Plenty to unpack in the SS document, my initial thoughts for...

Plenty to unpack in the SS document, my initial thoughts for those interested.

As I have been pointing out for some time, the 1.5% rutile type grades Sprott has been calling only come in the thin surface pediloth layer which means a footprint too big per annum to make sense. Grade drops off sharply below mottled zone, can be very low in saprolite. Graphite credits allows company to mine sensibly deep pits starting at 1.15% rutile and dropping to 1% rutile over LOM. To maximise early revenue as part of the 'dual product strategy' mine plan is chasing the higher graphite grades (1.6% TGC) over the first 6 years.


Couple of issues I have with the mining ore inventory. First, the 'Topsoil' has still not been removed. Farmers/EPA in Oz would want 30-50cm topsoil and 50cm subsoil removed and replaced after rehab for obvious reasons, you can't just strip mine the good stuff and leave behind a sterile wasteland these days. The resource model and scoping study has left topsoil in the mine plan while "Topsoil is disclosed separately but remains in the MRE in recognition of advancedinvestigations by SVM on topsoil generation". My guess is the top half of first meter topsoil will assay 2% rutile (higher than ~1.5% 1m grade), so even if SVM convince Malawi to only preserve 30cm of topsoil for rehab that is still a material reduction in contained rutile from the mine plan. Secondly, I cannot see that the old hand auger assays have been statically corrected down to the lower average grades-thickness indicated by recent aircore infill results.

Hyrdo-mining has been suggested as suitable, though there has to be risk it isn't. Iluka has been trial hydro-mining at Sierra Rutile for a while to study if it will work for them, SVM would have to undertake trial mining imo to prove that it works before anyone will lend to the project. The laterite profile in Malawi is so different to the massive and geologically consistent dunes at Kwale etc that question mark will hang over hydro-mining until proven. Typical laterite profile similar to Malawi taken from Weipa (not to scale) showing the transition through red pedolith, transtition, mottled zone, plastic (palid) zone above the saprolite proper....


Kasiya has now officially transitioned from a rutile deposit to dual product project with two thirds rutile (~US$160M) and one third graphite (US$80M) revenue over the LOM at SS assumed prices. Annual graphite production is in fact just over 150% what was assumed in the Malingunde stand alone graphite project. Like it or not, SVM is now tied to the battery graphite anode market, because coarse flake used for non-battery markets will be supplied as a by-product of gearing up total graphite production to meet battery demand growth. Right now graphite demand is gang busters, but looking out past 2025 when Kasiya is likely to get into production graphite is likely to be replaced by silica and/or metal anodes as tech breakthroughs improve on graphite's 40 year old technology for higher power densities, faster charging etc. What happens to graphite supply/demand and pricing past 2025 is a personal view I suppose, one which each investor should consider carefully...

Cost assumptions can be controversial in scoping studies, which have a reputation for being overly generous and often creeping up (to put it mildly) through PFS and into the DFS. I haven't reviewed the capex/opex in detail but at a glance they look a bit on the low side compared to the Malingunde PFS if nothing else (I know, Mr negative, what a surprise). Transport and Logistics cost dropped from $^^/t con in 2018 for Malingunde to $51/t con todays SS. Total con jumps from 52ktpa to 202ktpa but logistical savings on higher volume counts for little when considering it's now a two product project and the vast majority of expense is in the >1000km transport. Monopoly train company, no economic alternative for SVM, negotiate a much cheaper train contract after 3 years of inflation... I doubt it lol. Graphite 'Processing' for ~1.5Mt of ~6% TGC graphite con into the rougher floatation tanks and onwards now costs $40/t graphite product compared to Malingunde 600ktpa of 9% TGC graphite con into the rougher floatation tanks etc 2018 cost at $118/t graphite product?? Lower slimes in the rougher float tank obviously but red flag imo... Anyway, it's only a SS and I don;t have access to the data/assumptions so again it's a personal view to consider...

The other big valuation assumption as always is product prices and revenue. TZMI is always pretty generous imo (being a industry service to their developing/mining clients who always want to present generous price assumptions to investors), but I haven;t seen a 'bagged premium' price assumption before. Nice little earner if you can get it, and to be fair it is a premium product. Still, rumours of market forces and the price cycle death is premature imo, long-term pricing will probably head towards TZMI's $1180/t much quicker than expected (on inflation adjusted terms of course). Can SVM extract that sort of price premium over that part of the cycle when all these new TiO2 projects are up, running and vying for volume and off-take and economy of scale efficiency? Time will tell...



Long way to go, lot of work to prove up the feasibility and assumptions into a permitted, socially acceptable and financeable project. An interesting project I will continue to follow.

Good luck