REG - Savannah Resources - Interim Results for Six Months Ended 30 June 2024
30/09/2024 07:00
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RNS Number : 1967G Savannah Resources PLC 30 September 2024
30 September 2024
Savannah Resources Plc
(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the 'Company')
Interim Results for Six Months Ended 30 June 2024
Savannah Resources Plc, the developer of the Barroso Lithium Project (the
'Project') in Portugal, Europe's largest spodumene lithium deposit, is pleased
to provide its interim results for the six months ended 30 June 2024.
First half 2024 and recent highlights include:
Corporate:
· First outcome from the Strategic Partnering Process announced in
June: Landmark agreement reached with AMG Critical Materials, N.V. ('AMG'),
which included a GBP16m equity investment at a 35% premium to 30-day VWAP (AMG
now holding a 15.77% stake), an offtake heads of terms agreement, a mutual
option for a 'full project financing solution' led by AMG, and a Co-operation
agreement on studies for a feldspar/spodumene pilot plant in Portugal and for
the construction of a Spodumene-to-Lithium Carbonate refinery in Portugal or
Spain.
· Chairman appointment: Experienced lithium sector executive, Rick
Anthon, appointed as Chairman on the retirement of former Chairman, Matthew
King.
· Other board changes: Diogo de Silveira appointed as Deputy Chairman
and Mike Connor appointed as Non-Executive Director as AMG's Board
representative. Former Non-Executive Directors, James Leahy and Mary Jo
Jacobi, retired from the Board.
· Financials: Losses from continued operations increased by 27% vs. H1
2023 to GBP 1.9m (2023: 1.5m) due to increased activity on a number of fronts
and a larger workforce. Following AMG's GBP 16m investment, highest ever cash
balance of GBP 21.6m reported as at 30 June 2024 (30 June 2023 GBP 4.8m).
· Savannah continues to have 100% ownership of the Project and at least
50% of its future concentrate offtake available to place with other partners.
Barroso Lithium Project (the 'Project'):
Definitive Feasibility Study ('DFS'):
· Phase 1 of DFS drilling programme completed in July with c.6,000m
drilled.
o Confirmed extension to the Pinheiro, Reservatório and NOA orebodies and
identified a new mineralised zone at Pinheiro with the highest lithium assays
reported at the Project to date.
o First of new JORC compliant Resource estimates made. NOA orebody (0.66Mt
at 1.03% Li(2)O) now with 93% of the tonnage in the Indicated category, ready
for subsequent conversion into Reserves.
· Work advanced on final designs for processing plant and other key
project infrastructure.
· Phase 2 drilling (c.13,000m) expected to start in Q4 2024.
Environmental Licencing:
· Good progress was made with the monitoring and study work required
for the current compliance, 'RECAPE', phase of the licencing process. All
outstanding contractors required now appointed.
Stakeholder Engagement:
· Community Relations Manager appointed to lead on local stakeholder
engagement activities.
· Social Impact Assessment being finalised by Community Insights Group.
· Regular meetings held with individuals, parishes and local groups and
community events hosted.
· Delegation of local people taken to meet community members living
near Somincor's Neves Corvo mine in southern Portugal to learn about the local
socio-economics benefits of that project.
· Further relationship building with key members of the new national
government, relevant government agencies and the Boticas municipality
authority.
· Greater awareness of Savannah and the Project generated through
regular in-country media coverage and relationship building with other
businesses, trade bodies, universities and NGOs.
· Significant growth reported in the Company's in-country shareholder
base with more than 12.5% of the Company's total share capital now owned by
Portuguese.
Land acquisition & access arrangements
· Savannah passed the milestone of having purchased 100 properties from
private landowners.
· To keep Project workstreams on track, Savannah started the legal
process which grants it temporary access to land it does not currently own on
the Project's concession area.
· After a delay of more than half a year caused by the change in
government earlier in the year, Savannah expects the legal process to conclude
shortly.
· Access to the land is expected from Q4 2024, which will allow the
completion of all fieldwork required to take the Project to a Final Investment
Decision ('FID') point.
· Friendly purchase programme remains open and active, with more
properties being acquired. Additional, alternative routes for land acquisition
remain available.
Project timetable:
· The delay of more than half a year experienced in receiving approval
for the temporary land access order has had an impact on the Project's
schedule.
· As a result, Savannah now expects to be drilling again in 4Q 2024 and
to deliver its DFS in the second half of 2025 with the environmental licencing
process expected to be completed in a similar timeframe.
· Commissioning and first production from the Project is now scheduled
for 2027 with nameplate capacity still expected to be reached later in that
year.
Next steps/future news flow:
· Restart of fieldwork from Q4 2024 following the conclusion of the
temporary land access legal process. Savannah is committed to proactively
upholding and fulfilling the mandate given by the government to the Project's
ongoing development while maintaining open two-way engagement with all
stakeholders.
· Continue to deepen relationships with local stakeholders through
multiple channels including additional local job creation and further
negotiations on land acquisition and access.
· Further in-country and international brand building through
engagement with media and investors.
· Continue negotiations with additional potential strategic partners
and evaluation of government/EU funding opportunities.
· Complete DFS and environmental licencing work towards FID funded by
record cash reserves.
CHAIRMAN'S STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2024
I am pleased to be making my first official communication with shareholders
since my appointment as the Company's Chairman in June and I am grateful for
the opportunity to be part of our Company's growing team, taking the Barroso
Lithium Project forward through development.
As the reporting period largely predates my own arrival at Savannah, I will
refer you to the Operational Review section below for the more detailed
reporting of activities in the first six months of the year. My thanks again
go to my predecessor in the Chair, Matthew King, and former Non-Executive
Directors James Leahy and Mary Jo Jacobi, who all retired from the Board in
June. Their significant efforts on behalf of Savannah, including their
encouragement and support of the team, have helped to progress our Company to
the strong position it is in today.
This is also another opportunity for me to welcome Mike Conner to our Board as
our newest Non-Executive Director. As the representative of AMG Critical
Materials N.V. ('AMG'), our new strategic partner and largest shareholder, we
look forward to his input and building a strong relationship with him and the
rest of the AMG team as we move forward together.
Without doubt, Savannah's new strategic partnership with AMG was the most
significant achievement of the first half of the year. This partnership
provides Savannah with the financing it needs to take the Project forward
towards production, whilst also providing a clear pathway towards full
financing of the Project. Furthermore, it pairs us with an established
spodumene concentrate producer and the soon-to-be first large-scale producer
of lithium chemicals in Europe, capable of providing valuable technical
insight as we continue with our own Project's development, backed by our
replenished cash reserves which, at the time of writing, stand at GBP 19.6m.
