By Christian Moess Laursen

 

Sovereign Metals said Monday that Rio Tinto will invest 40.4 million Australian dollars ($27.6 million) to acquire a 15% stake in the company, becoming a strategic investor.

The London and Australian-listed mining company said the money will be used to advance the Kasiya rutile-graphite project in Malawi.

Under the investment agreement, Rio Tinto--the world's second-biggest miner by market value--will provide assistance and advice on technical and marketing aspects of Kasiya.

"We welcome Rio Tinto as a major shareholder of Sovereign and look forward to working with Rio Tinto as our strategic partner in the development of Kasiya," Chairman Ben Stoikovich said.

Sovereign issued 83 million new shares to Rio Tinto at a price of A$0.486 a share representing a 10% premium to the 45-day volume weighted average price at July 14 close-of-business.

Rio Tinto has the exercise option to increase its stake by 4.99% to potentially 19.99% within 12 months. The 34.5 million options issued have an exercise price of A$0.535 per share, a 21% premium to the 45-day volume weighted average price at July 14 close-of-business, for additional proceeds of up to $18.5 million.

 

Write to Christian Moess Laursen at christian.moess@wsj.com

 

(END) Dow Jones Newswires

July 17, 2023 03:13 ET (07:13 GMT)

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