Interim Results for Six Months Ended 30 June 2024

Savannah Resources PLC
30 September 2024
 

 

 

30 September 2024

Savannah Resources Plc

(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the 'Company')

 

Interim Results for Six Months Ended 30 June 2024

 

Savannah Resources Plc, the developer of the Barroso Lithium Project (the 'Project') in Portugal, Europe's largest spodumene lithium deposit, is pleased to provide its interim results for the six months ended 30 June 2024.

 

First half 2024 and recent highlights include:

 

Corporate:

·    First outcome from the Strategic Partnering Process announced in June: Landmark agreement reached with AMG Critical Materials, N.V. ('AMG'), which included a GBP16m equity investment at a 35% premium to 30-day VWAP (AMG now holding a 15.77% stake), an offtake heads of terms agreement, a mutual option for a 'full project financing solution' led by AMG, and a Co-operation agreement on studies for a feldspar/spodumene pilot plant in Portugal and for the construction of a Spodumene-to-Lithium Carbonate refinery in Portugal or Spain.

·    Chairman appointment: Experienced lithium sector executive, Rick Anthon, appointed as Chairman on the retirement of former Chairman, Matthew King.

·    Other board changes: Diogo de Silveira appointed as Deputy Chairman and Mike Connor appointed as Non-Executive Director as AMG's Board representative. Former Non-Executive Directors, James Leahy and Mary Jo Jacobi, retired from the Board.

·    Financials: Losses from continued operations increased by 27% vs. H1 2023 to GBP 1.9m (2023: 1.5m) due to increased activity on a number of fronts and a larger workforce. Following AMG's GBP 16m investment, highest ever cash balance of GBP 21.6m reported as at 30 June 2024 (30 June 2023 GBP 4.8m).

·    Savannah continues to have 100% ownership of the Project and at least 50% of its future concentrate offtake available to place with other partners.

 

Barroso Lithium Project (the 'Project'):

 

Definitive Feasibility Study ('DFS'):

·    Phase 1 of DFS drilling programme completed in July with c.6,000m drilled.

Confirmed extension to the Pinheiro, Reservatório and NOA orebodies and identified a new mineralised zone at Pinheiro with the highest lithium assays reported at the Project to date.

First of new JORC compliant Resource estimates made. NOA orebody (0.66Mt at 1.03% Li2O) now with 93% of the tonnage in the Indicated category, ready for subsequent conversion into Reserves.

·    Work advanced on final designs for processing plant and other key project infrastructure.

·    Phase 2 drilling (c.13,000m) expected to start in Q4 2024.

Environmental Licencing:

·    Good progress was made with the monitoring and study work required for the current compliance, 'RECAPE', phase of the licencing process. All outstanding contractors required now appointed.

Stakeholder Engagement:

·    Community Relations Manager appointed to lead on local stakeholder engagement activities.

·    Social Impact Assessment being finalised by Community Insights Group.

·    Regular meetings held with individuals, parishes and local groups and community events hosted.

·    Delegation of local people taken to meet community members living near Somincor's Neves Corvo mine in southern Portugal to learn about the local socio-economics benefits of that project.

·    Further relationship building with key members of the new national government, relevant government agencies and the Boticas municipality authority.

·    Greater awareness of Savannah and the Project generated through regular in-country media coverage and relationship building with other businesses, trade bodies, universities and NGOs.

·    Significant growth reported in the Company's in-country shareholder base with more than 12.5% of the Company's total share capital now owned by Portuguese.

Land acquisition & access arrangements

·    Savannah passed the milestone of having purchased 100 properties from private landowners.

·    To keep Project workstreams on track, Savannah started the legal process which grants it temporary access to land it does not currently own on the Project's concession area.

·    After a delay of more than half a year caused by the change in government earlier in the year, Savannah expects the legal process to conclude shortly.

·    Access to the land is expected from Q4 2024, which will allow the completion of all fieldwork required to take the Project to a Final Investment Decision ('FID') point.

·    Friendly purchase programme remains open and active, with more properties being acquired. Additional, alternative routes for land acquisition remain available.

Project timetable:

·    The delay of more than half a year experienced in receiving approval for the temporary land access order has had an impact on the Project's schedule.

·    As a result, Savannah now expects to be drilling again in 4Q 2024 and to deliver its DFS in the second half of 2025 with the environmental licencing process expected to be completed in a similar timeframe.

·    Commissioning and first production from the Project is now scheduled for 2027 with nameplate capacity still expected to be reached later in that year.

 

Next steps/future news flow:

·    Restart of fieldwork from Q4 2024 following the conclusion of the temporary land access legal process. Savannah is committed to proactively upholding and fulfilling the mandate given by the government to the Project's ongoing development while maintaining open two-way engagement with all stakeholders.

·    Continue to deepen relationships with local stakeholders through multiple channels including additional local job creation and further negotiations on land acquisition and access.

·    Further in-country and international brand building through engagement with media and investors.

·    Continue negotiations with additional potential strategic partners and evaluation of government/EU funding opportunities.

·    Complete DFS and environmental licencing work towards FID funded by record cash reserves.

 

 

 

CHAIRMAN'S STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2024

I am pleased to be making my first official communication with shareholders since my appointment as the Company's Chairman in June and I am grateful for the opportunity to be part of our Company's growing team, taking the Barroso Lithium Project forward through development.

 

As the reporting period largely predates my own arrival at Savannah, I will refer you to the Operational Review section below for the more detailed reporting of activities in the first six months of the year. My thanks again go to my predecessor in the Chair, Matthew King, and former Non-Executive Directors James Leahy and Mary Jo Jacobi, who all retired from the Board in June. Their significant efforts on behalf of Savannah, including their encouragement and support of the team, have helped to progress our Company to the strong position it is in today.

 

This is also another opportunity for me to welcome Mike Conner to our Board as our newest Non-Executive Director. As the representative of AMG Critical Materials N.V. ('AMG'), our new strategic partner and largest shareholder, we look forward to his input and building a strong relationship with him and the rest of the AMG team as we move forward together.

 

Without doubt, Savannah's new strategic partnership with AMG was the most significant achievement of the first half of the year. This partnership provides Savannah with the financing it needs to take the Project forward towards production, whilst also providing a clear pathway towards full financing of the Project. Furthermore, it pairs us with an established spodumene concentrate producer and the soon-to-be first large-scale producer of lithium chemicals in Europe, capable of providing valuable technical insight as we continue with our own Project's development, backed by our replenished cash reserves which, at the time of writing, stand at GBP 19.6m. With the lithium market remaining subdued in the first half of the year, despite the continuing growth in global EV sales (7m sold in H1 2024, +20% vs. H1 2023, source: Rho Motion), the favourable timing and strategic significance of this partnership, should not be underestimated.

 

As the Operational Review highlights, Savannah made solid progress in the first half of 2024 advancing its key workstreams including the Project's Definitive Feasibility Study ('DFS') and environmental licencing process, stakeholder engagement and recruitment. Notable highlights included the identification of a new zone of mineralisation at the Pinheiro orebody, which returned the highest lithium assays reported at the Project to date, and the growing engagement of the local population at our community social events.

