Why the Sovereign Metals (ASX:SVM) share price spiked today

The rutile explorer surged by almost 12% but struggled to hold onto its morning gains.

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The Sovereign Metals Limited (ASX: SVM) share price struggled to hold onto its gains today after surging 11.6% higher this morning to 71.5 cents. At market close, shares in the rutile explorer were sitting at 65 cents, up only 1.56%.

The company announced a broker briefing presentation this morning, which might have influenced the rally this morning.

What was announced?

The Sovereign Metals share price enjoyed a strong rally this morning after the explorer advised it has in its possession a "company making asset" in the Kasiya rutile deposit in Malawi.

Previously, on 9 June, Sovereign Metals released a maiden resource estimate for Kasiya, with assay results revealing 644 million tonnes at 1.01% rutile, including 137 metric tonnes at 1.41% rutile.

The positive announcement witnessed the Sovereign Metals share price surge 13% on the day to a record close of 77 cents.

According to today's presentation, the company is accelerating its work programs in order to meet key short-term objectives at Kasiya.

This includes aggressive drilling programs to drive additional resource growth and extensions, as well as a scoping study, which is expected to be completed in late 2021.

While the Kasiya deposit is still in an exploration phase, the company highlighted Malawi as a "stable, transparent jurisdiction" with "operation-ready infrastructure".

In addition, Sovereign Metals has a memorandum of understanding in place with rail and port operators to, in the future, export to global rutile markets.

Sovereign Metals share price rallies in 2021

The Sovereign Metals share price has rallied by more than 75% year to date.

The company believes there is "the perfect storm" to support rutile prices in both the short, medium and long term.

It pointed to factors including, a "resurgence in demand for titanium pigment and from the welding sector" as well as "strong market fundamentals driving a robust long-term price".

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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