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Mozambique mineral sands JV progressing

SAND SAMPLES Savannah Resources has progressed with its exploration programme at the Mutamba/Jangamo joint venture

SAND SAMPLES Savannah Resources has progressed with its exploration programme at the Mutamba/Jangamo joint venture

11th March 2016

  

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Aim-listed diversified miner Savannah Resources remains optimistic about finalising its joint venture (JV) with diversified mining major Rio Tinto, says CEO David Archer. He notes: “Savannah’s plan over the coming year is to conduct further resource drilling and complete a scoping study to further define and, ultimately, finalise production plans for the project.”

Archer states that the planned fast-paced, staged evaluation of the JV – which comprises Savannah’s Jangamo heavy mineral sands (HMS) project and Rio Tinto’s Mutamba project, in Mozambique – in conjunction with Savannah’s ongoing copper project in Oman, in the Middle East, will ensure a transformational year for Savannah.

The JV is still subject to approval from the country’s Ministry of Mineral Resources and Energy and National Directorate of Mines.

To provide sufficient time for the approval of the processes, Rio Tinto and Savannah have agreed to extend the date for fulfilment of the conditions precedent to March 31 – or a later date as agreed to in writing between the parties.

JV Background
The JV agreement, announced in June, combines Savannah’s wholly owned Jangamo HMS project with three licence areas held by Rio Tinto – the Mutamba and Dongane prospects adjacent to Jangamo, as well as the nearby Chilubane project.

Under the terms of the JV, Savannah will be the operator and may earn up to a 51% interest in the JV. Additionally, Rio Tinto has agreed to enter into, or procure an affiliate that enters into, offtake sales contracts on commercial terms for the 100% purchase of the heavy minerals concentrate production from any mine that may be developed in the Mutamba-Jangamo project area.

Following the release of its 2015 financial results, Savannah chairperson Matthew King explains that, on approval of the JV, the plan is to evaluate the potential to rapidly develop the combined projects as a low-capital expenditure HMS mine.

King believes that the amalgamation of the projects makes commercial sense as it combines licences that are effectively part of the same, continuous mineralisation trend.

Additionally, the project, located in the Gaza and Inhambane provinces, is near to existing road, grid-power and water infrastructure. It is also around 40 km from the ports of Inhambane and Maxixie and 450 km north-east of Mozambique’s capital, Maputo.

Further, Rio Tinto will provide access to its existing camp and associated equipment at Mutamba, which, according to King, should save time on and reduce costs of the JV project development.

King notes that much of the mineralisation appears to be suited to conventional dry mining and simple gravity processing to produce feed for sale as HMS concentrate for further processing in a heavy mineral separation circuit that would allow extraction of ilmenite, rutile and zircon products.

Archer adds that these assets “have been proven to host thick zones of ilmenite-dominant HMS from surface and are part of a large area of prograding, siliciclastic sediments, which are ideal for hosting heavy mineral deposits and cover much of the south-eastern African coastline.”

He explains that Savannah has already defined an inferred mineral resource of 65-million tonnes at 4.2% heavy minerals at Jangamo, while Rio Tinto’s licence areas feature an exploration target of between 7 t and 12 t of ore at a grade ranging from 3% to 4.5%. “Based on the potential of the area and the significant exploration target, Savannah is confident that there is significant scope to expand the current mineral resource.”

Outlook
King states that last year was challenging for the resource sector; however, based on the current geopolitical climate, some recovery will occur during the course of this year.

Nonetheless, the primary factor in planning new resource developments is cost. “Low operating and capital expenditure requirements are key to enhancing resource value, establishing sustainable operations and achieving superior economic returns for shareholders.”

Edited by Tracy Hancock
Creamer Media Contributing Editor

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