 

The first half of 2024 was also marked by a change of government in Portugal. Pleasingly, the political consensus of the major parties around the importance of economic development, participation in the opportunities offered by technological transformation and development of the battery value chain remains strong. Further confirmation that our industry is well regarded was shown by the clear support it received during a recent debate in the Portuguese Parliament with specific comments relating to our Project showing that its importance to the region and to the country is well understood.

 

However, the change of government has led to a delay of more than half a year in the development of the Project. This relates to the time taken to receive approval for the temporary land access order we require to proceed with our fieldwork on land situated on the Project's concession area. With the new government now settled in, I'm pleased to report that we have seen procedures speed up and normalise in the state entities concerned. This is good news, not only for Savannah, but also for Portugal in its continuing efforts to reap the benefits of its natural endowments for the greater prosperity of its people, be it our spodumene or other resources in other industries.

 

We now expect to deliver our DFS in the second half of 2025 with the environmental licencing confirmation completed in a similar timeframe. The commissioning and first production from the Project could then take place in 2027 with nameplate capacity still expected to be reached later in that year.

 

The Savannah team will look to make up on the schedule wherever possible of course. Furthermore, the Project's schedule continues to fit well with the general forecast of much tighter lithium market conditions and higher prices from 2027 and beyond.

 

While the global market context has been more challenging recently, Savannah will continue to push ahead -because of both the quality and low-cost nature of its Project and also as we believe the longer-term outlook is now even stronger from a fundamental perspective than before. Having worked in the lithium sector for well over 15 years, I have experienced numerous challenges with projects I have been involved with, a number of highly volatile market cycles, and endless 'market noise' in relation to factors such as the speed of EV adoption, competing battery technologies and interpretation of geopolitical risks. However, it is my observation that the relevant mega trends such as the energy transition away from fossil fuels, increasing electric mobility and the desire of western governments to create strategic autonomy in new critical industries, while often varying in intensity, have not, and will not, stop.

 

With this broad long-term view firmly in sight, it is the job of all of us on the Savannah team to progress and develop our project so that our Company can fully leverage the positive situation that exists today and that will deepen in the years ahead. Crucially, we have the mandate, skills and finance to do so, and we know that this will benefit all stakeholders, from shareholders to business partners, our team in the region and the broader population in Portugal and Europe.

 

My thanks go to our shareholders and stakeholders for their ongoing support as we move forward together.

 

Rick Anthon

Chairman

 

Date: 27 September 2024

 

 

 

OPERATIONAL REVIEW FOR THE SIX MONTHS ENDED 30 JUNE 2024

Operational Review

 

Definitive Feasibility study

To date, Savannah has completed the first of the two stages of the DFS drilling programme. This programme was completed in July and included over 6,000m of resource, geotechnical and hydrogeological related drilling. From a resource perspective, the programme has been primarily designed to support the upgrade of existing Indicated and Inferred Resources in order to convert as much of the Project's ore into Reserves which will form the basis for the future mining operation. Evidence that this goal is being achieved was provided by the new resource estimate for the NOA orebody which was made in May and featured 93% of the tonnage in the Indicated category, ready for subsequent conversion into Reserves. With the drills set to start turning again soon, further updated resource estimates will follow in due course.

 

The drilling campaign has also allowed Savannah to confirm extensions to the Pinheiro, Reservatório and NOA orebodies and has identified new zones of mineralisation. This includes a new zone at NOA and in the eastern Pinheiro orebody, which returned the highest lithium assays recorded to date at the Project including three 1m interval sections all assaying at over 3.5% Li2O.

 

Planning for the second phase of the programme (an estimated 13,000m) is all but complete and we expect to start this phase in Q4 2024.

 

In parallel with the drilling, good progress was made on final designs for the processing plant, overall project layout, and a detailed assessment of the Project's topography through a LiDAR (light detection and ranging) survey which has provided a detailed 3D terrain model to aid final infrastructure planning.

 

As highlighted in the Chairman's Statement, we now expect to complete the DFS in the second half of 2025.

 

 

Environmental licencing

Savannah is currently undertaking the compliance, or RECAPE, phase of the licencing process. During this phase Savannah must show that the Project's final design satisfies the conditions which accompanied the positive 'DIA' decision given by the environmental regulator in May 2023.

 

During the first half of 2024, Savannah concluded the selection and appointment of the remaining RECAPE contractors required to support our in-house team with the preparation of the submission. Contractors were also selected to work on the layout (now finalised) and licencing process for the Project's new access road. This is being managed as a separate workstream to the main Project with Savannah and its contractors collaborating with the relevant government agency, Infrastructure Portugal.

 

Savannah is also required to continue with its seasonal monitoring of numerous environmental parameters, data from which will form the baseline against which the Project's environmental performance will be measured during development and production. These include noise, vibrations, air and water quality, ground and surface water levels as well ecological parameters, such as the flora and fauna found in the local area. This includes the Iberian wolf population in the region with the latest survey again concluding that there are no wolf packs living in the project area.

 

Community Insights Group ('CIG') has also been continuing with its work on the Social Impact Assessment, which will be included as part of the RECAPE submission. CIG has undertaken a detailed and comprehensive assessment of the Project's potential impact on local communities, which has included receiving significant feedback from community members. The report is currently being finalised and will form part of our planning for ongoing stakeholder engagement.

 

As previously flagged, much of the input regarding final project design which is required for the RECAPE submission will come from the DFS. Hence its timeline is intrinsically linked to that of the DFS. However, following a recent review of the RECAPE requirements, Savannah has concluded that we can make the submission before completing the whole DFS. As a result, Savannah now expects to submit the RECAPE in the summer of 2025. If the regulator's decision is positive the Project will be awarded a 'DCAPE', which will allow Savannah to complete the licencing process and receive the Project's final environmental licence in the second half of 2025.

 

Strategic Partnerships and financing

On 20 June, Savannah was delighted to announce a landmark agreement with AMG Critical Materials, N.V. the Amsterdam-listed, global critical materials business. This was the first outcome from Savannah's Strategic Partnering Process.

 

AMG's wholly owned German subsidiary, AMG Lithium B.V., an established spodumene concentrate producer and, soon to be, first major European lithium chemical producer (with the first module of its plant being commissioned earlier this month), invested GBP 16m in Savannah through a share subscription at a price of 4.67p (representing a 35% premium to the 30-day VWAP), and became the Company's largest shareholder in the process with a 15.77% stake.

 

The partnership also includes an offtake heads of terms agreement through which, subject to binding agreements being negotiated and signed, AMG can purchase 45ktpa of spodumene concentrate from the Project (approximately 25% of total) for 5 years based on prevailing market prices at the time. In addition, AMG will take a lead role in the partnership in securing a 'full project financing solution' for the Project's development. If such financing is successful, the Offtake heads of terms anticipate the increase and extension of the offtake arrangements to 90ktpa for 10 years.

