TIDMSAV
RNS Number : 1703S
Savannah Resources PLC
29 September 2017
Savannah Resources Plc / Index: AIM / Epic: SAV / Sector:
Mining
29 September 2017
Savannah Resources Plc
Interim Results
Savannah Resources plc (AIM: SAV) ('Savannah' or 'the Company')
announces its interim financial results for the six months ended 30
June 2017.
HIGHLIGHTS
OPERATIONS
-- International resource development company poised to move into production
-- Mining targeted to commence at Oman copper projects in H1 2018
o Targeting an underground mine at Mahab 4 and open-cut mine
development Maqail South
o Intention to install a central processing plant and tailings
storage facility to be used by both mines
o Preliminary metallurgical results confirm that a saleable,
high grade, low contaminant copper concentrate can be produced with
recoveries exceeding 88% with silver credits
o Low-cost flotation process and relatively low primary milling
power requirements expected
o Awaiting final licencing approval
-- Mutamba Heavy Minerals Sands Project in Mozambique being
developed as part of a Consortium Agreement with industry major Rio
Tinto - production targeted for 2020
o 26% increase in resource size and an 8% increase in total
heavy minerals ('THM') grade to 4.4 billion tonnes at 3.9% THM -
includes a high-grade zone of 92Mt at 6.2% THM
o Scoping Study proves potential for a financially robust, long
life mineral sands project that is anticipated to provide excellent
financial returns with relatively modest capital requirements
o Based on a resource of 451Mt at 6.0% THM, average annual
production of 456,000t of roasted ilmenite and 118,000t of
non-magnetic concentrate (rutile and zircon) could be achieved over
an initial life of mine of 30 years, with potential revenues of
US$4.23 billion and pre-tax NPV of US$335 million achievable
o Preliminary Feasibility Study underway
o Bulk sampling programme on track to commence H1 2018 -
construction of a 20 tonne per hour pilot plant commenced
-- Expanded portfolio via the acquisition of a 75% interest in a
series of highly prospective lithium projects in the north of
Portugal
o Primary focus on advancing the Mina do Barroso Project, which
with an approved Mining Plan, Environmental Impact Assessment and a
30-year Mining Licence offers near term mining opportunity
o Appears amenable to producing a high-grade (over 6% Li(2) O),
clean, low iron, lithium concentrate product
o Drilling underway to define a JORC compliant Mineral Resource
estimate - results already successfully extended the strike and
depth extents of the known pegmatites and include - 36m at 1.26% Li
O from 29m at Reservatorio deposit and 18m at 1.27% Li O from 1m at
Grandao deposit
o With a defined resource, a development decision could be made
by the end of 2018
-- Assessing ways in which to best realise value from two lithium projects in Finland
FINANCIAL
-- Investments in intangible and exploration project assets of
GBP2.90m during the period, including the acquisition of the new
lithium projects in Portugal
-- Operating loss of GBP1.53m reflects the continued high tempo
of mine development activities and expansion of portfolio
-- Cash placings and subscriptions in March 2017 which raised gross proceeds of GBP3.25m
-- Cash balance of GBP1.29m at the reporting date and further
strengthened post balance sheet subscriptions of GBP1.32m in July
2017
CHAIRMAN'S STATEMENT
The six months under review have been an extremely active time
for our Company, documented with significant news flow, which is
reflective of our active growth strategy. We are committed to
maintaining this pace and have a defined development programme in
order to maximise value from our multi-commodity portfolio in Oman,
Mozambique, Finland and most recently Portugal, which aims to build
upon our position as an international resource development company
moving to production.
I am pleased to report that we are now well poised to transition
into production, with copper mining expected to commence in Oman in
H1 2018. We are also on track to commence bulk sampling at our
Mutamba Heavy Mineral Sands Project in Mozambique in H1 2018.
Alongside these developments, we have made tangible progress in
strategically expanding our asset portfolio, via the acquisition of
a series of highly prospective lithium projects with near-term
production potential in the north of Portugal. With an approved
Mining Plan, Environmental Impact Assessment and a 30-year Mining
Licence, a development decision could be made as early as the end
of 2018 once we have a defined JORC resource. Accordingly, drilling
is well underway to support a targeted JORC compliant Mineral
Resource Estimate. This will incorporate historical data we have
available to us and I am pleased to report that initial results
from drilling to date are very encouraging. We therefore believe
the next six months will be equally active and significant for
Savannah.
Oman: Blocks 4 and 5, Copper Project
We have the rights to two blocks (Blocks 4 and 5) covering
1,004km(2) in the copper-rich, Semail Ophiolite Belt in the
Sultanate of Oman; a region proven to host clusters of moderate to
high-grade copper deposits with gold credits and metallurgically
simple ores. The two blocks are located approximately 180km
northwest of Muscat, the capital city of Oman, and within close
proximity to the deep-water export Port of Sohar. With an
established resource of 1.7Mt at 2.2% copper, work is now focused
on advancing our copper portfolio into high margin, low cost
production. Mining is targeted to commence in H1 2018.
The Mineral Resource Estimate comes from two primary deposit
areas in Block 5 - 1.51Mt at 2.1% copper at Mahab 4 and 0.16Mt at
3.8% copper at Maqail South - and our focus during the period has
centred on finalising our mining and processing plans. It is our
intention that Mahab 4 will be developed as an underground mine,
whilst the resource at Maqail South will be an open-cut mine
development. To support both these operations, we propose
installing a processing plant and tailings storage facility ('TSF')
on an area on the adjacent Block 4. Run-of-mine crushed ore will be
trucked to the plant which will produce a copper concentrate for
shipment to export markets. Tailings produced from the processing
plant will be stored under a strategy that is currently being
reviewed by the Ministry of Environment and Climate Affairs
('MECA'). Our strategy has received in principle approval from MECA
in that they have confirmed that it is worthy to be considered for
licencing.
