Mozambique: Savannah and Rio Tinto sitting on massive mineral sands resource


Savannah Resources PLC expects to begin a scoping study immediately on its enlarged heavy minerals sands project in Mozambique having brokered a new deal to combine assets with mining giant Rio Tinto.

The commercials remain broadly similar to the original agreement to bring together the projects, which are next to each other and are effectively component parts of the same deposit.

To speed up the process, Savannah’s Jangamo property and Rio’s Chilubane and Mutamba areas will go into a consortium company at a later date, likely to be after the grant of a mining licence.

The AIM-listed mine developer will have an initial 10% stake in and operatorship of the merged entity, which will rise to 51% as it achieves certain milestones.

Meanwhile, the company noted that 52% of the mineral resource fell in the indicated category, while 48% was in the inferred category. Savannah would now undertake a three- to four-month scoping study. The scoping study, to assess the potential of the projects, will kick off immediately and is expected to be complete by the first quarter of next year.

Mutamba-Jangamo includes an established 65-million-ton resource and significant expansion potential. The exploration target is out at between seven and 12-billion tons at a grade ranging from 3% to 4.5% total heavy minerals sands.

In November, a new 3.5-billion resource was estimated for two of the deposits – Jangamo and Dongane. They contain an estimated 81-million tons of ilmenite, 2.2million tons of rutile, and 3.8-million tons of zircon.
This mineral resource estimate will form the foundation of the scoping study that will focus on the high-grade areas where there is little or no overburden.

It is part of Savannah’s low-cost mining strategy for the project targeting production of around 200mt, said broker Northland.

The latest agreement follows consultation with the Ministry of Mineral Resources and Energy of Mozambique.

A “delighted” Chief Executive David Archer said that: “Agreeing an arrangement that enables exploration activities to be conducted on a unified basis across the Mutamba, Dongane and Jangamo projects makes significant commercial sense, effectively combining three areas which are part of the same, continuous mineralisation trend”.
Stock is on the move:

In the year to date the stock has advanced 186% and is showing no signs of flagging.

“The consortium approach is a major positive development for Savannah Resources that will allow the company to get started on its eagerly awaited initial work programme at the combined Mutamba-Jangamo project”, said Ryan Long, mining analyst at Northland Capital.

In a recent interview with Proactive Investors, CEO Archer said there were three reasons to invest in the company: “Our assets in Mozambique, our assets in Oman and our shareholder base”.

Source: Proactive Investors/Creamer Media’s Mining Weekly

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