Final Results and Notice of AGM

RNS Number : 7375X

Savannah Resources PLC

24 February 2017

 

Savannah Resources Plc / Index: AIM / Epic: SAV / Sector: Mining

24 February 2017

Savannah Resources Plc

Financial Results for the Year Ended 31 December 2016

and

Notice of Annual General Meeting

Savannah Resources plc (AIM: SAV) ('Savannah' or the 'Company') announces the release of its audited financial results for the year ended 31 December 2016 along with the notice of its Annual General Meeting, which is to be held in London on 26 April 2017.

HIGHLIGHTS

Operations

·     Signed a landmark Consortium Agreement with Rio Tinto over the world-class Mutamba heavy mineral sands deposits in Mozambique;

·     Reported a substantial Indicated and Inferred Mineral Resource Estimate for the Mutamba Project;

·     Scoping Study of the Mutamba Project commenced in 2016 and is nearing completion with its focus on defining a potential dry mining operation for staged, early development;

·     Consistent high-grade drill results from copper projects in Oman with studies underway ahead of mining, targeted to commence in late 2017 as copper prices are predicted to increase; and

·     Expanded its project portfolio with the grant of two lithium exploration licences in Finland in the context of significant demand and favourable pricing environment due to increasing demand for Electric Vehicles, off grid storage and lithium-ion batteries.

Financial

·     Raised a total of £4.04m in 2016 including private placements to both new and existing shareholders in a challenging funding environment, and, post year end, a further £2.24m in February 2017; 

·     Strong support from Al Marjan Limited as a cornerstone shareholder;

·     Operating loss of £1.76m reflects the increased tempo of operational activities in 2016;

·     £1.9m increase in the book value of our exploration and evaluation assets; 

·     Cash position of approximately £3.02m following the issue of new shares to both new and existing shareholders as announced on 22 February 2017.

David Archer, Savannah's Chief Executive Officer said today, "2016 was a very productive year for Savannah and has enabled us to start 2017 with three projects each at exciting stages of development.  Thanks to the Consortium Agreement we entered into with Rio Tinto regarding the Mutamba Project, we have secured and amalgamated our individual projects in Mozambique into a globally significant ilmenite project at a time of rising prices, increased demand and declining inventories.  We are delighted that the project appears to be amenable to dry mining which should provide a faster, lower-cost and flexible route to production.  In parallel, we continue to make solid progress towards copper production in Oman from the Mahab and Maqail deposits.  In the meantime, we look forward to providing updates on the lithium potential of the newest additions to our portfolio in Finland, providing longer-term potential to our core heavy mineral sands and copper projects where we expect to see significant milestones being achieved throughout 2017."

Availability of Annual Report and Financial Statements

Copies of the Company's full Annual Report and Financial Statements are expected to be posted to shareholders shortly and will also be made available to download today from the Company's website www.savannahresources.com.

Annual General Meeting

The Company's next Annual General Meeting ('AGM') will be held at the Collingwood Room at the Company's office at 1 Northumberland Avenue, Trafalgar Square, London, WC2N 5BW, on 26 April 2017 at 11:00 a.m.  A formal Notice of AGM and proxy form are expected to be posted to shareholders shortly and will be available to download today from the Company's website at www.savannahresources.com.

For further information please visit www.savannahresources.com or contact:

David Archer	Savannah Resources plc	Tel: [phone]
David Hignell / Gerry Beaney (Nominated Adviser)	Northland Capital Partners Ltd	Tel: [phone]
Jon Belliss / Elliot Hance (Corporate Broker)	Beaufort Securities Ltd	Tel: [phone]
Charlotte Page / Lottie Brocklehurst	St Brides Partners Ltd	Tel: [phone]

Chairman's Statement

The mineral resource sector opens 2017 with a much more favourable outlook compared to 2016, with higher commodity prices promoting greater optimism. At Savannah we are feeling particularly energised for the year ahead, having successfully strengthened our asset base in order to create a clear development pipeline portfolio, offering the potential for both near and longer term value accretion.

At the fore of this portfolio is our Mutamba Heavy Mineral Sands Project in Mozambique, which is being developed under a Consortium Agreement with Rio Tinto.  This provides us with the opportunity to earn a 51% interest in a world-class heavy mineral sands project in Mozambique. We established our credentials in the country via our existing Jangamo licence and the tie-up with Rio Tinto stands as an endorsement of our highly active development strategy, as evidenced by having delineated a substantial Mineral Resource Estimate for the enlarged project within less than a month of signing the agreement with Rio Tinto in October 2016. We remain committed to expediting the development of the project.

