Mozambique – The study further concludes that the project will provide excellent life of mine financial returns with relatively modest capital requirements.
The Mutamba mineral sands project is being developed by Savannah Resources and Rio Tinto as part of a consortium agreement between the two parties.
Savannah Resources has the right to earn up to a 51% interest in the project, subject to key milestones being met. By delivering the scoping study Savannah Resources now holds a 20% interest.
Savannah Resources’ key scoping study highlights
- Initial mine life (LOM) of 30 years based on a resource of 451 Mt at 6% total heavy minerals (THM) (based on a conceptual mine plan utilising 33% indicated resource and 67% inferred resource);
- Targeting first production in 2020 with average annual production of 456 000 t of ilmenite and 118 000 t of non-magnetic concentrate;
- US$4.23 billion LOM revenue forecast based on Management Case Two (base case revenue of $3.53 billion forecast);
- Pre-production capital expenditure of $152 million plus $74 million of contingency, EPCM (Engineering, Procurement, Construction Management) and spares, with identified opportunities that may reduce capital expenditure (based on conceptual estimate +/-35%);
- Modelled production of 15 Mtpa will be mined at LOM strip ratio (waste/ore) of essentially zero (2:451);
- Considerable upside potential remains through refining costings and further resource drilling; and
“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. 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. Our Management Case One shows that the project has a Pre-tax NPV₁₀ of $244 million and a four year pay-back,” says Savannah Resources CEO, David Archer.
“Our conceptual mine plan is based on well known, long established mining and processing techniques and is 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.
“Savannah’s interest can be further increased to 35% upon the delivery of a pre-feasibility study. We are now looking to commission a group to undertake this study once a tender process is complete.”