Heavy mineral sands (HMS) exploration company MRG Metals (ASX:MRQ) reports it has signed a binding heads of agreement (HoA) with lithium focused development company Savannah Resources, to acquire its Jangamo HMS Project in Mozambique.
The Jangamo project represents a 65Mt at 4.2% HMS licence that boasts ‘excellent’ mineralogy in an already granted mining concession.
This acquisition also demonstrates the potential for the optimisation of the company’s start-up production pipeline in relation to its Corridor Mining Licence applications, the company reports.
However, the company’s Corridor Mining Licence applications are currently awaiting approval.
The HoA is subject to an exclusive 45-day due diligence period, which is awaiting commencement by MRG Metals.
Addressing the option agreement, MRG Metals Chairman, Andrew Van Der Zwan said: “We are pleased to have worked with Savannah to reach an option agreement that allows both parties to potentially gain from a small yet high quality asset in the Jangamo project.
“We are pleased to have worked with Savannah to reach an option agreement that allows both parties to potentially gain from a small yet high quality asset in the Jangamo project”
Of great interest to MRG is the ‘significantly’ higher VHM content of the Jangamo deposit.
We are now commencing the due diligence period and will advise the market upon developments.”
MRG Metals also notes that key aspects of the option agreement include a payment of about US$0.5 million in order to complete the work program by mid-October 2023, which is focused on commitments necessary to satisfy Instituto Nacional de Minas (INAMI).
On successful completion of the work program, Savannah Resources’ subsidiary company AME EAST AFRICA (AME), announces it will reimburse MRG Metals for 50% of its spend on the project up to a value of US$0.25 million.
It is also reported that MRG may exercise the option to acquire the projects and associated tenements at any point during the option period, following the cash payment of US$0.8 million or in new ordinary shares based on a 20-day volume weighted average price.
In addition, it is also reported that the financials of the deal are ‘attractively’ prices for MRG Metals shareholders.
The Jangamo project is located about 170km northeast from the Corridor projects and is currently owned by Matilda Minerals Savannah Resources’ subsidiary company Matilda Minerals. The project covers a total land area of 11,948 hectares and is valid until April 2044, with the possibility of a 25-year extension.
With the HoA agreement now signed, MRG Metals announces it remains focused on commencing the 45-day due diligence period.
Images: MRG Metals Ltd & iStock
