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LONDON (Alliance News) - Savannah Resources PLC on Tuesday said it has agreed a new consortium deal with mining giant Rio Tinto PLC which will allow Savannah to start work immediately on the mineral sands project on which the pair are working in Mozambique.
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.
On Tuesday, Savannah said it has entered a new consortium agreement with Rio, following consultation with the Ministry of Mineral Resources & Energy of Mozambique, which will allow work to start on the projects immediately.
Savannah will operate Mutamba/Jangamo and will have an initial 10% beneficial interest in the combined projects, rising to 51% if certain milestones are reached. The agreement also includes an offtake agreement on commercial terms for the sale of 100% of production from the projects to Rio Tinto.
A scoping study will start immediately, and Savannah expects to complete this before the end of the first quarter of 2017.
"Following consultation with the Ministry of Mineral Resources & 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," said Savannah Chief Executive David Archer.
Shares in Savannah were up 10% at 4.49 pence early Tuesday.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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