In support of future development, all regulatory applications
for copper mine development at both Mahab 4 and Maqail South have
now been submitted. Whilst the licencing process has taken longer
to complete than initially hoped, resulting in a delay to the
proposed production schedule, things continue to progress well
towards commencement of mining in H1 2018.
Looking at the commercial viability of the project development,
in February this year we received preliminary metallurgical results
for Mahab 4, which confirmed that a saleable, high grade, low
contaminant copper concentrate can be produced with recoveries
exceeding 88% with silver credits. There also appears to be
potential to produce a zinc product but further work is required to
confirm if this is possible. Chalcopyrite was identified as the
sole copper bearing mineral, which is likely to lead to a simple,
quick and relatively low-cost flotation process to concentrate the
copper and the ore appears to be relatively soft, meaning it should
require relatively low primary milling power requirements. This
means that the project should enjoy favourable processing
costs.
Omani copper concentrates have historically been regarded as a
high-quality product and are much sought after by off-takers for
blending purposes. Testament to this, I am pleased to report that
we have received strong interest from off-takers and this could
form part of the financing element for the mine development.
Additional metallurgical test work is now underway to refine our
processing model and to try and further improve the already high
recoveries and overall copper concentrate grades. Alongside this we
are developing a detailed mine design and production plan for the
two mines and preparing an Economic Study to gain further clarity
on the revenue potential. We therefore remain highly active whilst
we await the granting of our mining licences, in order to ensure
the timely development of Mahab 4 and Maqail South. We believe
these mines will come online at an opportune time given the current
strong copper price and the solid market demand.
Mozambique: Mutamba Mineral Sands Project
Located in a world-class mineral sands province in Mozambique,
Mutamba is a tier one deposit that is well placed to provide a
long-term, reliable supply of ilmenite, zircon and rutile for
global markets. We are delighted to be advancing this asset into
production as part of a Consortium Agreement with industry major
Rio Tinto, and we believe that the unification of our skill set and
resources strongly positions us to meet a production target of
2020.
The project boasts a significant Indicated and Inferred Mineral
Resource Estimate of 4.4 billion tonnes at 3.9% THM, which
currently covers three of four target areas identified in the
Mutamba Project (being Jangamo, Dongane, Ravene and Chilubane). We
established this resource level following a notable expansion
during the period as a result of drilling conducted at Ravene,
which resulted in a 26% increase in resource size and an 8%
increase in THM grade. This increase clearly highlights the
potential scope of Mutamba as a globally significant producer of
titanium feedstocks and has been achieved at a time of significant
global growth which is driving demand. Thanks to its significant
size and quality, Mutamba is one of the few significant deposits
that has the potential to be brought into production in order to
meet this growing market demand.
Aside from the Mineral Resource Estimate increase, the drilling
at Ravene led to the definition of a high-grade zone of 92Mt at
6.2% THM, which was a key, high grade element for the Scoping Study
that was completed in May 2017. The results of this study were very
encouraging and concluded that there is potential for a financially
robust, long life mineral sands project that is anticipated to
provide excellent financial returns with relatively modest capital
requirements.
Incorporating well known, conventional dry mining and processing
techniques, the study was based on a conceptual mine plan which
centred around a resource of 451Mt at 6.0% THM (utilising 33%
Indicated Mineral Resource Estimate and 67% Inferred Mineral
Resource Estimate). The study concluded that average annual
production (following ramp-up to a 15Mtpa mining rate) of 456,000t
of roasted ilmenite and 118,000t of non-magnetic concentrate
(rutile and zircon) could be achieved over an initial life of mine
('LOM') of 30 years. To bring the mine into this state of
production, pre-production capital expenditure is expected to be
US$152 million, with US$74 million to be held for contingency, EPCM
(Engineering, Procurement, Construction Management) and spares. A
number of opportunities have, however, already been identified that
may reduce this cost. Indeed, Mutamba benefits from a range of
established infrastructure, comprising local roads, power,
telecommunications, an international airport and the nearby port of
Inhambane, in addition to Rio Tinto's existing camp and equipment,
which positively impacts capex.
Based on these production rates and costs, potential revenues
and returns for the Company were modelled in the Scoping Study on
three ilmenite pricing scenarios - a base case of US$185/t;
Management Case One with a +10% increase in product price to
US$204/t; and Management Case Two with a +20% increase in product
price to US$222/t. Taking the base case scenario, LOM revenue of
US$3.53 billion and LOM cash operating costs of US$2.16 billion
were forecast, with an IRR of 19% and pre-tax NPV of US$154
million. In comparison, Management Case Two could result in LOM
revenues of US$4.23 billion, with LOM cash operating costs of
US$2.18 billion and an IRR of 27%, and pre-tax NPV of US$335
million. In either case, both scenarios have the potential to
generate significant financial returns for our Company.
We are now focused on making the Scoping Study forecasts a
reality, with first production targeted for 2020. In support of
this, Stage One of the Preliminary Feasibility Study ('PFS')
commenced post-period end, in August 2017. Mineral sands expert
TZMI has been appointed to complete this phase of the work, which
will define the scope of the PFS, and support project planning and
budget finalisation for Stage Two of the PFS. In parallel, in June
2017, construction of a 20 tonne per hour pilot plant commenced.
The pilot plant is expected to be constructed and commissioned by
the end of 2017, and once operational will be used to produce bulk
samples of concentrate for metallurgical and product test work.
This will help us refine our final production model whilst also
supporting test marketing to be undertaken by our partner Rio Tinto
(or its affiliate), which has an offtake agreement on commercial
terms for the purchase of 100% of heavy mineral concentrate
produced at Mutamba.
I am pleased to report that we are currently seeing prices for
titanium feedstocks such as ilmenite and rutile rise, which
suggests that this is an ideal time to be developing this project.
