Rio Tinto hikes Sovereign Metals stake with $18.5m investment
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The news: Rio Tinto will invest $18.5 million to increase its shareholding in ASX small cap Sovereign Metals which will help advance its Kasiya Rutile-Graphite project in Malawi.
The numbers: Rio's investment, made through exercising all its share options, will increase the miner's stake in Sovereign from around 15% to 19.76%.
Rio exercised an option to acquire 34.5 million new shares at $0.535 per share. Sovereign's shares were $0.66 at last close.
Rio purchased its initial stake in Sovereign in July last year, in a deal that included the option for Rio to acquire the additional shares within 12 months.
The context: Sovereign said it will use the proceeds from Rio's additional investment to continue advancing its Kasiya Rutile-Graphite project in Malawi.
This includes progressing the current optimisation study for Kasiya which is focused on the development of a mine capable of supplying critical minerals to the titanium pigment, titanium metal and lithium-ion battery industries.
Under the investment agreement between the two companies, Rio will continue to provide assistance and advice on technical and marketing aspects of Kasiya.
What they said: Sovereign chair Ben Stoikovich said: "Rio Tinto's further investment in Sovereign reaffirms Kasiya's position as one of the most significant critical minerals projects globally".
"With Rio Tinto's wealth of experience as one of the world's largest and most accomplished global mining companies, Kasiya is well-positioned to potentially become a market leader in low-CO2-footprint natural rutile and graphite," he said.
The source: ASX announcement