 

The Partnership also features a co-operation agreement, whereby the parties have agreed to work together on a number of mutually beneficial opportunities including a study for joint construction of a feldspar/spodumene pilot plant in Portugal and a study for the construction of a Spodumene-to-Lithium Carbonate refinery in Portugal or Spain. AMG also received the right to nominate one director to sit on Savannah's Board, and as a result, Mike Connor has been appointed.

 

Importantly, the agreement with AMG leaves Savannah with 100% ownership of the Project and at least 50% of its future concentrate offtake available to place with other partners. Since the announcement of the agreement with AMG, the Company has received fresh interest in the Project from other parties who participated in our Strategic Partnering Process. However, the Company's short-term focus remains firmly on completing the workstreams required to reach a Final Investment Decision point. Hence, while Savannah will be maintaining and growing relationships with other potential partners, it does not expect to secure additional partnerships or agreements until much closer to that point.

 

In parallel with the Strategic Partnering Process, Savannah has continued to evaluate and prepare for public funding opportunities which may become available from the Portuguese Government through various funding mechanisms and from the European Commission via the recently initiated Critical Raw Materials Act. While the Company's current funding plans for the Project do not assume any contribution from these sources, it seems reasonable to expect that Savannah and its Project could qualify for any such funding given the strategic and critical raw material being targeted, the Company's commitment to responsible production and supply to the European battery chain, and the long term economic growth and jobs that will be created in an area in need of such catalysts.

 

Building our team

Good progress was made on building out the team during the first half of the year. This follows the significant growth already seen in Savannah's technical team during 2023 with the ramp up in fieldwork and the arrival of Emanuel Proença, as our new CEO. During the period, the senior team in Portugal was strengthened in areas including Community Relations, Communications and Business Development as Savannah consolidates its position both locally in the Boticas municipality but also within wider Portuguese society. This is all part of our gearing up for the Project's future development and operation, which was also reflected in the changes made to the profile of the Board.

 

With the Project progressing, the recruitment drive has continued into the second half of the year as the Company looks to add staff at all levels. These will mostly be positions located in Portugal and, as always, Savannah will look to recruit locally where possible. Future senior hires in the short term are expected to include a Project Development Manager and an HR Manager. Additional geologists and technical personnel will also be required as fieldwork activities accelerate again in the remainder of the year and into 2025.

 

Stakeholder engagement

Having a larger team, which now includes an in-country CEO, a Community Liaison Manager and a larger Communications department, has allowed Savannah to make a much greater commitment to engagement with Portuguese stakeholders. Importantly, Savannah staff are simply more present in the local area than in the past with more fieldwork being undertaken, increasing numbers of employees drawn from the local community and more colleagues living near the Project. This allows for more regular informal contact and for relationships with local stakeholders to grow more organically.

 

The Company has also been more comprehensive and structured in its engagement with local communities and other local stakeholder groups. This has included creating a stakeholder engagement framework and contact tracking tool, holding regular meetings with individuals, parishes and local groups and hosting a series of open community social events, which have grown significantly in popularity over recent months.

 

Uncertainty and concerns amongst local people have decreased, but this is just the start of a vitally important and never-ending process of transparently presenting, explaining, engaging and listening to everyone in the region. Savannah's team continues to find ways to address these concerns and provide accurate information on the Project. This included taking over 50 local people to meet community members living near Somincor's (Lundin Mining) Neves Corvo polymetallic mine in the Castro Verde municipality in southern Portugal. While this long-established underground mining operation differs from Savannah's in terms of commodity and mining style, it is similar to our Project in having neighbouring villages and provides an excellent in-country example of how a mining operation can become a very significantly beneficial socio-economic anchor for a community.

 

In addition, Savannah staff have undergone training to ensure optimised interaction with local people, and previous initiatives such as, publishing a further update factsheet relating to the Social Impact Assessment being conducted by CIG and another edition of our community newspaper, have been maintained. Support of local groups and individuals through sponsorships and the provision of equipment and resources has also been continued.

 

While building ties with local people is a priority, it is just one part of Savannah's overall stakeholder engagement strategy. During the period, staff continued to build relationships with key members of the new national government, relevant government agencies and the Boticas municipality authority. The Company was also delighted to welcome to site both the British and Australian Ambassadors to Portugal and a representative from the German Embassy in Portugal during the first half of the year.

 

Significant effort has also been made to build Savannah's brand within wider Portuguese society through the media. As a result CEO, Emanuel Proença, and other members of the team have featured regularly across multiple platforms and formats of the local and national media. Further work remains to be done, but reporting on the Project is becoming more balanced and more fact based as a result.

 

Savannah has also been reaching out directly to build relationships with other businesses, trade associations, NGOs and universities to demonstrate and highlight the Company's commitment to being a long-term player in an exciting new industry for the country.

 

Perhaps the most tangible success in terms of the Company's perception in Portugal has been in the growth of the in-country shareholding in Savannah. Now standing at above 12.5% of the Company's total share capital, Portugal has rapidly become one of most significant shareholding centres for the Company as well as home to its flagship asset. Overseas investors should take note of the speed and scale of the growth of this shareholding, as well as the individuals involved, as it demonstrates a strong growth in confidence in the ultimate development of the Project and resulting creation of value. In the meantime, Savannah continues to try to grow its investor base in country and, to this end, was pleased that CaixaBI, one of Portugal's leading investment banks, initiated research coverage on the Company in July with a Buy recommendation.

 

Land acquisition & access arrangements

Land in and around the area of our Project in the Boticas municipality is either owned privately, owned publicly by the local parish or is community land managed by local community 'Baldios' management groups. The landscape is dominated by managed pine forests and scrubland with an additional small section of agricultural land.

 

The 30-year Mining Lease granted in 2006 safeguards Savannah's right to access land which it does not already own for the development of the Project. However, to obtain access to the areas required, Savannah must either acquire, rent, or agree access terms with the relevant owner (land managed by Baldios groups cannot be acquired under law). If suitable agreements cannot be reached in a reasonable timeframe, the legal right is established under Portuguese law to use established legal processes for both temporary land access and outright compulsory purchase.

 

Contrary to other structural projects that were developed in recent times in the region, such as dams and highways, Savannah has chosen not to pursue these rights outright, allowing as much time as possible for commercially negotiated acquisitions, even when that allowed some of those opposing the Project to take advantage of this goodwill. The positive effect was that many landowners were given the extra time they needed to get paperwork in place, become comfortable with the Project, appreciate the value offered and ultimately, sell their land.

 

As announced during the period, Savannah reached the milestone of having purchased 100 properties from private landowners. Ownership now stands at 106 properties with a further 13 properties under promissory contracts. Savannah has spent approximately EUR 2.1m on private land purchases to date.

 

With respect to areas managed by Baldios groups, long term lease proposals have been made to the two largest Baldios groups, which feature compelling financial and non-financial compensation to the groups, their individual members, and the wider communities.

 

In an effort to keep current and future Project workstreams on track, Savannah started the legal process which grants it temporary access to land not currently owned. After some delays caused by the change in national government earlier in the year, Savannah expects the process to formally conclude shortly. Once concluded, the Company expects to have access to the land from Q4 2024 which will allow the completion of all fieldwork required to take the Project to a Final Investment Decision point.

