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LONDON (Alliance News) - Savannah Resources PLC on Tuesday said it has started work on the scoping study for the Mutamba project being developed in Mozambique with Rio Tinto PLC, and said drilling is also underway on the Ravene deposit.
Savannah struck a landmark deal with Rio Tinto in June 2015 to combine their heavy mineral sands projects in Mozambique, giving Savannah the chance to earn up to 51% of the enlarged project by completing a three-phase work programme. The agreement covers Savannah's Jangamo project and Rio's Chilubane and Mutamba projects.
An indicated and inferred mineral resource of 3.50 billion tonnes of ore graded at 3.8% heavy mineral sands was declared at just two of the four deposits at the project last month. That covers the Jangamo and Dongane - thought to contain 81.0 million tonnes of ilmenite, 2.2 million tonnes of rutile and 3.8 million tonnes of zircon.
One licence covering Jangamo held all of the indicated resource, which made up most of the total resource declared.
"Following the release of the first Mineral Resource Estimate of 3.5 billion tonnes at 3.8% THM for the Jangamo and Dongane deposits, which was a major milestone for Savannah and the company's consortium partner, Rio Tinto, we have now turned our attention to pre-development activities to continue our evaluations and understanding of the Mutamba project," said David Archer, chief executive of Savannah, on Tuesday.
On Tuesday, Savannah said an auger drilling programme is nearing completion on the Ravene deposit, where previous drilling has returned grades of up to 14.7% total heavy minerals. A follow up reverse circulation drill programme is already underway and should be completed in January, with 88 holes over 3,500 metres of drilling to be completed by then.
Savannah is infill drilling an existing space that has been drilled to bolster confidence in completing an inferred mineral resource estimate for the deposit. Savannah said the work is being fast tracked so Ravene can be considered as part of the scoping study for the wider development.
In addition, the company has commissioned the scoping and enviromental studies for the wider project by hiring mineral sands expert TZ Minerals International. Savannah said the study will initially look for a "low capex, long life, dry mining operation around a potential 200 million tonne well graded resource".
The scoping study will take about four months, hence why drilling Ravene has been accelerated. The study will focus on large areas of mineralisation graded above 5.0%.
Leading Mozambican environmental consultants ERM and IMPACTO have been awarded the contracts to conduct environmental studies for the Mutamba Project North and the Chilubane deposit, and that will also take three, possibly four months.
Data compilation and a detailed review of the Chilubane deposit is underway to further understand and evaluate the project and is expected to take six to eight weeks to complete.
In addition to new staff hired, all of Rio Tinto's former in-country team has been employed by Savannah and integrated into the in-country team, Savannah said.
Savannah shares were up 2.1% to 6.0 pence per share on Tuesday morning while Rio Tinto shares were down 1.7% to 3,190.0 pence.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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