TIDMSAV
RNS Number : 1662M
Savannah Resources PLC
11 October 2016
Savannah Resources Plc / Index: AIM / Epic: SAV / Sector:
Mining
11 October 2016
Savannah Resources Plc
Rio Tinto and Savannah Mutamba/Jangamo Project Consortium
Savannah Resources Plc (AIM: SAV) ('Savannah' or 'the Company'),
is pleased to announce a new Consortium arrangement with Rio Tinto
covering Savannah's Jangamo Project and Rio Tinto's Chilubane and
Mutamba Projects, including the Jangamo, Dongane and Ravene heavy
mineral sands deposits, all of which are located in a world class,
heavy minerals sands province in Mozambique (collectively
'Mutamba/Jangamo' or the 'Projects'), that will enable Savannah to
commence work immediately (the 'Consortium', or the 'Consortium
Agreement'). To view the original press release announced on 22
June 2015 with the illustrative maps and diagrams please use the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/1662M_-2016-10-10.pdf
HIGHLIGHTS:
-- Rio Tinto and Savannah have entered into a new Consortium
Agreement following consultation with the Ministry of Mineral
Resources and Energy of Mozambique ('MIREM')
-- Commencement of operations is expected to bring immediate new
jobs and investment to Mozambique and Inhambane Province
-- To expedite commencement of Savannah's operatorship, the
Company and Rio Tinto have agreed to transfer legal ownership of
their projects to a Consortium company only at a future date (which
is expected to be subsequent to grant of a mining lease), subject
to receiving the prior written approval of the MIREME to transfer
of legal ownership in accordance with Mozambique's mining law and
regulations
-- The Projects include an Exploration Target over zones of
mineralisation of between 7.0 and 12.0Bt at a grade ranging from 3
to 4.5% total heavy minerals(2) ) ('THM')
-- The Projects are located close to existing road, grid power,
water and port infrastructure and will have access to Rio Tinto's
existing camp and equipment
-- Savannah will operate Mutamba/Jangamo and will have an
initial 10% beneficial interest in the combined mineral sands
projects, with the potential to increase to 51% beneficial interest
on the achievement of milestones as previously announced
-- The Consortium Agreement includes an offtake agreement on
commercial terms for the sale of 100% of production to Rio Tinto
(or an affiliate)
-- Scoping study to commence immediately, with an expected completion before the end of Q1 2017
-- The Mutamba/Jangamo Consortium will focus on defining a
potential dry mining operation for staged, early development
David Archer, Savannah's Chief Executive Officer said today
"Following consultation with the Ministry of Mineral Resources and
Energy of Mozambique we're delighted to have agreed to a new
Consortium arrangement with Rio Tinto, a leading global mining and
metals company, that will enable operations to start immediately in
a combination on materially the same commercial terms as previously
agreed and announced. 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. Mutamba/Jangamo
includes an established 65Mt at 4.2% THM resource and significant
expansion potential and an exploration target of between seven and
12 billion tonnes at a grade ranging from 3% to 4.5% THM.
"Savannah will operate the combined projects and can earn up to
a 51% beneficial interest in the combined Mutamba/Jangamo Project
in stages by undertaking scoping, pre-feasibility and feasibility
studies. Our focus is now on commencing activity on the ground,
with a scoping study due to commence immediately and targeted for
completion in Q1 2017. Importantly, the Projects are located close
to existing road, grid power, water, and port infrastructure and
Rio Tinto will be providing access to its existing camp, facilities
and equipment."