To this end, a drilling programme has already been completed targeted at increasing the current Mineral Resource Estimate and defining areas of high grade mineralisation for potential early development. Additionally, a scoping study is nearing completion. A pilot plant is due to be commissioned mid-year so that a proof of concept bulk sampling programme can be undertaken.  Furthermore, the resource looks amenable to dry mining techniques, and of supporting phased mining development, which will allow us to commence mining operations in the near term.

Alongside this, in Oman, we have a notably high grade copper Indicated and Inferred Mineral Resource at Block 5, which is our main focus for an initial mine development.  Mining licence applications for the Mahab 4 and Maqail South deposits have been submitted, targeting the commencement of operations in late 2017, which I believe strategically positions the Company to take advantage of stronger copper prices expected in late 2017 and into 2018.   Ahead of this, work will be undertaken to determine the best processing route and finalise feasibility studies.  This will build upon the recent metallurgical work conducted at Mahab 4, which confirmed the significant commercial appeal of our projects by indicating that a saleable copper concentrate with recoveries of over 90% can be produced from a relatively simple float process.

Block 4 offers further upside potential; the licence hosts a number of previously producing copper mines and initial exploration has identified the potential for these assets to host resources to supplement those already defined at Block 5.  The Dog's Bone target at Aarja in particular is recognised for its resource potential and, looking ahead, the existing underground access from historical mining activities should enable rapid development with low capital expenditures.  We will continue to undertake strategic exploration work at Block 4 in order to further prove up the licence prospectivity whilst we simultaneously centre our efforts on achieving production at Block 5 later this year.  As a result of the significant progress that has been made on both Blocks 4 and 5, and as part of an ongoing portfolio review process, Savannah has terminated its interest in Block 6 in Oman, which was at a very early stage of exploration.

Finally, a major development for the year under review was the expansion of our asset portfolio through the addition of two new licences in Finland, which are prospective for lithium.  Lithium is popular with investors at present and the emergence of the Electric Vehicle is powering a surge in lithium-ion batteries and the battery energy storage on a grid-, industrial-, commercial- and consumer-scale is reaching commercial viability, suggesting that the Energy Storage sector could grow materially over the next 10 years, leading to significant demand and a favourable pricing environment for lithium.

The exploration tenements are at an early stage of evaluation and initial groundwork has already identified seven pegmatites with anomalous lithium - two on Somero and five on Erajarvi.  The addition to our portfolio of these highly prospective assets provides Savannah with the potential for longer-term growth, with a steady flow of operational activity over the coming years.  Accordingly, we intend to undertake work to improve our understanding of the resource potential of these areas, but would like to affirm that our primary focus for 2017 will be on our Mozambique and Omani assets.

Corporate Update

We are delighted that Al Marjan Ltd ('Al Marjan') increased its investment in the Company at the start of 2016, taking its interest in Savannah to 29.99% in March 2016.  In light of Al Marjan becoming our largest shareholder and underpinning their intention to remain a supportive investor going forward, Mr. Maqbool Ali Sultan (former Minister of Commerce and Industry in Oman) and Mr. Imad Kamal Abdul Redha Sultan joined the Board in July 2016 as representatives of Al Marjan, assuming the roles of Non-Executive Directors of the Company, with Mr. Manohar Pundalik Shenoy and Mr. Murtadha Ahmed Sultan appointed as their respective alternates.  We are pleased to welcome them to the Board and they have already materially contributed to the Company thanks to their proven operating experience both in Oman and internationally.

Financial Overview

As is to be expected with an active exploration group, the Group is reporting a loss for the year of £1.76m (2015: £3.11m).  The significant driver was staff costs amounting to £1.02m. Other Comprehensive Income for the year amount of £0.48m (2015: £0.69m) was primarily due to the foreign exchange gain from the retranslation of the financial statements of subsidiaries with functional currencies not denominated in the presentation currency, GBP, and to the revaluation of loans to subsidiaries which have seen the translated value increase due to the weakness of GBP against major currencies in 2016 following the UK's referendum on membership of the EU.  Net assets have increased to £6.07m (2015: £3.58m) predominantly due to the increase in the exploration activity during the year with additions in Exploration and evaluation assets of £1.46m as at 31 December 2016, and the increase in Cash and cash equivalents by £0.80m as a result of well supported capital raisings during the year.

