NEWS RELEASE I 28 JULY 2025

NEW GRAPHITE TARIFF ENVIRONMENT UNDERSCORES KASIYA'S GLOBAL SIGNIFICANCE

·    Strategic positioning enhanced as new tariff environment highlights Kasiya's potential as world's largest and lowest-cost non-Chinese graphite producer with industry-leading US$241/t incremental cost of production

·    Market dynamics impacted by new U.S. Commerce Department 93.5% anti-dumping duties on Chinese graphite imports

·    Kasiya offers supply chain diversification opportunity as battery manufacturers seek alternatives amid 160% effective tariffs on Chinese-sourced graphite

·    Latest coating optimisation testwork achieves successful CSPG production characteristics with superior performance metrics to support advancing offtake discussions

Sovereign Metals Limited (ASX:SVM; AIM:SVML; OTCQX: SVMLF) (Sovereign or the Company) is pleased to announce that at a time of unprecedented disruption in global graphite markets, with new U.S. tariffs fundamentally altering supply chain dynamics, the latest testwork on graphite from the Company's Kasiya Rutile-Graphite Project (Kasiya or the Project) in Malawi has delivered highly successful results.  The testwork focused on optimising the coating process for conversion of Kasiya-derived spherical purified graphite (SPG) to coated spherical purified graphite (CSPG) while maintaining premium performance. The results will assist with ongoing offtake discussions with anode manufacturers. Sovereign is developing Kasiya to potentially become the world's largest and lowest-cost natural graphite producer outside of China.

Figure 1: Natural Flake Graphite Industry Cost Curve For Projects at Prefeasibility Stage or Later

(Sources: See Appendix 1)

Strategic Market Opportunity

The global graphite supply chain is experiencing fundamental realignment following the U.S. Commerce Department's 17 July 2025 announcement of 93.5% preliminary anti-dumping duties on Chinese graphite imports. Combined with existing tariffs, this creates an effective 160% barrier on Chinese graphite, fundamentally altering the economics for battery manufacturers seeking secure, cost-competitive supply chains. China currently controls approximately 75% of global graphite production and 97% of anode material processing, creating critical supply chain vulnerabilities that major battery manufacturers are now actively addressing.

Tesla, Inc. (Tesla) and Panasonic were among companies that opposed the new US tariffs, with Tesla's submission to the U.S. Government stating that U.S. graphite producers have yet to demonstrate the "technical ability to produce commercial quantities" of graphite at the quality and purity required by Tesla and other battery cell manufacturers.

Once developed, Kasiya has the potential to become the world's largest and lowest-cost natural flake graphite producer, offering battery manufacturers a strategic alternative to Chinese supply chains for anode material feedstock. The latest successful coating testwork is a further demonstration of Kasiya's increasing strategic importance.

Latest Testwork Validates Kasiya Graphite's World-Class Quality to Anode Manufacturers

Optimisation testwork conducted by Prographite GmbH (Prographite) has once again demonstrated the exceptional characteristics of Kasiya graphite for CSPG production. The optimisation process successfully achieved target coating specifications and optimised inputs into the coating process while maintaining the premium performance metrics that position Kasiya graphite among the highest-quality sources globally (refer to Announcement "Outstanding Battery Anode Material Produced From Kasiya Graphite" dated 4 September 2024 for previously announced premium performance metrics).

Managing Director and CEO Frank Eagar commented: "Kasiya remains a primary rutile project, but our ability to also produce exceptional CSPG with world-class performance characteristics from our natural graphite concentrate is a further demonstration of the geopolitically strategic nature of Kasiya. These new U.S. tariffs on Chinese graphite highlight the urgent need for reliable, high-quality alternatives. Kasiya's resource scale, long life, potentially lowest-cost non-Chinese producer, combined with our demonstrated technical excellence, positions us perfectly to serve battery manufacturers seeking secure supply chain diversification."

Pitch coating is a standard refinement process where carbon-rich pitch material is applied to spherical graphite particles to create protective layers that enhance battery performance and longevity, turning SPG into CSPG. The latest testwork systematically evaluated pitch content to achieve optimal performance parameters.

Key achievements from the process include:

·    Process Efficiency Demonstrated: Coating requirements optimised while maintaining superior CSPG characteristics

·    Premium Performance Maintained: All target specifications achieved for discharge capacity (>360mAh/g) and first cycle efficiency (>94%)

·    Physical Properties Achieved: Specific surface area (<4m²/g) and tap density (>1.0 g/cm³) specifications met

The electrochemical test results demonstrate the consistently high quality of CSPG produced from Kasiya graphite:

The data confirms that Kasiya graphite consistently delivers discharge capacity well above the critical 360mAh/g threshold while achieving first cycle efficiency above 94% - both key specifications for premium-quality natural graphite anode materials.

Customer Engagement Advances with Market Dynamics Creating Strategic Advantage

Initial samples of Kasiya fine flake graphite concentrate have been distributed to leading natural graphite anode producers and anode project developers. These strategic engagements will support the development of offtake agreements while validating market demand for Kasiya's high-quality battery-grade graphite.

