Sovereign Metals (ASX:SVM) said Rio Tinto Mining and Exploration notified Sovereign that it will not exercise its right to become the operator of Sovereign's Kasiya rutile-graphite project in Malawi under the investment agreement, according to a Wednesday Australian bourse filing.

Sovereign will continue as the operator of the project, and it plans to prioritize a US-focused strategy for the project. Rio said in a formal note that the decision reflects its change in corporate strategy regarding its titanium business.

Rio continues to hold a stake of around 18.2% in Sovereign. However, some of Rio's rights under the investment agreement lapsed, including exclusive marketing rights to market 40% of the annual production of all products, as well as a pre-emptive right over any offer from a third party to acquire an interest in the project.

Sovereign's shares fell 1% in recent trading on Wednesday.