We look forward to establishing Mutamba as a globally significant
ilmenite producer in conjunction with Rio Tinto.
Portugal: C-100, Mina do Barroso, Lithium Project
In May this year we entered into an agreement with a consortium
of vendors led by Slipstream Resources Investments Pty Ltd to
acquire a 75% interest in a series of highly prospective lithium
projects spread over four project areas covering approximately
1,024km(2) in the north of Portugal. Within this project area there
are pending applications over 348km(2) , which are on track for
government approval, and 670km(2) of the licence area is currently
subject to overlapping exploration licence applications from third
parties. Crucially, our most significant element of the Portuguese
projects is the highly strategic 'Mina do Barroso' Project which
covers an area of 5.4km(2) . With an approved Mining Plan,
Environmental Impact Assessment and 19 years of its 30-year Mining
Licence remaining, which may be extended by a further 20 years
subject to the agreement of the Portuguese state, we believe Mina
do Barroso offers a near term mining opportunity. We are now
focused on defining a JORC compliant Mineral Resource Estimate as a
precursor to making a development decision, which could be made by
the end of 2018. In support of this, drilling commenced in July
2017 with positive results reported to date.
Work at Mina do Barroso previously focused on producing a
product for ceramics, however, having identified significant
anomalous lithium mineralisation, which appears amenable to
producing a high-grade (over 6% lithium oxide ('Li(2) O')), clean,
low iron, lithium concentrate product. Based on the advanced nature
of the asset, and results received to date, we believe the project
has the potential to become Europe's first lithium mine. This is a
highly strategic opportunity for Savannah because Europe, as an
early proponent of Electric Vehicles ('EVs') and battery storage
solutions, is one of biggest drivers in lithium demand. However,
despite strong demand prospects, no European country currently
produces battery grade LCE products, meaning that European
manufacturers currently import 100% of their requirements. These
European manufacturers consume approximately 24% of global battery
grade lithium (second only to China) and with more countries
pledging their commitment to EVs by phasing out petrol and diesel
cars we expect Li(2) O demand to rise dramatically, making this an
undoubtedly exciting commodity to be in.
Having acquired our Portuguese assets, we have quickly commenced
work and completed geological mapping across three primary target
areas at Mina do Barroso - Grandao, Reservatorio and NOA - which
have been shown to have relatively high grades of Li(2) O with
drill results up to 1.67% Li(2) O over significant widths. I am
pleased to report that this mapping successfully extended the
surface expressions of all three of these major lithium bearing
pegmatites, which reinforces our confidence in this asset's
resource potential. Furthermore, the results laid the foundations
for the drilling programme currently underway.
Drilling commenced post period end in July 2017, less than two
months after acquisition, which highlights our fast-paced
development approach. This targeted drill programme is ultimately
focused on defining a JORC compliant Mineral Resource Estimate and
I am pleased to report that results received to date are highly
encouraging. In August 2017, we completed phase 1 of the drilling,
with 16 Reverse Circulation ('RC') holes drilled at the
Reservatorio and Grandao deposits. All of these holes intersected
massive pegmatite and successfully extended the strike and depth
extents of the known pegmatites. At Reservatorio, drilling
confirmed mineralisation over a 200m strike length together with
good down dip extensions of at least 80m; results include 36m at
1.26% Li(2) O from 29m, 33m at 1.15% Li(2) O from 16m and 25m at
1.01% Li(2) O from 36m. At Grandao, drilling confirmed
mineralisation over a 200m strike length in a large, near surface,
sub horizontal pegmatite body; results include 18m at 1.27% Li(2) O
from 1m, 17m at 1.24% Li(2) O from 16m and 15m at 1.08% Li(2) O
from 39m. Crucially, both deposits remain open along strike and
down dip, leaving excellent upside potential for both deposits. We
hope to extend upon these results through phase 2 of the drill
programme, which commenced in September 2017. This second round of
RC drilling is targeting potential extensions to the significant
zones of mineralisation identified at Grandao and Reservatorio and
is also testing the third NOA deposit. I look forward to providing
the Company's shareholders with the results of this drilling in due
course.
Of course, further upside remains outside of this current drill
programme. Accordingly, further mapping is being undertaken at Mina
do Barroso to assist in precisely defining other already identified
lithium bearing pegmatites within the larger project area. This
work is expected to be completed shortly and we look forward to
sharing the results when available. Additional upside also remains
within the wider 1,024km(2) land package but our current focus is
on Mina do Barroso as we believe this offers the Company the most
near-term value potential.
Finland: Somero and Erajarvi Lithium Projects
Complementary to our newly acquired Portuguese lithium licences
is our Finnish portfolio of lithium assets. Somero and Erajarvi
cover an area of 159km(2) of highly prospective lithium terrain in
Finland. Reconnaissance rock chip sampling has returned anomalous
lithium mineralisation across both projects, leading to the
discovery of seven lithium bearing pegmatites - two on Somero and
five on Erajarvi. With assays of up to 4.47% Li(2) O and key
lithium minerals petalite, spodumene and lepidolite all identified
in hand specimens the results are very encouraging.
Now that realising nearer term value opportunities in Portugal
is our primary lithium focus in Europe, we have sought expressions
of interest from a number of groups with an energy metals
focus.
Financials
As might be expected for an active exploration and
pre-production resource development group, the Group is reporting a
loss for the period of GBP1.53m (30 June 2016: GBP0.76m) (31
December 2016: GBP1.76m). The increase compared to the prior period
reflects the increased tempo of resource development activities and
the expansion of the Company's portfolio (GBP0.1m), and also
includes non-cash costs relating to share options issued as
long-term incentives (GBP0.28m). Net assets have increased to
GBP9.26m (30 June 2016: GBP4.61m) (31 December 2016: GBP6.07m)
predominantly due to the acquisition in May of the highly
prospective lithium project portfolio with near-term production
potential in the north of Portugal and the increase in project
development activity during the year (see Note 2).
