REG - Savannah Resources - Half-year Report
26/09/2022 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220926:nRSZ5397Aa&default-theme=true
RNS Number : 5397A Savannah Resources PLC 26 September 2022
26 September 2022
Savannah Resources Plc
(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the 'Company')
Interim Results for Six Months Ended 30 June 2022
Savannah Resources, the European lithium development company, is pleased to
announce its interim results for the six months ended 30 June 2022.
First half and recent highlights include:
Corporate:
· Cash balance of £9.4m at 30 June (31 December 2021: £13.0m);
Savannah recorded a first half net loss from continuing operations of £1.3m
(30 June 2021: £1.9m)
· Dale Ferguson appointed as Interim Chief Executive Officer in July
after David Archer stepped down; The search for a permanent CEO replacement
has been initiated
· Mary Jo Jacobi appointed as an Independent Non-Executive Director
& Manohar Shenoy appointed as a Non-Executive Director; Expecting to
appoint an experienced Portuguese candidate as a Non-Executive Director to the
Board
Barroso Lithium Project (the 'Project'):
Technical:
· Agreed with the Portuguese environmental regulator ('APA') to
progress its review of the Environmental Impact Assessment ('EIA') on the
Project via the time-controlled and more interactive 'Article 16' process
· A number of constructive meetings have already been held with APA;
Savannah and its consultants are revising elements of the Project's design for
resubmission of the EIA
· EIA resubmission deadline set at 17 March 2023; Savannah expects to
make its resubmission during Q1 2023, APA will then have up to 50 business
days to issue its Declaration of Environmental Impact ('DIA') decision
· Design of process flowsheet finalised, based on standard plant and
environmentally friendly reagent regime
· Decarbonisation Study initiated, with initial results expected
shortly
· Definitive Feasibility Study ('DFS') to be completed once the
Project's final design has been agreed through the 2(nd) phase of the
environmental licencing process ('RECAPE') and necessary fieldwork undertaken.
DFS expected to take around 12 months from restart of fieldwork
Stakeholder Engagement:
· Relationships with a number of key stakeholders refreshed after
initiation of the Article 16 process and team changes within Savannah
· Opened an additional information centre in the local area, recruited
new staff from the local population, continued to give preference to local
suppliers of goods and services, and provided support to local groups and
events
· Commissioned social performance consultancy, Community Insights Group
(CIG), to support with stakeholder engagement planning. Results from the first
phase of CIG's work expected in Q4 2022
Commercial:
· EV & lithium market backdrop remains encouraging. H1 2022 global
EV sales of 4.3m (+63% vs. 1H 2021), annual sales expected to be over 10m
(6.75m 2021). Growth in demand for EVs has maintained pressure on lithium
supplies; lithium prices up over 100% in H1 2022
· War in Ukraine has also placed great emphasis on Europe's need to
rapidly increase its autonomy and strategic independence in renewable energy
provision and critical mineral production
· Levels of interest in offtake from the Project have increased as
lithium market continues to tighten; Savannah remains in discussions with
several groups
· Despite Article 16 extension to the Project's timetable, its
development remains well aligned with the construction schedules of the two
proposed refineries in Portugal and other European plants
Outlook/Next steps:
· Cash balance (£9.4m) should be sufficient to see the Company through
the Article 16 process and into the DFS/RECAPE completion phase of the
Project's development
· Future newsflow to provide updates on:
o The Article 16 process, resubmission of revised EIA and APA's DIA decision
o Decarbonisation study and strategy
o Staff appointments
o Community engagement activities
o Commercial discussions
CHAIRMAN'S STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2022
The first half of 2022 was another busy period for Savannah and there have
been some further significant developments within the Company since I gave my
AGM statement in June. Of most note has been the agreement with the Portuguese
environmental regulator, Agência Portuguesa do Ambiente ('APA') to progress
their review of our Environmental Impact Assessment ('EIA') on the Barroso
Lithium Project (the 'Project') via the so-called 'Article 16' process. An
update on this process is provided below but as we stated in our 6 July
announcement, after the extended previous phases of the review process, which
included very limited opportunity to interact with the regulator, this phase
is strictly time-controlled and we welcome the opportunity it brings to engage
regularly in-person with APA. We hope it will result in a final design which
is to APA's satisfaction so we can move forward with the Project.
In another significant change, David Archer stood down as Savannah's Chief
Executive with immediate effect in early July after almost nine years in the
role. We thank David again for his long period of leadership and his ongoing
support as a shareholder. Pleasingly, Dale Ferguson, our Technical Director
and the Board representative of Savannah's second largest shareholder,
Slipstream Resources, agreed to step up to the CEO role on an interim basis.
Dale is ideally placed to lead the Company over the important coming months as
we look to complete our re-submission to APA under the Article 16 process and
increase our engagement with all key stakeholders in the Project. The search
for a permanent replacement for David Archer as CEO is well-underway and we
expect to make an appointment in due course. We also have a search underway to
identify an experienced Portuguese candidate to join the Board as a
Non-Executive Director.
During the period, we also welcomed Mary-Jo Jacobi to the Board as an
Independent Non-Executive Director and Manohar Shenoy as Non-Executive
Director. Their appointments coincided with the retirement from the Board of
Maqbool Sultan (Non-Executive director) and Murtadha Sultan, who served as an
alternate director for Imad Sultan, and I take this opportunity again to thank
both Maqbool and Murtadha for their valuable contributions to Savannah over
the last six years.
We have also recruited new members of staff in Portugal to expand our
technical and communications teams. Growing the in-country team further will
be critical to Savannah in the years ahead and our efforts to bolster the team
will continue.
