December 2024 Quarterly Report

Sovereign Metals Limited (ASX:SVM, AIM:SVML, OTCQX:SVMLF) (Sovereign or the Company) is pleased to provide its quarterly report for the period ended 31 December 2024.

HIGHLIGHTS DURING AND SUBSEQUENT TO THE QUARTER

Optimised PFS Results Reaffirm Kasiya's Globally Strategic Significance

• In January 2025, the Optimised Prefeasibility Study ( OPFS ) was completed with oversight from Sovereign-Rio Tinto Technical Committee
• Results of the OPFS reaffirm Kasiya's potential to become the largest and lowest-cost producer of natural rutile and natural flake graphite while generating exceptional economics
• Various optimisations have led to superior project delivery, operational flexibility, environmental and social outcomes compared to the 2023 Prefeasibility Study ( PFS )

Pilot Phase Advanced to Rehabilitation Stage following Mining Trials and Backfilling

• In December 2024 material mined and stockpiled during the Pilot Mining and Land Rehabilitation ( Pilot Phase ) was placed back in the test pit filling it to its original ground level
• On-site soil remediation and land rehabilitation activities are underway testing Sovereign's proposed rehabilitation approach and demonstrating how mined land can support sustainable farming post-closure

Positive Initial Test Results for Use of Kasiya Graphite in Refractories

• In November 2024 Sovereign announced that preliminary tests confirmed that graphite concentrate produced from Kasiya exhibits prerequisite characteristics for selling graphite to the refractory materials sector

Infill Drilling Program Complete

• In October 2024 Sovereign announced the completion of an infill drilling program designed to upgrade Kasiya's Mineral Resource Estimate ( MRE ) and to facilitate conversion of Ore Reserves from Probable to Proven category

Next Steps

• Over the course of the next quarter, Sovereign will advance the Definitive Feasibility Study ( DFS ), provide updates on the rehabilitation component of the Pilot Phase, publish an upgrade to the MRE, continue with further graphite testwork to support potential offtake discussions and further its community and social development programs in Malawi.

Classification 2.2: This announcement includes Inside Information

Enquires

Optimised PFS Results Reaffirm Kasiya's Globally Strategic Significance

Subsequent to the quarter, the Company announced the results of an Optimised Pre-feasibility Study (OPFS) for its Kasiya Rutile-Graphite Project (Kasiya or the Project) which was undertaken following a strategic investment by Rio Tinto Mining and Exploration Limited (Rio Tinto) in 2023. Under the Investment Agreement, a joint Technical Committee was established to oversee the development of Kasiya; the OPFS was conducted with oversight from the Sovereign-Rio Tinto Technical Committee.

The OPFS proposes a large-scale, long-life operation to deliver substantial volumes of natural rutile and graphite while generating significant returns. Table 1 below summarises the key findings from the OPFS and includes a comparison to the PFS results released 16 months ago, in September 2023. It is important to note that the results for the 2023 PFS in Table 1 have not been updated or adjusted for inflation since their release.

TABLE 1: KEY OPFS METRICS

*Annual average graphite produced includes 292kt of graphite processed and sold in two years post cessation of active ore mining. Average graphite produced during the 25-year initial mine life only is 240ktpa; total revenue during the same period is US$15,990 million. All rutile is produced and sold during the 25-year initial mine life. Note: All cashflows and costs are presented in US$ real January 2025 terms unless otherwise stated. Operating costs exclude mineral royalties and community development support costs.

Summary of Optimisations

The OPFS optimises seven key areas compared to the 2023 PFS, as summarised below.

Mining Method

The PFS proposed a 25-year initial LOM based on a hydraulic mining process where slurry material would be screened and pumped overland to the processing plants.

Operating Model

The 2023 PFS envisaged mining would take place on a contractor basis.

During the OPFS, Sovereign undertook a trade-off analysis between the following operating options:

• Fully owner-operated mine with draglines and trucks purchased by the owner
• Owner-operated mine with draglines and trucks leased by the owner
• Mining contractor operation using excavators and trucks

Plant Configuration

Plant Location

Tailings Management

Water Management

The PFS proposed that the primary water supply for the Kasiya mining complex would be created by building a water storage dam and collecting run-off water from the greater catchment area. Following the introduction of dry mining and mud farming, the size of the water storage dam proposed in the PFS has been significantly reduced, with less process water required and more process water recovered.

The OPFS mining trials and material deposition tests indicated a water demand of 10.2 Mm³ per annum, almost a 40% decrease in water requirement from the PFS (16.7 Mm³). The effect on the water storage dam wall could be a reduction in volume from 0.79 Mm³ to 0.57 Mm³ and a reduction in dam wall height from 20 metres to 17 metres.

Power

The 2023 PFS envisaged a hybrid hydro-generated grid power plus solar power system solution.

Pilot Phase Advanced to Rehabilitation Stage Following Mining Trials and Backfilling

In December 2024, the Company announced that the test pit mined during the Pilot Phase at the Kasiya Project had been successfully backfilled. This allowed Sovereign to commence on-site soil remediation and land rehabilitation activities, testing our proposed rehabilitation approach and demonstrating that the mined land can support sustainable farming post-closure.

During the Pilot Phase mining trials, 170,000m3 was mined using a conventional excavator fleet. The fleet was used to place mined material back into the pit, filling the pit to the original ground level in less than two months and ahead of schedule.