In February and March 2016 Al Marjan increased their investment in the Company, further endorsing its support of Savannah's growth strategy, with the placing of 98,295,329 new ordinary shares at a placement price of 1.78p per ordinary share. This raised a total of £1.75 million (before expenses), resulting in Al Marjan becoming the Company's largest shareholder with a holding of 29.99% in the Company's issued share capital. In September 2016 the Company raised a further £1.42m cash (before expenses) through the placing of 40,708,973 new ordinary shares at a significantly increased placing price of 3.5p per ordinary share. Following this placement the Company issued 23,576,741 new ordinary shares at a price of 3.5p to Al Marjan, David Archer and Matthew King, with both Al Marjan and David Archer restoring their respective shareholding percentages in the Company to those prior to the placement in September which was undertaken whilst the Company was in a close period. This raised a total of £0.83m cash (before expenses). Finally in November 2016 1,500,000 new ordinary shares at a price of 3.0p were issued in the exercise of share options by a former employee.

As of 31 December 2016, the Group had a cash position of £1.17 million. On 21 February 2017 the Company agreed a cash subscription of £2.24 million cash (before expenses). The Company will have a pro-forma cash balance of approximately £3.02 million following the receipt of the Placing and Subscription proceeds. This is expected to be increased by a further £1.01 million cash from Directors and their related parties (Al Marjan Ltd) when the Company is not in a "close period", with letters of intent received to this effect. 

Social Responsibility

Maintaining positive relationships with the communities in which we operate, supporting regional development, and ensuring high social and environmental standards remains a priority for Savannah and our operating partners.  We have developed a very active programme of engagement with the communities close to our operations in Oman and this has already paid dividends via support for our mining lease applications with a letter of no objection from the community being received already for the mine development at Maqail South. We will adopt a similar process of engagement in Mozambique, focusing on positive interaction with all parties and honest, timely and transparent communication with all our stakeholders.

Outlook

Savannah has strategically positioned itself for growth having established a portfolio of assets offering both near and longer term prospects in three commodities, each of which have a favourable pricing outlook at present, albeit this must be tempered somewhat by the uncertain outlook for global trade growth.

2017 is expected to be a significant year for the Company in which we transform from a development to a production company, with copper mining operations scheduled to commence in Oman towards the end of the year.

In the medium term and of greater significance is the potential of bringing the globally significant Mutamba Heavy Mineral Sands Deposit into development via our Consortium Agreement with Rio Tinto.

Longer term, our lithium assets may enable us to participate in the renewable energy market.

Our plans are to develop the Omani and Mozambique assets in sequence - something we are able to achieve thanks to the experienced operating teams we have established and are developing in Oman and Mozambique respectively, supported by a well-credentialed executive management team and Board of Directors.

We look forward to keeping shareholders updated with our active development strategy and I would like to take this opportunity to thank all our stakeholders for their continued support.  I would also like to thank our team for their ever consistent hard-work.  We anticipate making further additions to our team to match the needs of our growing company in the coming year and alongside this we are using a well-respected consulting group to help develop a long-term incentive scheme.  I look forward to the opportunities ahead.

Matthew King

Chairman

Date: 23 February 2017

Chief Executive's Report

Savannah has established a multi-commodity development portfolio spanning heavy mineral sands in Mozambique, copper in Oman and lithium in Finland.  Operations in Oman and Mozambique offer near to mid-term development potential whilst Finland provides a longer term development opportunity.  By establishing a portfolio of assets that are at a strategically staged point of their development, the Company is positioned to have consistently active news flow and clear and demonstrable value accretive milestones.

Heavy Mineral Sands, Mozambique (Consortium Agreement with Rio Tinto)

October 2016 saw a landmark achievement for Savannah Resources; the signing of a new Consortium arrangement with Rio Tinto covering Savannah's Jangamo Project and Rio Tinto's Chilubane and Mutamba Projects, including the Jangamo, Dongane and Ravene heavy mineral sands deposits.  The unified project, known as the Mutamba Project ('Mutamba'), marks a significant step in the evolution of these mineral sands assets, creating an amalgamated project comprising a globally significant resource.

Savannah operates the Mutamba Project and has an initial 10% beneficial interest in the combined mineral sands project, with the potential to increase this up to a 51% beneficial interest on the achievement of the following milestone developments: delivery of a scoping study - 20%; delivery of a pre-feasibility study - 35%; and delivery of a feasibility study - 51%.  Additionally, the Consortium Agreement includes an offtake agreement on commercial terms for the sale of 100% of production to Rio Tinto (or an affiliate).

