JOHANNESBURG (miningweekly.com) – Aim-listed Savannah Resources says its operating loss of £630 877 for the six months ended June 30 reflects the increased pace of operational activities around the company's prospective copper and heavy mineral sands projects, in Oman and Mozambique.

“Savannah continues to distinguish itself within the junior exploration arena by a high level of activity. Our acquisition of two highly prospective copper projects in Oman marks a transformational move into a highly prospective copper-producing region.

“We intend to leverage our in-country advantage to ultimately become a mid-sized copper producer,” CEO David Archer said in an interim results statement on Friday.

The company, meanwhile, attributed total comprehensive loss for the period of £2.6-million to losses of £1.7-million, relating to a write-down of the value of its investment in Alecto Minerals and finance expenses of £288 376 – principally owing to movements in the valuation of derivatives.

OMAN BLOCKS
Post period-end, Savannah completed the acquisition of interests in the Block 5 and Block 6 copper projects in Oman from TSX-listed Gentor Resources.

These blocks had an indicated and inferred mineral resource of 1.7-million tons at 2.2% copper with “significant” opportunity to supplement this.

“We have an exciting exploration programme aimed at unlocking the resource potential and are planning to start drilling at Block 5 later in the year.

"In addition, our ongoing exploration at our Jangamo heavy mineral sands project in a world-class province in Mozambique highlights the project's potential to host a moderate to high-grade commercial deposit as we remain on track to delineate a maiden resource by the end of 2014,” Archer said.

Savannah chairperson Mike Johnson added that, with copper supplies coming under increasing pressure owing to mine disruptions, reduced capital investment and high associated costs in major producer countries, Savannah's move into Oman was “very timely”. 

“Oman is a very favourable setting for the discovery of medium- to high-grade copper deposits and, most importantly, is a low-cost operating region, with well-developed road, power and port infrastructure, low fuel costs and a favourable fiscal regime,” he commented

The blocks covered 870 km² of the highly prospective, copper-rich, Semail Ophiolite belt, which was proven to host clusters of moderate- to high-grade copper deposits with gold credits and metallurgically simple ores. 

The company was currently formulating an exploration programme, with drilling targeted to start later this year.

“In line with this, a highly capable exploration team is already in place and I look forward to using our in-country advantage within Oman's mineral exploration industry as we focus on establishing the company as a mid-sized copper producer,” Archer noted.

MOZAMBIQUE PLAY
Meanwhile, in tandem with the evaluation of its Omani projects, Savannah remained focused on advancing its 180 km² Jangamo heavy mineral sands project, in a “world-class” mineral sands province in southern Mozambique. 

Most notably, Jangamo was located immediately to the west of Rio Tinto's Mutamba deposit – one of two major deposits Rio had defined in Mozambique, which, collectively, had an exploration target of between 7-billion tons and 12-billion tons.

“Importantly, exploration work conducted at the project indicates that the geology and geomorphology of Jangamo is similar to that of Mutamba,” the miner said.

Savannah had conducted an integrated set of exploration programmes designed to prove Jangamo's potential to host high-grade, commercial, heavy mineral sands deposits. 

An airborne magnetic survey commissioned by Savannah suggested that in excess of 20 significant, multikilometre-long strandlines could be present within the highly prospective eastern and western dune systems of the project. 

A further scout drilling programme was completed in July, which consisted of 96 drill holes for a total of 3 990 m. 

“Very encouragingly, visual estimations of heavy mineral sands were found in the drill spoils, which have highlighted six major anomalous zones. 

“These drill samples have been sent for analysis and the results are expected to form the basis of a future close-spaced grid drill-out programme. It is expected that this second round of drilling will enable the definition of a mineral resource by the end of 2014,” Johnson noted. 

He added that Jangamo was well served with established infrastructure, including grid power and a primary highway, which cut through the middle of the project. 

ALECTO INVESTMENT
In addition to advancing its exploration and development activities, the company said it remained a “supportive” shareholder of Aim-listed Alecto Minerals, in which it now had a 21.1% shareholding following the conversion into shares of an unsecured loan note in July.

Alecto was focused on the evaluation of its Kossanto gold project in the prolific Kenieba inlier, in Mali, which had a current mineral resource of 247 000 oz gold with a 0.5 g/t gold cut off, as well as the Wayu Boda and Aysid Meketel gold and base metal projects, in Ethiopia, for which Alecto had a joint venture (JV) with miner Centamin.

Under this JV, Centamin was committing up to $14-million in exploration funding to earn up to 70% in each project. 

“As a result, our interest in Alecto further diversifies both our commodity and geographic reach,” Savannah noted.

STRATEGIC DIVESTMENT
To further support its growth strategy, which was currently focused on advancing its interests in Mozambique and Oman, and in line with the company's previous divestment of the Kossanto gold project to Alecto, Savannah sold its remaining Malian gold exploration permits to Alecto in March. 

Following a strategic review of the company's assets, a sale price of £250 000 was agreed, which was satisfied by the issue of 20-million new shares in Alecto. 

This ensured that Savannah retained an indirect interest in the potential upside of the Malian projects, while gaining a more streamlined portfolio. 

“Importantly, Alecto is very well placed to add value to these projects on the back of its in-country capabilities,” said Savannah.

TREASURY
To progress its development, Savannah raised £1.5-million through the placing of 20-million new ordinary shares at a placing price of 7.5p an ordinary share with both new and existing investors.

In addition, in April, the group agreed to an investment of up to $6.3-million by way of a private placement agreement and the issuance of an unsecured convertible instrument with institutional investment fund Bergen Global Opportunity Fund.

Savannah had, thus far, drawn down $1.1-million of the original $6.3-million available, while $200 000 had lapsed having not been drawn down in the most recent tranche. 

“This means Savannah still has $5-million available, if needed, meaning we are exceptionally well placed to support operations across our portfolio.

“It is also worthwhile to note that the financing agreement contains contractual limitations on Bergen's ability to dispose of shares following any share subscription, as well as a prohibition on short selling of shares,” Johnson outlined.