REG - Savannah Resources - Heads of Agreement with MRG Metals Limited

Savannah ResourcesAnnouncement

09/11/2022 07:16

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221109:nRSI8076Fa&default-theme=true

RNS Number : 8076F  Savannah Resources PLC  09 November 2022

 

9 November 2022

Savannah Resources Plc

(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the 'Company')

 

Heads of Agreement for potential divestment of last remaining Mozambique
Mining Concession

 

Savannah Resources, the European lithium development company, is pleased to
announce that its subsidiary AME EAST AFRICA LIMITED ('AME') has signed a
Binding Heads of Agreement ('HoA') with MRG Metals Limited (ASX: MRQ, 'MRG')
in relation to an option agreement under which MRG could acquire Mining
Concession 9735C ('ML 9735C', the 'Licence') in Mozambique, owned by the
Company's subsidiary Matilda Minerals Lda ('Matilda') (the "Proposed
Transaction").

 

Key aspects of the Proposed Transaction include:

·    MRG is given an exclusive 45-day due diligence period commencing on 8
November 2022 ('Due Diligence' and 'Due Diligence Period' respectively) to
validate all relevant costs, technical aspects of the Licence and any legal,
regulatory, tax or commercial matters.

·    On completion of the Due Diligence Period, if MRG chooses to proceed
with the Proposed Transaction, the parties will execute an Option Agreement
providing MRG a 16-month option period (the 'Option' and 'Option Period'
respectively), which can be extended by mutual consent.

·    During the Due Diligence Period, AME will take all reasonable steps
to prepare a draft Option Agreement with which to negotiate with MRG in
anticipation of it being entered into by the parties within 5 working days
following the expiry of the Due Diligence Period, or earlier by agreement
between both parties.

·    During the Option Period, MRG will fund the estimated US$0.5m to
complete a Work Programme by mid-October 2023. The Work Programme is focussed
on commitments necessary to satisfy Instituto Nacional de Minas ('INAMI') but
may include infill/extension drilling to improve resource quality and
quantity.

·    During the Option Period, MRG may exercise the Option to acquire ML
9735C based on the following terms:

o  US$0.8m, payable at the sole discretion of MRG in cash, or in new ordinary
shares in MRG based on the 20-day volume weighted average price at time of
exercise of the Option, or a combination of cash and new ordinary shares in
MRG (the 'Acquisition Consideration'); and

o  In years where the Licence area generates a net profit after tax, MRG to
make a 1% royalty payment to AME on revenues from product sold, calculated
annually for the year completed, capped at no more than 50% of Net Profit
after Tax in any given year.

·    If MRG choose to exercise the Option, the Licence will be transferred
and the Acquisition Consideration paid by MRG to AME.

·    If MRG does not exercise the Option to acquire the Licence:

o  MRG will return all data to AME including all new data created during the
Option Period; and

o  MRG will return any drilling sites used by MRG to original condition at
its own cost.

 

Dale Ferguson, CEO of Savannah Resources said, "We are delighted to have
entered this HoA with MRG in relation to Savannah's last remaining Mining
Concession in Mozambique. MRG has been operating in Mozambique for a number of
years and has shown its commitment to the country's mineral sands sector
through the planned development of its Corridor Sands Project.

 

Through the Proposed Transaction, Savannah would retain some risk-free
exposure to Jangamo's development through future royalty payments, and
potentially to MRG's broader growth strategy through a shareholding in the
Company. The Proposed Transaction would complete Savannah's planned withdrawal
from Mozambique and enable us to focus 100% on the ongoing licensing and
development of the Barroso Lithium Project.

 

I look forward to providing further updates regarding the Proposed Transaction
as MRG progresses Due Diligence."

 

MRG Metals Chairman, Mr Andrew Van Der Zwan said: "We are pleased to have
worked with Savannah to reach the terms for the Proposed Transaction that
allows both parties to potentially gain from a small, yet high quality, asset
in the Jangamo Project.

 

We are now commencing the Due Diligence period and will advise the market upon
developments."

 

About MRG Metals

MRG Metals Limited is a junior ASX explorer (ASX: MRQ) which has made a
world-class JORC classified heavy mineral sands (HMS) discovery and is now
working towards a 100-year mine development in Mozambique.

 

The Company's key HMS assets in Mozambique comprise:

·    Corridor Sands (https://mrgmetals.com.au/projects/corridor-sands/) -
Mineral resources estimates (MREs), Scoping Study and Preliminary Economic
Assessment delivered for Koko Massava, Nhacutse and Poiombo HMS deposits

·    Marão (https://mrgmetals.com.au/projects/marao/) - three large
targets identified for testing during aircore drilling programme

·    Corridor North - complimentary HMS exploration prospect currently
under application

·    Linhuane (https://mrgmetals.com.au/projects/linhuane/) - exciting HMS
exploration prospect currently under application

 

The Company is diversifying to include Rare Earths and Uranium in the
exploration portfolio:

·    Patricio, Fotinho and Adriano - high potential Rare Earths and
Uranium exploration prospects currently under application

 

MRG has a dual speed approach - to explore for Heavy Mineral Sands, Rare
Earths and Uranium across multiple tenements while progressing to mine
development at Corridor Central and South.

 

Regulatory Information

This Announcement contains inside information for the purposes of the UK
version of the market abuse regulation (EU No. 596/2014) as it forms part of
United Kingdom domestic law by virtue of the European Union (Withdrawal) Act
2018 ('UK MAR').

 

Savannah - Enabling Europe's energy transition.

 

**ENDS**

Follow @SavannahRes on Twitter

Follow Savannah Resources on LinkedIn

 

For further information please visit www.savannahresources.com or contact:

 

 Savannah Resources PLC                                Tel: +44 20 7117 2489

 Dale Ferguson, CEO

 SP Angel Corporate Finance LLP (Nominated Advisor)    Tel: +44 20 3470 0470

 David Hignell/ Charlie Bouverat (Corporate Finance)

 Grant Barker/ Abigail Wayne (Sales & Broking)

                                                       Tel: +44 (0) 20 7653 4000

 RBC Capital Markets (Joint Broker)

 Farid Dadashev/ Jamil Miah

 Camarco (Financial PR)                                Tel: +44 20 3757 4980

 Gordon Poole/ Emily Hall

About Savannah

Savannah is the owner of the Barroso Lithium Project, located close to key
infrastructure in Northern Portugal which contains the most significant
spodumene lithium resource in Western Europe. Following a positive Scoping
Study which outlined a conventional operation producing 175,000t of spodumene
concentrate per annum, Savannah is progressing the development and
environmental licencing of the Barroso Lithium Project.

 

The Company is listed and regulated on AIM and the Company's ordinary shares
are also available on the Quotation Board of the Frankfurt Stock Exchange
(FWB) under the symbol FWB: SAV, and the Börse Stuttgart (SWB) under the
ticker 'SAV'.

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  AGRBLBRTMTMMMRT