Rehabilitation is currently underway with an approach based on agronomic principles, including promoting sustainable farming practices and providing various end-land uses.

Positive Initial Test Results for Use of Kasiya Graphite in Refractories

In November 2024, the Company announced that downstream testwork targeting the traditional graphite market, conducted at leading independent consultancy ProGraphite GmbH (ProGraphite) in Germany, had delivered very positive initial test results.

Preliminary tests confirmed that graphite concentrate produced from Kasiya in Malawi exhibits prerequisite characteristics required for graphite sales into the refractory materials sector.

Traditional demand for natural graphite is primarily tied to the steel industry where it is used as a component in bricks that line both blast and electric arc furnaces ("refractories") and as a liner for ladles and crucibles. It is used in brake linings, gaskets and clutch materials in the automotive industry. Graphite has many other industrial uses in lubricants, carbon brushes for electric motors, fire retardants, and insulation and reinforcement products.

Graphite's key properties for use in refractory applications are its resistance to oxidation, chemical inertness and good thermal conductivity.

Additional evaluation of Kasiya's coarse flake for traditional and expandable applications is underway, with results expected in the coming months. This will generate the information required to further offtake discussions.

Infill Drilling Program Complete

In October 2024, the Company announced the completion of an infill drilling program at Kasiya to support an upgrade of the MRE.

Aircore drilling, supported by hand auger, push tube and diamond core drilling, was completed in the southern part of Kasiya. The drilling was focused on the designated pits proposed to provide ore feed in the first eight years of the Project's production schedule. Ore Reserves in these areas are expected to convert from the Probable to Proven category with an upgrade of the current MRE from Indicated to the Measured category under the JORC (2012) Code.

Offsite laboratories in South Africa and Australia will assay all samples for rutile and graphite. The drilling program's results and subsequent Resource upgrade are expected in early 2025.

Corporate Update

Sovereign remains in a strong financial position with cash at bank of approximately A$34 million and no debt.

Next Steps

The Company plans to update the market on the following progress in the coming months:

• Rehabilitation component of the Pilot Phase
• MRE upgrade during the current quarter
• Further graphite testwork results as the Company continues to advance the qualification of its graphite product for the lithium-ion battery and traditional graphite sectors
• Progress in discussions with future potential end-users of rutile and graphite
• Updates on community and social development programs
• Progress of the DFS, which is targeted for completion by Q4, 2025

Ore Reserve for the Kasiya Deposit

* RutEq. Formula: Rutile Grade x Recovery (100%) x Rutile Price (US$1,484/t) + Graphite Grade x Recovery (67.5%) x Graphite Price (US$1,290/t) / Rutile Price (US$1,484/t). All assumptions are from the Kasiya PFS ** Any minor summation inconsistencies are due to rounding

Kasiya Total Indicated + Inferred Mineral Resource Estimate at 0.7% rutile cut-off grade (inclusive of Ore Reserves)

APPENDIX 1: SUMMARY OF MINING TENEMENTS

As at 31 December 2024, the Company had an interest in the following tenements:

Notes:

SSL: Sovereign Services Limited, MML: McCourt Mining Limited

1 An exploration licence (EL) covering a preliminary period in accordance with the Malawi Mines and Minerals Act (No 8. Of 2019) (2019 Mines Act) is granted for a period not exceeding three (3) years. Thereafter two successive periods of renewal may be granted, but each must not exceed two (2) years. This means that an EL has a potential life span of seven (7) years under the 2019 Mines Act. ELs that have come to the end of their term can be converted by the EL holder into a retention licence (RL) for a term of up to 5 years subject to meeting certain criteria. All of Sovereign's ELs were originally granted under the 2019 Mines Act. On 28 June 2024, the Mines and Minerals Act (2023) (2023 Mines Act) was gazetted and came into force. As previously disclosed, the New Act introduces amendments to improve transparency and governance of the mining industry in Malawi. Sovereign notes the following updates in the New Act which may affect the Company going forward: (i) ELs granted under the 2023 Mines Act will be granted for an initial period of 5 years with the ability to extend by 3 years on two occasions (total 11 years); (ii) the Malawian Government maintains a right to free equity ownership for large-scale mining licences but the New Act has removed the automatic free government equity ownership with the right to be a negotiation matter; and (iii) A new Mining and Regulatory Authority will be responsible for implementing the objectives of the New Act.

2 In October 2024, SSL applied for RLs in relation to EL0492 in accordance with the 2023 Mines Act.

APPENDIX 2: RELATED PARTY PAYMENTS

During the quarter ended 31 December 2024, the Company made payments of A$306,000 to related parties and their associates. These payments relate to existing remuneration arrangements (executive salaries, director fees, superannuation and bonuses (A$209,000)) and provision of serviced office facilities, company secretarial services and administration services (A$97,000).

APPENDIX 3: MINING EXPLORATION EXPENDITURES

There were no mining or production activities and expenses incurred during the quarter ended 31 December 2024, other than the mining trials (disclosed above) completed as part of the Pilot Phase.

Appendix 5B

Mining exploration entity or oil and gas exploration entity

quarterly cash flow report

Name of entity

Sovereign Metals Limited

Answer: Not applicable

Answer: Not applicable

Answer: Not applicable

Compliance statement

2 This statement gives a true and fair view of the matters disclosed.

Date: 30 January 2025

Authorised by: Company Secretary

(Name of body or officer authorising release - see note 4)

Notes