Big Picture – A Deep Dive Examination of the Savannah Resources PLC
Savannah Resources PLC Snapshot
Savannah has a dual development programme in order to maximise value from its multi-commodity portfolio in Oman, Mozambique and Finland and aims to build a global development and ultimately production company.
The Company maintains an active growth strategy and will continue to target additional multi-commodity projects that add value and complement the existing portfolio.
Savannah is focussed on the low-cost, dual development of:
• Blocks 4, 5 and 6 copper-gold projects in Oman
o Current Indicated and Inferred Mineral Resource of 1.7Mt at 2.2% Cu, including a high-grade zone of ~0.5Mt at 4.5% Cu
o Exploration Target of between 10,700,000t and 29,250,000t grading at between 1.4%/t and 2.4%/t copper with additional gold credits
o Production targeted to commence late 2017
• The Mutamba / Jangamo heavy mineral sands project in Mozambique
o Joint venture agreement with Rio Tinto
o 65Mt Inferred Mineral Resource @4.2% total heavy minerals (“THM”) at a 2.5% cut-off grade
o Exploration Target of 7-12Bn tonnes at 3-4.5% THM for enlarged JV licence area
o Targeting mineable inventory of c.200Mt at c.7% THM for low cost dry mining operation
• Somero and Eräjärvi Lithium Projects, Finland
BLOCKS 4, 5 AND 6 COPPER-GOLD PROJECTS, OMAN
Savannah has rights to three blocks covering 1,270km² in the copper-rich, Semail Ophiolite Belt in the Sultanate of Oman, a region proven to host clusters of moderate to high-grade copper deposits with gold credits and metallurgically simple ores. The three blocks are located approximately 180km northwest of Muscat, the capital city of Oman and within close proximity to the export Port of Sohar. The Company’s strategy is centred on building a copper and gold resource inventory to support high margin, low cost operations and establish Savannah as a commercial producer, with initial production targeted for late 2017.
Mineral Resource and Exploration Target
The Ophiolite belt is characterised by medium to high grade copper deposits with gold credits and metallurgically simple ores that have been shown to be amenable to profitable, open-cut development, to produce high quality copper concentrates for local or overseas smelters. Despite the region's rich history of copper production there has however been limited modern exploration in Oman. The Company and its Omani partners aim to capitalise on this by applying rigorous, modern exploration techniques such as Versatile Time Domain Electromagnetic Surveying (‘VTEM’). Importantly, all new discoveries in Oman over the past 10 years have largely come out of the application of VTEM.
At Block 4, multiple prospective targets have been identified for development. This includes four targets (Aarja, Zuha, Lasail and Bayda) which host old copper mines that collectively produced over 190,000t copper and boast existing mine infrastructure to support rapid development and exploitation, and two targets with additional gold upside (Salahi 1 and Gaddamah). A number of exploration programmes have been conducted across these targets, with results returned including:
• Aarja – drill results: 9m at 4.86% copper, 1.54% zinc, 1.3g/t gold and 37.3g/t silver, including 6m at 7.01% copper, 2.20% zinc, 1.9g/t gold and 53.8g/t silver from 103m, from the Dog’s Bone area
• Gaddamah – trench samples: 7.7m at 11.35g/t gold, 1.45% zinc and 0.40% copper
• Salahi 1 – trench/rockchip channel and grab samples: 72.2g/t gold, with trench sampling results including 12m at 11.87g/t gold
Block 5 has a current Indicated and Inferred Mineral Resource of 1.5Mt at 2.1% copper ('Cu'), including a high-grade zone of 0.5Mt at 4.5% Cu, which was defined at the Mahab 4 target. Historical results from this target of 54.86m at 6.32% copper and 20.06m at 5.62% copper combined with exploration conducted by Savannah, has highlighted an opportunity to extend this resource further. Indeed, drilling has identified down-dip extensions of 6.6m at 6.92% copper, 5.6% zinc, 0.3g/t gold and 23.8g/t silver.
Maqail South has also been identified as a prospective target, with historical results for this prospect including 6.68m @ 7.42% Cu.
Block 6 is at an early stage of exploration
In early 2015 Savannah acquired an extensive, digitised exploration database relating to historical drill data across Block 4, which has been significantly enhanced during 2015 with the addition of data collected between 1975 and 1994 including approximately 100,000m of drilling data for the Aarja, Bayda and Lasail deposits. The analysis of this has been extremely valuable, giving a much higher degree of confidence in the resource potential of the projects and at minimal cost which might otherwise have cost approximately US$20 million at today’s prices. Importantly this has also saved significant amounts of time.