With the lithium market remaining subdued in the first half of the year,
despite the continuing growth in global EV sales (7m sold in H1 2024, +20% vs.
H1 2023, source: Rho Motion), the favourable timing and strategic significance
of this partnership, should not be underestimated.
As the Operational Review highlights, Savannah made solid progress in the
first half of 2024 advancing its key workstreams including the Project's
Definitive Feasibility Study ('DFS') and environmental licencing process,
stakeholder engagement and recruitment. Notable highlights included the
identification of a new zone of mineralisation at the Pinheiro orebody, which
returned the highest lithium assays reported at the Project to date, and the
growing engagement of the local population at our community social events.
The first half of 2024 was also marked by a change of government in Portugal.
Pleasingly, the political consensus of the major parties around the importance
of economic development, participation in the opportunities offered by
technological transformation and development of the battery value chain
remains strong. Further confirmation that our industry is well regarded was
shown by the clear support it received during a recent debate in the
Portuguese Parliament with specific comments relating to our Project showing
that its importance to the region and to the country is well understood.
However, the change of government has led to a delay of more than half a year
in the development of the Project. This relates to the time taken to receive
approval for the temporary land access order we require to proceed with our
fieldwork on land situated on the Project's concession area. With the new
government now settled in, I'm pleased to report that we have seen procedures
speed up and normalise in the state entities concerned. This is good news, not
only for Savannah, but also for Portugal in its continuing efforts to reap the
benefits of its natural endowments for the greater prosperity of its people,
be it our spodumene or other resources in other industries.
We now expect to deliver our DFS in the second half of 2025 with the
environmental licencing confirmation completed in a similar timeframe. The
commissioning and first production from the Project could then take place in
2027 with nameplate capacity still expected to be reached later in that year.
The Savannah team will look to make up on the schedule wherever possible of
course. Furthermore, the Project's schedule continues to fit well with the
general forecast of much tighter lithium market conditions and higher prices
from 2027 and beyond.
While the global market context has been more challenging recently, Savannah
will continue to push ahead -because of both the quality and low-cost nature
of its Project and also as we believe the longer-term outlook is now even
stronger from a fundamental perspective than before. Having worked in the
lithium sector for well over 15 years, I have experienced numerous challenges
with projects I have been involved with, a number of highly volatile market
cycles, and endless 'market noise' in relation to factors such as the speed of
EV adoption, competing battery technologies and interpretation of geopolitical
risks. However, it is my observation that the relevant mega trends such as the
energy transition away from fossil fuels, increasing electric mobility and the
desire of western governments to create strategic autonomy in new critical
industries, while often varying in intensity, have not, and will not, stop.
With this broad long-term view firmly in sight, it is the job of all of us on
the Savannah team to progress and develop our project so that our Company can
fully leverage the positive situation that exists today and that will deepen
in the years ahead. Crucially, we have the mandate, skills and finance to do
so, and we know that this will benefit all stakeholders, from shareholders to
business partners, our team in the region and the broader population in
Portugal and Europe.
My thanks go to our shareholders and stakeholders for their ongoing support as
we move forward together.
Rick Anthon
Chairman
Date: 27 September 2024
OPERATIONAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2024
Operational Review
Definitive Feasibility study
To date, Savannah has completed the first of the two stages of the DFS
drilling programme. This programme was completed in July and included over
6,000m of resource, geotechnical and hydrogeological related drilling. From a
resource perspective, the programme has been primarily designed to support the
upgrade of existing Indicated and Inferred Resources in order to convert as
much of the Project's ore into Reserves which will form the basis for the
future mining operation. Evidence that this goal is being achieved was
provided by the new resource estimate for the NOA orebody which was made in
May and featured 93% of the tonnage in the Indicated category, ready for
subsequent conversion into Reserves. With the drills set to start turning
again soon, further updated resource estimates will follow in due course.
The drilling campaign has also allowed Savannah to confirm extensions to the
Pinheiro, Reservatório and NOA orebodies and has identified new zones of
mineralisation. This includes a new zone at NOA and in the eastern Pinheiro
orebody, which returned the highest lithium assays recorded to date at the
Project including three 1m interval sections all assaying at over 3.5% Li(2)O.
Planning for the second phase of the programme (an estimated 13,000m) is all
but complete and we expect to start this phase in Q4 2024.
In parallel with the drilling, good progress was made on final designs for the
processing plant, overall project layout, and a detailed assessment of the
Project's topography through a LiDAR (light detection and ranging) survey
which has provided a detailed 3D terrain model to aid final infrastructure
planning.
As highlighted in the Chairman's Statement, we now expect to complete the DFS
in the second half of 2025.
Environmental licencing
Savannah is currently undertaking the compliance, or RECAPE, phase of the
licencing process. During this phase Savannah must show that the Project's
final design satisfies the conditions which accompanied the positive 'DIA'
decision given by the environmental regulator in May 2023.
During the first half of 2024, Savannah concluded the selection and
appointment of the remaining RECAPE contractors required to support our
in-house team with the preparation of the submission. Contractors were also
selected to work on the layout (now finalised) and licencing process for the
Project's new access road. This is being managed as a separate workstream to
the main Project with Savannah and its contractors collaborating with the
relevant government agency, Infrastructure Portugal.
Savannah is also required to continue with its seasonal monitoring of numerous
environmental parameters, data from which will form the baseline against which
the Project's environmental performance will be measured during development
and production. These include noise, vibrations, air and water quality, ground
and surface water levels as well ecological parameters, such as the flora and
fauna found in the local area. This includes the Iberian wolf population in
the region with the latest survey again concluding that there are no wolf
packs living in the project area.
Community Insights Group ('CIG') has also been continuing with its work on the
Social Impact Assessment, which will be included as part of the RECAPE
submission. CIG has undertaken a detailed and comprehensive assessment of the
Project's potential impact on local communities, which has included receiving
significant feedback from community members. The report is currently being
finalised and will form part of our planning for ongoing stakeholder
engagement.
