The transaction structure helps entered by Savannah Resources and Force Commodities help Savannah retain an interest in the long-term economic performance of the projects and allows the company to concentrate its resources wholly on the production of the Mina do Barroso lithium project in Portugal and the Mutamba mineral sands project in Mozambique.
Resource development company Savannah completed the sale to Australia-listed mine development company Force Commodities of its stakes in the copper projects Block 4 and Block 5 in Oman.
“The strategic review we initiated last year looked at a number of options regarding Savannah’s ongoing participation in the projects. It concluded that an appropriately structured divestment, which allowed Savannah to retain an interest in the projects’ long-term economic success, represented the best outcome available to us.
“The transaction gives Savannah a meaningful shareholding in Force, as well as the potential for cash payments from any future production from the projects,” said CEO David Archer.
Savannah will receive 50-million new fully paid ordinary shares issued by Force, giving the company a 4.9% stake in Force after four-million shares are used to settle some transaction costs. Savannah will receive preferential payment of A$3.5-million in cash from an existing loan out of cash flow generated from production on Block 5.
The company will also receive a payment of a 1.0% net smelter royalty on any future metal sales.