The cash placing and subscription for GBP3.25m cash (before
expenses) in March 2017 contributed towards the ongoing development
of the Company's projects in Mozambique, Oman, Portugal and
Finland. The cash subscription of GBP1.32m (before expenses) in
July 2017 after the reporting date will further contribute towards
the development of the Company's projects, with the Oman project in
particular heading towards production in the short term.
Outlook
The natural resources sector is experiencing increasing impetus
thanks to technology/industry developments. The strong rise of EVs
is garnering much market and media attention and the demand on
critical energy metals such as lithium and copper is increasing,
which is in turn driving price and market demand. With exposure to
both of these commodities, and crucially the ability to advance
these into production in the near-term, we believe Savannah has a
strong and attractive portfolio.
Accordingly, our focus is now on converting our near-term
production potential into a reality. In Oman, this means finalising
our production and processing plans whilst we await the grant of
the mining licences so that we can commence mining in H1 2018. In
Portugal, we look forward to completing our current drill programme
and defining a JORC resource.
Alongside these developments, in Mozambique we continue to make
excellent progress in advancing our Mutamba heavy mineral sands
project towards a production target, which is targeted to commence
in 2020 with average annual production of 456,000t of roasted
ilmenite and 118,000t of non-magnetic concentrate (rutile and
zircon).
With a highly strategic portfolio of assets and defined routes
to production, the coming months will be a very active period for
Savannah. We have carefully structured our portfolio and
operational team to best position our Company and assets for growth
so that we can build real value for shareholders.
Finally, I extend thanks to our shareholders for their continued
support and to our multi-national team for their consistent hard
work and I look forward to the achievement of the development
milestones that lie in front of us.
Chairman
Matthew King
28 September 2017
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 30 JUNE 2017
Unaudited Unaudited Audited
Six months Six months Year
Notes to 30 to 30 ended
June June 31 December
2017 2016 2016
GBP GBP GBP
Operations
Revenue - - -
Profit / (Loss) on disposal
of investments - 7,678 42,871
Impairment of intangibles 4 - (129,059) -
Loss on disposal of assets - - (128,505)
Administrative expenses (1,529,071) (674,267) (1,669,203)
Operating loss (1,529,071) (795,648) (1,754,837)
Finance income - 39,511 -
Finance expense (2,256) (4,404) (4,413)
Loss for the period before
tax (1,531,327) (760,541) (1,759,250)
Taxation - - -
---------------------------------- -------- ------------ ------------ -------------
Loss for the period attributable
to equity owners of the
parent (1,531,327) (760,541) (1,759,250)
---------------------------------- -------- ------------ ------------ -------------
Other comprehensive income
Items that will or may
be reclassified to profit
or loss:
Change in market value
of investments (16,656) 105,065 44,840
Transfer to realised
loss on disposal of investments - (7,678) (42,871)
Exchange (losses)/gains
on translating foreign
operations (54,052) 108,996 476,018
---------------------------------- -------- ------------ ------------ -------------
Other comprehensive income
for the period (70,708) 206,383 477,987
---------------------------------- -------- ------------ ------------ -------------
Total comprehensive income
for the period attributable
to the equity owners
of the parent (1,602,035) (554,158) (1,281,263)
---------------------------------- -------- ------------ ------------ -------------
Loss per share attributable
to equity owners of the
parent expressed in pence
per share
---------------------------------- -------- ------------ ------------ -------------
Basic and diluted
From operations 3 (0.31) (0.21) (0.46)
---------------------------------- -------- ------------ ------------ -------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2017
Unaudited Unaudited Audited
Notes 30 June 30 June 31 December
2017 2016 2016
GBP GBP GBP
Assets
Non-current assets
Intangible assets 4 7,888,034 3,565,686 5,066,750
Property, plant and
equipment 5 197,729 19,397 16,170
Other receivables 7 165,852 23,274 33,171
Other non-current assets - 238,668 -
------------------------------ -------- ------------- ------------ -------------
Total non-current assets 8,251,615 3,847,025 5,116,091
Current assets
Investments 107,816 243,712 124,472
Trade and other receivables 7 459,971 107,369 126,557
Cash and cash equivalents 1,294,539 740,483 1,172,347
Total current assets 1,862,326 1,091,564 1,423,376
------------------------------ -------- ------------- ------------ -------------
Total assets 10,113,941 4,938,589 6,539,467
------------------------------ -------- ------------- ------------ -------------
Equity and liabilities
Shareholders' equity
Share capital 9 5,345,401 3,851,608 4,509,465
Share premium 14,849,523 9,725,036 11,226,706
Foreign currency reserve 337,946 24,976 391,998
Share-based payment
and warrant reserve 752,523 488,918 455,309
Warrant reserve 419,671 362,252 386,794
Retained earnings (12,448,310) (9,842,800) (10,900,327)
Total equity attributable
to Equity holders of
the parent 9,256,754 4,609,990 6,069,945
Liabilities
Current liabilities
Trade and other payables 8 857,187 328,599 469,522
Total liabilities 857,187 328,599 469,522
------------------------------ -------- ------------- ------------ -------------
Total equity and liabilities 10,113,941 4,938,589 6,539,467
------------------------------ -------- ------------- ------------ -------------
The interim financial report was approved by the Board of
Directors on 28 September 2017 and was signed on its behalf by:
D S Archer
Chief Executive Officer
Company number: 07307107
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 30 JUNE 2017
Share
Foreign based
Share Share currency payment Warrant Retained Total
capital premium reserve reserve reserve earnings equity
GBP GBP GBP GBP GBP GBP GBP
At 1 January
2016 2,858,658 9,156,284 (84,020) 473,178 362,252 (9,187,216) 3,579,136
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
Loss for the
period - - - - - (760,541) (760,541)
Other comprehensive