As previously flagged, much of the input regarding final project design which
is required for the RECAPE submission will come from the DFS. Hence its
timeline is intrinsically linked to that of the DFS. However, following a
recent review of the RECAPE requirements, Savannah has concluded that we can
make the submission before completing the whole DFS. As a result, Savannah now
expects to submit the RECAPE in the summer of 2025. If the regulator's
decision is positive the Project will be awarded a 'DCAPE', which will allow
Savannah to complete the licencing process and receive the Project's final
environmental licence in the second half of 2025.
Strategic Partnerships and financing
On 20 June, Savannah was delighted to announce a landmark agreement with AMG
Critical Materials, N.V. the Amsterdam-listed, global critical materials
business. This was the first outcome from Savannah's Strategic Partnering
Process.
AMG's wholly owned German subsidiary, AMG Lithium B.V., an established
spodumene concentrate producer and, soon to be, first major European lithium
chemical producer (with the first module of its plant being commissioned
earlier this month), invested GBP 16m in Savannah through a share subscription
at a price of 4.67p (representing a 35% premium to the 30-day VWAP), and
became the Company's largest shareholder in the process with a 15.77% stake.
The partnership also includes an offtake heads of terms agreement through
which, subject to binding agreements being negotiated and signed, AMG can
purchase 45ktpa of spodumene concentrate from the Project (approximately 25%
of total) for 5 years based on prevailing market prices at the time. In
addition, AMG will take a lead role in the partnership in securing a 'full
project financing solution' for the Project's development. If such financing
is successful, the Offtake heads of terms anticipate the increase and
extension of the offtake arrangements to 90ktpa for 10 years.
The Partnership also features a co-operation agreement, whereby the parties
have agreed to work together on a number of mutually beneficial opportunities
including a study for joint construction of a feldspar/spodumene pilot plant
in Portugal and a study for the construction of a Spodumene-to-Lithium
Carbonate refinery in Portugal or Spain. AMG also received the right to
nominate one director to sit on Savannah's Board, and as a result, Mike Connor
has been appointed.
Importantly, the agreement with AMG leaves Savannah with 100% ownership of the
Project and at least 50% of its future concentrate offtake available to place
with other partners. Since the announcement of the agreement with AMG, the
Company has received fresh interest in the Project from other parties who
participated in our Strategic Partnering Process. However, the Company's
short-term focus remains firmly on completing the workstreams required to
reach a Final Investment Decision point. Hence, while Savannah will be
maintaining and growing relationships with other potential partners, it does
not expect to secure additional partnerships or agreements until much closer
to that point.
In parallel with the Strategic Partnering Process, Savannah has continued to
evaluate and prepare for public funding opportunities which may become
available from the Portuguese Government through various funding mechanisms
and from the European Commission via the recently initiated Critical Raw
Materials Act. While the Company's current funding plans for the Project do
not assume any contribution from these sources, it seems reasonable to expect
that Savannah and its Project could qualify for any such funding given the
strategic and critical raw material being targeted, the Company's commitment
to responsible production and supply to the European battery chain, and the
long term economic growth and jobs that will be created in an area in need of
such catalysts.
Building our team
Good progress was made on building out the team during the first half of the
year. This follows the significant growth already seen in Savannah's technical
team during 2023 with the ramp up in fieldwork and the arrival of Emanuel
Proença, as our new CEO. During the period, the senior team in Portugal was
strengthened in areas including Community Relations, Communications and
Business Development as Savannah consolidates its position both locally in the
Boticas municipality but also within wider Portuguese society. This is all
part of our gearing up for the Project's future development and operation,
which was also reflected in the changes made to the profile of the Board.
With the Project progressing, the recruitment drive has continued into the
second half of the year as the Company looks to add staff at all levels. These
will mostly be positions located in Portugal and, as always, Savannah will
look to recruit locally where possible. Future senior hires in the short term
are expected to include a Project Development Manager and an HR Manager.
Additional geologists and technical personnel will also be required as
fieldwork activities accelerate again in the remainder of the year and into
2025.
Stakeholder engagement
Having a larger team, which now includes an in-country CEO, a Community
Liaison Manager and a larger Communications department, has allowed Savannah
to make a much greater commitment to engagement with Portuguese stakeholders.
Importantly, Savannah staff are simply more present in the local area than in
the past with more fieldwork being undertaken, increasing numbers of employees
drawn from the local community and more colleagues living near the Project.
This allows for more regular informal contact and for relationships with local
stakeholders to grow more organically.
The Company has also been more comprehensive and structured in its engagement
with local communities and other local stakeholder groups. This has included
creating a stakeholder engagement framework and contact tracking tool, holding
regular meetings with individuals, parishes and local groups and hosting a
series of open community social events, which have grown significantly in
popularity over recent months.
Uncertainty and concerns amongst local people have decreased, but this is just
the start of a vitally important and never-ending process of transparently
presenting, explaining, engaging and listening to everyone in the region.
Savannah's team continues to find ways to address these concerns and provide
accurate information on the Project. This included taking over 50 local people
to meet community members living near Somincor's (Lundin Mining) Neves Corvo
polymetallic mine in the Castro Verde municipality in southern Portugal. While
this long-established underground mining operation differs from Savannah's in
terms of commodity and mining style, it is similar to our Project in having
neighbouring villages and provides an excellent in-country example of how a
mining operation can become a very significantly beneficial socio-economic
anchor for a community.
In addition, Savannah staff have undergone training to ensure optimised
interaction with local people, and previous initiatives such as, publishing a
further update factsheet relating to the Social Impact Assessment being
conducted by CIG and another edition of our community newspaper, have been
maintained. Support of local groups and individuals through sponsorships and
the provision of equipment and resources has also been continued.
While building ties with local people is a priority, it is just one part of
Savannah's overall stakeholder engagement strategy. During the period, staff
continued to build relationships with key members of the new national
government, relevant government agencies and the Boticas municipality
authority. The Company was also delighted to welcome to site both the British
and Australian Ambassadors to Portugal and a representative from the German
Embassy in Portugal during the first half of the year.
Significant effort has also been made to build Savannah's brand within wider
Portuguese society through the media. As a result CEO, Emanuel Proença, and
other members of the team have featured regularly across multiple platforms
and formats of the local and national media. Further work remains to be done,
but reporting on the Project is becoming more balanced and more fact based as
a result.
Savannah has also been reaching out directly to build relationships with other
businesses, trade associations, NGOs and universities to demonstrate and
highlight the Company's commitment to being a long-term player in an exciting
new industry for the country.
Perhaps the most tangible success in terms of the Company's perception in
Portugal has been in the growth of the in-country shareholding in Savannah.
