Savannah Resources subsidiary AME East Africa has agreed to form a joint venture (JV) with Rio Tinto International to combine their heavy mineral-sands prospects in Mozambique to develop them further.
Both companies plan to combine their mineral sands projects in Mutamba, Dongane, Chilubane and Jangamo across Gaza and Inhambane provinces.
Savannah Resources CEO David Archer said: "The amalgamation of the Mutamba, Dongane and Jangamo Projects makes enormous sense as it combines three areas, which are effectively part of the same, continuous mineralisation trend.
"The projects are located close to existing road, grid power, water and port infrastructure."
The combined projects will be operated by Savannah, which has an option to earn up to 51% of the combined Mutamba/Jangamo project in stages.
According to Savannah, the projects located in the Gaza and Inhambane provinces of Mozambique, represent an opportunity to aggregate the key mineral sands projects in the Inhambane region.
The projects claimed to have the potential to sustain mining operation for more than 20 years.
With an 80% shareholding in Matilda Minerals, Savannah operates the Jangamo exploration project.
Through the JV, Savannah aims to build, a mineral sands presence of significance in Mozambique in collaboration with Rio Tinto.
Savannah also plans to deliver a stable supply of titanium feedstock to global markets through Rio Tinto's offtake.
Formation of the JV is subject to approval of the proposed work programme by the National Directorate of Mines of Mozambique.
Once all the conditions are satisfied, Savannah will initially have a participating interest of 10% in the JV and will operate the projects.
The company will prepare and implement the work programme and budget in relation to the Mutamba/Jangamo project.
Further, Savannah will fund and undertake a three phase exploration programme to earn a 51% participating interest in the JV, under the conditional agreement.
Upon completion of the feasibility study, Savannah and Rio Tinto will determine where to begin construction of an initial mine.