MUSCAT, SEPT 1 - The UK-registered mineral resource development firm Savannah Resources has announced the complete divestment of its stakes in two copper-rich blocks in the Sultanate in favour of Force Commodities, an Australian listed firm. However, a share purchase agreement reached by the two sides guarantees seller Savannah Resources exposure to the upside once the Omani copper projects enter into production. London-headquartered Savannah, whose shares are listed on the Alternative Investment Market (AIM) of the London Stock Exchange, announced on Tuesday that its move to divest from the Sultanate follows the completion of a “strategic review”, the upshot of which was a decision to focus on its flagship lithium mining project in Portugal.
The divestment, once formalised and approved by regulatory authorities, will result in the acquisition by Force Commodities of Savannah’s rights to Blocks 4 and 5 covering an area of over 1,000 sq kilometres spanning the copper-rich Semail Ophiolite region. The belt is known to host clusters of moderate to high-grade copper deposits associated with gold and other metallurgical ores, according to experts.
Prior to its divestment Savannah held a 65 per cent interest in Block 5 via its shareholding in Al Fairuz Mining, and a 51 per cent stake in Block 4 via its shareholding in Al Thuraya Mining. Located within easy access of the Port of Sohar, Block 5 has a current Indicated and Inferred Mineral Resource of 1.7 metric tonnes (Mt) at 2.2 per cent copper (Cu), split between the Mahab 4 deposit (1.51Mt at a grade of 2.1 per cent Cu) and the Maqail South deposit (0.16Mt at a grade of 3.8 per cent copper).
The Mahab 4 deposit also includes a high-grade zone of 0.5Mt at 4.5 per cent Cu. Mining licences for the development of the blocks are still awaited from the Ministry of Energy and Minerals.
As part of the divestment transaction, Force Commodities will issue 50,000,000 new ordinary shares (deemed issue price of 1 cent per Force share), as well as make a preferential payment of AUD$3,500,000 of an existing loan from cash flow from production. Force has also pledged a payment of a 1 per cent net smelter royalty on future metal sales, thereby ensuring that Savannah retains exposure to the economic success of the two blocks.
In a statement, David Archer, Savannah’s CEO said: “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. 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.
Simon Pooley, Force’s CEO added: “The acquisition of the (Omani) 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,” he stated.
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