Immediately following his appointment, Dale and I travelled to Portugal to
meet with a number of key stakeholders in person and to provide support and
guidance to our in-country team as we head into this critical period for the
Company. Savannah has an excellent and experienced team, and we are focused on
empowering them to lead in the critical relationships we must maintain and
grow to achieve our goals of becoming a lithium raw material producer in
Portugal, benefiting the communities we work alongside, and generating
shareholder value.
We remain in regular contact with a number of potential offtakers and are
keeping them informed of the impact of the Article 16 process on the Project's
timeline. We are also progressing our decarbonisation study so that we can
decide how to achieve our objective of minimising the carbon footprint of the
Project.
Meanwhile, the situation in the lithium market remains highly encouraging for
new raw material producers like Savannah. Website EV-Volumes.com reported that
H1 2022 global sales reached 4.3 million units, or 63% higher than H1 2021
with sales in Europe up 9% vs. H1 2021 despite the significant current
pressure on the economy. Global sales included over 956,000 units being sold
in June 2022 which was a new all-time monthly high (+55% vs. June 2021). The
global market share for plug-ins in H1 2022 reached 11.2% of all new cars sold
vs. 6.3% in H1 2021. As of July EV-volumes.com is forecasting global annual
sales of 10.6 million units vs. 2021 sales of 6.75 million (+57%). This EV
market trend has maintained pressure on the current lithium-ion battery value
chain and resulted in the spot prices for the three major lithium raw
materials, spodumene concentrate, lithium carbonate and lithium hydroxide
rising by over 100% during the first six months of the year. For reference,
the spodumene spot price rose from US$2,800/t (FOB Australia) at the end of
December 2021 to US$6,450/t at the end of June and, following a brief dip in
mid- July to US$6,000/t, is currently at US$6,550/t (source: S&P Global
Market Insight).
At the same time, the war in Ukraine, now tragically over six months in
duration, is also placing great emphasis on the need to accelerate the energy
transition away from fossil fuels. This is particularly true for Europe which
must expedite and expand its plans for more renewable power provision to both
deal with the immediate energy crisis and deliver on its long-term net zero
climate goal. This means not only rapidly creating far greater renewable
energy capacity but also providing the associated storage mechanisms,
including batteries. In turn this requires the responsible mass production of
the raw materials required, such as lithium. Furthermore, Europe can no longer
rely on energy and raw material production from external, often high-risk
countries, such as Russia. The European Commission is determined to develop
the region's autonomy and strategic independence when it comes to renewable
energy provision and in the critical minerals and materials that can make the
transition possible. Hence, Savannah, and all its lithium and battery metal
production peer group, will have a vitally important role to play in the
future of European society.
However, as everyone in Savannah appreciates, while the lithium from our
Project and others like it has an important role to play for society at large,
its extraction does have an impact on the immediate area concerned. Achieving
social acceptance is one of the greatest challenges faced by the mining
industry around the world. The onus is on all of us to find the best balance
we can so that the maximum beneficial outcomes can be achieved with the
smallest impact. We willingly acknowledge that there will always be a range of
views concerning these impacts and we welcome constructive dialogue on them
with our stakeholders.
Overall we see the Article 16 process and our renewed conversations with
stakeholders as an opportunity to optimise the Project's design and our
proposed community programmes. The team and our experienced consultants are
now working hard to complete the required tasks, which we believe we can do in
the time available. Furthermore, our robust cash position, £9.4m as at 30
June, gives us sufficient capital to complete this phase and, if the approval
is given by APA, move into the next phase with confidence.
Barroso Lithium Project, Portugal
Environmental Licencing process
In July 2022 Savannah agreed to APA's proposal that the EIA evaluation
process, the major step in obtaining the Environmental licence required for
the Project, should continue under Article 16 of Decree-Law No. 151-B/2013,
amended and republished by the Decree-law 152-B/2017 of 11 December ('Article
16'), which regulates Environmental Impact Assessments in Portugal. After the
extended period of time taken during previous phases of the EIA review process
(the EIA was initially submitted in June 2020), we were encouraged by this
option under the relevant legislation as it has both a fixed time period,
including a maximum 50 business day review period for a final 'Declaration of
Environmental Impact' ('DIA') decision by APA, and provides the proponent with
greater opportunity to engage directly with APA than in previous phases. To
this end, we have already held a number of useful and productive meetings with
APA, and, in collaboration with our expert consultants, we are developing
revised plans for aspects of the Project which APA have identified as
requiring further consideration. These include certain physical aspects such
as infrastructure, management of local water resources, landscape impacts and
ecological systems, and socio-economic considerations including, the impact of
the Project on other local businesses. We are also looking to deepen the links
between the Project and the local communities and the municipality.
As we announced on 21 September, it has also been confirmed in our ongoing
discussions with APA that the 'six months' period defined in the Article 16
legislation allowed for a proponent to resubmit any relevant parts of its EIA
documents, in fact refers to 180 business days and not six calendar months. As
a result, Savannah will have up to 17 March 2023 to submit its revised plans
to the regulator, with APA's 50 business day review to follow thereafter.
Based on our ongoing discussions with APA and our consultants to date, we
expect to make our submission in Q1 2023.
While I understand the extension caused to the overall Project timetable by
the Article 16 phase will be a frustration to many shareholders, it is
imperative that we revise elements of the Project's design to give ourselves
the best chance of receiving a positive decision from APA. This period should
also give us an opportunity to consult with other stakeholders about the
revised Project design, how we will minimise its impact on the local
environment and society, and the associated socio-economic benefits the
Project can bring.