Our focus at Mutamba is to define a potential dry mining operation for staged, early development. In line with this fast-paced development approach, within less than a month of finalising the agreement with Rio Tinto, a major milestone was achieved with the delineation of an initial Indicated and Inferred Mineral Resource Estimate of 3.5 billion tonnes at 3.8% Total Heavy Minerals ('THM'), containing 81 million tonnes ('Mt') of ilmenite, 2.2Mt rutile and 3.8Mt zircon, with 52% in the Indicated Category and 48% in the Inferred Category.  This is a significant Mineral Resource, and highlights the project's potential to be a key producer of titanium feedstocks.

While Mutamba is already a globally significant accumulation of heavy mineral sands there is potential to increase the overall Mineral Resource Estimate for the combined deposits. The initial Mineral Resource was defined at the Jangamo and Dongane deposits and a Mineral Resource estimation in respect of the Ravene and Chilubane deposits is yet to be completed.  Drilling has been completed at Ravene, and data compilation and a detailed review of the Chilubane is to be undertaken.

Results from drilling at Ravene, together with the Mineral Resource Estimate will form the focus for the current scoping study for the evaluation of an initial phase, low capex, long life, dry mining operation around a potential 200Mt well graded resource.  This will centre on, in particular, large areas of >5%THM that have been defined.  Mineral sands industry expert TZ Minerals International ('TZMI') has been commissioned to conduct the study, with completion expected by the end of Q1 / early Q2 2017.  Alongside this, leading Mozambican environmental consultants ERM and IMPACTO have been appointed to conduct environmental studies for, respectively, the Mutamba Project North and Chilubane deposit; an environmental study is a key document which is required for the lodging of a mining concession for any potential mine development. Furthermore, by appointing two contractors we are able to ensure the timely completion of these studies, which are expected to be finalised by the end of Q1 / early Q2 2017.

The completion of these studies will enable the commencement of a number of other value accretive initiatives, including marketing, pre-feasibility and feasibility studies.  The Consortium partners intend to apply for a mining concession later this year.  We are planning to commission a pilot plant which is already on site and which will enable a proof-of-concept bulk sampling programme to be undertaken.  This bulk sampling programme will help to determine commercially viable processing routes ahead of commencing mine construction, which is targeted to commence in 2018.

The Mozambique coastline hosts some of the largest ilmenite dominant heavy mineral sands deposits in the world. The deposits that comprise the Mutamba Project are favoured in being close to existing road, grid power, water and port infrastructure - the ENI 1 highway, the electricity grid and sub-station at Lindela and the sheltered harbour at Inhambane.  The Project also benefits from the Jangamo and Chilubane camp facilities and equipment. As part of the Consortium Agreement Rio Tinto's former project team has been employed by Savannah and integrated into Savannah's existing in-country team, meaning the Company is ideally poised to deliver on its targeted development goals.

Copper with additional gold upside, Oman

In Oman we hold a highly prospective asset portfolio covering 1,006km² across Block 4 and Block 5.  Our focus is on building a resource inventory to support high margin, low cost copper production, with mining targeted to commence in late 2017.

Block 5 is the most advanced of our licences in Oman.  The project hosts the Mahab 4 and Maqail South deposits, which collectively have a current Indicated and Inferred Mineral Resource of 1.7Mt at 2.2% copper.  These targets remain open and drill work was undertaken during the period to extend the high-grade portions of both deposits.  Results received are consistent and underscore the high-grade nature of the deposits, including 10.05m at 10.51% copper, 2.67% zinc and 0.4g/t gold from 34.95m at Mahab 4 and 5.8m at 4.42% copper and 0.2g/t gold from 58.6m at Maqail South, which should lead to an updated Mineral Resource estimate in Q1 2017.  Subject to licensing, we continue to target a start to mining operations in late-2017 in order to produce first copper concentrate in 2018.

The results of the drilling will feed into feasibility studies and ultimately Ore Reserves, which will be our focus of development this year, alongside defining final processing routes.  At Maqail South, an open-cut mine development is planned, whilst at Mahab 4, where the larger resource is located, underground mining will be conducted.  Whilst underground mining is more expensive than open-pit mining, the surface area required associated with an underground development is much smaller and easier to manage, meaning there is less impact on our neighbours and the environmental impact is far smaller.  Mining licences, based on these proposed development plans, have been submitted and work has begun relating to the requisite Environmental Impact Assessment ('EIA').  Commencement of the EIA is a key milestone towards commencing copper mining and leading Omani Environmental Consultant, Geo Resources Consultancy, has been contracted to oversee the work.  Discussions with a total of eight Government ministries have commenced and finalisation of the EIA is expected in Q2 2017.