 

Savannah remains hopeful that discussions with all relevant stakeholders can still take place and amicable sale or access agreements can be reached for the development and operating phases. However, if the Company is unable to conclude agreements for the land required, Savannah will need to initiate the legal process for compulsory purchase or access. While this would not be the Company's chosen course of action, the support given by the Portuguese Government for the temporary access order gives reason to believe any such application would be successful should Savannah need to take this step. Furthermore, as a legal process through which purchase prices or access fees for land would be set by the Portuguese courts, all stakeholders would still be assured of an alternative and equally transparent and fair process as that proposed by Savannah.

 

Legal matters

 

Operation Influencer

The Company has had no relevant contact with the investigating authorities during the first half of the year and has continued with all its workstreams unencumbered. On 30 January 2024, Savannah announced the conclusions from an independent legal review (the 'Independent Review') and legal opinions (the 'Legal Opinions') which it commissioned following the announcement of the Operation Influencer investigation in November 2023. In summary, the Independent Review found no evidence which would give rise to the liability of the Company in connection with any irregular financial transactions by the Company. It also found no evidence of improper offers, improper payments, or other forms of wrongdoing by the Company regarding the suspicions set out in the Investigation associated with: past relations with a potential partner, discussions on the by‐pass (access) road, royalties, or in relation to interactions with national entities in the EIA process under Article 16. No material legal risk was identified related to the alleged facts and circumstances outlined in the Investigation.

 

Separate Legal Opinions also confirmed that, based on the findings of the Independent Review, but also on the functioning of the Portuguese permitting process, past legal experience, and constitutional protections, under no realistic circumstance would the Project's execution and its expected future cash flows be at risk from the Investigation's findings. Hence, the conclusions of the Independent Review and the Legal Opinions demonstrated Savannah's solid legal position in relation to the alleged facts and circumstances contained in Operation Influencer. Based on past similar cases, the timeline for next steps remains uncertain and likely to be long, and a formal clearing or accusation is not expected in the near term.

 

Other legal matters

In the three other legal cases (Further details can be found in the 2023 Annual Report) brought against various parties in relation to the Project there were no material developments or final judgements made during the period. These ongoing cases have had no impact on the good standing of the Project's Mining Lease or its 2023 DIA. Nor have they stopped Savannah carrying on its work at the Project. Savannah's lawyers continue to advise that the cases relating to licensing and permitting are without foundation. In respect of the disputed land borders case, Savannah continues to be allowed to work on the land in question which it has purchased, and has the right under Portuguese law to use established legal processes for outright compulsory purchase if required.

 

Financials

Savannah's first half results include the GBP 16m equity investment made in late June by the Company's Strategic Partner, and now largest shareholder, AMG. This investment, made at the same price of 4.67p/share as the July 2023 GBP 6.5m (gross) raise (and a 35% premium to the 30-day VWAP), took the Company's cash position to its highest ever level at GBP 21.6m (30 June 2023 GBP 4.8m), putting Savannah in a strong financial position to continue with its development of the Project. With increased activity on a number of fronts, as well as a larger workforce, losses from continued operations increased by 27% versus first half 2023 to GBP 1.9m (2023: GBP 1.5m). Alongside the increased cash position on the balance sheet, ongoing technical work led to a GBP 1.5m increase in Intangible assets from year end 2023 to GBP 19.9m, while a small increase in Property, Plant and Equipment to GBP 1.7m was also recorded, reflecting Savannah's ongoing land purchase programme. Overall, total equity increased by 50% from year end 2023 to GBP 41.8m.

 

Outlook

Savannah is in the strongest position it has been in to date in relation to the Barroso Lithium Project.

 

It has a sizeable cash balance with which to progress the Project towards a Final Investment Decision. It has AMG, an established industry player, as a highly supportive strategic partner and largest shareholder which is offering a pathway to potential full financing for the Project. Yet Savannah has also been able to maintain 100% ownership of the asset and has at least 50% of its future concentrate production to trade and leverage. The Company is also attracting influential Portuguese investors and succeeding in growing its brand and levels of support in country, to complement its long-term support bases in the UK, northern Europe, Oman and Australia. The team is growing through the recruitment of good quality staff, and while the Project's timetable has been extended, its commissioning remains on track to coincide with an expected improvement in market conditions.

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2024

 


 

 

 

Unaudited

Six months to 30 June 2024

Unaudited

Six months to 30 June 2023

Audited

Year ended 31 December 2023


Notes

£

£

£

 


 



CONTINUING OPERATIONS


 



Revenue


-

-

-

Administrative Expenses


(1,855,896)

(1,383,467)

(3,477,405)

Foreign Exchange Loss


(104,444)

(148,008)

(81,116)

OPERATING LOSS


(1,960,340)

(1,531,475)

(3,558,521)

Finance Income


68,362

32,588

108,286

Finance Costs


-

-

(555)

LOSS FROM CONTINUING OPERATIONS BEFORE TAX


(1,891,978)

(1,498,887)

(3,450,790)

Tax Expense


-

-

-

LOSS FROM CONTINUING OPERATIONS AFTER TAX


(1,891,978)

(1,498,887)

(3,450,790)

LOSS ON DISCONTINUED OPERATIONS NET OF TAX

3

(24,393)

(48,060)

(167,304)

LOSS AFTER TAX ATTRIBUTABLE

TO EQUITY OWNERS OF THE PARENT


(1,916,371)

(1,546,947)

(3,618,094)

OTHER COMPREHENSIVE INCOME


 



Items that will not be reclassified to Profit or Loss:


 



Net Change in Fair Value through Other Comprehensive Income of Equity Investments


(2,736)

(4,111)

(5,289)

Items that will or may be reclassified to Profit or Loss:


 



Exchange Loss arising on translation of foreign operations


(354,792)

(414,958)

(237,364)

OTHER COMPREHENSIVE INCOME FOR THE PERIOD


(357,528)

(419,069)

(242,653)

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT


(2,273,899)

(1,966,016)

(3,860,747)

Loss per Share attributable to Equity Owners of the parent expressed in pence per share:


 



Basic and Diluted

 

 



From Operations

3

(0.10)

(0.09)

(0.20)

From Continued Operations

3

(0.10)

(0.09)

(0.20)

From Discontinued Operations

3

(0.00)

(0.00)

(0.00)

 

The notes form part of this Interim Financial Report.

