Rio Tinto makes $40.4m investment in Sovereign Metals

Rio Tinto (ASX:RIO) has made a $40.4m investment in Sovereign Metals (ASX:SVM) for an initial 15% shareholding.

The mining giant has agreed to initially subscribe for and purchase 83,095,592 new fully paid Sovereign shares at a price of 48.6¢ per share.

The subscription also involves Rio being granted options to acquire 34,549,598 further shares in Sovereign within 12 months of the initial subscription to increase its shareholding to 19.99%.

Sovereign will use the proceeds from Rio to advance the Kasiya rutile graphite project, including progressing a definitive feasibility study focused on developing a world-class, low carbon dioxide mine capable of supplying material to the titanium pigment, titanium metals and lithium-ion battery industries.

Sovereign chairman Ben Stoikovich said the agreement will unlock significant benefit for Kasiya.

“This landmark agreement with Rio Tinto, one of the world’s largest and most accomplished global mining companies, is confirmation of Kasiya’s place as one of the most significant critical mineral discoveries in recent times,” he said.

“The experience that Rio Tinto brings will truly set Kasiya apart as a potentially globally significant supply of two critical minerals and take us all a step closer to supply chain decarbonisation and achieving net-zero.

“Furthermore, this is yet another step towards unlocking significant benefits from development of the Kasiya project for Malawi.”

Rio and Sovereign have also entered an investment agreement, where Rio will provide assistance and advice on technical and marketing aspects of Kasiya.

Rio Tinto also has the right to appoint a director or an observer to Sovereign’s board, a general manager with access to the Kasiya and three members to the project’s technical committee.