Stakeholder Engagement
In our continuing efforts to secure social acceptance for the Project, senior
management and the team in Portugal have engaged extensively with all key
stakeholders in the year to date. Most significantly, the move into the
Article 16 phase on the EIA and team changes within Savannah have given us an
opportunity to start a new chapter in our conversations with a number of key
stakeholders. Hence, we are in the process of establishing and building new
relationships, as well as strengthening those which have been formed over the
years Savannah have been present in Portugal. We hope our efforts will form
the basis for meaningful progress and future mutual benefit.
During the year to date we also have made significant efforts to maintain our
interaction with the local communities. These efforts have included increasing
the number of information centres in the area, recruiting new staff from the
local population to man our centres and to represent Savannah in the
community, continuing to give preference to local suppliers of goods and
services, and providing support to local groups and events.
As part of our work in creating a Project specific Environmental and Social
Management System, we have commissioned the highly experienced social
performance consultancy, Community Insights Group (CIG), to support the
Project in its stakeholder engagement planning. CIG has extensive experience
in mining and energy projects around the world, including in Portugal. CIG's
staff have already visited the Project and have been gathering background
information from Savannah's staff and other sources. During the remainder of
the year they will be undertaking an extensive survey amongst the local
community to build a detailed profile of local attitudes towards the Project
and to better understand the relationship that members of the local community
expect to have with the Project, and what actions they would like Savannah to
undertake. Results from the first phase of CIG's work are expected in the
final quarter of the year.
Commercial Discussions
Project 'stakeholders' also include our future commercial partners. As we have
highlighted previously, the level of interest in offtake from the Project has
increased in line with the rising price of lithium. This reflects the growing
appreciation shown by lithium consumers and new market entrants alike that the
current tight supply conditions in the lithium sector are likely to continue
over the long term and that, more generally, insufficient raw material supply
poses a significant threat to their own business plans. The growing level of
commercial interest in the Project also reflects the increasing number of
merchant lithium refineries now being planned in Europe, and the arrival of
the major metal trading houses in the battery metal markets. Our preference
remains to do business with groups committed to developing the lithium value
chain in Portugal and Europe.
Against this background, we remain in discussions with several groups, and
have kept these parties informed about the move into the Article 16 phase on
the EIA, and the impact on the Project's timeline. As we highlighted in July,
with our new expectation of first production in 2026 we remain well aligned
with the development schedules of the two proposed refineries in Portugal and
other chemical plants elsewhere in Europe. In terms of formally finalising
offtake agreements, Savannah and our potential counterparties are unlikely to
take this step until we have clarity on the Project's licencing status next
year. However, we will be continuing discussions in preparation for that time,
focused on deal structures which will help to de-risk the Project's future
construction and financing.
Decarbonisation study
During the period we also initiated and advanced a decarbonisation study,
following the commitment the Company made in November 2021 to move towards net
zero Scope 1 and 2 emissions once the Project is in operation, and also to
reduce the Scope 3 emissions as much as possible. ECOPROGRESSO, part of the
Quadrante Group, have been leading this study and working in collaboration
with the global technology leader, ABB. We expect to receive the study's
initial findings shortly, which can then be further investigated in the next
phase. We also expect to attract more partners to work on this critical
element of the overall Project, which underlies Savannah's commitment to
minimising the carbon footprint associated with Europe's domestic lithium
value battery chain, such as vehicle OEMs.
Definitive Feasibility Study
As we have highlighted previously, it will only be possible to complete the
Definitive Feasibility Study ('DFS') once both the Project's final design has
been agreed through the environmental licencing process, and necessary
fieldwork has been undertaken. Hence, we will progress the DFS in parallel
with the second and final ('Relatório de Conformidade Ambiental do Projeto de
Execução, 'RECAPE') design phase of the environmental licencing process once
a positive DIA is received. We expect the DFS to take around 12 months to
complete from the point when fieldwork is restarted.
Importantly, during 2022 we have been successful in significantly advancing a
key input into the DFS, namely the metallurgical process that will be used to
produce the spodumene lithium concentrate and quartz-feldspar products at the
Project. As we announced in February, we have been able to design a circuit
which will produce a high quality spodumene concentrate through the use of
industry standard equipment and processes and an environmentally friendly
reagent regime. The initial lab scale tests returned spodumene recovery rates
in the high 70% range, while the more advanced locked cycle tests completed in
June showed recoveries as high as 81% with the potential for lower reagent
consumption rates than first expected. Further opportunities have also been
identified to potentially increase recovery still further, and these will be
investigated along with completion of pilot plant test work, once fieldwork is
underway again and sufficient ore samples are available from the planned
infill drill programme.
In the meantime, we have been regularly reviewing our estimates of future
capital and operating costs on the Project based on updated inputs from
potential suppliers, consultants and other market sources. These exercises do
imply a level of cost inflation in line with that being reported by other
development companies in the mining sector.
Legal Proceedings
As shareholders will be aware, two sets of proceedings have been initiated in
the Portuguese courts during 2022 in relation to the Project. The first, which
was filed in February (RNS 4 February 2022) was brought by the Parish of Covas
do Barroso as plaintiff in the Mirandela Fiscal and Administrative Court in
Portugal against the Republic of Portugal and the Ministry of Economy as
defendants. In this case, which the Company's legal counsel advise is without
foundation, Savannah's wholly owned subsidiary, Savannah Lithium Unipessoal
Lda, has been joined as the counter-interested party (not a defendant). The
litigation seeks to nullify certain administrative actions taken by the
defendants in June 2016 including the addition of lithium to and the expansion
in the area of the C-100 Mining Lease. To date the Ministry of Economy has
presented its contestation to the lawsuit, to which the Parish of Covas do
Barroso has replied. The next step, therefore, is for the Court to decide
whether or not there is a case to answer. If it decides that the claim is
baseless, the case will not proceed. If it does decide there is a case to
answer, a date for a hearing will be set. Savannah's counsel advises that a
decision on whether a hearing is required can be expected early in 2023.