 

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2024

 

 

 

 

Unaudited

30 June

Unaudited

30 June

Audited

31 December

 

 

2024

2023

2023

 

Notes

£

£

£

ASSETS


 



NON-CURRENT ASSETS


 



Intangible Assets

4

19,860,606

16,660,692

18,391,089

Right-of-Use Assets


70,964

14,515

56,378

Property, Plant and Equipment

5

1,735,879

1,598,389

1,660,135

Other Receivables

6

434,924

434,350

432,003

Other Non-Current Assets

7

79,988

92,398

92,869

TOTAL NON-CURRENT ASSETS


22,182,361

18,800,344

20,632,474

CURRENT ASSETS


 



Equity Instruments at FVTOCI


3,952

7,866

6,688

Trade and Other Receivables

6

547,799

408,502

426,065

Other Current Assets


-

395

166

Cash and Cash Equivalents

8

21,560,741

4,839,155

9,721,281

TOTAL CURRENT ASSETS


22,112,492

5,255,918

10,154,200

TOTAL ASSETS


44,294,853

24,056,262

30,786,674

EQUITY AND LIABILITIES

 

 



SHAREHOLDERS' EQUITY


 



Share Capital

10

21,727,742

16,889,598

18,281,499

Share Premium


59,215,369

41,693,178

46,598,337

Shares to be Issued


-

-

43,423

Merger Reserve


6,683,000

6,683,000

6,683,000

Foreign Currency Reserve


34,774

211,972

389,566

Share Based Payment Reserve


610,731

495,612

600,709

FVTOCI Reserve


(49,060)

(45,146)

(46,324)

Retained Earnings


(46,392,785)

(42,546,826)

(44,606,003)

TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT


41,829,771

23,381,388

27,944,207

LIABILITIES


 



NON-CURRENT LIABILITIES


 



Lease Liabilities


47,658

9,306

39,033

TOTAL NON-CURRENT LIABILITIES


47,658

9,306

39,033

CURRENT LIABILITIES


 



Lease Liabilities


23,306

5,210

17,346

Trade and Other Payables

9

1,595,728

660,358

1,993,060

Tax Provisions

11

798,390

-

793,028

TOTAL CURRENT LIABILITIES


2,417,424

665,568

2,803,434

TOTAL LIABILITIES


2,465,082

674,874

2,842,467

TOTAL EQUITY AND LIABILITIES


44,294,853

24,056,262

30,786,674

 

The Interim Financial Report was approved by the Board of Directors on 27 September 2024 and was signed on its behalf by:

………………………………………………..

Emanuel Proença

CEO and Director

Company number: 07307107

 

 

 

The notes form part of this Interim Financial Report.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2024

 


Share Capital

£

 

Share Premium

£

 

 

 

Shares to be Issued

£

 

Merger Reserve

£

Foreign Currency Reserve

£

 

Share Based Payment Reserve

£

 

          FVTOCI Reserve

£

                      

Retained Earnings

£

 

Total Equity

£

 

At 1 January 2023

16,889,598

41,693,178

-

6,683,000

626,930

403,749

(41,035)

(40,999,879)

25,255,541

Loss for the period

-

-

-

-

-

-

-

(1,546,947)

(1,546,947)

Other Comprehensive Income

-

-

 

-

-

(414,958)

-

(4,111)

-

 

(419,069)

Total Comprehensive Income for the period

                              -

-

 

-

-

(414,958)

-

(4,111)

(1,546,947)

(1,966,016)

Share Based Payment charges

-

-

 

-

-

-

91,863

-

-

91,863

At 30 June 2023

16,889,598

41,693,178

-

6,683,000

211,972

495,612

(45,146)

(42,546,826)

23,381,388

Loss for the period

-

-

-

-

-

-

-

(2,071,147)

(2,071,147)

Other Comprehensive Income

-

-

-

-

 

177,594

-

(1,178)

-

176,416

Total Comprehensive Income for the period

-

-

-

-

177,594

-

(1,178)

(2,071,147)

(1,894,731)

Issue of Share Capital (net of expenses)

1,391,901

4,905,159

 

-

 

-

 

-

 

-

 

-

 

-

6,297,060

Share Based Payment charges

-

-

 

  43,423

-

-

117,067

-

-

160,490

Lapse of Options

-

-

-

-

-

(11,970)

-

11,970

-

At 31 December 2023

18,281,499

46,598,337

43,423

6,683,000

389,566

600,709

(46,324)

(44,606,003)

27,944,207

Loss for the period

-

-

-

-

-

-

-

(1,916,371)

(1,916,371)

Other Comprehensive Income

-

-

 

-

-

(354,792)

-

(2,736)

-

(357,528)

Total Comprehensive Income for the period

-

-

 

-

-

(354,792)

-

(2,736)

(1,916,371)

(2,273,899)

Issue of Share Capital (net of expenses)

3,426,124

12,562,712

-

-

-

-

-

-

15,988,836

Share Based Payment charges

-

-

31,016

-

-

139,611

-

-

170,627

Issue / Exercise Share Based Payments

20,119

54,320

(74,439)

-

-

-

-

-

-

Lapse of Options

-

-

-

-

-

(129,589)

-

129,589

-

At 30 June 2024

21,727,742

59,215,369

-

6,683,000

34,774

610,731

(49,060)

(46,392,785)

41,829,771

 

The notes form part of this Interim Financial Report.

 

 

 

CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2023

 


 

Notes

 

Unaudited Six months to June 2024

£

 

Unaudited Six months to June 2023

£

 

Audited

Year ended December

2023

£

Cash Flows used in Operating Activities

 

 



Loss for the period


(1,916,371)

(1,546,947)

(3,618,094)

Depreciation and Amortisation charges


14,856

5,472

22,095

Share based payment charge - Share Options


139,611

91,863

208,930

Shares based payment charge - Shares to be issue in lieu of bonus


31,016

-

43,423

Finance Income


(68,362)

(32,588)

(108,286)

Finance Expense


-

-

555

Reverse impairment other assets


-

-

(710,467)

Exchange Losses


106,854

166,683

131,325

Cash Flow from Operating Activities before changes in Working Capital


(1,692,396)

(1,315,517)

(4,030,519)

(Increase) / Decrease in Trade and Other Receivables


(100,961)

137,471

140,148

Increase / (Decrease) in Trade and Other Payables


94,248

(396,205)

982,457

Net Cash used in Operating Activities


(1,699,109)

(1,574,251)

(2,907,914)

Cash flow used in Investing Activities


 



Purchase of Intangible Exploration Assets

4

(2,279,953)

(607,380)

(1,456,075)

Purchase of Tangible Fixed Assets

5

(119,663)

(63,940)

(120,573)

Interest received


60,632

32,589

96,367

Net Cash used in Investing Activities


(2,338,984)

(638,731)

(1,480,281)

Cash Flow used in Financing Activities


 



Proceeds from issues of ordinary shares (net of expenses)


15,988,836

-

6,297,060

Principal paid on Lease Liabilities


(9,552)

(2,605)

(9,252)

Interest paid


-

-

(555)

Net Cash from / (used in) Financing Activities


15,979,284

(2,605)

6,287,253

Increase / (Decrease) in Cash and Cash Equivalents

 

11,941,191

(2,215,587)

1,899,058

Cash and Cash Equivalents at beginning of period

 

9,721,281

7,202,334

7,202,334

Increase Restricted Cash

 

-

-

701,903

Exchange Losses on Cash and Cash Equivalents

 

(101,731)

(147,592)

(82,014)

Cash and Cash Equivalents at end of period

 

21,560,741

4,839,155

9,721,281

 

The notes form part of this Interim Financial Report.

