Rio Tinto, Savannah to set up Mozambique mineral sands joint venture

LONDON, June 22 (Reuters) - Global miner Rio Tinto (LSE: RIO.L - news) has agreed to combine its heavy mineral sands prospects in Mozambique with those of small developer Savannah Resources (LSE: SAV.L - news) , pushing shares in AIM-listed Savannah up by as much as 141 percent.

The two companies are to set up a joint venture including Rio Tinto's Mutamba, Dongane and Chilubane assets and Savannah's Jangamo prospects, Savannah said on Monday.

Savannah will operate the joint venture and can earn up to 51 percent of the combined project by carrying out scoping and feasibility studies.

Rio Tinto, which will be providing access to its existing camp, facilities and equipment to help speed up the work, has agreed to enter an offtake for all the heavy mineral concentrate products developed from the area.

The deposits can produce ilmenite, titanium, rutile and zircon, which can be used in steelmaking, refractory ceramics and paints.

The assets combination is a positive for both companies, Investec (LSE: INVP.L - news) analysts said in a note.

"Savannah gets greater scale (and assumedly some financial backing) and Rio gets Savannah to advance a project that will be way off its list of priorities," they said.

The joint (NasdaqCM: JYNT - news) venture will require approval from Mozambique's ministry of mineral resources and energy.

Shares (Berlin: DI6.BE - news) in Savannah were up 73 percent at 0904 GMT while Rio Tinto's shares were flat, in line with the UK-listed mining sector. (Reporting by Silvia Antonioli; editing by Jason Neely)