The Company continues advancing additional pilot-scale graphite concentrate processing to supply further concentrate material, with planning underway for a larger-scale concentrate processing run. These programs will support expanded customer qualification programs as development advances.

Competent Person Statement

The information in this report that relates to Metallurgical Testwork is based on information compiled by Dr Surinder Ghag, PhD., B. Eng, MBA, M.Sc., who is a Member of the Australasian Institute of Mining and Metallurgy (MAusIMM). Dr Ghag is engaged as a consultant by Sovereign Metals Limited. Dr Ghag has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Dr Ghag consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Exploration Results is based on information compiled by Mr Malcolm Titley, a Competent Person who is a member of The Australasian Institute of Mining and Metallurgy (AusIMM). Mr Titley consults to Sovereign Metals Limited and is a holder of ordinary shares and unlisted performance rights in Sovereign Metals Limited. Mr Titley has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken, to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Titley consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to operating costs and graphite marketing is extracted from an announcement dated 22 January 2025, which is available to view at www.sovereignmetals.com.au. Sovereign confirms that: a) it is not aware of any new information or data that materially affects the information included in the original announcement; b) all material assumptions and technical parameters underpinning the Production Target, and related forecast financial information derived from the Production Target included in the original announcement continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons' findings are presented in this presentation have not been materially modified from the original announcement.

Forward Looking Statement

This release may include forward-looking statements, which may be identified by words such as "expects", "anticipates", "believes", "projects", "plans", and similar expressions. These forward-looking statements are based on Sovereign's expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Sovereign, which could cause actual results to differ materially from such statements. There can be no assurance that forward-looking statements will prove to be correct. Sovereign makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

The information contained within this announcement is deemed by Sovereign to constitute inside information as stipulated under the Regulation 2014/596/EU which is part of domestic law pursuant to the Market Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). By the publication of this announcement via a Regulatory Information Service, this inside information (as defined in UK MAR) is now considered to be in the public domain.

APPENDIX 1: FLAKE GRAPHITE OPERATING COST INFORMATION

1.   China weighted average C1 cash cost source: Benchmark Mineral Intelligence

2.   Cumulative Demand & China graphite production source: S&P Global Market Intelligence

3.   Company specific disclosure sources as follows:

Notes:

1.     Blencowe Resources C1 cash costs calculated as US$499/t operating costs (FOB) less US$17/t royalties as disclosed in the source above

2.     South Star Battery Metals Corp.'s Santa Cruz mine not included as FOB costs not disclosed. For reference, operating costs are disclosed as US4396/t from source: Technical Report: Updated Resources and Reserves Assessment and Pre-feasibility Study (18 March 2020)

3.     Magnis not included while shares are suspended by the ASX in December 2023

4.     Walkabout's Lindi Project not included following appointment of voluntary administrators and Receivers in November 2024

5.     Leading Edge Materials Woxna Graphite not included as it is currently under care and maintenance

6.     Northern Graphite's Lac des Iles not included due to recent maintenance

7.     Talga Group not shown as latest technical study based on integrated anode plant strategy

8.     Tirupati Graphite not included due to lack of relevant disclosure

APPENDIX 2: PITCH OPTIMISATION TESTWORK DATA

Prographite produced spherical purified graphite (SPG) with a mean diameter of 17 microns from Kasiya graphite concentrate. Pitch coating in the current testwork was very effective in reducing the Specific Surface Area (SSA) and increasing the tap density of the CSPG relative to SPG, with samples 3,4 and 5 all below 4m²/g SSA and a tap density above 1.0 g/cm³ - Table 2.

The SSA is a key parameter in determining the first cycle efficiency of the anode material - a measure of the percentage of lithium ions used to charge (lithiate) the anode that are discharged (delithiate) from the anode. The rest of the lithium-ions are consumed to form the solid electrolyte interface (SEI) and no longer available for charging/discharging. A full-cell lithium-ion battery (LiB) only has a limited amount of lithium-ions available and therefore maximising the first cycle efficiency is critical to the longevity of the LiB.

The SEI forms a protective layer around the graphite particles, facilitating their use as an effective anode material. Its formation is critical for the ability to use graphite as an anode material. The SEI is generated from lithium compounds, and the consumed lithium-ions are no longer available for charging and discharging a lithium-ion battery. Consequently, excessive SEI formation reduces the lithium-ions available for use in the cell. As a rule, the lower the SSA of the anode material, less lithium-ions are consumed in for ming the SEI and the higher the first cycle efficiency.

It is important to note that lithium-ion batteries are complex systems whose optimisation is dependent on many variables across the cell components.  In contrast, the half-cell tests used in the current program evaluate the performance of just the anode material in isolation, providing comparative information on anode materials under standard conditions. This data is useful for engagement with anode producers and cell manufacturers but does not describe LiB cell performance, which is more complex.

APPENDIX 3: JORC CODE, 2012 EDITION - TABLE 1

SECTION 1 - SAMPLING TECHNIQUES AND DATA

SECTION 2 - REPORTING OF EXPLORATION RESULTS