Sovereign Metals Limited’s (ASX: SVM, OTC: SVMLF, AIM: SVML) shares witnessed a 26% surge in Monday’s early trading following the announcement of Rio Tinto as their new strategic investor, injecting approximately A$40.4mln to support the Kasiya rutile-graphite project in Malawi.
Rio Tinto’s investment results in a 15% ownership stake in the small-cap firm, quoted on both the AIM and ASX, along with the option to escalate its share to nearly 19.99% over the next 12 months.
This investment signifies a significant advancement towards unearthing a substantial new supply of natural rutile and flake graphite with a low carbon footprint, as mentioned by Sovereign in a statement to the stock market.
In addition to financial investment, Rio Tinto is anticipated to contribute to the Kasiya project’s technical and marketing development, according to Sovereign.
“This groundbreaking agreement with Rio Tinto, among the world’s largest and most skilled global mining companies, validates Kasiya’s position as one of the most crucial mineral discoveries in recent history,” Sovereign’s chair, Ben Stoikovich, stated.
“The know-how and proficiency Rio Tinto offer will undoubtedly distinguish Kasiya as a potentially substantial global source of two essential minerals, pushing us towards achieving supply chain decarbonization and net-zero emissions,” the statement read.
In London, shares of Sovereign increased by 6.1p, which is a 26.52% rise, reaching 29.10p.
Earlier on the ASX, where the company primarily lists, the shares experienced an increase of slightly above 7% to A$0.53, establishing the company’s valuation at A$247 million.
