Savannah Resources reports on 'robust' Mutamba scoping study

The AIM-traded company said the Mutamba Mineral Sands Project was being developed by Savannah and Rio Tinto as part of a consortium agreement between the two parties.

Savannah held the right to earn up to a 51% interest in the project, subject to key milestones being met, and by delivering the scoping study Savannah now held a 20% interest.

The company said the highlights of the study included an initial mine life of 30 years, based on a resource of 451Mt at 6.0% total heavy minerals.

It was targeting first production in 2020 with average annual production of 456,000t of ilmenite and 118,000t of non-magnetic concentrate.

The study suggested $4.23bn life-of-mine revenue was forecast based on Management Case Two, with base case revenue of $3.53bn forecast.

Pre-production capital expenditure of $152m, plus $74m of contingency, EPCM (engineering, procurement, construction management) and spares was forecast, with opportunities identified that could reportedly reduce capital expenditure.

“The results of the scoping study outline the potential for a long life, robust project at a time of increasing demand for titanium feedstocks and strong price growth,” said Savannah CEO David Archer.

“Mutamba is a tier one deposit that is well placed to provide a long-term, reliable supply of ilmenite, zircon and rutile.

“With high-grades at surface, the project shows potential strong returns over a 30-year mine life.”

Archer said the company’s conceptual mine plan was based on well known, long established mining and processing techniques and was enhanced by the “very complementary” infrastructure setting, comprising local roads, power, telecommunications, an international airport and the nearby port of Inhambane.

“Importantly, the project could provide major benefits to the people of Inhambane Province and to Mozambique as a whole.

“Mutamba could be a major industrial development for the region, and with an anticipated final labour complement of 332 people and over 1,000 indirect jobs expected to be created, we are targeting 95% local participation once the operations become established.”

Archer explained that the key social benefits of the project would be job creation and job diversity, which was complemented by the consortium's current skills development programme with the local community.

“The involvement of local business and contractors in the project would be supported through a procurement and logistics policy.

“Furthermore, the project could provide strong capital flows into Mozambique and will be an additional element in the country's growing levels of foreign direct investment.”

Archer also pointed out that Savannah's interest in the project could be further increased to 35% upon the delivery of a pre-feasibility study, and the board was now looking to commission a group to undertake that study once a tender process was complete.