Now standing at above 12.5% of the Company's total share capital, Portugal has
rapidly become one of most significant shareholding centres for the Company as
well as home to its flagship asset. Overseas investors should take note of the
speed and scale of the growth of this shareholding, as well as the individuals
involved, as it demonstrates a strong growth in confidence in the ultimate
development of the Project and resulting creation of value. In the meantime,
Savannah continues to try to grow its investor base in country and, to this
end, was pleased that CaixaBI, one of Portugal's leading investment banks,
initiated research coverage on the Company in July with a Buy recommendation.
Land acquisition & access arrangements
Land in and around the area of our Project in the Boticas municipality is
either owned privately, owned publicly by the local parish or is community
land managed by local community 'Baldios' management groups. The landscape is
dominated by managed pine forests and scrubland with an additional small
section of agricultural land.
The 30-year Mining Lease granted in 2006 safeguards Savannah's right to access
land which it does not already own for the development of the Project.
However, to obtain access to the areas required, Savannah must either acquire,
rent, or agree access terms with the relevant owner (land managed by Baldios
groups cannot be acquired under law). If suitable agreements cannot be reached
in a reasonable timeframe, the legal right is established under Portuguese law
to use established legal processes for both temporary land access and outright
compulsory purchase.
Contrary to other structural projects that were developed in recent times in
the region, such as dams and highways, Savannah has chosen not to pursue these
rights outright, allowing as much time as possible for commercially negotiated
acquisitions, even when that allowed some of those opposing the Project to
take advantage of this goodwill. The positive effect was that many landowners
were given the extra time they needed to get paperwork in place, become
comfortable with the Project, appreciate the value offered and ultimately,
sell their land.
As announced during the period, Savannah reached the milestone of having
purchased 100 properties from private landowners. Ownership now stands at 106
properties with a further 13 properties under promissory contracts. Savannah
has spent approximately EUR 2.1m on private land purchases to date.
With respect to areas managed by Baldios groups, long term lease proposals
have been made to the two largest Baldios groups, which feature compelling
financial and non-financial compensation to the groups, their individual
members, and the wider communities.
In an effort to keep current and future Project workstreams on track, Savannah
started the legal process which grants it temporary access to land not
currently owned. After some delays caused by the change in national government
earlier in the year, Savannah expects the process to formally conclude
shortly. Once concluded, the Company expects to have access to the land from
Q4 2024 which will allow the completion of all fieldwork required to take the
Project to a Final Investment Decision point.
Savannah remains hopeful that discussions with all relevant stakeholders can
still take place and amicable sale or access agreements can be reached for the
development and operating phases. However, if the Company is unable to
conclude agreements for the land required, Savannah will need to initiate the
legal process for compulsory purchase or access. While this would not be the
Company's chosen course of action, the support given by the Portuguese
Government for the temporary access order gives reason to believe any such
application would be successful should Savannah need to take this step.
Furthermore, as a legal process through which purchase prices or access fees
for land would be set by the Portuguese courts, all stakeholders would still
be assured of an alternative and equally transparent and fair process as that
proposed by Savannah.
Legal matters
Operation Influencer
The Company has had no relevant contact with the investigating authorities
during the first half of the year and has continued with all its workstreams
unencumbered. On 30 January 2024, Savannah announced the conclusions from an
independent legal review (the 'Independent Review') and legal opinions (the
'Legal Opinions') which it commissioned following the announcement of the
Operation Influencer investigation in November 2023. In summary, the
Independent Review found no evidence which would give rise to the liability of
the Company in connection with any irregular financial transactions by the
Company. It also found no evidence of improper offers, improper payments, or
other forms of wrongdoing by the Company regarding the suspicions set out in
the Investigation associated with: past relations with a potential partner,
discussions on the by‐pass (access) road, royalties, or in relation to
interactions with national entities in the EIA process under Article 16. No
material legal risk was identified related to the alleged facts and
circumstances outlined in the Investigation.
Separate Legal Opinions also confirmed that, based on the findings of the
Independent Review, but also on the functioning of the Portuguese permitting
process, past legal experience, and constitutional protections, under no
realistic circumstance would the Project's execution and its expected future
cash flows be at risk from the Investigation's findings. Hence, the
conclusions of the Independent Review and the Legal Opinions demonstrated
Savannah's solid legal position in relation to the alleged facts and
circumstances contained in Operation Influencer. Based on past similar cases,
the timeline for next steps remains uncertain and likely to be long, and a
formal clearing or accusation is not expected in the near term.
Other legal matters
In the three other legal cases (Further details can be found in the 2023
Annual Report) brought against various parties in relation to the Project
there were no material developments or final judgements made during the
period. These ongoing cases have had no impact on the good standing of the
Project's Mining Lease or its 2023 DIA. Nor have they stopped Savannah
carrying on its work at the Project. Savannah's lawyers continue to advise
that the cases relating to licensing and permitting are without foundation. In
respect of the disputed land borders case, Savannah continues to be allowed to
work on the land in question which it has purchased, and has the right under
Portuguese law to use established legal processes for outright compulsory
purchase if required.
Financials
Savannah's first half results include the GBP 16m equity investment made in
late June by the Company's Strategic Partner, and now largest shareholder,
AMG. This investment, made at the same price of 4.67p/share as the July 2023
GBP 6.5m (gross) raise (and a 35% premium to the 30-day VWAP), took the
Company's cash position to its highest ever level at GBP 21.6m (30 June 2023
GBP 4.8m), putting Savannah in a strong financial position to continue with
its development of the Project. With increased activity on a number of fronts,
as well as a larger workforce, losses from continued operations increased by
27% versus first half 2023 to GBP 1.9m (2023: GBP 1.5m). Alongside the
increased cash position on the balance sheet, ongoing technical work led to a
GBP 1.5m increase in Intangible assets from year end 2023 to GBP 19.9m, while
a small increase in Property, Plant and Equipment to GBP 1.7m was also
recorded, reflecting Savannah's ongoing land purchase programme. Overall,
total equity increased by 50% from year end 2023 to GBP 41.8m.
Outlook
Savannah is in the strongest position it has been in to date in relation to
the Barroso Lithium Project.