income - - 108,996 - - 97,387 206,383
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
Total comprehensive
income for
the period - - 108,996 - - (663,154) (554,158)
Issue of share
capital (net
of expenses) 992,950 568,752 - - - - 1,561,702
Issue of share
options - - - 23,310 - - 23,310
Lapse of options - - - (7,570) - 7,570 -
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
At 30 June
2016 3,851,608 9,725,036 24,976 488,918 362,252 (9,842,800) 4,609,990
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
Loss for the
period - - - - - (998,709) (998,709)
Other comprehensive
income - - 367,022 - - (95,418) 271,604
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
Total comprehensive
income for
the period - - 367,022 - - (1,094,127) (727,105)
Issue of share
capital (net
of expenses) 657,857 1526,212 - - - - 2,184,069
Issue of share
options - - - 2,991 - - 2,991
Exercise of
options - - - (36,600) - 36,600 -
Lapse of options - - - - - - -
Issue of warrants - (24,542) - - 24,542 - -
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
At 31 December
2016 4,509,465 11,226,706 391,998 455,309 386,794 (10,900,327) 6,069,945
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
Loss for the
period - - - - - (1,531,327) (1,531,327)
Other comprehensive
income - - (54,052) - - (16,656) (70,708)
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
Total comprehensive
income for
the period - - (54,052) - - (1,547,983) (1,602,035)
Issue of share
capital (net
of expenses) 835,936 3,655,694 - - - - 4,491,630
Issue of share
options - - 297,214 - - 297,214
Lapse of options - - - - - -
Issue of warrants - (32,877) - - 32,877 - -
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
At 30 June
2017 5,345,401 14,849,523 337,946 752,523 419,671 (12,448,310) 9,256,754
--------------------- ---------- ------------ ----------- ---------- ---------- -------------- --------------
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTHSED 30 JUNE 2017
Notes Unaudited Unaudited Audited
Six months Six months Year ended
to June 2017 to June 2016 December
GBP GBP 2016
GBP
Cash flows used in operating
activities
Loss for the period (1,531,327) (760,541) (1,759,250)
Depreciation and amortisation
charges 728 220 9,536
Impairment of intangibles 4 - 129,059 -
Loss on disposal of assets - - 128,505
Gain on disposal of investments - (7,678) (42,871)
Share based payments
reserve charge 297,214 44,302 26,301
Shares issued in lieu
of payments to extinguish
liabilities 82,431 - 20,992
Finance income - (39,511) -
Finance expense 2,256 4,404 4,413
Exchange losses 47,925 - 96,036
Cash flow from operating
activities before changes
in working capital (1,100,773) (629,745) (1,516,338)
Increase in trade and
other receivables (466,095) (17,979) (53,476)
(Decrease)/increase in
trade and other payables 218,251 (53,347) 46,089
--------------------------------- -------- --------------- --------------- -------------
Net cash used in operating
activities (1,348,617) (701,071) (1,523,725)
--------------------------------- -------- --------------- --------------- -------------
Cash flow used in investing
activities
Purchase of intangible
exploration assets (1,471,957) (504,665) (1,557,087)
Purchase of tangible (120,816) - -
fixed assets
Purchase of other non-current - (21,100) -
assets
Purchase of investments - (24,991) (24,363)
Proceeds from sale of
investments - 39,321 94,653
Interest received - 993 -
--------------------------------- -------- --------------- --------------- -------------
Net cash used in investing
activities (1,592,773) (510,442) (1,486,797)
--------------------------------- -------- --------------- --------------- -------------
Cash flow from / (used
in) financing activities
Proceeds from issues
of ordinary shares (net
of expenses) 3,093,000 1,540,709 3,724,778
Interest paid (2,256) (4,404) (4,413)
--------------------------------- -------- --------------- --------------- -------------
Net cash from financing
activities 3,090,744 1,536,305 3,720,365
--------------------------------- -------- --------------- --------------- -------------
Increase in cash and
cash equivalents 149,354 324,792 709,843
Cash and cash equivalents
at beginning of period 1,172,347 359,296 359,296
Exchange (losses)/gains
on cash and cash equivalents (27,162) 56,395 103,208
--------------------------------- -------- --------------- --------------- -------------
Cash and cash equivalents
at end of period 1,294,539 740,483 1,172,347
--------------------------------- -------- --------------- --------------- -------------
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT
FOR THE SIX MONTHSED 30 JUNE 2017
1. BASIS OF PREPARATION
The financial information set out in this report is based on the
consolidated financial statements of Savannah Resources Plc and its
subsidiary companies (together referred to as the 'Group'). The
interim financial report of the Group for the six months ended 30
June 2017, which is unaudited, was approved by the Board on 28
September 2017. 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 2016 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 2016.
The Group interim financial report is presented in Pound
Sterling.
Going Concern
In common with many mineral exploration companies, the Company
raises equity funds for its activities in discrete share
placements. The Directors are confident that the Group's project
portfolio is highly attractive and the sums of GBP3.25m and GBP1.3m
raised in Q1 and Q3 2017 respectively support this. The Directors
are therefore confident that funding will continue to be secured
and therefore it is appropriate to prepare the interim financial
report on a going concern basis. However, although the Company has
been successful in the past in raising equity finance, the lack of
formal agreements means there can be no certainty that the funding
required by the Group will be secured within the necessary
timescale. These conditions indicate the existence of a material
uncertainty which may cast significant doubt about the Group's
ability to continue as a going concern, however as aforementioned
and evidenced by announcements the Company has routinely been able
to raise funds to progress its highly prospective portfolio. The
interim financial report does not include the adjustments that
would result if the Group was unable to continue as a going
concern, which would principally relate to the impairment of
intangible assets.