The second case (RNS 25 July 2022) is a civil claim lodged at the Vila Real
District court by the Management Commission of the Covas do Barroso Baldios
(the 'Baldios Commission') against certain private landowners in respect of
some land packages at the Project which they sold to Savannah. The Baldios
Commission claims that the landowners have registered some of their properties
in excess and occupying property that is actually Baldios land (community
owned and managed land). As Savannah has acquired some of those properties,
the Baldios Commission has included Savannah in this claim. For reference, out
of a total area of 593 hectares within the Project's concession, the areas
that are being disputed by the Baldios Commission occupy approximately 8
hectares, or circa 1.4% of the total area of the Project. To the best of
Savannah's knowledge, the purchased properties correspond with the
declarations made by the private landowners to the official registration of
cadastral information office and Savannah has purchased exactly what is
registered with the Land Registry Office. The court is in the process of
notifying all defendants of this claim, including Savannah, and requesting
submission of responses. Savannah expects to be asked to submit its defence,
which is being prepared, by the end of October. We have been advised that this
case could take over one year to conclude.
Savannah will make further announcements regarding the litigation as
appropriate, but the Company is keen to reiterate that the C-100 Mining Lease
is fully granted, has a term of 30 years to 2036 and remains in good standing.
Neither set of legal proceedings is impacting on activities at the Project or
the current Article 16 phase of the environmental impact assessment process.
Mozambique
Following the cancellation of its unincorporated joint venture with Rio Tinto
on the Mutamba mineral sands project last year (announced 1 December 2021),
Savannah remains in the process of divesting its only residual Mozambiquan
assets (Matilda Minerals Lda and Mining Concession 9735C). Discussions are
ongoing and we remain confident that a suitable deal structure can be agreed
with an acquirer to fully complete Savannah's exit from the Mozambique mineral
sands sector.
Financials
During the period Savannah has importantly maintained a robust cash position
of £9.4m (31 December 2021: £13.0m) following the oversubscribed placing in
April 2021, which raised gross proceeds of £10.3m, and the US$9.5m received
from Rio Tinto on termination of the unincorporated Joint Venture on the
Mutamba project last December. In terms of the broader financial performance
Savannah recorded a first half net loss from continuing operations of £1.3m
(30 June 2021: £1.9m) with a £0.6m exchange rate gain (30 June 2021: -
£0.1m) offsetting a 10% increase in administrative expenses (primarily
professional fees supporting the Project's development).
Outlook
In the months ahead Savannah's top priorities are to revise the Barroso
Lithium Project's EIA to align with APA's requests under the Article 16
protocol so that a positive DIA decision is received and to build strong and
meaningful relationships with key stakeholders so social acceptance of the
Project is achieved.
Assuming a positive outcome means we must also continue to prepare for the
future by deepening our ties with the local areas, advancing commercial
discussions and our decarbonisation strategy, building our in-country team and
brand, and marketing Savannah to investors as a means for them of securing
responsibly managed exposure to lithium prices and Europe's lithium-ion
battery value chain. We must also be ready to take the chance to grow the
Company's asset portfolio when relevant opportunities are identified.
By continuing to maintain a close control of costs going forward, Savannah's
cash reserve (£9.4m) should be sufficiently comfortable to see the Company
through the Article 16 process and into the DFS/RECAPE phase of the Project's
development. Securing subsequent finance at that point, whether it be from an
offtake partner, strategic investor, capital markets, or alternative sources,
when the Project is significantly de-risked from a licencing perspective
should be readily achievable.
We look forward to providing shareholders with updates regarding the Article
16 process as appropriate in the coming weeks. Additionally, we plan to
provide the market with updates on the decarbonisation strategy, commercial
discussions, staff appointments, and community engagement activities.
I take this opportunity to thank our staff for their persistent efforts to
drive forward the Barroso Lithium Project, and our shareholders for their
continuing support while we do this.
Matthew King
Chairman
Date: 23 September 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30
JUNE 2022
Unaudited Unaudited Audited
Six months to 30 June 2022 Six months to 30 June 2021* Year ended 31 December 2021
Notes
£ £ £
CONTINUING OPERATIONS
Revenue - - -
Other Income - - -
Administrative Expenses (1,932,032) (1,750,161) (3,305,649)
Foreign exchange gain/(loss) 628,980 (120,501) (213,088)
OPERATING LOSS (1,303,052) (1,870,662) (3,518,737)
Finance Income 341 355 671
Finance Costs - (114) (139)
LOSS FROM CONTINUING OPERATIONS BEFORE AND AFTER TAX (1,302,711) (1,870,421) (3,518,205)
(LOSS)/GAIN ON DISCONTINUED OPERATIONS BEFORE AND AFTER TAX (50,838) 436,341 2,371
LOSS BEFORE AND AFTER TAX ATTRIBUTABLE (1,353,549) (1,434,080) (3,515,834)
TO EQUITY OWNERS OF THE PARENT
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to Profit or Loss:
Net change in Fair Value through Other Comprehensive Income of Equity (13,844) 100,060 82,006
Investments
Items that will or may be reclassified to Profit or Loss:
Exchange Gains arising on translation of foreign operations 397,464 131,362 154,815
OTHER COMPREHENSIVE INCOME FOR THE PERIOD 383,620 231,422 236,821
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO EQUITY OWNERS OF THE (969,929) (1,202,658) (3,279,013)
PARENT
Loss/(Gain) per share attributable to Equity Owners of the parent expressed in
pence per share:
Basic and Diluted
From Operations 3 (0.08) (0.09) (0.22)
From Continued Operations 3 (0.08) (0.12) (0.22)
From Discontinued Operations 3 (0.00) 0.03 0.00
* The disclosures as at 30 June 2021 have been re-presented so that the
operations that are discontinued at 30 June 2022 are classified as
discontinued.
