Sovereign Metals has announced that mining giant Rio Tinto will invest AUD 40.4 million ($27.6 million) to acquire a 15% stake in the company, making them a strategic investor. The funds will be used to advance the Kasiya rutile-graphite project in Malawi.
Collaboration with Rio Tinto
As part of the investment agreement, Rio Tinto, the world’s second-largest mining company, will provide support and guidance on technical and marketing aspects of the Kasiya project. Chairman Ben Stoikovich expressed his enthusiasm about the partnership, stating, “We welcome Rio Tinto as a major shareholder of Sovereign and look forward to working with them in the development of Kasiya.”
Share Issuance
To facilitate the investment, Sovereign issued 83 million new shares to Rio Tinto at a price of A$0.486 per share, which represents a 10% premium to the 45-day volume weighted average price as of July 14.
Potential Stake Increase
Furthermore, Rio Tinto holds an option to increase its stake by 4.99% within the next 12 months, potentially reaching a total of 19.99%. If exercised, this would generate additional proceeds of up to $18.5 million for Sovereign. The exercise price for these additional shares is set at A$0.535 per share, reflecting a 21% premium to the 45-day volume weighted average price as of July 14.