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 comprise of: exploration and
development in Oman, Mozambique and Portugal; exploration in
Finland; and headquarter and corporate costs including the
Company's third party investments.
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 Oman, Mozambique, Portugal and
Finland 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 and included in each segment below. Inter-Company loans are
eliminated to zero and not included in each segment below.
Oman Mozambique Portugal Finland HQ and Elimination Total
Copper Mineral Lithium Lithium corporate
Sands
GBP GBP GBP GBP GBP GBP
Period
30 June
2017
Revenue - - - - 254,214 (254,214) -
Finance
costs - 1,370 - - 886 - 2,256
Share
based
payments 11,963 44,370 - - 240,881 - 297,214
(Loss)
/ Gain
for the
year (187,211) (281,801) (25,600) (4,980) (1,031,735) - (1,531,327)
Total
assets 3,939,037 2,695,063 2,120,317 132,740 1,226,784 - 10,113,941
Total
non-current
assets 3,844,054 2,177,590 2,094,898 127,690 7,383 - 8,251,615
Additions
to
non-current
assets 457,852 640,400 2,094,128 5,103 7,382 - 3,204,865
Total
current
assets 94,982 517,474 25,419 5,050 1,219,401 - 1,862,326
Total
liabilities (110,431) (395,701) (92,244) (4,831) (253,980) - (857,187)
--------------- ------------ ------------- ------------ ---------- -------------- -------------- --------------
Oman Mozambique Finland HQ and Elimination Total
Copper Mineral Lithium corporate
Sands
GBP GBP GBP GBP GBP GBP
December 2016
Revenue - - - 442,984 (442,984) -
Finance costs - (36) - (4,377) - (4,413)
Gain on disposal
of investments - - - 42,871 - 42,871
Loss on disposal
of assets (128,505) - - - - (128,505)
Share based
payments 20,992 - - 26,301 - 47,293
(Loss) / Gain
for the year (657,598) (230,113) (5,844) (865,695) - (1,759,250)
Total assets 3,667,380 1,546,750 128,486 1,196,851 - 6,539,467
Total non-current
assets 3,558,424 1,438,862 118,805 - - 5,116,091
Additions
to non-current
assets 1,366,465 204,241 118,805 - - 1,689,511
Total current
assets 108,956 107,495 9,682 1,197,243 - 1,423,376
Total liabilities (135,754) (34,553) (12,304) (286,911) - (469,522)
------------------- ------------ ------------- ---------- ------------ -------------- ------------
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 Unaudited Audited
Six months Six months Year
to 30 to 30 ended
June June 31 December
2017 2016 2016
Basic loss per share:
Loss from operations
attributable to ordinary
shareholders (GBP) (1,531,327) (760,541) (1,759,250)
Loss attributable to
ordinary shareholders
(GBP) (1,531,327) (760,541) (1,759,250)
-------------------------------- -------------- -------------- --------------
Weighted average number
of shares (number) 490,020,180 354,026,108 385,212,275
-------------------------------- -------------- -------------- --------------
Loss per share from operations
(pence) 0.31 0.21 0.46
Basic and diluted loss
per share (pence) 0.31 0.21 0.46
-------------------------------- -------------- -------------- --------------
4. INTANGIBLE ASSETS
Exploration
and evaluation
assets
GBP
At 1 January 2016 3,155,242
Additions 403,690
Impairment expense (129,059)
Exchange differences 135,813
------------------------ ----------------
At 30 June 2016 3,565,686
Additions 1,060,683
Disposals of assets (127,535)
Transfers from Other
non-current assets 225,668
Impairment expense 129,059
Exchange difference 213,189
------------------------ ----------------
At 31 December 2016 5,066,750
------------------------ ----------------
Additions 2,897,871
Exchange differences (76,587)
------------------------ ----------------
At 30 June 2017 7,888,034
------------------------ ----------------
5. PROPERTY, PLANT AND EQUIPMENT
Motor Office Machinery Land Total
vehicles Equipment
GBP
Cost
At 1 January
2016 30,474 10,398 - - 40,872
Additions - - - - -
Exchange
difference 6,133 1,003 - - 7,136
---------------- ---------- ----------- ---------- ------- ----------------
At 31 December
2016 36,607 11,401 - - 48,008
---------------- ---------- ----------- ---------- ------- ----------------
Additions 6,991 1,735 119,081 44,819 172,626
Exchange
differences (2,833) (174) 9,528 1,116 7,637
---------------- ---------- ----------- ---------- ------- ----------------
At 30 June
2017 40,765 12,962 128,609 45,935 228,271
---------------- ---------- ----------- ---------- ------- ----------------
Depreciation
At 1 January
2016 10,013 8,967 - - 18,980
Charge for
the year 9,152 384 - - 9,536
Exchange difference 1,999 1,323 - - 3,322
---------------------- -------- ------- --------
At 31 December
2016 21,164 10,674 - - 31,838
---------------------- -------- ------- --------
Charge for
the year 728 - - - 728
Exchange differences (1,598) (426) - - (2,024)
---------------------- -------- ------- --------
At 30 June
2017 20,294 10,248 - - 30,542
---------------------- -------- ------- --------
Net Book Value
At 31 December
2016 15,443 727 - - 16,170
---------------- -------- ------ -------- ------- --------
At 30 June
2017 20,471 2,714 128,609 45,935 197,729
---------------- -------- ------ -------- ------- --------
6. INVESTMENTS
During May 2017, the Group incorporated two new subsidiary
entities: Savannah Resources Portugal B.V. ('SRPBV'), being a
wholly-owned subsidiary of Savannah Resources Plc ('SAV'), and AME
Portugal Pty Ltd ('AMEPPty'), being a wholly-owned subsidiary of
SRPBV. In May 2017, SAV entered into an agreement to acquire 100%
of Slipstream PORT Pty Ltd ('SPPty'), thereby acquiring an
effective 75% interest in Slipstream Resources Portugal Lda ('SRP')
(formerly Slipstream Resources Portugal Unipessoal Lda). SRP is a
Portuguese entity which is the holder of a series of highly
prospective lithium projects with near-term production potential in
the north of Portugal.