The notes form part of this Interim Financial Report.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2022
Unaudited Unaudited Audited
Notes 30 June 30 June 31 December
2022 2021 2021
£ £ £
ASSETS
NON-CURRENT ASSETS
Intangible Assets 4 15,235,815 17,836,604 14,137,817
Right-of-Use Assets 18,052 12,256 5,390
Property, Plant and Equipment 5 1,366,935 1,064,198 676,536
Other Non-Current Assets 7 74,863 70,803 69,542
Bank Deposits 7 - 687,467 -
TOTAL NON-CURRENT ASSETS 16,695,665 19,671,328 14,889,285
CURRENT ASSETS
Equity instruments at FVTOCI 17,731 66,002 31,575
Trade and Other Receivables 6 1,035,356 423,513 962,058
Other Current Assets 7 18,211 16,137 19,300
Cash and Cash Equivalents 9,433,689 9,659,326 13,002,084
TOTAL CURRENT ASSETS 10,504,987 10,164,978 14,015,017
TOTAL ASSETS 27,200,652 29,836,306 28,904,302
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share Capital 9 16,889,598 16,889,598 16,889,598
Share Premium 41,693,178 41,695,948 41,693,178
Merger Reserve 6,683,000 6,683,000 6,683,000
Foreign Currency Reserve 358,738 (62,179) (38,726)
Warrant Reserve - 12,157 -
Share Based Payment Reserve 425,019 152,335 305,095
FVTOCI Reserve (35,281) (14,120) (21,437)
Retained Earnings (39,606,088) (36,214,631) (38,284,665)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 26,408,164 29,142,108 27,226,043
LIABILITIES
NON-CURRENT LIABILITIES
Lease Liabilities 11,051 - -
TOTAL NON-CURRENT LIABILITIES 11,051
CURRENT LIABILITIES
Lease Liabilities 5,214 6,477 1,132
Trade and Other Payables 8 776,223 687,721 1,677,127
TOTAL CURRENT LIABILITIES 781,437 694,198 1,678,259
TOTAL LIABILITIES 792,488 694,198 1,678,259
TOTAL EQUITY AND LIABILITIES 27,200,652 29,836,306 28,904,302
The Interim Financial Report was approved by the Board of Directors on 23
September 2022 and was signed on its behalf by:
………………………………………………..
Dale Ferguson
Chief Executive Officer
Company number: 07307107
The notes form part of this Interim Financial Report.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE
2022
Share Capital Share Premium Foreign Currency Reserve Warrant Reserve Share Based Payment Reserve FVTOCI Reserve Retained Earnings Total Equity
£ £ Merger Reserve £ £ £ £ £ £
£
At 1 January 2021 14,309,910 34,474,884 6,683,000 (193,541) 12,157 393,865 276,712 (35,450,713) 20,506,274
Loss for the period - - - - - - - (1,434,080) (1,434,080)
Other Comprehensive Income - - - 131,362 - - (290,832) 390,892 231,422
Total Comprehensive Income for the period - - - 131,362 - - (290,832) (1,043,188) (1,202,658)
Issue of Share Capital (net of expenses) 2,579,688 7,221,064 - - - - - - 9,800,752
Lapse of Options - - - - - (279,270) - 279,270 -
Share Based Payment charges - - - - - 37,740 - - 37,740
At 30 June 2021 16,889,598 41,695,948 6,683,000 (62,179) 12,157 152,335 (14,120) (36,214,631) 29,142,108
Loss for the period - - - - - - - (2,081,754) (2,081,754)
Other Comprehensive Income - - - 23,453 - - 372,838 (390,892) 5,399
Total Comprehensive Income for the period - - - 23,453 - - 372,838 (2,472,646) (2,076,355)
Issue of Share Capital (net of expenses) - (2,770) - - - - - - (2,770)
Share Based Payment charges - - - - - 163,060 - - 163,060
Lapse of Options - - - - - (10,300) - 10,300 -
Lapse of Warrants - - - - (12,157) - - 12,157 -
Disposal of FVTOCI investments - - - - - - (380,155) 380,155 -
At 31 December 2021 16,889,598 41,693,178 6,683,000 (38,726) - 305,095 (21,437) (38,284,665) 27,226,043
Loss for the period - - - - - - - (1,353,549) (1,353,549)
Other Comprehensive Income - - - 397,464 - - (13,844) - 383,620
Total Comprehensive Income for the period - - - 397,464 - - (13,844) (1,353,549) (969,929)
Issue of Share Capital (net of expenses) - - - - - - - -
Lapse of Options - - - - - (32,126) - 32,126 -
Share Based Payment charges - - - - - 152,050 - - 152,050
At 30 June 2022 16,889,598 41,693,178 6,683,000 358,738 - 425,019 (35,281) (39,606,088) 26,408,164
The notes form part of this Interim Financial Report
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2022
Notes Unaudited Six months to June 2022 Unaudited Six months to June 2021 Audited
£ £ Year ended December
2021
£
Cash Flows used in Operating Activities
Loss for the period (1,353,549) (1,434,080) (3,515,834)
Depreciation and Amortisation charges 5 12,137 19,626 35,369
Impairment of Other Intangible Assets - 5,948 5,948
Share Based Payments Reserve charge 152,050 37,740 200,800
Shares issued in lieu of payments to suppliers - -
Finance Income (12,697) (12,711) (671)
Finance Expense 3,557 3,671 139
Exchange (Gains) / Losses (628,090) 120,501 213,088
Loss on sale of discontinued operations - - -
Gain on relinquishment of the rights and obligations of discontinued - - (627,078)
operations
Cash Flow from Operating Activities before changes in Working Capital (1,826,592) (1,259,305) (3,688,239)
(Increase) / Decrease in Trade and Other Receivables (97,472) 29,212 (267,267)
(Decrease) / Increase in Trade and Other Payables (765,133) (464,981) 451,801
Net Cash used in Operating Activities (2,689,197) (1,695,074) (3,503,705)
Cash flow used in Investing Activities
Purchase of Intangible Exploration Assets 4 (939,423) (685,970) (1,603,208)
Purchase of Right-of-Use assets - (798) (798)
Purchase of Tangible Fixed Assets 5 (665,952) (20,027) (633,090)
Proceeds from sale of Investments - 462,115 654,347
Interest received 12,697 12,711 671
Proceeds from relinquishment of the rights and obligations of discontinued 86,675 - 6,506,852
operations
Net Cash (used)/ received in Investing Activities (1,506,003) (231,969) 4,924,774
Cash Flow from/(used in) Financing Activities