Based on these historical drill results and other exploration factors, a series of internally generated Exploration Targets have been calculated for each of Savannah's high priority areas, namely the Mahab 4 and Maqail South deposits in Block 5 and the Aarja and Bayda and Lasail deposits in Block 4. This has led to the projection of an Exploration Target between 10,700,000t and 29,250,000t grading at between 1.4%/t and 2.4%/t copper with additional gold credits.
Savannah is focussed on building a copper and gold resource inventory to support high margin, low cost operations, with initial production targeted for late 2017. To this end, Savannah has initiated a fast paced exploration programme, with initial work focused on advancing the identified high priority target areas in Block 4 and 5, in addition to improving the understanding of mineralised trends. A series of Exploration Targets have now been calculated for each of Savannah’s high priority areas and the data will support a resource definition drill programme to further build upon the current copper resource in addition to improving confidence in the gold potential. In addition to this, Savannah continues to assess a number of potential production routes relating to the establishment of a central processing facility in Oman, which will be used to treat copper ores produced from the Company’s copper/gold projects in the area – namely Blocks 4 and 5. Leveraging shared infrastructure with other local operators will help minimise capital expenditure and maximise operating margins.
MUTAMBA / JANGAMO HEAVY MINERAL SANDS PROJECT, MOZAMBIQUE
In June 2015 Savannah announced a landmark Joint Venture agreement with Rio Tinto to combine Savannah’s 100% owned Jangamo licence with Rio Tinto’s adjacent Mutamba and Dongane Prospects and nearby Chilubane Project. The objective of the joint venture is to develop a significant dry mining project in a world-class province in Mozambique, which has excellent infrastructure, including road and power, and access to the nearby ports of Inhambane and Maxixie located approximately 40km away.
Under the terms of the Joint Venture, Savannah will be the operator and may earn up to a 51% interest in the combined project as it moves towards production through scoping, pre-feasibility and feasibility studies. Rio will be providing all its existing camp, facilities and associated equipment, which will help accelerate activity, and, significantly, will enter into, or procure an affiliate that enters into, an offtake sales agreement for 100% of the production from any mine that may be developed.
Mineral Resources and Exploration Target
The projects, which will be collectively known as Mutamba / Jangamo under the Joint Venture, are located in the Gaza and Inhambane provinces of Mozambique in a world-class heavy minerals sands region close to established infrastructure, approximately 450km northeast of the capital city of Maputo. The areas are part of a large area of prograding, siliciclastic sediments and ideal for hosting heavy mineral deposits which cover much of the south eastern African coastline. The heavy minerals are derived from the Limpopo River over a long period and reworked along ancient and current coast lines.
Savannah has already defined an Inferred Mineral Resource of 65Mt Inferred Mineral Resource at 4.2% total heavy minerals (“THM”) at a 2.5% cut-off grade for Jangamo. Jangamo borders Rio Tinto's Mutamba and Dongane prospects which, together with Rio Tinto’s Chilubane mineralised occurrences, have an Exploration Target of between 7.0 and 12.0Bt at a grade ranging from 3 to 4.5% THM. Based on the prospectivity of the area and the significant exploration target, Savannah is confident that there is significant potential to expand the current resource further and establish Mutamba / Jangamo as a leading heavy mineral sands producer.
Over 80,000 metres of drilling has been carried out by Rio Tinto’s affiliate producing over 35,000 samples from approximately 4,000 reverse circulation, sonic and auger drill holes to define heavy mineral-bearing sand units that vary in thickness from 15 to +70 metres. Eight large, separate mineralised bodies have been identified within the three Rio Tinto areas and have been the subject of Order of Magnitude Studies.
Drilling, sampling and metallurgical test work by Rio Tinto’s affiliate of the three areas suggests a combined potential contained ilmenite content of between 140 and 170 million tonnes with a further 10-15 million tonnes of contained zircon and rutile.
*The Exploration Target was previously reported by the Rio Tinto Group in 2008, under Section 18 of the JORC Code (2004) as applicable at the time of reporting, and has not been updated since this time.
The Exploration Target was based on assessments of prospects within the Rio Tinto Group’s tenure which are supported by drilling, geophysics, geological studies, imagery analysis, metallurgical testwork and preliminary modelling. However, the potential quality and grade is conceptual in nature, and there has been insufficient exploration to define a Mineral Resources and it is uncertain if further exploration will result in discovery of a Mineral Resource.
