Recent metallurgical test-work found that a blend of 85% saprock can be processed along with 15% of the very soft saprolite material. The material can be dug from pits 35m deep with low strip ratios, and will not require primary crushing or grinding, providing the potential for substantially reduced processing costs compared to hard rock graphite deposits.

 

Sovereign says Malingunde is the world's largest reported soft saprolite-hosted graphite resources, now standing at a total 45.7 million tonnes grading 7.2% total graphitic carbon, including high-grade 14.5Mt at 9.7% TGC.

 

The company's prefeasibility study is focused on the high-grade core, where 88% of resources are measured or indicated, with a significant increase in tonnage driven primarily by the saprock material, up from 8.9Mt.

 

The resource includes the newly discovered 1000m-long Msinja deposit, some 1.5km along strike to the south-east of main 4500m-long Malingunde deposit.

 

Managing director Dr Julian Stephens said the updated resource raised prospect of a future low capital and low operating cost natural flake graphite operation.

 

"The ability to process a blend of saprock along with the very soft saprolite allows a 60% increase in high-grade, low-cost material that Sovereign will consider as part of the Malingunde PFS," 

Stephens said.

 

He said the PFS should deliver a low cost, high margin project.

 

Last year the scoping study suggested Malingunde would need less than US$30 million to develop and would have costs of $301/t, around half the cost of graphite at the time. 

 

The company hopes to produce a premium graphite product in terms of flake sizes and concentrate grades that should lead to attractive concentrate pricing.

 

The proximity to Malawi's capital should provide advantages in terms of workforce, power and water, and last year Sovereign convinced two of the world's biggest miners, Vale and Mitsui, to allow it access to rail freight, port access and handling services for the provision of transporting and shipping up to 100,000tpa of concentrates over 20 years.

 

Initially Sovereign is looking at an initial production target of 44,000tpa and a total mine life of 17 years with payback in just two years.

 

Shares in Sovereign last changed hands at A10.5c, capitalising the company at $29 million.