Proceeds from issues of Ordinary Shares (net of expenses) - 9,704,501 9,797,982
Proceeds from exercise of share options - - -
Principal paid on Lease Liabilities (2,275) (6,263) (11,607)
Interest paid (3,557) (3,671) (139)
Net Cash (used)/received from Financing Activities (5,832) 9,694,567 9,786,236
Increase / (Decrease) in Cash and Cash Equivalents (4,201,032) 7,767,524 11,207,305
Cash and Cash Equivalents at beginning of period 13,002,083 2,000,209 2,000,209
Exchange Gains / (Losses) on Cash and Cash Equivalents 632,638 (108,407) (205,430)
Cash and Cash Equivalents at end of period 9,433,689 9,659,326 13,002,084
The notes form part of this Interim Financial Report.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30
JUNE 2022
1. BASIS OF PREPARATION
The financial information set out in this report is based on the Consolidated
Financial Statements of Savannah Resources Plc (the 'Company') and its
subsidiary companies (together referred to as the 'Group'). The Interim
Financial Report of the Group for the six months ended 30 June 2022, which is
unaudited, was approved by the Board on 23 September 2022. The financial
information contained in this interim report does not constitute statutory
accounts as defined by s434 of the Companies Act 2006. The statutory accounts
for the year ended 31 December 2021 have been filed with the Registrar of
Companies. The Auditors' Report on those accounts was unqualified and did not
contain a statement under section 498 (2) or 498 (3) of the Companies Act
2006.
The financial information set out in this report has been prepared in
accordance with the accounting policies set out in the Annual Report and
Financial Statements of Savannah Resources Plc for the year ended 31 December
2021. New standards and amendments to IFRS effective as of 1 January 2022 have
been reviewed by the Group and there has been no material impact on the
financial information set out in this report as a result of these standards
and amendments.
The Group Interim Financial Report is presented in Pound Sterling.
Going Concern
The Group had cash balance of £9.4m at 30 June 2022. The Directors have
reviewed the cash-flow projection for the Group and concluded that it has
sufficient finance in place to meet its financial commitments for at least 12
months from the date of approval of the Interim Financial Report.
In forming their view, the Directors have considered the impacts of the
conflict in Ukraine, COVID-19 related restrictions and potential future delays
on the work schedule. Whilst the potential future impacts are unknown, the
Board has considered the effect that additional delays in the work schedule
could have on the Group's available cash resources. Considering the impact of
the conflict in Ukraine the Directors considered that it is likely to
accelerate the EU's move to renewable energy sources and away from carbon
fuels, assisting the ongoing transition to EVs and the related need for
lithium. Having factored in reasonably plausible scenarios and reasonable
mitigating actions (for example, the ability to reduce its uncommitted future
expenditure), the Director's consider sufficient cash balance are maintained
under each scenario and that the Company will be able to meet its obligations
as they fall due.
Accordingly, the Directors have concluded that these circumstances form a
reasonable expectation that the Group has adequate resources to continue in
operational existence, for the foreseeable future. For these reasons, the
Directors continue to adopt the going concern basis in preparing the Interim
Financial Report.
2. SEGMENTAL REPORTING
The Group complies with IFRS 8 Operating Segments, which requires operating
segments to be identified on the basis of internal reports about components of
the Group that are regularly reviewed by the chief operating decision maker,
which the Company considers to be the Board of Directors. In the opinion of
the Directors, the operations of the Group are comprised of exploration and
development in Portugal, headquarter and corporate costs and the Company's
third party investments and the discontinued operation in Mozambique.
Based on the Group's current stage of development there are no external
revenues associated to the segments detailed below. For exploration and
development in Portugal and the discontinued operation in Mozambique the
segments are calculated by the summation of the balances in the legal entities
which are readily identifiable to each of the segmental activities. In the
case of the Investments, this is calculated by analysis of the specific
related investment instruments. Recharges between segments are at cost
(including transfer price charge) and included in each segment below.
Inter-company loans are eliminated to zero and not included in each segment
below.
Portugal Lithium HQ and Corporate Investments Elimination Total
Discontinued Operation Mozambique Mineral Sands *
£ £ £ £ £ £
Period 30 June 2022
Revenue (1) - 1,065,095 471,016 - (1,536,111) -
Finance Costs - - - - - -
Interest Income - - 341 - - 341
Share Based Payments - - (152,050) - - (152,050)
Loss for the period (50,838) (932,463) (370,248) - - (1,353,549)
Total Assets 752,409 17,298,526 9,131,986 17,731 - 27,200,652
Total Non-Current Assets 1,831 16,687,058 6,776 - - 16,695,665
Additions to Non-Current Assets - 1,516,978 - - - 1,516,978
Total Current Assets 750,578 611,468 9,125,210 17,731 - 10,504,987
Total Liabilities (96,113) (315,723) (380,652) - - (792,488)
* This is including costs related to the Company's Mozambican subsidiary,
Matilda Minerals Lda.
