Ann: Sovereign to Demerge Standalone Graphite Projects, page-6

Hello WST:

Apologies for my delay in posting to your comments...I agree the benefits for investors to enjoy potential increases in shareholder value for the parent company and the pending approval demerger of NGX can be very interesting.

From a financial perspective, have both rutile and natural flake graphite projects competing for equity / capital from investors with strong interest from investors in one mineral over the other would do a fund-raising disservice to both projects. The demerger provides a pathway to expand the individual interest in each project group while focusing on the intrinsic market potential for each project.

Over the past 3+ years, many graphite projects have added other critical or rare earth mineral / gold projects / assets to their project portfolios to increase financial interest in the overall company leveraging even higher interest more well know / higher demand minerals. Yet, over the past 18 months or so, companies such as Sovereign, have elected to demerge or divest graphite projects to stand alone assets with dedicated management teams for each stand-alone project.

One cannot fault any new project company for wanting to improve their market cap with acquisitions or mergers of supplemental minerals and now, the timing to focus more on graphite projects is gaining momentum and more projects will inevitably be able to secure equity that has been elusive since Syrah created a very volatile equity scarce environment for future projects.

Marvel Gold demerged / spun-off the Chilalo Flake Graphite Project and has been able to secure several million in equity and should the demerger by Sovereign be approved by shareholders, NGX will enjoy a healthily balance sheet prior to future IPO ASX Listing and with a qualified graphite experienced management team will create value for shareholders that would not have been realised if the demerger strategy has not taken place.