Project Concept and Development Strategy
The combined Mutamba/Jangamo projects have the potential for the definition of a large orebody able to sustain a significant mining operation. The mineralisation is amenable to dry mining and dredge mining in parts, with ilmenite being the dominant heavy mineral present. At this early stage in the evaluations, processing the heavy minerals into final products appears to be amenable to the use of conventional equipment, thus positively impacting CAPEX and OPEX.
Savannah’s overall objective is to build, in partnership with Rio Tinto, a commercial mineral sands presence in Mozambique, delivering, via Rio Tinto’s offtake, a stable supply of titanium feedstock to global markets. Savannah’s strategy is to identify high grade ‘strandline’ deposits of sufficient size to support the development of an early, first stage heavy mineral sands (“HMS”) operation. Magnetic and radiometric surveys are being used in conjunction with targeted drilling to determine the existence of strandline deposition under the broader dunal accumulation. Results to date show a strong correlation between these geophysical signatures and thick, high grade HMS intersections, indicating the exploration and depositional model works.
Savannah currently considers a mineable inventory of c.200Mt at c.7% THM will provide sufficient scale for the initial mine development, producing c. +600ktpa of ilmenite and 40ktpa of rutile plus zircon (“non-mag”) concentrate, either as final products or a bulk heavy mineral concentrate. In order to meet these development objectives the Joint Venture partners consider a consolidation of the Mutamba and Jangamo projects to be a commercially sensible strategy as the mineralised system runs across both projects.
SOMERO AND ERÄJÄRVI LITHIUM PROJECTS, FINLAND
In June 2016 Savannah extended its project portfolio into the attractive lithium arena through the granting of two highly prospective projects, Somero and Eräjärvi, in Finland, which cover a collective area of 159km2. Savannah holds a 100% interest in the projects through its wholly owned subsidiary Finkallio Oy.
Finland has been identified by the Board as one of the most prospective countries on mainland Europe for potential lithium discoveries, offering not only an attractive geological setting but also favourable mining legislation and infrastructure endowment, with both projects adjacent to high quality infrastructure and potential end customers. With lithium an increasingly attractive commodity due to its increasing role in a changing global energy mix, the projects provide Savannah with access to a strongly expanding market.
The Somero Lithium Project
Somero covers an area of 60.5km² just north of the township of Somero, one of the more prospective parts of the Somero-Tammela rare earth pegmatite belts, which cover an area of about 400km². The Somero reservation application area comprises at least 56 complex pegmatites enriched in lithium, niobium and tantalum. The pegmatites contain lithium silicates and phosphates including spodumene, lepidolite, petalite and lithium rich micas. This application occurs just to the south of TSX listed Nortec Minerals Kietyonmaki and Hirvikalio lithium deposits and covers a series of pegmatites reaching up to 1.2km in length and 50m wide. Historical geological mapping of the area by the Finnish geological survey has confirmed the presence of the lithium minerals. Initial analysis, geological mapping and rock chip sampling completed in September 2016 identified prospective pegmatites up to 1,200m long and 50m wide with an initial rockchip assay of 4% lithium oxide (‘Li2O’).
The Eräjärvi Lithium Project
Eräjärvi covers an area of 98.5km² approximately 200km north of the Finnish capital Helsinki. The Eräjärvi Pegmatites are situated in southern Finland near the town of Orivesi and about 61 complex pegmatites have been mapped in the area to date. They contain a series of complex and simple pegmatites with the complex pegmatites in the Eräjärvi area often distinctly zoned and contain lithium rich minerals including spodumene and lepidolite. Dykes within the tenement reach up to 600m length and 50m wide and historical geological mapping by the Finnish geological survey has confirmed the presence of the minerals. Initial analysis, geological mapping and rock chip sampling highlighted prospective pegmatites up to 800m long and 30m wide with an initial rockchip assay of 1.29% Li2O.
Early work is already confirming both encouraging grades and defining significant pegmatites at surface containing key lithium minerals. Savannah is focussed on defining drill targets during 2016 in order to further prove the resource potential of the projects.
Matthew King - Chairman
A graduate in law from Durham University, Matthew is currently a Senior Advisor to The Operational Risk Practice Pte Ltd, a Singapore-based risk management consultancy and a member of the Expert Panel of Cambridge Governance Labs, an inter-disciplinary initiative at the University of Cambridge with a mission to provide practical tools to aid decision-making with a particular focus on Africa. Having qualified as a solicitor with Slaughter and May, he held a number of risk management positions with HSBC in Asia, Australia, the Americas and Europe. He has a wealth of experience in both developed and developing countries and has previously served on a number of Boards and Audit Committees.
