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Savannah Resources has entered a consortium arrangement with Rio Tinto covering Jangamo Project and Chilubane and Mutamba Projects, which include the Jangamo, Dongane and Ravene heavy mineral sands deposits in Mozambique.

Savannah owns the Jangamo Project, while Rio Tinto owns Chilubane and Mutamba Projects. In order to speed-up the starting of Savannah’s operatorship, the two firms have agreed to transfer legal ownership of their projects to a consortium company at a future date, which is expected to be subsequent to grant of a mining lease.

Operations commencement will bring immediate new jobs and investment to Mozambique and Inhambane provinces.

The projects feature an exploration target over zones of mineralisation of between 7Bt and 12Bt at a grade ranging from 3% to 4.5% in total heavy minerals.

Savannah will operate Mutamba/Jangamo and have an initial 10% beneficial interest in the combined mineral sands projects. This can potentially increase to 51% on achievement of milestones.

The consortium agreement includes an offtake agreement on commercial terms for the sale of 100% of production to Rio Tinto or an affiliate.

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Scoping study will begin 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.

Savannah CEO David Archer said: “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."