SVM - Sovereign Metals

[Sean K]

I'm surprised the investment by RIO hasn't given this more support. Just going nowhere in particular at the moment. PFS due in the Sept Quarter that might be a catalyst. Once they re-confirm production rates, LOM and NPV should confirm it's still way undervalued. More off-takes might help too although expect RIO might help out a bit there. Surprised they haven't asked to put someone on the board. Maybe that will come next.

 

[Sean K]

Topped up on this on pullback to this sort-of upward trend line - which means it'll crash. Still surprised that the RIO buy-in at the blue arrow hasn't given this more of a kick. They have MOUs for about half the rutile off-take initially but no agreements for the graphite as yet. More off-take MOUs for both might be another catalyst on top of a surprise PFS. ?

 

[Sean K]

Will be interesting to see if this gets any more loving once the PFS comes out (hopefully) this quarter. Should be sometime this month I guess. The financials they've already produced are pretty compelling and this study will include a bigger resource, throughput and LOM so should be positive. Not sure how much is factored in. Maybe none considering Sprott's PT of around $1.65. They own it though, so take that with a grain of rutile.

Just hanging on to that support line. Looks tenuous...

 

[Sean K]

Tenuous support broken. Added a few more on this weakness.

PFS out this quarter which I assume will be along the same lines as the ESS. Current MC is about $240m and they're forecast to be earning $323m pa EBITDA for 25 years. Something doesn't add up.

Not sure what's going to change between the ESS and the PFS. Maybe some inflation on the capex and opex. Rutile and graphite prices are about the same I think.

I wonder where the capex comes from? With RIO on board perhaps they'll cough it up, or off-takers will..

 

[Sean K]

PFS out. Everything a little higher except IRR which is lower as expected with increased costs. Capex has blown out a bit as you'd think, but was hoping for something with a 4 in front of it, not closer to a 6, which is where it'll be by the time they get to DFS. Excuses for the increase in the bottom dot point. IRR looks pretty crappy. Obviously a very big project. Not sure how they can manage this themselves. With a lowly MC hovering just over $200m (NPV $1.6b??) I think they will be hoping RIO take the reigns but they are at least being highly involved by the sounds as per bottom point.

 

[Sean K]

PFS Preso out. Given a little bit more info on RIO's commitment and plan. I hadn't read anywhere that there was a specified option for RIO to become the operator, it was just an initial investment prior to this. Still surprised the RIO involvement hasn't really kicked this along. Maybe the rutile and graphite market is in a lull and the focus is on more trendy metals for the minute.

 

[Sean K]

Just a rampy announcement telling us about doing business. If this is so good, start digging the crap up and start selling it FFS.

I was pretty sure the met work had already been done and it was very good.

The 1,000kg of flake graphite product produced will be used for downstream test-work and initial product qualification targeting the battery anode sector. Previously reported initial characterisation testwork on Kasiya’s graphite has indicated excellent suitability for use in lithium-ion batteries with very high purity and very high crystallinity being the key features.

NPV of $1.6b with MC of $250m and RIO on board. This should be 6x the current price if it ever gets rated properly.

 

[Sean K]

Interesting discussion around SVM, Graphite and Rutile markets.

 

[Sean K]

Zzzzzzz, someone wake me up when RIO take this over.

Maybe boring is good in this market.

 

[Sean K]

Compulsory ramp for the 2024 Comp.

Nothing new to report really.

They did bring out a new preso on 27 Nov which didn't say anything new...

SP going sideways, zzzzzzzz

Maybe this is the year that graphite and rutile take off?

If RIO don't take this over in the next 2 years I'll eat my hat.

I think this same slide was in the October preso:

 

[Sean K]

A rampy ann out regarding some ESG work that needs to be done to keep the locals on side as they're going to be ripping up a few square kilometers of Malawi.

Still just going sideways.

I'm hoping the DFS and financing this year will be a catalyst. Best case RIO takeover at a large premium.

Also hoping graphite and rutile don't go the way of lithium and nickel etc...

 

[Sean K]

Still going sideways since May 21. zzzzzzzzz.

Probably lucky it hasn't caved in like Ni and Li explorers/developers. Not sure if graphite has really been that badly effected like the other battery metals.

This ann came out at the start of the month. Not sure why they need to extend this it's already got a 30 year LOM or something. Would be better if they just found some higher grade patches particularly in graphite. 1.4% is very low made up for by scale.

RIO needs to take over before the end of the year so I don't finish last in the comp.

 

[Sean K]

Excuse me while I go out and watch the grass grow.

 

[Sean K]

Wake me up when it's all over
When I'm wiser and I'm older
All this time I was finding myself, and I
Didn't know I was lost....

Detailed interview with the SVM CCO:

 

[Sean K]

Not sure why you need three brokers. Maybe different jurisdictions.

Zzzzzzzz.

 

[Sean K]

Is this price sensitive? Sending some rocks to Cape Town?

Had a few good days, back over 50c, but still pretty much going sideways for 3 years. Holding above here will be weekly yearly highs. Zzzzzz

 

[Sean K]

Is this price sensitive? Sending some rocks to Cape Town?

Had a few good days, back over 50c, but still pretty much going sideways for 3 years. Holding above here will be weekly yearly highs. Zzzzzz

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SVM is one of my recalcitrant stocks in the yearly comp not playing the game @debtfree .

One of the catalysts will be further met work results mentioned above, which should be soon, but next will be what RIO decide to do with this. They're already in it for a bunch and if things go to plan they eventually buy more and more and become the operator. Not sure why they wouldn't just buy the whole damn thing if they were going to be the operator. I suspect they've taken this path to get inside and get to know it much better as a backdoor due diligence then just take it out.

I think the prices in brackets in this slide under the timeline must be agreed prices for RIO to purchase more. Hadn't seen that before that I recall. So, they can buy 5% more in July at $0.535, I guess. If they don't do that it's going to look bad.

 

[Sean K]

Early May announcement and chance for an update @debtfree. Up to around 50c which is where it's been failing for the past year, so I expect more of the same.

The next catalyst may be for the downstream testwork to produce a marketable product. The way they're talking about it can't see why not. Maybe that will push it through that 50c barrier.

 

[noirua]

Test work shows potential for Sovereign's Kasiya to be major graphite player

Sovereign Metals Ltd has completed testwork on its Kasiya rutile and graphite project in Malawi, showing potential for high quality graphite.

themarketonline.com.au

Sovereign is aiming to produce a commercially viable graphite concentrate for use in the lithium-battery sector, as well as moving towards a definitive feasibility study (DFS) for production of both rutile and graphite from the project, following up a prefeasibility study (PFS) completed in September last year.

 

[Sean K]

They're doing a lot of test work on this stuff. A bit different to simply digging up gold or copper I suppose.

For those wondering where we are in the cycle on this, I'm guessing we're somewhere around the bottom of the orphan stage on the Lassonde Curve. Just a matter of being patient for the value to increase on the way to production. SVM is what could be called being in the 'pre-production sweet spot', described by Lobo Tiggre in the video below. His research indicates that you normally get a double on the SP from this zone.

Holding above 50c has been positive. It's found it hard to stay above that level for the past 12 months. Need that to become a floor. But, I'm not counting my chickens on that and prepared for another dip. I'll take that as an opportunity to add a few.