Discontinued Operation Portugal Lithium HQ and Corporate Investments Elimination Total
Mozambique Mineral Sands
£ £ £ £ £ £
Period 31 December 2021
Revenue (1) - 1,115,071 646,619 - (1,761,690) -
Finance Costs 3,557 (25) - - - 3,532
Interest Income (12,356) - 316 - - (12,040)
Share Based Payments - - (163,060) - - (163,060)
Loss for the period 211,921 (1,053,916) (1,239,759) - - (2,081,754)
Total Assets 676,357 15,487,686 12,708,684 31,575 - 28,904,302
Total Non-Current Assets 1,483 14,881,026 6,776 - - 14,889,285
Additions to Non-Current Assets - 1,422,507 - - 1,422,507
Total Current Assets 674,874 606,660 12,701,908 31,575 - 14,015,017
Total Liabilities (130,940) (299,648) (1,247,671) - - (1,678,259)
Discontinued Operation Portugal Lithium HQ and Corporate Investments Elimination Total
Mozambique Mineral Sands
£ £ £ £ £ £
Period 30 June 2021
Revenue (1) - 539,496 385,655 - (925,151) -
Finance Costs (3,557) (114) - - - (3,671)
Interest Income 12,356 - 355 - - 12,711
Share Based Payments - - (37,740) - - (37,740)
Impairment of Assets - - (5,948) - - (5,948)
Loss for the period (209,550) (589,510) (635,020) - - (1,434,080)
Total Assets 6,097,829 13,790,051 9,882,424 66,002 - 29,836,306
Total Non-Current Assets 5,975,203 13,689,348 6,777 - - 19,671,328
Additions to Non-Current Assets 255,871 468,602 - - - 724,473
Total Current Assets 122,626 100,703 9,875,647 66,002 - 10,164,978
Total Liabilities (23,671) (171,796) (498,731) - - (694,198)
( )
(1) Revenues included in the Portugal Lithium segment include £1,065,096 (31
December 2021: £1,654,567; 30 June 2021: £539,496) related to intercompany
recharges within this segment and therefore eliminated in the Elimination
column
3. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the
earnings attributable to the ordinary shareholders by the weighted average
number of ordinary shares outstanding during the period.
In accordance with IAS 33 as the Group is reporting a
loss for both this and the preceding period the share options are not
considered dilutive because the exercise of share options and warrants would
have the effect of reducing the loss per share.
Reconciliations are set out below:
Unaudited Six months to 30 June 2022 Unaudited Six months to 30 June 2021 Audited Year ended 31 December 2021
Basic and Diluted Loss per Share:
Losses attributable to Ordinary Shareholders (£):
Total Loss for the period (£) (1,353,549) (1,434,080) (3,515,834)
Total Loss for the period from Continuing Operations (£) (1,302,711) (1,870,421) (3,518,205)
Total (Loss)/Gain for the period from Discontinued Operations (£) (50,838) 436,341 2,371
Weighted average number of shares (number) 1,688,959,820 1,518,176,396 1,609,019,120
Loss per share - total loss for the period from Operations (£) (0,00080) (0.00094) (0.00219)
Loss per share - total loss for the period from Continuing Operations (£) (0,00077) (0.00123) (0.00219)
(Loss)/Gain per share - total (Loss)/Gain for the period from Discontinued (0,00003) 0,00029 0.00000
Operations (£)
4. INTANGIBLE ASSETS
Exploration and Evaluation Assets
£
Cost
At 1 January 2021 17,246,222
Additions 687,447
Exchange differences (97,065)
At 30 June 2021 17,836,604
Additions 1,130,123
Disposal assets on relinquishment of rights and obligations (4,702,323)
Exchange difference (126,587)
At 31 December 2021 14,137,817
Additions 840,532
Exchange differences 257,466
At 30 June 2022 15,235,815
Depreciation and Impairment
At 1 January 2021 -
At 30 June 2021 -
At 31 December 2021 -
At 30 June 2022 -
Net Book Value
At 30 June 2021 17,836,604
At 31 December 2021 14,137,817
At 30 June 2022 15,235,815
In December 2021 a Deed of Termination was signed with Rio Tinto in relation
to the Consortium Agreement signed in October 2016. Under this Deed of
Termination, the rights and obligations provided to Savannah Group on Rio
Tinto's licences under the Consortium Agreement were relinquished, and agreed
that no exploration or development activities should be undertaken by any
Savannah Group entity. Therefore, all exploration and evaluation assets
related to the Mozambique licences were registered as disposed. All remaining
exploration and evaluation assets relate to the Barroso Lithium Project.