In consideration for acquiring 100% of the issued share capital
of SPPty, the Group paid AUD$ 1,000,000 (GBP GBP591,000) in cash
and issued 20,000,000 ordinary shares in SAV. In addition, the
purchase of SPPty dictates future milestone payments as disclosed
in Note 10. The transaction has been accounted for as an
acquisition of an asset due to it not meeting the definition of a
business combination.
Other than the transactions disclosed above there were no
significant changes in the investments held by the Group and the
parent company.
7. TRADE AND OTHER RECEIVABLES
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP GBP GBP
Non-Current
Other receivables
- VAT 82,551 23,274 33,171
Other receivables
- Deposits 83,301 - -
---------- ---------- -------------
165,852 23,274 33,171
========== ========== =============
Current
VAT recoverable 25,263 18,267 24,364
Other receivables 434,708 89,102 102,193
-------- -------- --------
459,971 107,369 126,557
======== ======== ========
Included in Current Other receivables at 30 June 2017 is USD$
300,000 (GBP GBP230,704) committed payment related to licencing
commitments (see note 8). The payment will be deferred along the
life of the related licencing commitment's community projects with
an estimated end date in May 2019.
8. TRADE AND OTHER PAYABLES
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP GBP GBP
Current
Trade payables 286,985 105,446 155,077
Other payables 25,431 14,182 44,414
Accruals and deferred
income 544,771 208,971 270,031
857,187 328,599 469,522
========== ========== =============
Included in Current Accruals at 30 June 2017 are the USD$
300,000 (GBP GBP230,704) committed payment related to licencing
commitment's community projects.
9. SHARE CAPITAL
Allotted, issued and fully paid
Six months Six months Year ended
to to 31 December
30 June 2017 30 June 2016 2016
GBP0.01 GBP0.01 GBP0.01
ordinary ordinary ordinary
shares shares shares
number GBP number GBP number GBP
At beginning
of period 450,946,455 4,509,465 285,865,770 2,858,658 285,865,770 2,858,658
Issued during
the period:
Share placement 61,904,764 619,047 98,295,329 982,954 162,581,043 1,625,811
Bonus paid in
shares 1,688,870 16,889 999,642 9,996 999,642 9,996
Exercise of share
options - - - - 1,500,000 15,000
In lieu of cash
for acquisition
of lithium project
(note 6) 20,000,000 200,000 - - - -
--------------------- ------------- ---------- ------------ ---------- ------------ ----------
At end of period 534,540,089 5,345,401 385,160,741 3,851,608 450,946,455 4,509,465
--------------------- ------------- ---------- ------------ ---------- ------------ ----------
10. 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 the trigger event has not yet occurred.
Deferred consideration payable in relation to the acquisition of
80% shareholding in Matilda Minerals Lda (Mozambique mineral sands
project)
In 2013, in consideration for acquiring 80% shareholding in
Matilda Minerals Lda, the Group paid initial consideration of
AUD$400,000 (GBP GBP236,000) in ordinary shares in Savannah
Resources plc and a cash payment for cost reimbursements of
AUD$125,000 (GBP GBP74,000). Additionally, milestone payments, to
be satisfied by the issue of ordinary shares in the Company are
payable as follows: (a) AUD$500,000 (GBP GBP295,500) upon the
establishment of a JORC Inferred Resource of 150Mt @ 3% THM; (b)
AUD$500,000 (GBP GBP295,500) upon the establishment of a JORC
Indicated Resource of 350Mt @ 3% THM; (c) AUD$500,000 (GBP
GBP295,500) upon the establishment of a JORC Indicated Resource of
500Mt @ 3% THM.
In August 2017, a deed of variation was executed between the
parties that entered into the agreement for the acquisition of 80%
shareholding in Matilda Minerals Lda in September 2013. In
accordance with the deed of variation, the deferred consideration
agreed in the September 2013 agreement was substituted by fixed
consideration of AUD$ 50,000 (GBP GBP29,500). In August 2017, such
fixed consideration was satisfied by the issue of 597,037 ordinary
shares in the Company.
Deferred consideration payable in relation to the acquisition of
Gentor Resources Ltd (Oman copper project)
On 15 July 2014 the Company completed an acquisition of
interests in the highly prospective Block 5 and Block 6 copper
projects in the Semail Ophiolite belt in the Sultanate of Oman from
the TSX-Venture listed Gentor Resources Inc. The Company paid
initial consideration of USD $800,000 (GBP GBP615,000) with the
following deferred consideration (up to 50% payable in Savannah
shares) required to complete the acquisition of 100% of the issued
share capital of Gentor Resources Ltd ("GRL"):
(a) a milestone payment of USD $1,000,000 (GBP GBP769,000) upon
a formal final investment decision for the development of the Block
5 Licence;
(b) a milestone payment of USD $1,000,000 (GBP GBP769,000) upon
the production of the first saleable concentrate or saleable
product from ore derived from the Block 5 Licence; and
(c) a milestone payment of USD $1,000,000 (GBP GBP769,000)
within six months of the payment of the Deferred Consideration in
(b).