It has a sizeable cash balance with which to progress the Project towards a
Final Investment Decision. It has AMG, an established industry player, as a
highly supportive strategic partner and largest shareholder which is offering
a pathway to potential full financing for the Project. Yet Savannah has also
been able to maintain 100% ownership of the asset and has at least 50% of its
future concentrate production to trade and leverage. The Company is also
attracting influential Portuguese investors and succeeding in growing its
brand and levels of support in country, to complement its long-term support
bases in the UK, northern Europe, Oman and Australia. The team is growing
through the recruitment of good quality staff, and while the Project's
timetable has been extended, its commissioning remains on track to coincide
with an expected improvement in market conditions.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30
JUNE 2024
Unaudited Unaudited Audited
Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 December 2023
Notes £ £ £
CONTINUING OPERATIONS
Revenue - - -
Administrative Expenses (1,855,896) (1,383,467) (3,477,405)
Foreign Exchange Loss (104,444) (148,008) (81,116)
OPERATING LOSS (1,960,340) (1,531,475) (3,558,521)
Finance Income 68,362 32,588 108,286
Finance Costs - - (555)
LOSS FROM CONTINUING OPERATIONS BEFORE TAX (1,891,978) (1,498,887) (3,450,790)
Tax Expense - - -
LOSS FROM CONTINUING OPERATIONS AFTER TAX (1,891,978) (1,498,887) (3,450,790)
LOSS ON DISCONTINUED OPERATIONS NET OF TAX 3 (24,393) (48,060) (167,304)
LOSS AFTER TAX ATTRIBUTABLE (1,916,371) (1,546,947) (3,618,094)
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 (2,736) (4,111) (5,289)
Investments
Items that will or may be reclassified to Profit or Loss:
Exchange Loss arising on translation of foreign operations (354,792) (414,958) (237,364)
OTHER COMPREHENSIVE INCOME FOR THE PERIOD (357,528) (419,069) (242,653)
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO EQUITY OWNERS OF THE (2,273,899) (1,966,016) (3,860,747)
PARENT
Loss per Share attributable to Equity Owners of the parent expressed in pence
per share:
Basic and Diluted
From Operations 3 (0.10) (0.09) (0.20)
From Continued Operations 3 (0.10) (0.09) (0.20)
From Discontinued Operations 3 (0.00) (0.00) (0.00)
The notes form part of this Interim Financial Report.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024
Unaudited Unaudited Audited
30 June 30 June 31 December
2024 2023 2023
Notes £ £ £
ASSETS
NON-CURRENT ASSETS
Intangible Assets 4 19,860,606 16,660,692 18,391,089
Right-of-Use Assets 70,964 14,515 56,378
Property, Plant and Equipment 5 1,735,879 1,598,389 1,660,135
Other Receivables 6 434,924 434,350 432,003
Other Non-Current Assets 7 79,988 92,398 92,869
TOTAL NON-CURRENT ASSETS 22,182,361 18,800,344 20,632,474
CURRENT ASSETS
Equity Instruments at FVTOCI 3,952 7,866 6,688
Trade and Other Receivables 6 547,799 408,502 426,065
Other Current Assets - 395 166
Cash and Cash Equivalents 8 21,560,741 4,839,155 9,721,281
TOTAL CURRENT ASSETS 22,112,492 5,255,918 10,154,200
TOTAL ASSETS 44,294,853 24,056,262 30,786,674
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share Capital 10 21,727,742 16,889,598 18,281,499
Share Premium 59,215,369 41,693,178 46,598,337
Shares to be Issued - - 43,423
Merger Reserve 6,683,000 6,683,000 6,683,000
Foreign Currency Reserve 34,774 211,972 389,566
Share Based Payment Reserve 610,731 495,612 600,709
FVTOCI Reserve (49,060) (45,146) (46,324)
Retained Earnings (46,392,785) (42,546,826) (44,606,003)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 41,829,771 23,381,388 27,944,207
LIABILITIES
NON-CURRENT LIABILITIES
Lease Liabilities 47,658 9,306 39,033
TOTAL NON-CURRENT LIABILITIES 47,658 9,306 39,033
CURRENT LIABILITIES
Lease Liabilities 23,306 5,210 17,346
Trade and Other Payables 9 1,595,728 660,358 1,993,060
Tax Provisions 11 798,390 - 793,028
TOTAL CURRENT LIABILITIES 2,417,424 665,568 2,803,434
TOTAL LIABILITIES 2,465,082 674,874 2,842,467
TOTAL EQUITY AND LIABILITIES 44,294,853 24,056,262 30,786,674
The Interim Financial Report was approved by the Board of Directors on 27
September 2024 and was signed on its behalf by:
………………………………………………..
Emanuel Proença
CEO and Director
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
2024
Share Capital Share Premium Foreign Currency Reserve Share Based Payment Reserve FVTOCI Reserve Retained Earnings Total Equity
£ £ Merger Reserve £ £ £ £ £
Shares to be Issued £
£
At 1 January 2023 16,889,598 41,693,178 - 6,683,000 626,930 403,749 (41,035) (40,999,879) 25,255,541
Loss for the period - - - - - - - (1,546,947) (1,546,947)
Other Comprehensive Income - - - (414,958) - (4,111) -
- (419,069)
Total Comprehensive Income for the period - - - (414,958) - (4,111) (1,546,947) (1,966,016)
-
Share Based Payment charges - - - - 91,863 - - 91,863
-
At 30 June 2023 16,889,598 41,693,178 - 6,683,000 211,972 495,612 (45,146) (42,546,826) 23,381,388
Loss for the period - - - - - - - (2,071,147) (2,071,147)
Other Comprehensive Income - - - - - (1,178) - 176,416
177,594
Total Comprehensive Income for the period - - - - 177,594 - (1,178) (2,071,147) (1,894,731)
Issue of Share Capital (net of expenses) 1,391,901 4,905,159 6,297,060
- - - - - -
Share Based Payment charges - - - - 117,067 - - 160,490
43,423
Lapse of Options - - - - - (11,970) - 11,970 -
At 31 December 2023 18,281,499 46,598,337 43,423 6,683,000 389,566 600,709 (46,324) (44,606,003) 27,944,207
Loss for the period - - - - - - - (1,916,371) (1,916,371)
Other Comprehensive Income - - - (354,792) - (2,736) - (357,528)
-
Total Comprehensive Income for the period - - - (354,792) - (2,736) (1,916,371) (2,273,899)
-
Issue of Share Capital (net of expenses) 3,426,124 12,562,712 - - - - - - 15,988,836
Share Based Payment charges - - 31,016 - - 139,611 - - 170,627
Issue / Exercise Share Based Payments 20,119 54,320 (74,439) - - - - - -
Lapse of Options - - - - - (129,589) - 129,589 -
At 30 June 2024 21,727,742 59,215,369 - 6,683,000 34,774 610,731 (49,060) (46,392,785) 41,829,771
The notes form part of this Interim Financial Report.
CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2023
Notes Unaudited Six months to June 2024 Unaudited Six months to June 2023 Audited
£ £ Year ended December
2023
£
Cash Flows used in Operating Activities
Loss for the period (1,916,371) (1,546,947) (3,618,094)
Depreciation and Amortisation charges 14,856 5,472 22,095
Share based payment charge - Share Options 139,611 91,863 208,930
Shares based payment charge - Shares to be issue in lieu of bonus 31,016 - 43,423
Finance Income (68,362) (32,588) (108,286)
Finance Expense - - 555
Reverse impairment other assets - - (710,467)
Exchange Losses 106,854 166,683 131,325
Cash Flow from Operating Activities before changes in Working Capital (1,692,396) (1,315,517) (4,030,519)
(Increase) / Decrease in Trade and Other Receivables (100,961) 137,471 140,148
Increase / (Decrease) in Trade and Other Payables 94,248 (396,205) 982,457
Net Cash used in Operating Activities (1,699,109) (1,574,251) (2,907,914)
Cash flow used in Investing Activities
Purchase of Intangible Exploration Assets 4 (2,279,953) (607,380) (1,456,075)
Purchase of Tangible Fixed Assets 5 (119,663) (63,940) (120,573)
Interest received 60,632 32,589 96,367
Net Cash used in Investing Activities (2,338,984) (638,731) (1,480,281)
Cash Flow used in Financing Activities
Proceeds from issues of ordinary shares (net of expenses) 15,988,836 - 6,297,060
Principal paid on Lease Liabilities (9,552) (2,605) (9,252)
Interest paid - - (555)
Net Cash from / (used in) Financing Activities 15,979,284 (2,605) 6,287,253
Increase / (Decrease) in Cash and Cash Equivalents 11,941,191 (2,215,587) 1,899,058
Cash and Cash Equivalents at beginning of period 9,721,281 7,202,334 7,202,334
Increase Restricted Cash - - 701,903
Exchange Losses on Cash and Cash Equivalents (101,731) (147,592) (82,014)
Cash and Cash Equivalents at end of period 21,560,741 4,839,155 9,721,281
The notes form part of this Interim Financial Report.
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30
JUNE 2023
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 2024, which is
unaudited, was approved by the Board on 27 September 2024. 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 2023 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
2023. New standards and amendments to IFRS effective as of 1 January 2024 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 GBP 21.6m at 30 June 2024. 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. However,
with the level of activity and related expenditure accelerating the Company
will require further funding to get to the ultimate goal of having a producing
spodumene mine. The Directors believe that following the grant of the DIA, and
the strategic partnership investment by the Company's new largest shareholder,
AMG, the Group's Barroso Lithium Project will be attractive to investors and
other offtake partners. Furthermore, with AMG incentivised to deliver a full
funding solution for the Project, the Directors are confident that funding
required to move the Project forwards will be available. However, whilst the
Group and Company have been successful in raising equity finance in the past,
and while the Directors are confident of raising additional funding when
required, their ability to do this is not completely within their control and
the lack of a binding agreement means there can be no certainty that the
additional funding required by the Group and the Company will be secured.
In forming their view, the Directors have considered the impacts that future
delays on the work schedule could have on the Group's available cash
resources. Having factored in reasonably plausible scenarios and reasonable
mitigating actions (for example, the ability to reduce its uncommitted future
expenditure), the Directors consider sufficient cash balance is maintained
under each scenario and that the Group will be able to meet its obligations as
they fall due for at least 12 months from the date of approval of the Interim
Financial Report.
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, and headquarter, corporate and other costs.
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 the segments are calculated by the summation of the
balances in the legal entities which are readily identifiable to each of the
segmental activities. Recharges between segments are at cost (although tax
related transfer pricing markup is required) and included in each segment
below. Intercompany loans are eliminated to zero and not included in each
segment below.
Portugal Lithium HQ, corporate and other (3) Elimination Total
£ £ £ £
Period 1 January 2024 to 30 June 2024
Revenue (1) 576,468(2) 360,100 (936,568) -
Interest Income - 68,362 - 68,362
Share Based Payments - 170,627 - 170,627
Loss for the period (868,040) (1,048,331) - (1,916,371)
Total Assets 22,734,944 21,559,909 - 44,294,853
Total Non-Current Assets 21,747,436 434,925 - 22,182,361
Additions to Non-Current Assets 2,062,175 - - 2,062,175
Total Current Assets 987,508 21,124,984 - 22,112,492
Total Liabilities (1,044,652) (1,420,430) - (2,465,082)
Portugal Lithium HQ, corporate and other (3) Elimination Total
£ £ £ £
Period 1 July 2023 to 31 December 2023
Revenue (1) 1,121,047(2) 536,918 (1,657,965) -
Finance Costs (555) - - (555)
Interest Income - 75,698 - 75,698
Share Based Payments - 344,216 - 344,216
Loss for the period (1,500,584) (570,563) - (2,071,147)
Total Assets 20,709,860 10,076,814 - 30,786,674
Total Non-Current Assets 20,200,471 432,003 - 20,632,474
Additions to Non-Current Assets 1,693,577 - - 1,693,577
Total Current Assets 509,389 9,644,811 - 10,154,200
Total Liabilities (1,039,684) (1,802,782) - (2,842,466)
Portugal Lithium HQ, corporate and other (3) Elimination Total
£ £ £ £
Period 1 January 2023 to 30 June 2023
Revenue (1) 429,358(2) 321,171 (750,529) -
Interest Income - 32,588 - 32,588
Share Based Payments - (91,863) - (91,863)
Loss for the period (571,419) (975,528) (1,546,947)
Total Assets 18,694,198 5,362,064 24,056,262
Total Non-Current Assets 18,365,994 434,350 18,800,344
Additions to Non-Current Assets 638,991 0 638,991
Total Current Assets 328,204 4,927,714 5,255,918
Total Liabilities (237,496) (437,378) - (674,874)
( )
(1) Revenues included the intercompany recharges within the Group which are
eliminated.
(2) Included in the Portugal Lithium segment is GBP 576,468 (31 December 2023:
GBP 1,121,047; 30 June 2023: GBP 429,358) relating to intercompany recharges
within this segment and therefore eliminated in Elimination column.
