Savannah Resources PLC (LON:SAV) has agreed to sell its copper projects in Oman to Australian firm Force Commodities Ltd (ASX:4CE).
Force will issue 50mln shares to Savannah and has agreed to the preferential payment of A$3.5mln of a loan, funded via cash flow generated from production on Block 5 of the project. Savannah will also receive a 1% net smelter royalty on metal sales.
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"With the company's focus moving to the further development and subsequent commercialisation of the Mina do Barroso lithium project in Portugal, which continues to increase in significance from a European battery value chain perspective, an opportunity has arisen to divest our Omani copper projects to Australian listed company Force Commodities,” David Archer, Savannah chief executive said in a statement.
“The divestment allows us to retain exposure to the upside of the projects through the shareholding in Force, together with a loan and royalty payable when the projects go into production,” he added.
Simon Pooley, Force Commodities' chief executive commented: “The acquisition of the projects is a major milestone in cementing Force's position as a multi-commodity exploration and development company and represents the first step in our strategy of establishing the company as a copper producer.
“The transaction provides Force with exposure to one of the most prospective Ophiolite belts in the world. We believe that with the application of systematic exploration and further commercial transactions, the opportunity exists in Oman to become a significant mid-tier copper producer."