SYDNEY, AUSTRALIA: Sovereign Metals Limited (ASX:SVM) intends to undertake a demerger whereby Sovereign’s Malawian graphite projects being the Nanzeka Project, Malingunde Project, Duwi Project and Mabuwa Project (Graphite Projects) are to be demerged through NGX Limited (NGX), a wholly owned subsidiary of the Company, allowing Sovereign to focus on the development of the Kasiya Rutile Project (Kasiya) while unlocking value in its Graphite Projects for shareholders.

Sovereign proposes, subject to shareholder approval, to demerge the Graphite Projects via a spin-out of NGX and in-specie distribution of NGX fully paid ordinary shares (NGX Shares) to Sovereign shareholders by issuing one (1) NGX Share for every eleven (11) Sovereign shares (SVM Shares) held (Distribution), allowing Sovereign shareholders to retain exposure to the value and upside of the Graphite Projects.

Upon completion of the Demerger, NGX intends to seek admission to the official list of the ASX. NGX will undertake a capital raising to satisfy the ASX admission requirements.

NGX will be the offeror of the NGX Shares under the IPO. A prospectus will be issued by NGX for the IPO capital raising which will be made available when the NGX Shares are offered. Anyone wishing to acquire NGX Shares as part of the IPO offer will need to complete the application form that will accompany the prospectus.

The Demerger allows Sovereign Metals Limited to better focus its efforts and resources on Kasiya and other primary rutile discoveries.

The Demerger will provide shareholders with an interest in two companies – Sovereign and NGX. The Board believes a separate entity with a separate management team focused on the Graphite Projects presents a better prospect of delivering value to Sovereign shareholders.