(3) Following the divestment of its Oman operations and the discontinued
operations in Mozambique, the Group is effectively a single project group and
it is appropriate to adjust its segmental reporting accordingly. Therefore the
2023 segment note disclosures have been re-stated accordingly, combining the
following categories 'Discontinued Operation Mozambique Mineral Sands' and 'HQ
and corporate' into 'HQ, corporate, and other'.
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 2024 Unaudited Six months to 30 June 2023 Audited Year ended 31 December 2023
Basic and Diluted Loss per Share:
Losses attributable to Ordinary Shareholders (£):
Total Loss for the period (£) (1,916,371) (1,546,947) (3,618,094)
Total Loss for the period from Continuing Operations (£) (1,891,978) (3,450,790)
(1,498,887)
Total Loss for the period from Discontinued Operations (£) (1) (24,393) (167,304)
(48,060)
Weighted average number of shares (number) 1,845,932,402 1,688,959,820 1,751,881,365
Loss per Share - Total Loss for the period from Operations (£) (0.00104) (0.00207)
(0.00092)
Loss per Share - Total Loss for the period from Continuing Operations (£) (0.00103) (0.00197)
(0.00089)
Loss per Share - Total Loss for the period from Discontinued Operations (£) (0.00001) (0.00010)
(0.00003)
(1) Savannah is in the process of exiting its residual
interest in Mozambique which includes Mining Concession 9735C and finalising
administrative work related to the termination of the Consortium Agreement as
required by the Mozambique laws. The costs incurred during 2024 and 2023 are
related to these activities and are registered under Discontinued Operations.
4. INTANGIBLE ASSETS
Exploration and Evaluation Assets
£
Cost
At 1 January 2023 16,459,599
Additions 557,175
Exchange differences (356,082)
At 30 June 2023 16,660,692
Additions 1,605,022
Exchange difference 125,375
At 31 December 2023 18,391,089
Additions 1,800,791
Exchange differences (331,274)
At 30 June 2024 19,860,606
Exploration and Evaluation Assets
£
Amortisation and Impairment
At 1 January 2023 -
At 30 June 2023 -
At 31 December 2023 -
At 30 June 2024 -
Net Book Value
At 30 June 2023 16,660,692
At 31 December 2023 18,391,089
At 30 June 2024 19,860,606
The Exploration and Evaluation Assets referred to in
the table above comprise expenditure in relation to exploration licences in
Portugal. The Directors consider that for the purposes of assessing
impairment, the above exploration and evaluation expenditure is allocated to
the Portugal Lithium licences area, representing the Group's Cash Generating
Units ('CGUs').
The Directors have reviewed the carrying value of the CGU and have not
identified any indicators of impairment for the assets allocated to the
licences in Portugal, and therefore there is no impairment charge in 2024 or
2023 for Portugal operations.
5. PROPERTY, PLANT AND EQUIPMENT
Motor Vehicles Office Equipment Land Total
£ £ £ £
Cost
At 1 January 2023 57,355 49,208 1,559,816 1,666,379
Additions - 1,521 62,419 63,940
Exchange differences (1,648) (4,197) (46,010) (51,855)
At 30 June 2023 55,707 46,532 1,576,225 1,678,464
Additions - 14,079 42,554 56,633
Exchange difference 485 514 14,997 15,996
At 31 December 2023 56,192 61,125 1,633,776 1,751,093
Additions - 4,737 114,926 119,663
Exchange differences (1,277) (5,573) (38,101) (44,951)
At 30 June 2024 54,915 60,289 1,710,601 1,825,805
Motor Vehicles Office Equipment Land Total
£ £ £ £
Depreciation
At 1 January 2023 57,355 25,080 - 82,435
Charge for the period - 2,817 - 2,817
Exchange differences (1,648) (3,529) - (5,177)
At 30 June 2023 55,707 24,368 - 80,075
Charge for the period - 10,080 - 10,080
Exchange difference 485 318 - 803
At 31 December 2023 56,192 34,766 - 90,958
Charge for the period - 5,223 - 5,223
Exchange differences (1,277) (4,978) - (6,255)
At 30 June 2024 54,915 35,011 - 89,926
Net Book Value
At 30 June 2023 - 22,164 1,576,225 1,598,389
At 31 December 2023 - 26,359 1,633,776 1,660,135
At 30 June 2024 - 25,278 1,710,601 1,735,879
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.
The above Property, Plant and Equipment is allocated to the Portugal Lithium
operations, representing the Group's CGUs.
Management has evaluated the existence of impairment indicators of the
Property, Plant and Equipment allocated to the licences area together with the
impairment review performed for the Exploration and Evaluation Assets, and it
has concluded that there are no indicators of impairment, and therefore there
is no impairment charge in 2024 or 2023.
6. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 December 2023
£ £ £
Non-Current
Other Receivables 434,924 434,350 432,003
Total Non-Current Trade and Other Receivables 434,924 434,350 432,003
Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 December 2023
£ £ £
Current
VAT Recoverable 181,879 125,078 253,790
Other Receivables 365,920 283,424 172,275
Total Current Trade and Other Receivables 547,799 408,502 426,065
7. OTHER CURRENT AND NON-CURRENT ASSETS
Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 December 2023
£ £ £
Non-Current
Guarantees 61,862 62,755 63,301
Other 18,126 29,643 29,568
Total Other Non-Current Assets 79,988 92,398 92,869
8. CASH AND CASH EQUIVALENTS
Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 December 2023
£ £ £
Cash and Cash Equivalents
Cash at Bank and in Hand 20,854,093 4,839,155 9,019,375
Restricted Cash 706,648 - 701,906
Total Cash and Cash Equivalents 21,560,741 4,839,155 9,721,281
The balance of Cash and Cash Equivalents approximates fair value.
The Group's cash balance in Mozambique is restricted
for use in Mozambique until the Group and the Mozambican Tax Authority resolve
the potential tax treatment or otherwise of the Deed of Termination from 2021
(see Note 11).
9. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 2024 30 June 2023 31 December 2023
£ £ £
Current
Trade Payables 761,287 392,612 820,487
Other Payables 2,478 16,385 7,825
Accruals 650,070 190,829 1,050,694
Deferred Income 115,393 21,969 43,005
Taxes 66,500 38,563 71,049
Total Current Trade and Other Payables 1,595,728 660,358 1,993,060
10. SHARE CAPITAL
Six months to Six months to Six months to
30 June 2024 30 June 2023 31 December 2023
£0.01 ordinary shares number £ £0.01 ordinary shares number £ £0.01 ordinary shares number £
Allotted, issued and fully paid
At beginning of period 1,828,149,904 18,281,499 1,688,959,820 16,889,598 1,688,959,820 16,889,598
Issued during the period:
Share placement 342,612,420(1) 3,426,124 - - 139,190,084 1,391,901
Shares issued in lieu 2,011,880(2) 20,119 - - - -
At end of period 2,172,774,204 21,727,742 1,688,959,820 16,889,598 1,828,149,904 18,281,499
(1) In respect of the Share placements in 2024 the net proceeds were GBP
15,988,836 (2023: GBP 6,297,060) of which GBP 12,562,712 (2023: GBP 4,905,159)
has been recorded in Share Premium. The gross proceeds were GBP 16,000,000
(2023: GBP 6,500,177) and the costs of the Share placement GBP 11,164 (2023:
GBP 203,117).
(2) In respect of the issue of shares to the CEO (at his election of receiving
shares rather than cash) in lieu of payment of the 2023 bonus. This is
considered a share based payment and a charge of GBP 43,423.08 was recognised
in 2023 and GBP 31,016.48 has been recognised in 2024.
The par value of the Company's shares is GBP 0.01.
11. GROUP CONTINGENT LIABILITIES
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, because 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 purchased the right to acquire a
Mining Lease Application for lithium, feldspar and quartz from private
Portuguese company, Aldeia & Irmão, S.A., once the Mining Lease has been
granted. The terms of the agreement were modified in June 2024, primarily to
extend the date, by which the Mining Licence can be issued (until September
2026) to ensure that the Company's right to acquire it is continued. The total
purchase price for the acquisition is EUR 3,550,000 (~GBP 3,008,000) if the
transfer of the Mining Lease to an entity within the Group takes place before
30 April 2025, whereas if the transfer of the Mining Lease takes place after
that date the purchase price will be EUR 3,250,000 (~GBP 2,754,000). In both
cases this will only become due once the Mining Lease Application has been
granted and the Mining Lease 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 monthly instalments. Upon
delivery of the request for transfer of the Mining Lease to an entity within
the Group to Aldeia to submit the request to the DGEG (Portuguese mining
licencing authority), the Group shall provide Aldeia with a bank guarantee of
EUR 3,495,000 (~GBP 2,961,000) or EUR 3,195,000 (~GBP 2,707,000) that will be
reduced in accordance with the 71 monthly instalments. Additionally, once the
Mining Lease is issued, Savannah has the option to defer the timing of issuing
the Bank Guarantee by up to 12 months by making payments of EUR 150,000 for 6
months or a further EUR 150,000 for 12 months (these payments of EUR 150,000
will be deducted from the total purchase price and adjusted in the future
monthly payment schedule).
Provisions:
In October 2016 the Group and Rio Tinto entered into a Consortium Agreement to
develop their respective projects in Mozambique through an unincorporated
consortium. On 1 December 2021 Savannah signed a Deed of Termination relating
to the Consortium Agreement. Under the Deed of Termination, compensation of
USD 9.5m (GBP 7.0m) was agreed to be paid by Rio Tinto to the Group. In 2023
the Company was indirectly notified that the Mozambican Tax Authority ('MTA')
considers the transaction in scope for capital gains tax and that a tax amount
of MZN 134,261,677 (~GBP 1,650,000) should be paid. Savannah has not received
any formal notification from the MTA and it does not agree with the MTA's
position in relation to this matter. However, the fact that the Group and the
MTA have different opinions in this matter represents the existence of an
uncertainty in the tax treatment relating to the Deed of Termination and
therefore the Group is required to apply IFRIC 23. The Company has applied
estimations to determine the probability of different scenarios occurring and
has made a provision of GBP 798,390 (31 December 2023: GBP 793,028; 30 June
2023: GBP nil) based on the sum of the probability-weighted outcomes, but that
does not indicate the Group will be liable to pay this amount. Although the
Company is seeking a resolution of the matter with the MTA the timing thereof
is not certain, in the event that any tax is paid it could be settled from
restricted cash held in Mozambique (see Note 8) or non-current other
receivables (see Note 6).
12. EVENTS AFTER THE REPORTING DATE
On 20 August 2024 the Company appointed a new Non-Executive Director.
Following the investment from the Company's new largest shareholder and
strategic partner, AMG Critical Materials N.V. ('AMG'), Mike Connor was
appointed as Non-Executive Director, as the Board representative of AMG and as
per the terms of the subscription agreement.
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**
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For further information please visit www.savannahresources.com or contact:
Savannah Resources PLC Tel: +44 20 7117 2489
Emanuel Proença, CEO
SP Angel Corporate Finance LLP (Nominated Advisor & Joint Broker) Tel: +44 20 3470 0470
David Hignell/ Charlie Bouverat (Corporate Finance)
Grant Barker/Abigail Wayne (Sales & Broking)
SCP Resource Finance (Joint Broker) Tel: +44 204 548 1765
Filipe Martins/Chris Tonkin
Camarco (Financial PR) Tel: +44 20 3757 4980
Gordon Poole/ Emily Hall / Nuthara Bandara
LPM ( Portugal Media Relations) Tel: +351 218 508 110
Herminio Santos/ Jorge Coelho/ Margarida Pinheiro
About Savannah
Savannah Resources is a mineral resource development company and the sole
owner of the Barroso Lithium Project (the 'Project') in northern Portugal, the
largest battery grade spodumene lithium resource outlined to date in Europe.
Through the Project, Savannah will help Portugal to play an important role in
providing a long-term, locally sourced, lithium raw material supply for
Europe's lithium battery value chain. Once in operation the Project will
produce enough lithium (contained in c.190,000tpa of spodumene concentrate)
for approximately half a million vehicle battery packs per year, and hence
make a significant contribution towards the European Commission's Critical Raw
Material Act goal of a minimum 10% of European endogenous lithium production
from 2030. Savannah is being supported in its development goals by its
strategic partner and largest shareholder AMG Critical Materials N.V., the
global critical materials business.
Savannah is focused on the responsible development and operation of the
Barroso Lithium Project so that its impact on the environment is minimised and
the socio-economic benefits that it can bring to all its stakeholders are
maximised.
The Company is listed and regulated on the London Stock Exchange's Alternative
Investment Market (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".
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