Savannah Resources PLC (LON:SAV) and Rio Tinto PLC (LON:RIO) have agreed to extend the deadline for sorting out their proposed joint Mutamba/Jangamo joint venture in Mozambique.
The two companies have agreed to extend again the long stop date for fulfilment of the conditions precedent of the joint venture from March 31 to June 30, or even later if both parties agree in writing.
The extension will allow further time to fulfil the applicable approval processes.
As announced in June of last year, Rio Tinto International Holdings Limited, a member of the Rio Tinto Group, and AME East Africa Limited, a wholly owned subsidiary of Savannah Resources, intend to combine their adjacent Mutamba, Dongane and Jangamo prospects and Rio Tinto's Chilubane heavy mineral sands occurrences in a joint venture.
Savannah will be the operator of the joint venture and may earn up to a 51% interest in the combined Mutamba/Jangamo project.
Formation of the joint venture is conditional on approval by the Ministry of Mineral Resources and Energy of the Republic of Mozambique.
Speaking to Proactive Investors, Savannah's chief executive, David Archer, said the collaboration with Rio Tinto is “probably a bit more complicated than most joint ventures” so the arrangement needs to be seen by a lot of ministries.
Archer said both parties are hopeful the amalgamation of assets can go through in the near term as the deal “makes eminent sense”.
“Both of those projects are neighbours on the coast of Mozambique, and what we're really looking at doing is amalgamating those areas to allow joint development, so you can piggy-back on the property developments associated with both deposits,” Archer explained.
Although disappointed by the delays, the amalgamation of the projects will ultimately enable to developments to proceed at a faster pace, Archer claimed.
“From the point of view of the people of Mozambique, that means there will be an earlier opportunity for employment … in an area that is looking for industrial developments of this type,” Archer said.
The Savannah chief executive estimated the project would be operational within about two months of the final approvals coming through, and noted that the dry season in Mozambique is approaching, which would give the company a clear run for drilling.
“The timing is looking pretty good,” Archer said.