REG - Savannah Resources - LoI for up to $270m loan guarantee from Germany

Savannah ResourcesAnnouncement

03/12/2024 07:00

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RNS Number : 5126O  Savannah Resources PLC  03 December 2024

 

3 December 2024

 

Savannah Resources Plc

(AIM: SAV) ('Savannah', or the 'Company')

 

Savannah receives LoI from Euler Hermes on behalf of the German Federal
Ministry of Economic Affairs for a project finance loan guarantee of up to USD
270m

 

Savannah Resources Plc announces a significant step in its project financing
for the development of the Barroso Lithium Project (the 'Project') in
Portugal, Europe's largest spodumene lithium deposit. Euler Hermes AG, the
export credit agency acting for the German Government has confirmed in a
non-binding Letter of Interest, the potential for a guarantee on a loan up to
USD 270 million, for Savannah's Project.

 

Highlights

·   Euler Hermes AG has confirmed "eligibility in principle" for Savannah to
receive an Untied Loan Guarantee (UFK (https://www.ufk-garantien.de/en) ) for
a loan up to USD 270 million for construction of the Barroso Lithium Project.

·    This potential funding support is based on the supply of lithium to
Germany through Savannah's offtake Heads of Terms with AMG 1  for 90ktpa
spodumene concentrate for 10 years.

·   80% of a UFK-covered loan would be guaranteed by the Federal Republic of
Germany. This provides an attractive basis for a Project Finance loan of up to
USD 270 million (capped at 60% of Project CAPEX, which Savannah's 2023 Scoping
Study reported at USD 280 million) from Germany's KfW IPEX-Bank and / or other
banks.

·    Along with Savannah's strategic partner AMG, KfW IPEX-Bank supported
Savannah in this UFK process.

·   KfW IPEX-Bank's
(https://www.kfw-ipex-bank.de/International-financing/KfW-IPEX-Bank/)
long-established track record of providing debt funding to mineral development
projects globally, makes it is well placed to recognise the differentiating
features of Savannah's Project and its importance for the future of the
European automotive sector.

·   Savannah welcomes this potential funding which represents a significant
milestone in establishing a full financing solution for the Project and will
continue pursuing this, along with other potential sources of funding until
that is achieved.

 

Emanuel Proença, CEO of Savannah, said, "We are pleased to announce this
endorsement of the Project and key step towards putting in place a full
project financing solution. The possibility of obtaining a substantial portion
of the Project's overall finance under this longstanding German Government
loan guarantee scheme makes the debt funding of the Project more attractive to
financiers and offers the chance of lower interest costs. The support from the
German Government and global tier-1 bank, KfW IPEX-Bank, clearly underlines
for all stakeholders the Project's strategic significance and the responsible
approach Savannah is taking to its development.

 

"Debt funding represents a key element in the Project's overall funding
solution, and work is progressing well on complementary sources of funds,
including funding from other government / supranational bodies (grant, equity,
debt), and additional potential offtakers and strategic investors. There
remains significant work ahead to take the Project to construction and
production, but Savannah is demonstrably moving forwards with great confidence
and purpose."

 

Next steps

Savannah, KfW IPEX-Bank, and AMG shall move into the "Project Financing Stage"
of KfW IPEX-Bank's and Euler Hermes AG's processes. This involves due
diligence being undertaken by KfW IPEX-Bank, Euler Hermes AG and its advisers
including but not limited to, economic, technical, legal, and ESG matters
before any potential loan and related terms can be confirmed. The Company will
make further announcements as appropriate.

 

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 X (Formerly known as Twitter)

 

Follow Savannah Resources on LinkedIn

 

For further information please visit www.savannahresources.com
(https://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 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 AIM Market of the London Stock
Exchange and trades under the ticker "SAV".

 1  See Company's RNS dated 20 June 2024 for further details of this strategic
partnership, under which AMG can increase its offtake to 90ktpa for 10 years
(from 5 years at 45ktpa) if it provides an acceptable full project funding
solution for the Project's construction

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