 

 

 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2023

 

1.   BASIS OF PREPARATION

The financial information set out in this report is based on the Consolidated Financial Statements of Savannah Resources Plc (the 'Company') and its subsidiary companies (together referred to as the 'Group'). The Interim Financial Report of the Group for the six months ended 30 June 2024, which is unaudited, was approved by the Board on 27 September 2024. The financial information contained in this interim report does not constitute statutory accounts as defined by s434 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2023 have been filed with the Registrar of Companies. The Auditors' Report on those accounts was unqualified and did not contain a statement under section 498 (2) or 498 (3) of the Companies Act 2006.

 

The financial information set out in this report has been prepared in accordance with the accounting policies set out in the Annual Report and Financial Statements of Savannah Resources Plc for the year ended 31 December 2023. New standards and amendments to IFRS effective as of 1 January 2024 have been reviewed by the Group and there has been no material impact on the financial information set out in this report as a result of these standards and amendments.

 

The Group Interim Financial Report is presented in Pound Sterling.

 

Going Concern

The Group had cash balance of GBP 21.6m at 30 June 2024. The Directors have reviewed the cash-flow projection for the Group and concluded that it has sufficient finance in place to meet its financial commitments for at least 12 months from the date of approval of the Interim Financial Report. However, with the level of activity and related expenditure accelerating the Company will require further funding to get to the ultimate goal of having a producing spodumene mine. The Directors believe that following the grant of the DIA, and the strategic partnership investment by the Company's new largest shareholder, AMG, the Group's Barroso Lithium Project will be attractive to investors and other offtake partners. Furthermore, with AMG incentivised to deliver a full funding solution for the Project, the Directors are confident that funding required to move the Project forwards will be available. However, whilst the Group and Company have been successful in raising equity finance in the past, and while the Directors are confident of raising additional funding when required, their ability to do this is not completely within their control and the lack of a binding agreement means there can be no certainty that the additional funding required by the Group and the Company will be secured.

 

In forming their view, the Directors have considered the impacts that future delays on the work schedule could have on the Group's available cash resources. Having factored in reasonably plausible scenarios and reasonable mitigating actions (for example, the ability to reduce its uncommitted future expenditure), the Directors consider sufficient cash balance is maintained under each scenario and that the Group will be able to meet its obligations as they fall due for at least 12 months from the date of approval of the Interim Financial Report.

 

Accordingly, the Directors have concluded that these circumstances form a reasonable expectation that the Group has adequate resources to continue in operational existence, for the foreseeable future. For these reasons, the Directors continue to adopt the going concern basis in preparing the Interim Financial Report.

 

 

2.    SEGMENTAL REPORTING

The Group complies with IFRS 8 Operating Segments, which requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker, which the Company considers to be the Board of Directors. In the opinion of the Directors, the operations of the Group are comprised of exploration and development in Portugal, and headquarter, corporate and other costs.

 

Based on the Group's current stage of development there are no external revenues associated to the segments detailed below. For exploration and development in Portugal the segments are calculated by the summation of the balances in the legal entities which are readily identifiable to each of the segmental activities. Recharges between segments are at cost (although tax related transfer pricing markup is required) and included in each segment below. Intercompany loans are eliminated to zero and not included in each segment below.

 

 

Portugal Lithium

 

HQ, corporate and other 3

 

Elimination

 

Total

 

£

£

£

£

Period 1 January 2024 to 30 June 2024

Revenue 1

576,4682

360,100

(936,568)

-

Interest Income

-

68,362

-

68,362

Share Based Payments

-

170,627

-

170,627

Loss for the period

(868,040)

(1,048,331)

-

(1,916,371)

Total Assets

22,734,944

21,559,909

-

44,294,853

Total Non-Current Assets

21,747,436

434,925

-

22,182,361

Additions to Non-Current Assets

2,062,175

-

-

2,062,175

Total Current Assets

987,508

21,124,984

-

22,112,492

Total Liabilities

(1,044,652)

(1,420,430)

-

(2,465,082)


Portugal Lithium

HQ, corporate and other 3

Elimination

Total


£

£

£

£

Period 1 July 2023 to 31 December 2023

Revenue 1

1,121,0472

536,918

(1,657,965)

-

Finance Costs

(555)

-

-

(555)

Interest Income

-

75,698

-

75,698

Share Based Payments

-

344,216

-

344,216

Loss for the period

(1,500,584)

(570,563)

-

(2,071,147)

Total Assets

20,709,860

10,076,814

-

30,786,674

Total Non-Current Assets

20,200,471

432,003

-

20,632,474

Additions to Non-Current Assets

1,693,577

-

-

1,693,577

Total Current Assets

509,389

9,644,811

-

10,154,200

Total Liabilities

(1,039,684)

(1,802,782)

-

(2,842,466)

 

 


 

Portugal Lithium

 

HQ, corporate and other 3

 

Elimination

 

Total

 


£

£

£

£

 

Period 1 January 2023 to 30 June 2023

Revenue 1

429,3582

321,171

(750,529)

-

 

Interest Income

-

32,588

-

32,588

 

Share Based Payments

-

(91,863)

-

(91,863)

 

Loss for the period

(571,419)

(975,528)


(1,546,947)

 

Total Assets

18,694,198

5,362,064


24,056,262

 

Total Non-Current Assets

18,365,994

434,350


18,800,344

 

Additions to Non-Current Assets

638,991

0


638,991

 

Total Current Assets

328,204

4,927,714


5,255,918

 

Total Liabilities

(237,496)

(437,378)

-

(674,874)

 

 

1 Revenues included the intercompany recharges within the Group which are eliminated.

2 Included in the Portugal Lithium segment is GBP 576,468 (31 December 2023: GBP 1,121,047; 30 June 2023: GBP 429,358) relating to intercompany recharges within this segment and therefore eliminated in Elimination column.

3 Following the divestment of its Oman operations and the discontinued operations in Mozambique, the Group is effectively a single project group and it is appropriate to adjust its segmental reporting accordingly. Therefore the 2023 segment note disclosures have been re-stated accordingly, combining the following categories 'Discontinued Operation Mozambique Mineral Sands' and 'HQ and corporate' into 'HQ, corporate, and other'.

               

3.      EARNINGS PER SHARE

Basic earnings per share is calculated by dividing the earnings attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.

 

            In accordance with IAS 33 as the Group is reporting a loss for both this and the preceding period the share options are not considered dilutive because the exercise of share options and warrants would have the effect of reducing the loss per share.