David Archer - Chief Executive Officer
David is a non-practising Barrister of the Supreme Court of New South Wales, holds a B.Ec and is a Fellow of the Australasian Institute of Mining and Metallurgy. He has had wide experience in the mining industry for over 30 years, with specific expertise in the development and operation of copper/gold projects. David has held executive and non-executive roles in a number of listed companies and has been actively involved in the international resources industry. He is the Senior Independent Director of Anglo Pacific Group Plc. He is the former Managing Director and Deputy Chairman of Savage Resources Limited, Managing Director of Hillgrove Resources Limited, Executive Chairman of PowerTel Limited and Chairman of Hostworks Group Limited. He was a director of Eastern Star Gas Limited from 2006 to 2009.
Dale Ferguson - Technical Director
Dale graduated in 1993 with a BSc with 1st Class Honours, Double Major in Geology, from Latrobe University, Melbourne and is a Member of the Australasian Institute of Mining and Metallurgy. He has over 20 years’ experience in the resources industry with Hillgrove Resources Limited, Thundelarra Exploration, Savage Resources Limited and Gasgoyne Gold Mines. His experience spans greenfields and near mine exploration, resource delineation, feasibility studies, due diligence investigations and mine development and operations
Maqbool Ali Sultan – Non-Executive Director
Mr Maqbool Ali Sultan has significant business experience in Oman, the Middle East and internationally. In 1987 he was elected as President of the Oman Chamber of Commerce & Industry before being appointed as Minister of Commerce and Industry in 1991, a role which he held until 2011. During this time he represented the Government of Oman in a number of organisations, including as Chairman of Oman Oil Co., Chairman of Sohar Industrial Port, Chairman of Capital Market Authority, and as a Member of the Executive Committee of the State General Reserve Fund. Since 2011 he has been Group Advisor of W J Towell and Co. LLC*. He is also the Chairman of the Omani British Friendship Association.
Imad Kamal Abdul Redha Sultan – Non-Executive Director
Mr Imad Kamal Abdul Redha Sultan is Vice Chairman and Deputy Managing Director of W J Towell and Co. LLC*. Having started his career as a Trainee Marketing Executive, Mr Imad Kamal Abdul Redha Sultan joined W J Towell as a Business Development Manager in 1995, before advancing to his current role. He has accrued extensive managerial and board experience during his time with the company and currently serves as director and/or chairman on a number of W J Towell Group companies including Towell Engineering Cluster, Nestlé Oman Trading LLC and General Electric & Trading Company LLC. Other notable board positions held include serving as a director on the boards of the National Bank of Oman and Ominvest in the past, and National Hospitality Institute & Oman Arab Bank at present.
Michael McGarty - Chief Financial Officer
A graduate in Finance from Manchester University’s Business School, and a qualified accountant (Chartered Institute of Management Accountants, UK). He gained 16 years of experience working with Ingersoll Rand (NYSE:IR), a leading global diversified manufacturer of industrial and engineered products. During which time he has worked in roles of increasing responsibility, covering all areas of accounts payable / receivable, and financial / management accounting. He led the European implementation of the Sarbanes Oxley compliance initiative, and has served for 7 years as financial controller for businesses covering Europe, Middle East and Africa, including the provision of business partner support and strategic planning. Michael has 2 years’ experience in West African exploration.
Paul O’Donoghue - Mozambique Country Manager
Paul holds a MA in Development Studies from the University of East Anglia. He jointly founded Matilda Minerals. Prior to this he was involved in a cross section of private sector activities including large scale reafforestation, property development and services provision. He has served as a Board member of the private sector development foundation, the Malonda Foundation. Paul originally moved to Mozambique as a Diplomatic Attaché with the Embassy of Ireland in Maputo and has lived and worked in Southern Africa for over twenty years with extended periods in Lesotho, South Africa, and, in Mozambique for the past 15 years. Originally, he started his career in Banking but has worked for international NGOs, the Government of Ireland, as a private consultant and in the private sector. Paul is based in in Maputo and is a fluent speaker of Portuguese.
Dr Durair A’Shaik - Oman General Manager Business Development
Dr Durair is an internationally recognised expert in the genesis of base metal deposits and VMS style mineralisation, has published extensively and adds to the geological capability of Savannah’s team. Dr Durair is an Omani national, is based in Muscat. Formerly a senior executive of the Oman mines department.
Savannah Resources Plc
55 Gower Street