Key Features of the Consortium Agreement
Commercial:
-- Rio Tinto Mining and Exploration Limited (a member of the Rio
Tinto Group) ("Rio Tinto") and AME East Africa Limited (a wholly
owned subsidiary of Savannah Resources Plc) ("Savannah") are to
contractually combine their adjacent Jangamo deposit and Rio
Tinto's Mutamba and Chilubane heavy mineral sand deposits under the
operatorship of Savannah in this world-class heavy minerals sands
area in Mozambique (Figure 1)
-- Savannah may earn up to a 51% beneficial interest in the Consortium
-- The Company and Rio Tinto have agreed to transfer legal
ownership of the Projects to a Consortium company only at a future
date (which is expected to be subsequent to grant of a mining
lease), subject to receiving the prior written approval of the
MIREME to transfer of legal ownership in accordance with
Mozambique's mining law and regulations
-- Rio Tinto agrees to enter into, or procure that an affiliate
enters into, offtake sales contracts on commercial terms for the
purchase of 100% of the production of heavy mineral concentrate
("HMC") products from any mine that may be developed in the
Mutamba/Jangamo Project area
-- Rio Tinto has a right to acquire the Projects. If this right
is exercised prior to the delivery of the pre-feasibility study the
clawback price will be an agreed multiple of audited costs incurred
by Savannah (including investment costs on Jangamo prior to
entering into the arrangements) and following that it will be based
on an independent valuation of Savannah's participating
interest
-- Rio Tinto will grant Savannah a licence to use its camp and
equipment in connection with the Consortium Agreement
Technical:
-- The projects combine Savannah's Inferred Mineral Resource of
65Mt at 4.2% total heavy minerals(1) ("THM") and Rio Tinto's
previously declared Exploration Target of between 7.0 and 12.0Bt at
a grade ranging from 3% to 4.5% total heavy minerals(2)
-- The deposits contain thick zones of ilmenite dominant heavy mineral sands from surface
-- The deposits are well-suited to conventional dry mining to
produce feed for a conventional heavy mineral separation circuit
that would allow extraction of ilmenite, rutile and zircon
products
-- The Mutamba, Dongane and Jangamo deposits are located
approximately 450km northeast of the capital city of Maputo and
approximately 40km from the ports of Inhambane and Maxixie
-- Savannah and Rio Tinto will each be represented on a
technical review group and a Consortium Committee which shall be
responsible for approving the work programme and budget
-- The parties will focus on defining a dry mining operation for staged, early development
Figure 1. Mutamba/Jangamo Project Location Map - see PDF
link
Additional Information
In connection with the Consortium Agreement, Savannah entered
into a conditional agreement to acquire the remaining 20% of
Matilda Minerals Limitada that it does not own for AUD$100,000,
payable in Savannah's ordinary shares or cash. The transfer of
which is pending approval from MIREME and a further announcement
will be made in due course. The exploration assets of Matilda
Minerals are part of the Projects.
Competent Person
The information in this announcement that relates to exploration
results is based upon information compiled by Mr Dale Ferguson,
Technical Director of Savannah Resources Limited. Mr Ferguson is a
Member of the Australian Institute of Mining and Metallurgy
(AusIMM) and 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 December 2012 edition of the "Australasian
Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves" (JORC Code). Mr Ferguson consents to the inclusion in
the report of the matters based upon the information in the form
and context in which it appears.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
**S**
For further information please visit www.savannahresources.com
or contact:
David Archer Savannah Resources plc Tel: +44 20 7117
2489
David Hignell / Gerry Beaney Northland Capital Partners Tel: +44 20 3861
(Nominated Adviser) Ltd 6625
Jon Belliss / Elliot Hance Beaufort Securities Tel: +44 20 7382
(Corporate Broker) Ltd 8300
Charlotte Page / Lottie St Brides Partners Ltd Tel: +44 20 7236
Brocklehurst 1177
Notes
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks below is incorporated
into, or forms part of, this announcement.
1
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/12200821.html
2
http://www.riotinto.com/documents/ReportsPublications/Titanium_mineral_sands_exploration_target_in_Mozambique.pdf
Savannah Resources Plc (AIM: SAV) is a growth oriented,
multi-commodity, development company.
Mozambique
Savannah operates combined projects with Rio Tinto, and can earn
a 51% interest in heavy mineral sands projects in Mozambique, which
have a combined exploration target of 7-12Bn tonnes at 3-4.5% THM
(published in 2008). Under the terms of the agreement with Rio
Tinto Savannah must deliver the following to earn corresponding
interest in the combined projects: Scoping Study - 20%;
pre-feasibility study - 35%; feasibility study - 51%. Additionally
there is an offtake agreement for Rio Tinto to take 100% of
production.
Oman
Savannah has interests in two copper blocks in the highly
prospective Semail Ophiolite Belt in Oman. The projects, which have
an Indicated and Inferred Mineral Resource of 1.7Mt @ 2.2% copper
and high grade intercepts of up to 56.35m at 6.21% Cu, with
additional gold upside potential, provide Savannah with an
excellent opportunity to potentially evolve into a mid-tier copper
and gold producer in a relatively short time frame. Together with
its Omani partners, Savannah aims to outline further mineral
resources to provide the critical mass for a central operating
plant to develop the deposits, and in December 2015 outlined
exploration targets of between 10,700,000 and 29,250,000 tonnes
grading between 1.4% and 2.4% copper.
Finland
Savannah has Reservation Permits over two new lithium projects,
Somero and Erajarvi, covering an area of 159km(2) in Finland.
Savannah holds a 100% interest in these projects through its
Finnish subsidiary Finkallio Oy. Geological mapping by the Finnish
Government within the project areas has highlighted the presence of
lithium minerals spodumene, lepidolite and petalite with the
Government also identifying Somero and Erajarvi as one of the most
prospective areas to discover lithium deposits in Finland. Savannah
plans to initiate an exploration programme including data
compilation, geological mapping and surface sampling with the aim
of generating drill ready targets during 2016.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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