61(8) 9322 6322

Sapan Ghai (London)

+44 207 478 3900

RESULTS OF RUTILE PRODUCT PARTICLE SIZE ANALYSIS

On 24 June 2019, Sovereign announced a metallurgical test-work program was undertaken on a 180kg sample of saprolite-hosted rutile from an area representative of the style of mineralisation at the Wofiira rutile zone. This type of metallurgical assessment is undertaken using laboratory-scale bench tests designed to replicate the wet concentration and dry separation processing routes of typical mineral sands operations. The test work provides metallurgical recovery information in addition to mineralogical and other quality information used for resource and reserve development.

This test work demonstrated that a high-quality commercial rutile product can be produced using conventional mineral sands processing methods. The recovered rutile grade from in-situ was 1.16% in a +38µm to -250µm size fraction containing 96.0% TiO2.

The results of recent QEMSCANTM analysis have further demonstrated highly favourable particle size distribution of the rutile product with a d50 of 123µm, which is comparable to other leading natural rutile products in the market. The d50 is also known as the median diameter of the particle size distribution, i.e. it is the value of the particle diameter at 50% in the cumulative distribution by mass.

The favourable particle size distribution of rutile product from Sovereign’s Wofiira zone, as indicated in Figure 1 below, demonstrates the potential to produce commercial rutile specifications suitable for all three major rutile end-use markets including pigment, titanium metal and welding flux.

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Figure 1. Particle size distribution of Sovereign’s high-quality rutile product

QEMSCAN is standard analytical method for providing quantitative analysis of minerals. QEMSCAN is an abbreviation standing for Quantitative Evaluation of Minerals by SCANning electron microscopy. QEMSCAN creates phase assemblage maps of a specimen surface scanned by a high-energy accelerated electron beam. The data includes bulk mineralogy, particle grain size and shape, mineral associations and mineral liberation.

Sovereign’s rutile product was analysed in Australia by leading independent laboratory services provider ALS Limited and by the CSIRO.

The results from QEMSCAN of Sovereign’s rutile product are shown in Figure 2 below, where particles have been ordered by decreasing grain size.

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Figure 2. QEMSCANTM analysis of Sovereign’s high-quality rutile product

The results are further supported by previous QEMSCAN analysis conducted on a master composite sample of raw ore from across Sovereign’s Malingunde graphite deposit which is regionally proximate to the Wofiira rutile zone. This demonstrated a d50 of 160µm for rutile in the raw ore with in-situ rutile grades of 1-2%. This additional data provides the Company with confidence that further zones of well liberated, high grade rutile mineralization in commercial size fractions will be identified through the ongoing exploration, mineralogical and metallurgical programs.

MAJOR NATURAL RUTILE END-USE MARKETS

Natural rutile is the highest-grade titanium dioxide (TiO2) feedstock with its predominant end-use markets including high grade chloride pigment feedstock, titanium metal manufacture and welding flux. Global production of natural rutile has been approximately 750ktpa over the last few years.

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Source: TZM

Figure 3.  Demand for Natural Rutile

TiO2 Pigment

The TiO2 pigment segment accounts for over 70% of all natural rutile demand. Natural rutile is the preferred feedstock for the chloride process compared to synthetic rutile or titanium slag because natural rutile:

-          has the highest TiO2 content and the lowest levels of impurities

-          does not develop dust

-          has the highest density

-          has a narrow particle size band

Titanium Metal

Titanium metal has a high strength-to-weight ratio and is corrosion and heat resistant. As such, it is an ideal metal for use in aviation in the form of aircraft engines and frames, military applications, and medical industry uses e.g. hip joint production. Natural rutile for titanium metal manufacture should have low levels of tin. Smaller particle size fractions are acceptable for titanium metal manufacturers.

Welding and other uses

The welding market uses rutile in its raw form in the manufacture of welding flux cord wire. Rutile effectively stabilises the welding arc and protects molten metal from oxidisation. It is therefore crucial in welding-reliant applications such as ship building and steel construction. For welding purposes, the natural rutile should have low levels of phosphorus and sulphur so that the integrity of the weld strength is not compromised. Smaller particle size fractions are acceptable for the welding market.

RUTILE PRODUCT CHEMICAL SPECIFICATIONS

Chemical specifications of rutile product produced from the Wofiira zone are shown in Table 2 below, with comparisons to some other leading natural rutile products currently present in the market. Importantly, Sovereign’s initial rutile product is of comparable quality to Sierra Rutile’s, indicating potential for strong interest from natural rutile end-users.

NEXT STEPS

These exciting results indicate that Sovereign’s >4,000km2 ground package has the potential to host a new rutile province capable of supplying commercial specification at a time of decreasing supply. Accordingly, the Company is undertaking an accelerated work program over the coming months. Metallurgical work in progress at Australian laboratories includes analysis related to yields of rutile product and deportment i.e. grain size distribution and shape. Major elements of the work program include:

-          Hand auger drilling and resampling of historical holes to define discrete areas of mineralisation for future resource definition at the Wofiira and Dedza rutile prospects

-          Extensive regional soil sampling and panning to identify potential new areas of rutile mineralisation

-          Continued metallurgical test-work designed to optimise and validate the metallurgical flowsheet

SOVEREIGN OVERVIEW

Sovereign controls a large ground package of over 4,000km2 which contains the Malingunde saprolite-hosted graphite project and newly identified areas of rutile mineralisation. The Company is progressing the DFS on the Malingunde graphite deposit whilst also actively assessing the potential for commercial rutile operations from deposits potentially hosted within the soft, saprolite material.

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Figure 4. Project map showing Sovereign’s significant ground position in Malawi.

Competent Persons’ Statements

The information in this report that relates to Exploration Results and QEMSCAN Results is based on information compiled by Dr Julian Stephens, a Competent Person who is a member of the Australian Institute of Geoscientists (AIG). Dr Stephens is the Managing Director of Sovereign Metals Limited and a holder of ordinary shares and unlisted options in Sovereign Metals Limited. Dr Stephens 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'. Dr Stephens 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 Metallurgical Results is extracted from an announcement on 24 June 2019. This announcement is available to view on www.sovereignmetals.com.au. The information in the original announcement that related to Metallurgical Results was based on, and fairly represents, information compiled by Mr Gavin Diener, a Competent Person who is a member of the AusIMM. Mr Diener is the Chief Operating Officer of TZMI, an independent mineral sands consulting company and is not a holder of any equity type in Sovereign Metals Limited. Mr Diener 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'. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcements. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market 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.