5. PROPERTY, PLANT AND EQUIPMENT
Motor Vehicles Office Equipment Plant and Machinery Land Total
£
Cost
At 1 January 2021 58,226 32,414 991,887 56,337 1,138,864
Additions - 20,027 - - 20,027
Exchange differences (2,591) 425 157,227 (2,506) 152,555
At 30 June 2021 55,635 52,866 1,149,114 53,831 1,311,446
Additions - 2,099 - 610,964 613,063
Disposal assets on relinquishment of rights and obligations - (16,784) (1,182,880) - (1,199,664)
Exchange difference (1,234) (433) 33,766 (15,615) 16,484
At 31 December 2021 54,401 37,748 - 649,180 741,329
Additions - 8,068 - 657,884 665,952
Exchange differences 1,350 1,106 - 30,477 32,933
At 30 June 2022 55,751 46,922 - 1,337,541 1,440,214
Depreciation
At 1 January 2021 35,868 30,279 99,189 - 165,336
Charge for the period 6,127 4,211 57,456 - 67,794
Exchange differences (492) (1,113) 15,723 - 14,118
At 30 June 2021 41,503 33,377 172,368 - 247,248
Charge for the period 5,832 3,148 49,680 - 58,660
Disposal assets on relinquishment of rights and obligations - (18,645) (224,012) - (242,657)
Exchange difference (1,002) 580 1,964 - 1,542
At 31 December 2021 46,333 18,460 - - 64,793
Charge for the period 5,767 971 - - 6,738
Exchange differences 1,276 472 - - 1,748
At 30 June 2022 53,376 19,903 - - 73,279
Net Book Value
At 30 June 2021 14,132 19,489 976,746 53,831 1,064,198
At 31 December 2021 8,068 19,288 - 649,180 676,536
At 30 June 2022 2,375 27,019 - 1,337,541 1,366,935
As consequence of the signature of the Deed of Termination with Rio Tinto in
relation to the Consortium Agreement signed in October 2016 all property,
plant and equipment related to the Mozambique licences were registered as
disposed.
The additions in land reflect the land acquisition program that Savannah has
in place in Portugal to acquire the land required for the future development
of the Barroso Lithium project.
All remaining property, plant and equipment assets relates to the Barroso
Lithium Project.
6. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
£ £ £
Current
VAT recoverable 109,117 63,253 66,867
Other Receivables 926,239 360,260 895,191
Total Current Trade and Other Receivables 1,035,356 423,513 962,058
7. OTHER CURRENT AND NON-CURRENT ASSETS
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
£ £ £
Non-Current
Guarantees 66,257 62,674 61,284
Cash deposits - 687,467 -
Other 8,606 8,129 8,258
Total Other Non-Current Assets 74,863 758,270 69,542
Current
Other 18,211 16,137 19,300
Total Other Current Assets 18,211 16,137 19,300
8. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2022 30 June 2021 31 December 2021
£ £ £
Current
Trade Payables 276,820 398,923 866,053
Other Payables 54,646 100,315 79,236
Accruals 435,275 188,483 731,838
Taxes 9,482 - -
Total Current Trade and Other Payables 776,223 687,721 1,677,127
9. SHARE CAPITAL
Allotted, issued and fully paid
Six months to Six months to Six months to
30 June 2022 30 June 2021 31 December 2021
£0.01 ordinary shares number £0.01 ordinary shares number £0.01 ordinary shares number
£ £ £
At beginning of period 1,688,959,820 16,889,598 1,430,991,035 14,309,910 1,688,959,820 16,889,598
Issued during the period:
Share placement - - 257,968,785 2,579,688 - -
At end of period 1,688,959,820 16,889,598 1,688,959,820 16,889,598 1,688,959,820 16,889,598
The par value of the Company's shares is £0.01.
10. GROUP CONTINGENT LIABILITIES
Details of contingent liabilities where the probability
of future payments is not considered remote are set out below, as well as
details of contingent liabilities, which although considered remote, the
Directors consider should be disclosed. The Directors are of the opinion that
provisions are not required in respect of these matters, as at the reporting
date it is not probable that a future sacrifice of economic benefits will be
required and the amount is not capable of reliable measurement.
Consideration payable in relation to the acquisition of
Mining Lease Application for lithium, feldspar and quartz (Portugal lithium
project)
In June 2019 the Company exercised its option to acquire a
Mining Lease Application for lithium, feldspar and quartz from private
Portuguese company, Aldeia & Irmão, S.A.. The total purchase price for
the acquisition is EUR €3,250,000 (~ GBP £2,796,000), which will only
become due once the Mining Lease Application has been granted and the Mining
Rights transferred to an entity within the Group, at which point the agreed
payment schedule will consist of an initial EUR €55,000 (~ GBP £47,000)
payment with the balance due in 71 equal monthly instalments. Upon delivery of
the request for transfer of the Mining Rights to an entity within the Group,
the Group shall provide with a bank guarantee of EUR €3,195,000 (~ GBP
£2,749,000) that will be reduced in accordance with the 71 monthly
instalments. As at 30 June 2022 the mining lease has not been granted.
11. EVENTS AFTER THE REPORTING DATE
Mr David Archer stepped down as the Company's CEO on 5 July 2022. Mr Archer
received his accrued salary up to that date, and no further payments shall be
made to him. Furthermore, the 20,000,000 share options issued to Mr Archer
have lapsed and the accounting entry shall be recorded in the Company's Annual
Report and Financial Statements for 2022.
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
finnCap Ltd (Joint Broker) Tel: +44 20 7220 0500
Christopher Raggett/ Tim Redfern
RBC Capital Markets (Joint Broker) Tel: +44 (0) 20 7653 4000
Farid Dadashev/ Jamil Miah
WH Ireland Limited (Joint Broker) Tel: +44 20 7220 1666
Ben Good/ Darshan Patel (Corporate Finance)
Aimee McCusker (Corporate Broking)
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 IR FFFLIAEIEFIFRecent news on Savannah Resources
See all newsREG - Savannah Resources - Appointment of CEO to Board and PDMR Notification
AnnouncementREG - Savannah Resources - Financial Results for Year Ended 31 December 2023
AnnouncementREG - Savannah Resources - Update on Key Project Workstreams
AnnouncementRCS - Savannah Resources - Savannah wins Overseas Direct Investment Award
AnnouncementREG - Savannah Resources - Investor Presentation
Announcement