Results from preliminary metallurgical test work at Mahab 4, received post-period end in February 2017, are encouraging in highlighting the commercial appeal of the deposit, confirming that floatation test copper recoveries exceeding 90% and that a saleable copper concentrate can be produced.  Importantly, test work points towards Mahab being a soft ore, with chalcopyrite identified as the sole copper bearing mineral, which should mean that copper produced ought to benefit from favourable overall processing costs with work suggesting a relatively simple float process is required to produce a clean and desirable copper concentrate.  Such a product is likely to be keenly sought after by off-takers and smelters.  Adding to this, there is potential for both gold and silver by-product credits. There is also the possibility for a zinc co-product to be produced, but further work is required to explore this opportunity.     Additional test work is also underway to further refine the recovery process and try to improve the overall copper concentrate grades.

Block 4 offers additional upside to our Block 5 production prospects.  This licence hosts four targets - Aarja, Bayda and Lasail - which were part of previously producing mines commercially mined between 1980 and 1994. Underground access is still present, which would facilitate rapid development.  During the year under review, work has been undertaken to better determine the resource potential of these assets.  At Aarja, three primary mineralised areas have been identified, with Dog's Bone emerging as the principle zone of specific interest.  Drilling at Dog's Bone has confirmed the location and continuity of known mineralisation, with results including 5.75m at 1.84% copper and 0.8g/t gold from 109.3m, which we expect could lead to the delineation of a JORC compliant Mineral Resource.  Alongside this, at Bayda, work to date has identified a significant volume of disseminated sulphide mineralisation, with a broad mineralised zone of 33.4m at 0.69% copper, including 4m at 1.56% copper and 5.1m at 1.22% copper.  We believe this prospect could be developed as a larger tonnage, lower grade operation.

A high-powered ground electromagnetic ('EM') survey commenced at Lasail and Bayda in November 2016.  The surveys were designed to cover high priority exploration areas adjacent to known mineralisation to test for depth extensions or repeats.  The results are expected in Q1 2017 and will form the basis for future development plans, including a potential resource drilling programme.  Alongside this, further drilling is planned at Aarja in order to better determine the resource potential of Dog's Bone.  We look forward to proving up the resource potential of these assets, but I would like to affirm that our primary focus and goal is on realising near term copper production from the development of the Block 5 deposits, with the development of Block 4 offering second stage development opportunities. 

As shareholders will be aware, we previously held an interest Block 6 in Oman.  Alongside finalising the development strategy for our Omani assets, during the year under review we took the decision to terminate our interest in this licence area.  Block 6 was at a very early stage of exploration and as Block 4 and 5 are more advanced, and, we believe, more prospective, we deemed it prudent for us to relinquish our interests in Block 6 so that we can dedicate our efforts to the Blocks 4 and 5 developments. 

Lithium, Finland

In June 2016 Savannah was granted Reservation Permits over two new lithium projects, Somero and Erajarvi, covering an area of 159km² of highly prospective lithium terrain in Finland.  These assets, which Savannah holds a 100% interest in through its newly established Finnish subsidiary, Finkallio Oy, mark a strategic development in Savannah's growth strategy, strengthening the Company's pipeline portfolio.

Finland was ranked number one by the Fraser Institute in its 2014 survey of 122 mining jurisdictions around the world highlighting its attractiveness as an investment destination.  Further to this, the lithium carbonate price rose from around US$8/kg to over US$25kg in 12 months due to supply shortages and demand is forecast to continue to rise, with Deutsche Bank predicting it to rise from 184,000 tonnes per annum in 2015 to 534,000 tonnes per annum by 2025.  This is largely fuelled by the burgeoning battery market, which is experiencing exponential growth due largely to the lithium-ion battery's critical use in electric vehicles.  In addition to this, new forms of energy storage are emerging, which are again reliant on lithium; energy storage represents a small part of current lithium demand, but growth potential is high, with renewable sources set to potentially rival electric vehicle growth rates.  It is this favourable operating market combined with compelling market dynamics, which attracted our attention to Finland and lithium.

Finland is a favourable exploration destination for lithium opportunities. The country has access to good geological and exploration data, has a favourable tectonic history for the formation of Lithium-Cesium-Tantalum ('LCT') pegmatites, and despite having a history of lithium mining, management believe that, to date, lithium has been under explored.  Our attraction to these assets appeared justified; initial rock chip sampling has already proven the resource potential, with seven pegmatites containing anomalous lithium identified (two on Somero and five on Erajarvi).  At Somero, assays of up to 4.47% lithium oxide ('Li2O') at the Torkkamaki prospect have been returned, with mineralisation traced over 150m along strike and remaining open.  At Erajarvi, prospective pegmatites with assays of up to 1.56% Li2O have been recorded at the Viitaniemi prospect, and mineralisation was traced for over 350m before it was covered by glacial till.  Crucially, key lithium minerals petalite, spodumene and lepidolite were all identified in hand specimens and follow up work is now being planned for Q2 2017, following winter, to further expand and define the seven anomalous pegmatites in readiness for drilling.  To support our Finnish activity, we are delighted to have retained the services of experienced Finnish geological consulting groups.

