Today's study commissioned by Sovereign quantified what we, and ESG-conscious investors, already knew qualitatively, that the Global Warming Potential of low-grade waste-intensive ilmenite operations dwarfs that of high-grade rutile. Peers such as 'Iuka, Tronox, and Rio Tinto traditionally employed waste- and energy-intensive smelting (when on South African coal-fired power, less issue for Quebec facilities) and upgrading (in Australian coal-fired kilns) of low grade ilmenite as there was a lack of naturally occurring high-grade rutile. Sovereign's Kasiya / Nsaru assets can now 'displace and reduce' humanity's reliance on inefficient ilmenite upgrading. We can only expect studies like this will horrify any investor that genuinely cares about the ESG impact of mining, and thus energy-intensive ilmenite producers. Rio Tinto, whose Scope 3 (downstream use of product) are estimated to make up 94% of its total carbon footprint (&2,), has failed to set Scope 3 targets like peers BHP and Vale. Rather, their 2020 Climate Change Report here suggested that Scope 3 emissions can only be lowered by 'customer technology breakthrough and/or power grid decarbonisation'. This is evidently no longer the case, and trumpeting the benefits of highgrade slag while conveniently leaving ilmenite-conversion capacity may not be accepted by investors in the future. 'Iuka, on the other hand, owner of a high-grade rutile asset, confirms this, going on to add that rutile's 30% less ore drives 7x more chlorine and less waste than ilmenite, We maintain our BUY rating and A$O.95/sh PT based on 5% in-situ valuation (ie US$65/t rutile vs. NUS$I,300/t spot) over a nominal 500Mt. Post maiden MRE, we anticipate moving to a DCF valuation, but we can't stress enough the strategic premium this asset deserves already, with upcoming catalysts of a maiden Kaisya resource; followed by Nsaru, and d scoping study this year, while metallurgical work and off-take discussions 'continue in parallel.
https://www.sprott.com/media/3803/210420-scp-svm-esg.pdf