 

Reconciliations are set out below:

 

Unaudited Six months to 30 June 2024

Unaudited Six months to 30 June 2023

Audited Year ended 31 December 2023

Basic and Diluted Loss per Share:

 



Losses attributable to Ordinary Shareholders (£):

 



Total Loss for the period (£)

(1,916,371)

(1,546,947)

(3,618,094)

Total Loss for the period from Continuing Operations (£)

(1,891,978)

 

(1,498,887)

(3,450,790)

Total Loss for the period from Discontinued Operations (£) 1

(24,393)

 

(48,060)

(167,304)

Weighted average number of shares (number)

1,845,932,402

1,688,959,820

1,751,881,365

Loss per Share - Total Loss for the period from Operations (£)

(0.00104)

 

(0.00092)

(0.00207)

Loss per Share - Total Loss for the period from Continuing Operations (£)

(0.00103)

 

(0.00089)

(0.00197)

Loss per Share - Total Loss for the period from Discontinued Operations (£)

(0.00001)

 

(0.00003)

(0.00010)

        

         1 Savannah is in the process of exiting its residual interest in Mozambique which includes Mining Concession 9735C and finalising administrative work related to the termination of the Consortium Agreement as required by the Mozambique laws. The costs incurred during 2024 and 2023 are related to these activities and are registered under Discontinued Operations.

4.        INTANGIBLE ASSETS


 

 

Exploration and Evaluation Assets

£

Cost




At 1 January 2023



16,459,599

Additions



557,175

Exchange differences



(356,082)

At 30 June 2023



16,660,692

Additions



1,605,022

Exchange difference



125,375

At 31 December 2023



18,391,089

Additions

 

 

1,800,791

Exchange differences

 

 

(331,274)

At 30 June 2024

 

 

19,860,606

 

 



Exploration and Evaluation Assets

£

Amortisation and Impairment




At 1 January 2023



-

At 30 June 2023



-

At 31 December 2023



-

At 30 June 2024

 

 

-

 




Net Book Value



 

At 30 June 2023



16,660,692

At 31 December 2023



18,391,089

At 30 June 2024

 

 

19,860,606

 

            The Exploration and Evaluation Assets referred to in the table above comprise expenditure in relation to exploration licences in Portugal. The Directors consider that for the purposes of assessing impairment, the above exploration and evaluation expenditure is allocated to the Portugal Lithium licences area, representing the Group's Cash Generating Units ('CGUs').

 

The Directors have reviewed the carrying value of the CGU and have not identified any indicators of impairment for the assets allocated to the licences in Portugal, and therefore there is no impairment charge in 2024 or 2023 for Portugal operations.

 

 

 

5.      PROPERTY, PLANT AND EQUIPMENT


Motor Vehicles

£

Office Equipment

£

Land

£

Total

£

Cost





At 1 January 2023

57,355

49,208

1,559,816

1,666,379

Additions

-

1,521

62,419

63,940

Exchange differences

(1,648)

(4,197)

(46,010)

(51,855)

At 30 June 2023

55,707

46,532

1,576,225

1,678,464

Additions

-

14,079

42,554

56,633

Exchange difference

485

514

14,997

15,996

At 31 December 2023

56,192

61,125

1,633,776

1,751,093

Additions

-

4,737

114,926

119,663

Exchange differences

(1,277)

(5,573)

(38,101)

(44,951)

At 30 June 2024

54,915

60,289

1,710,601

1,825,805

        

 

Motor Vehicles

£

Office Equipment

£

Land

£

Total

£

Depreciation





At 1 January 2023

57,355

25,080

-

82,435

Charge for the period

-

2,817

-

2,817

Exchange differences

(1,648)

(3,529)

-

(5,177)

At 30 June 2023

55,707

24,368

-

80,075

Charge for the period

-

10,080

-

10,080

Exchange difference

485

318

-

803

At 31 December 2023

56,192

34,766

-

90,958

Charge for the period

-

5,223

-

5,223

Exchange differences

(1,277)

(4,978)

-

(6,255)

At 30 June 2024

54,915

35,011

-

89,926

 

Net Book Value





At 30 June 2023

-

22,164

1,576,225

1,598,389

At 31 December 2023

-

26,359

1,633,776

1,660,135

At 30 June 2024

-

25,278

1,710,601

1,735,879

 

The additions in land reflect the land acquisition program that Savannah has in place in Portugal to acquire the land required for the future development of the Barroso Lithium project.

 

The above Property, Plant and Equipment is allocated to the Portugal Lithium operations, representing the Group's CGUs.

 

Management has evaluated the existence of impairment indicators of the Property, Plant and Equipment allocated to the licences area together with the impairment review performed for the Exploration and Evaluation Assets, and it has concluded that there are no indicators of impairment, and therefore there is no impairment charge in 2024 or 2023.

 

 

6.      TRADE AND OTHER RECEIVABLES

 

 

Unaudited

30 June 2024

Unaudited

30 June 2023

Audited

31 December 2023

 

 

£

£

£

Non-Current

 

 



Other Receivables

 

434,924

434,350

432,003

Total Non-Current Trade and Other Receivables

 

434,924

434,350

432,003

 

 

 

Unaudited

30 June 2024

Unaudited

30 June 2023

Audited

31 December 2023

 

 

£

£

£

Current

 

 



VAT Recoverable

 

181,879

125,078

253,790

Other Receivables

 

365,920

283,424

172,275

Total Current Trade and Other Receivables

 

547,799

408,502

426,065

 

 

7.      OTHER CURRENT AND NON-CURRENT ASSETS

 

 

Unaudited

30 June 2024

Unaudited

30 June 2023

Audited

31 December 2023


 

£

£

£

Non-Current

 

 



Guarantees

 

61,862

62,755

63,301

Other

 

18,126

29,643

29,568

Total Other Non-Current Assets

 

79,988

92,398

92,869

 

 

8.      CASH AND CASH EQUIVALENTS

 

 

Unaudited

30 June 2024

Unaudited

30 June 2023

Audited

31 December 2023


 

£

£

£

Cash and Cash Equivalents

 

 



Cash at Bank and in Hand

 

20,854,093

4,839,155

9,019,375

Restricted Cash

 

706,648

-

701,906

Total Cash and Cash Equivalents

 

21,560,741

4,839,155

9,721,281

 

The balance of Cash and Cash Equivalents approximates fair value.

            The Group's cash balance in Mozambique is restricted for use in Mozambique until the Group and the Mozambican Tax Authority resolve the potential tax treatment or otherwise of the Deed of Termination from 2021 (see Note 11).

 

 

9.      TRADE AND OTHER PAYABLES

 

 

Unaudited

30 June 2024

Unaudited

30 June 2023

Audited

31 December 2023


 

£

£

£

Current

 

 



Trade Payables

 

761,287

392,612

820,487

Other Payables

 

2,478

16,385

7,825

Accruals

 

650,070

190,829

1,050,694

Deferred Income

 

115,393

21,969

43,005

Taxes

 

66,500

38,563

71,049

Total Current Trade and Other Payables

 

1,595,728

660,358

1,993,060

 

 

10.    SHARE CAPITAL

 


Six months to

30 June 2024

 

Six months to

30 June 2023

 

Six months to

31 December 2023


£0.01 ordinary shares number

£

£0.01 ordinary shares number

£

£0.01 ordinary shares number

£

Allotted, issued and fully paid

 

 

 

 

 

 

At beginning of period

1,828,149,904

18,281,499

1,688,959,820

16,889,598

1,688,959,820

16,889,598

Issued during the period:

 

 





Share placement

342,612,4201

3,426,124

-

-

139,190,084

1,391,901

Shares issued in lieu

2,011,8802

20,119

-

-

-

-

At end of period

2,172,774,204

21,727,742

1,688,959,820

16,889,598

1,828,149,904

18,281,499

 

1 In respect of the Share placements in 2024 the net proceeds were GBP 15,988,836 (2023: GBP 6,297,060) of which GBP 12,562,712 (2023: GBP 4,905,159) has been recorded in Share Premium. The gross proceeds were GBP 16,000,000 (2023: GBP 6,500,177) and the costs of the Share placement GBP 11,164 (2023: GBP 203,117).