Whilst these assets are still at a very early stage of development, it is important to note that both projects have excellent access to high quality infrastructure and are located close to potential final customers, including battery producers.  This will prove extremely beneficial to production, positively impacting capital and operating expenditure.

Outlook

Savannah is poised for growth.  With mining expected to commence in Oman and the achievement of value accretive milestones on track in Mozambique, including further Mineral Resource Estimate increases and development studies, 2017 is set to be an important year in the Company's development.  Oman is planned to mark our Company's first venture into production, and I believe Mozambique has the potential to establish Savannah as a significant mineral sands producer, due to the importance of the Mutamba Project which we are evaluating in partnership with Rio Tinto.

Our commitment is for the timely delivery of the outlined milestone targets.  We have a terrific team of industry professionals who have demonstrated their abilities in delivering a high tempo of activity over the last year. We have seen commodity prices continue to improve. Copper is a key Energy Metal and will continue to play a crucial role in the fast-evolving global energy matrix. Ilmenite prices have made a strong recovery and we are looking for further price increases during 2017. Meanwhile we are seeing increased corporate activity in the mineral sands sector which underscores the increasing appeal of the sector to investors.

All that we have achieved to date is testament to the skill set of our Directors, management and operational teams, and support of our shareholders, and for this I give my thanks.  I look forward to us continuing to work together to build our Company into a significant mining group.

David S Archer

Chief Executive Officer

Date: 23 February 2017

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 Jangamo 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 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).

FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2016

						2016       £				2015        £
CONTINUING OPERATIONS
Revenue					-				-
Administrative expenses					(1,669,203)				(1,372,509)
Gain / (Loss) on disposal of investments					42,871				(666,154)
Impairment of investments					-				(1,071,374)
Loss on disposal of assets					(128,505)				-
OPERATING LOSS					(1,754,837)				(3,110,037)
Finance income					-				2,371
Finance costs					(4,413)				(2,446)
LOSS BEFORE TAX					(1,759,250)				(3,110,112)
Taxation					-				-
LOSS FOR THE YEAR ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT					(1,759,250)				(3,110,112)
OTHER COMPREHENSIVE INCOME
Items that will or may be reclassified to profit or loss:
Change in market value of investments					44,840				(930,213)
Transfer to realised (gain) / loss on disposal of investments					(42,871)				666,154
Transfer to impairment loss of investments					-				1,071,374
Exchange gains / (losses) arising on translation of foreign operations					476,018				(120,191)
OTHER COMPREHENSIVE INCOME FOR THE YEAR					477,987				687,124
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT					(1,281,263)				(2,422,988)
Loss per share attributable to equity owners of the parent expressed in pence per share: Basic and diluted From Operations					(0.46)				(1.27)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

			2016 £		2015 £
ASSETS
NON-CURRENT ASSETS
Intangible assets			5,066,750		3,155,242
Property, plant and equipment			16,170		21,892
Other receivables			33,171		23,778
Other non-current assets			-		225,668
TOTAL NON-CURRENT ASSETS			5,116,091		3,426,580
CURRENT ASSETS
Investments			124,472		149,922
Trade and other receivables			126,557		82,472
Cash and cash equivalents			1,172,347		359,296
TOTAL CURRENT ASSETS			1,423,376		591,690
TOTAL ASSETS			6,539,467		4,018,270
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share capital			4,509,465		2,858,658
Share premium			11,226,706		9,156,284
Foreign currency reserve			391,998		(84,020)
Warrant reserve			386,794		362,252
Share based payment reserve			455,309		473,178
Retained earnings			(10,900,327)		(9,187,216)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT			6,069,945		3,579,136
LIABILITIES
CURRENT LIABILITIES
Trade and other payables			469,522		439,134
TOTAL LIABILITIES			469,522		439,134
TOTAL EQUITY AND LIABILITIES			6,539,467		4,018,270

The Financial Statements were approved by the Board of Directors on 23 February 2017 and were signed on its behalf by:

D S Archer

Chief Executive Officer

Company number: 07307107

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2016

			2016 £		2015 £
ASSETS
NON-CURRENT ASSETS
Intangible assets			290,750		55,078
Investments			281		820,655
Other receivables			6,685,753		3,121,824
Other non-current assets			-		214,628
TOTAL NON-CURRENT ASSETS			6,976,784		4,212,185
CURRENT ASSETS
Investments			124,472		149,922
Trade and other receivables			43,007		41,970
Cash and cash equivalents			1,029,765		316,328
TOTAL CURRENT ASSETS			1,197,244		508,220
TOTAL ASSETS			8,174,028		4,720,405
EQUITY AND LIABILITIES SHAREHOLDERS' EQUITY
Called up share capital			4,509,465		2,858,658
Share premium			11,226,706		9,156,284
Warrant reserve			386,794		362,252
Share based payment reserve			455,309		473,178
Retained earnings			(8,699,890)		(8,452,829)
TOTAL EQUITY			7,878,384		4,397,543
LIABILITIES CURRENT LIABILITIES
Trade and other payables			295,644		322,862
TOTAL LIABILITIES			295,644		322,862
TOTAL EQUITY AND LIABILITIES			8,174,028		4,720,405

The Company total comprehensive loss for the financial year was £291,231 (2015: £1,864,595).

The Financial Statements were approved by the Board of Directors on 23 February 2017 and were signed on its behalf by:

D S Archer

Chief Executive Officer

Company number: 07307107

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

	Share capital	Share premium	Foreign currency reserve	Warrant reserve	Share based payment reserve	Retained earnings	Total equity
	£	£	£	£	£	£	£
At 1 January 2015	2,231,697	8,539,626	36,171	362,252	619,423	(7,034,355)	4,754,814
Loss for the year	-	-	-	-	-	(3,110,112)	(3,110,112)
Other comprehensive income	-	-	(120,191)	-	-	807,315	687,124
Total comprehensive income for the year	-	-	(120,191)	-	-	(2,302,797)	(2,422,988)
Issue of share capital (net of expenses)	626,961	616,658	-	-	-	-	1,243,619
Issue of share options	-	-	-	-	3,691	-	3,691
Lapse of options	-	-	-	-	(149,936)	149,936	-
At 31 December 2015	2,858,658	9,156,284	(84,020)	362,252	473,178	(9,187,216)	3,579,136
Loss for the year	-	-	-	-	-	(1,759,250)	(1,759,250)
Other comprehensive income	-	-	476,018	-	-	1,969	477,987
Total comprehensive income for the year	-	-	476,018	-	-	(1,757,281)	(1,281,263)
Issue of share capital (net of expenses)	1,650,807	2,094,964	-	-	-	-	3,745,771
Issue of share options	-	-	-	-	26,301	-	26,301
Exercise of options	-	-	-	-	(36,600)	36,600	-
Lapse of options	-	-	-	-	(7,570)	7,570	-
Issue of warrants	-	(24,542)	-	24,542	-	-	-
At 31 December 2016	4,509,465	11,226,706	391,998	386,794	455,309	(10,900,327)	6,069,945

The following describes the nature and purpose of each reserve within owners' equity:

Reserve                                                             Description and purpose

Share capital                                                     Amounts subscribed for share capital at nominal value.

Share premium                                                   Amounts subscribed for share capital in excess of nominal value less costs of fundraising.

Foreign currency reserve                                Gains/losses arising on retranslating the net assets of Group                                  

                                                                             operations into Pound Sterling.

Warrant reserve                                               Fair value of the warrants issued.

Share based payment reserve                        Represents the accumulated balance of share based payment

                                                                             charges recognised in respect of share options granted by
Savannah Resources Plc, less transfers to retained losses in respect of options exercised, lapsed and forfeited.

Retained earnings                                            Cumulative net gains and losses recognised in the consolidated

                                                                             Statement of Comprehensive Income.

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2016

	Share capital	Share premium	Warrant reserve	Share based payment reserve	Retained earnings	Total equity
	£	£	£	£	£	£
At 1 January 2015	2,231,697	8,539,626	362,252	619,423	(6,738,170)	5,014,828
Loss for the year	-	-	-	-	(2,671,910)	(2,671,910)
Other comprehensive income	-	-	-	-	807,315	807,315
Total comprehensive income for the year	-	-	-	-	(1,864,595)	(1,864,595)
Issue of share capital (net of expenses)	626,961	616,658	-	-	-	1,243,619
Issue of share options	-	-	-	3,691	-	3,691
Lapse of options	-	-	-	(149,936)	149,936	-
At 31 December 2015	2,858,658	9,156,284	362,252	473,178	(8,452,829)	4,397,543
Loss for the year	-	-	-	-	(859,042)	(859,042)
Other comprehensive income	-	-	-	-	567,811	567,811
Total comprehensive income for the year	-	-	-	-	(291,231)	(291,231)
Issue of share capital (net of expenses)	1,650,807	2,094,964	-	-	-	3,745,771
Issue of share options	-	-	-	26,301	-	26,301
Exercise of options	-	-	-	(36,600)	36,600	-
Lapse of options	-	-	-	(7,570)	7,570	-
Issue of warrants	-	(24,542)	24,542	-	-	-
At 31 December 2016	4,509,465	11,226,706	386,794	455,309	(8,699,890)	7,878,384