Deferred consideration payable in relation to the acquisition of
Slipstream PORT Pty Ltd (Portugal lithium project)
On 24 May 2017 the Group acquired a series of highly prospective
lithium projects with near-term production potential in the north
of Portugal. The Group paid an initial consideration of AUD$
1,000,000 (GBP GBP591,000) in cash and issued 20,000,000 ordinary
shares in the Company. Additional milestone payments, to be
satisfied by cash and the issue of ordinary shares in SAV, are
payable as follows: (a) AUD$ 1,500,000 (GBP GBP886,500) cash and a
further 20,000,000 ordinary shares of SAV upon the announcement by
SAV of a JORC-compliant Indicated Mineral Resource Estimate of 7.5
million tonnes at no less than 1% Li(2) O; (b) AUD$1,500,000 (GBP
GBP886,500) cash and an additional 20,000,000 ordinary shares of
SAV upon the announcement by SAV of a further JORC-compliant
Indicated Mineral Resource Estimate of a minimum of 7.5m tonnes at
no less than 1% Li(2) O.
11. SHARE OPTIONS AND WARRANTS
Share options and warrants to subscribe for ordinary shares in
the Company are granted to certain employees, Directors and
investors. Some of the options issued vest immediately and others
over a vesting period and may include performance conditions.
The Directors' interests in the share options and warrants of
the Company are as follows:
At 30 June 2017
Quantity Quantity Lapsed Options Exercise Date First Final
at granted during / Warrants price of date date
1 Jan during the year at the of exercise of exercise
2017 the 30 Jun grant
year 2017
Share Options
Dale Ferguson 5,321,776 - - 5,321,776 3.0p 21/07/13 20/07/14 20/07/18
Dale Ferguson - 2,000,000 - 2,000,000 7.59p 01/03/17 01/03/17 28/02/21
Matthew
King 1,500,000 - - 1,500,000 3.0p 16/03/16 16/03/16 15/03/20
David Archer 7,000,000 - 7,000,000 7.59p 01/03/17 01/03/17 28/02/21
Investor
Warrants
David S
Archer 11,111,112 --11,111,112 3.0p 24/09/13 24/09/13 19/07/18
At 31 December 2016
Quantity Quantity Lapsed Options Exercise Date First Final
at granted during / Warrants price of date date
30 Jun during the year at the of exercise of exercise
2016 the 31 Dec grant
year 2016
Share Options
Dale Ferguson 5,321,776 - - 5,321,776 3.0p 21/07/13 20/07/14 20/07/18
Matthew
King 1,500,000 - - 1,500,000 3.0p 16/03/16 16/03/16 15/03/20
Investor
Warrants
David Archer 11,111,112 --11,111,112 3.0p 24/09/13 24/09/13 19/07/18
At 30 June 2016
Quantity Quantity Lapsed Options Exercise Date First Final
at granted during / Warrants price of date date
1 Jan during the year at the of exercise of exercise
2016 the 30 Jun grant
year 2016
Share Options
Dale Ferguson 5,321,776 - - 5,321,776 3.0p 21/07/13 20/07/14 20/07/18
Matthew
King - 1,500,000 - 1,500,000 3.0p 16/03/16 16/03/16 15/03/20
Investor
Warrants
David Archer 11,111,112 --11,111,112 3.0p 24/09/13 24/09/13 19/07/18
12. EVENTS AFTER THE REPORTING DATE
In August 2017, the Group acquired a further 20% of the issued
share capital of Matilda Minerals Lda, increasing its interest in
the entity to 100%. The Group paid an aggregate consideration of
AUD$ 100,000 (GBP GBP60,000), satisfied by the issue of 1,194,074
ordinary shares in the Company.
In August 2017, a deed of variation was executed between the
parties that entered into the agreement for the acquisition of 80%
shareholding in Matilda Minerals Lda in September 2013. In
accordance with the deed of variation, the deferred considerations
agreed in the September 2013 agreement was substituted by fixed
consideration of AUD$ 50,000 (GBP GBP30,000). In August 2017, such
this consideration was satisfied by the issue of 597,037 ordinary
shares in the Company.
In July 2017, the Company agreed cash subscriptions of GBP1.3m
(before expenses) through the issue of 25,085,954 new ordinary
shares at an issue price of GBP0.0525 per ordinary share and the
issue of one warrant per two subscription shares, each having an
exercise price of GBP0.06.
In July 2017, the Company also granted options over 500,000
ordinary shares in the Company.
Competent Person and Regulatory Information
The information in this document that relates to exploration
results is based upon information compiled by Mr Dale Ferguson,
Technical Director of Savannah Resources Limited. Mr Ferguson is a
Member of the Australian Institute of Mining and Metallurgy
(AusIMM) and has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and
to the activity which he is undertaking to qualify as a Competent
Person as defined in the December 2012 edition of the "Australasian
Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves" (JORC Code). Mr Ferguson consents to the inclusion in
the report of the matters based upon the information in the form
and context in which it appears.
The information in this document that relates to the Mozambican
projects' resource estimation is based upon information compiled by
Mr Colin Rothnie who is an independent consultant and a Member of
the Australian Institute of Mining and Metallurgy (AusIMM) and has
sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the December 2012 edition of the "Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore
Reserves" (JORC Code). Mr Rothnie consents to the inclusion in the
report of the matters based upon the information in the form and
context in which it appears.
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
Technical Glossary
Inferred / Indicated Mineral Resource Estimate - as defined in
the December 2012 edition of the "Australasian Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves" (JORC
Code).
**ENDS**
For further information please visit www.savannahresources.com
or contact:
David Archer Savannah Resources Tel: +44 20
plc 7117 2489
David Hignell / Gerry Northland Capital Tel: +44 20
Beaney (Nominated Partners Ltd 3861 6625
Adviser)
Christopher Raggett finnCap Ltd Tel: +44 20
/ Emily Morris 7220 0500
(Corporate Broker)
Charlotte Page / St Brides Partners Tel: +44 20
Lottie Brocklehurst Ltd 7236 1177
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SESFUAFWSELU
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