Rio Tinto takes a big stake in Australia’s Sovereign Metals

July 18, 2023 04:08 AM AEST | By Invezz

Rio Tinto takes a big stake in Australia’s Sovereign Metals — Image source: Invezz

Here’s what we know so far

Sovereign Metals plans on using the funds to further its Kasiya rutile-graphite project in Malawi.

Rio Tinto will also assist and advice the miner in marketing and technical affairs related to Kasiya. Ben Stoikovich – Chair of Sovereign Metals said in a press release today:

Expertise that Rio Tinto brings will set Kasiya apart as a potentially globally significantly supply of two critical minerals and take us a step closer to supply chain decarbonisation and achieving net-zero.

The stock market news arrives a day before Rio Tinto is scheduled to release its production update for the second quarter. Its shares are currently down roughly 20% versus their year-to-date high.

Could Rio Tinto get more involved?

Note that Rio Tinto has the option to further boost its stake in Sovereign Metals by 4.99% within twelve months.

Analysts at Berenberg are already convinced that the world’s second largest miner will invest more in the future. In their research note today, they said:

We consider Rio to be a logical long-term owner of Kasiya and view the announcement as a positive.

At writing, Berenberg has a “buy” rating on Sovereign Metals Ltd. The European bank sees upside in it to 90 pence that suggests the mining stock could more than triple from here.

The post Rio Tinto takes a big stake in Australia’s Sovereign Metals appeared first on Invezz.

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