The following describes the nature and purpose of each reserve within owners' equity:

Reserve                                                             Description and purpose

Share capital                                                     Amounts subscribed for share capital at nominal value.

Share premium                                                  Amounts subscribed for share capital in excess of nominal value less costs of fundraising.

Warrant reserve                                               Fair value of the warrants issued.

Share based payment reserve                        Represents the accumulated balance of share based payment

                                                                             charges recognised in respect of share options granted by
Savannah Resources Plc, less transfers to retained losses in respect of options exercised, lapsed and forfeited.

Retained earnings                                            Cumulative net gains and losses recognised in the consolidated

                                                                             Statement of Comprehensive income.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2016

				2016 £		2015 £
Cash flows used in operating activities
Loss for the year				(1,759,250)		(3,110,112)
Depreciation and amortisation charges				9,536		-
Impairment of investments				-		1,071,374
(Gain) / Loss on disposal of investments				(42,871)		666,154
Share based payment reserve charge				26,301		3,691
Shares issued in lieu of payments to extinguish liabilities				20,992		119,521
Finance income				-		(2,371)
Finance expense				4,413		2,446
Exchange losses				96,036		-
Loss on disposal of assets				128,505		-
Cash flow from operating activities before changes in working capital				(1,516,338)		(1,249,297)
(Increase) / Decrease in trade and other receivables				(53,476)		29,317
Increase in trade and other payables				46,089		105,380
Net cash used in operating activities				(1,523,725)		(1,114,600)
Cash flow used in investing activities
Purchase of intangible exploration assets				(1,557,087)		(1,245,818)
Purchase of other non-current assets				-		(133,824)
Purchase of investments				(24,363)		(63,004)
Proceeds from sale of investments				94,653		109,415
Interest received				-		2,371
Net cash used in investing activities				(1,486,797)		(1,330,860)
Cash flow from financing activities
Interest paid				(4,413)		(2,446)
Proceeds from issues of ordinary shares (net of expenses)				3,724,778		1,023,514
Net cash from financing activities				3,720,365		1,021,068
Increase / (Decrease) in cash and cash equivalents				709,843		(1,424,392)
Cash and cash equivalents at beginning of year				359,296		1,778,338
Exchange gains on cash and cash equivalents				103,208		5,350
Cash and cash equivalents at end of year				1,172,347		359,296

COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016

				2016 £		2015 £
Cash flows used in operating activities
Loss for the year				(859,042)		(2,671,910)
Impairment of investments				76,147		1,071,374
(Gain) / Loss on disposal of investments				(42,871)		666,154
Share based payment reserve charge				26,301		3,691
Shares issued in lieu of payments to extinguish liabilities				20,992		119,521
Finance income				-		(2,371)
Finance expense				4,377		2,446
Exchange Gains				(89,175)		-
Cash flow from operating activities before changes in working capital				(863,271)		(811,095)
(Increase) / Decrease in trade and other receivables				(1,037)		20,079
Increase in trade and other payables				28,159		116,043
Net cash used in operating activities				(836,149)		(674,973)
Cash flow used in investing activities
Investment in subsidiaries				(672,355)		(820,374)
Loans to subsidiaries				(1,610,058)		(762,076)
Purchase of investments				(24,363)		(63,004)
Purchase of intangible exploration assets				(61,900)		(7,687)
Purchase of other non-current assets				-		(122,783)
Proceeds from sale of investments				94,653		109,415
Interest received				-		2,371
Net cash used in investing activities				(2,274,023)		(1,664,138)
Cash flow from financing activities
Interest paid				(4,377)		(2,446)
Proceeds from issues of ordinary shares				3,724,778		1,023,514
Net cash from financing activities				3,720,401		1,021,068
Increase / (Decrease) in cash and cash equivalents				610,229		(1,318,043)
Cash and cash equivalents at beginning of year				316,328		1,634,371
Exchange gains on cash and cash equivalents				103,208		-
Cash and cash equivalents at end of year				1,029,765		316,328

**ENDS**

 

END

 

 

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