2 In respect of the issue of shares to the CEO (at his election of receiving shares rather than cash) in lieu of payment of the 2023 bonus. This is considered a share based payment and a charge of GBP 43,423.08 was recognised in 2023 and GBP 31,016.48 has been recognised in 2024.

 

The par value of the Company's shares is GBP 0.01.

 

 

11.    GROUP CONTINGENT LIABILITIES

Contingent Liabilities:

Details of contingent liabilities where the probability of future payments is not considered remote are set out below, as well as details of contingent liabilities, which although considered remote, the Directors consider should be disclosed. The Directors are of the opinion that provisions are not required in respect of these matters, because at the reporting date it is not probable that a future sacrifice of economic benefits will be required and the amount is not capable of reliable measurement.

 

         Consideration payable in relation to the acquisition of Mining Lease Application for lithium, feldspar and quartz (Portugal lithium project)

         In June 2019 the Company purchased the right to acquire a Mining Lease Application for lithium, feldspar and quartz from private Portuguese company, Aldeia & Irmão, S.A., once the Mining Lease has been granted. The terms of the agreement were modified in June 2024, primarily to extend the date, by which the Mining Licence can be issued (until September 2026) to ensure that the Company's right to acquire it is continued. The total purchase price for the acquisition is EUR 3,550,000 (~GBP 3,008,000) if the transfer of the Mining Lease to an entity within the Group takes place before 30 April 2025, whereas if the transfer of the Mining Lease takes place after that date the purchase price will be EUR 3,250,000 (~GBP 2,754,000). In both cases this will only become due once the Mining Lease Application has been granted and the Mining Lease transferred to an entity within the Group, at which point the agreed payment schedule will consist of an initial EUR 55,000 (~GBP 47,000) payment with the balance due in 71 monthly instalments. Upon delivery of the request for transfer of the Mining Lease to an entity within the Group to Aldeia to submit the request to the DGEG (Portuguese mining licencing authority), the Group shall provide Aldeia with a bank guarantee of EUR 3,495,000 (~GBP 2,961,000) or EUR 3,195,000 (~GBP 2,707,000) that will be reduced in accordance with the 71 monthly instalments. Additionally, once the Mining Lease is issued, Savannah has the option to defer the timing of issuing the Bank Guarantee by up to 12 months by making payments of EUR 150,000 for 6 months or a further EUR 150,000 for 12 months (these payments of EUR 150,000 will be deducted from the total purchase price and adjusted in the future monthly payment schedule).

 

Provisions:  

In October 2016 the Group and Rio Tinto entered into a Consortium Agreement to develop their respective projects in Mozambique through an unincorporated consortium. On 1 December 2021 Savannah signed a Deed of Termination relating to the Consortium Agreement. Under the Deed of Termination, compensation of USD 9.5m (GBP 7.0m) was agreed to be paid by Rio Tinto to the Group. In 2023 the Company was indirectly notified that the Mozambican Tax Authority ('MTA') considers the transaction in scope for capital gains tax and that a tax amount of MZN 134,261,677 (~GBP 1,650,000) should be paid. Savannah has not received any formal notification from the MTA and it does not agree with the MTA's position in relation to this matter. However, the fact that the Group and the MTA have different opinions in this matter represents the existence of an uncertainty in the tax treatment relating to the Deed of Termination and therefore the Group is required to apply IFRIC 23. The Company has applied estimations to determine the probability of different scenarios occurring and has made a provision of GBP 798,390 (31 December 2023: GBP 793,028; 30 June 2023: GBP nil) based on the sum of the probability-weighted outcomes, but that does not indicate the Group will be liable to pay this amount. Although the Company is seeking a resolution of the matter with the MTA the timing thereof is not certain, in the event that any tax is paid it could be settled from restricted cash held in Mozambique (see Note 8) or non-current other receivables (see Note 6).

 

 

12.    EVENTS AFTER THE REPORTING DATE

On 20 August 2024 the Company appointed a new Non-Executive Director. Following the investment from the Company's new largest shareholder and strategic partner, AMG Critical Materials N.V. ('AMG'), Mike Connor was appointed as Non-Executive Director, as the Board representative of AMG and as per the terms of the subscription agreement.

 

 

 

Regulatory Information

This Announcement contains inside information for the purposes of the UK version of the market abuse regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

 

Savannah - Enabling Europe's energy transition.

 

**ENDS**

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

 

Savannah Resources PLC

Emanuel Proença, CEO

 

Tel: +44 20 7117 2489

 

 

SP Angel Corporate Finance LLP (Nominated Advisor & Joint Broker)

David Hignell/ Charlie Bouverat (Corporate Finance)

Grant Barker/Abigail Wayne (Sales & Broking)

 

 

Tel: +44 20 3470 0470

 

 

 

SCP Resource Finance (Joint Broker)

Filipe Martins/Chris Tonkin

 

 

Tel: +44 204 548 1765

 

Camarco (Financial PR)

Gordon Poole/ Emily Hall / Nuthara Bandara

 

 

Tel: +44 20 3757 4980

 

LPM ( Portugal Media Relations)

Herminio Santos/ Jorge Coelho/ Margarida Pinheiro

 

Tel: +351 218 508 110

 

 

About Savannah

Savannah Resources is a mineral resource development company and the sole owner of the Barroso Lithium Project (the 'Project') in northern Portugal, the largest battery grade spodumene lithium resource outlined to date in Europe.

 

Through the Project, Savannah will help Portugal to play an important role in providing a long-term, locally sourced, lithium raw material supply for Europe's lithium battery value chain. Once in operation the Project will produce enough lithium (contained in c.190,000tpa of spodumene concentrate) for approximately half a million vehicle battery packs per year, and hence make a significant contribution towards the European Commission's Critical Raw Material Act goal of a minimum 10% of European endogenous lithium production from 2030. Savannah is being supported in its development goals by its strategic partner and largest shareholder AMG Critical Materials N.V., the global critical materials business.

 

Savannah is focused on the responsible development and operation of the Barroso Lithium Project so that its impact on the environment is minimised and the socio-economic benefits that it can bring to all its stakeholders are maximised.

 

The Company is listed and regulated on the London Stock Exchange's Alternative Investment Market (AIM) and the Company's ordinary shares are also available on the Quotation Board of the Frankfurt Stock Exchange (FWB) under the symbol FWB: SAV, and the Börse Stuttgart (SWB) under the ticker "SAV".

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