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SAVANNAH RESOURCES PLC
Company No 07307107
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Perivan Financial Print 254655
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CONTENTS
BUSINESS REVIEW
Chairman’s Statement
Chief Executive’s Report
Corporate Social Responsibility
Strategic Report
Project Overviews
GOVERNANCE
Report of the Directors
Corporate Governance Statement
Statement of Directors’ Responsibilities
Report of the Independent Auditors
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Changes in Equity
Company Statement of Changes in Equity
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Consolidated Financial Statements
NOTICE OF ANNUAL GENERAL MEETING
COMPANY INFORMATION
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CHAIRMAN’S STATEMENT
2018 was the year in which our spodumene lithium
project at Mina do Barroso in northern Portugal (“Mina
do Barroso”) was firmly established as our flagship asset
due to its strategic importance and impressive value
potential for shareholders. Management therefore
focused its efforts on developing this asset, while our
mining lease applications in Mozambique and Oman
continued to be shepherded through the governmental
processes in those countries. Our work was supported
by an oversubscribed fundraise in the third quarter of
2018 and we are very grateful for the support
demonstrated by our shareholders in that exercise.
For 2019, our objective is to reach a development
decision point on the Mina do Barroso project during the
year once the underway Definitive Feasibility Study is
completed. The anticipated award of the mining leases
we applied for in Mozambique last year will allow us to
accelerate the work programme on the current Pre
Feasibility Study and allow the market to reassess the
value of that project in our portfolio. Award of the
mining licences we have applied for in Oman would also
provide greater clarity on those projects. However, with
Savannah’s focus firmly on our more prospective
projects in Portugal and Mozambique, our Oman
projects are now seen as lower priority and we are
undertaking a strategic review to identify Savannah’s
best course of action in regard to these projects.
Portugal
Following the rapid delineation of a sizeable Mineral
Resource at Mina do Barroso (now over 23Mt at 1.02%
Li2O) and completion of a highly positive Scoping Study,
multiple work streams were initiated during 2018. These
workstreams should clearly define all aspects of the
project and take us to a decision point on its potential
development later this year. You will find more details of
the work which was completed and is continuing in the
following Chief Executive’s Report on page 6.
Our work at Mina do Barroso coincides with the rapid
developments that are taking place across Europe
(including in the UK) in relation to the development of a
comprehensive, regionally focused, lithium battery
industry. This industry will combine extraction and
processing of key battery raw materials, such as lithium,
with
large scale battery manufacturing. Once
established, this supply chain will provide the
rechargeable, zero emission, batteries which are
expected to play a key role in the EU’s efforts to
decarbonise Europe’s economy.
The European Union has embraced the challenge
presented by the climate change targets set by the 2015
Paris Agreement and the IPCC 2018 Special Report and
is calling for significant reductions in greenhouse gas
emissions from transport. Based on these targets the EU
is forecasting annual sales of Zero and Low emissions
vehicles (essentially fully electric and hybrid vehicles) to
rise from 0.7M in 2017 to at least 4M in 2030, making
Europe the second largest market for electric vehicles
(“EVs”) behind China and North America. Savannah
plans to play its part in supporting the region’s efforts to
meet its emission goals by providing a sustainable, local
supply of lithium concentrate from its Portuguese
operation which would be sufficient for 0.250.55M EVs
per annum.
Our development plan for Mina do Barroso also
complements Portugal’s own stated ‘Lithium Strategy’
which targets the development of Portugal’s inground
lithium resources to support the creation of a new
lithiumbased industry in the country. The country is
already Europe’s largest producer of lithium, and the
sixth largest producer in the world, with the material
used in the country’s large ceramics industry. However,
the emergence of lithium ion battery applications, first
in mobile technology and now on a much larger scale for
electric vehicles, provides Portugal with a great
opportunity to create many more jobs and greater tax
revenues from its lithium resources.
We believe that the acquisition (subject to shareholder
approval at the forthcoming AGM) of the minority 25%
stake in the project, which we announced on 15 April
2019 and which would take Savannah’s ownership to
100% clearly demonstrates our belief in Mina do Barroso
and reiterates our objective to become the most
significant producer of spodumene lithium in Europe.
However, we are also conscious of our wider community,
social and environmental responsibilities and we are
developing a range of programmes and initiatives that
will underscore our commitment to deliver not only jobs
and prosperity to the region but the very best
environmental and social outcomes too.
We are very conscious of our responsibilities to the local
community and we are committed to addressing any
concerns in a proactive way so that the impacts of a
potential mine development on the local community and
environment are minimised while at the same time
contributing to the development of the local economy and
the achievement of the continent’s climate change goals.
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CHAIRMAN’S STATEMENT
Mozambique
As one of the world’s largest resource bearing Heavy
Mineral Sands (“HMS”) projects remaining to be put into
production, we believe our Mutamba consortium
project with Rio Tinto (“Mutamba”) (“Consortium”) is a
valuable and strategic longterm asset within the HMS
industry. The titanium minerals and zircon found in HMS
deposits are used to manufacture inert white pigments
and opacifers which have many applications in society
ranging from white paint through to pharmaceuticals.
The prices of these minerals have recovered well from
the lows seen in 2015 as previously high inventory levels
have been worked down and global economic growth
rates have been maintained. Hence, Savannah remains
committed to progressing
its appraisal work on
Mutamba.
The 2017 Scoping study results, the involvement of Rio
Tinto as joint venture partner and offtaker, Mutamba’s
location close to Rio Tinto’s processing facilities at
Richards Bay in South Africa, and the recovery and
positive outlook for the underlying commodity prices,
all lead us to believe that Mutamba could provide
Mozambique with decades of social and economic
benefits.
Three Mining Lease applications were submitted in
January 2018. To date, the Consortium is yet to receive
a final decision on the applications, or on the additional
mining lease application which was made on an
adjoining tenement area submitted last September. We
have maintained an open and constructive dialogue with
the Mozambique Government
from which we
understand that our applications continue to transit
through the application process. Based on the feedback
received, we are hopeful that the mining leases will be
issued in the coming months.
Once mining leases are granted the next step will be to
progress and complete the current PreFeasibility Study.
This would see our ownership in the joint venture
increase from 20% to 35%. Assuming the results support
the positive conclusions of the 2017 Scoping Study, we
expect to then complete a Bankable Feasibility Study
which would lift our ownership in the Consortium to a
final and majority position of 51%.
Oman
As in Mozambique, progress on our copper projects in
Oman was also impacted by delays to the award of the
relevant mining licences. We had hoped with the news
that the last Ministerial letter of ‘no objection’ had been
received in May 2018, that a positive decision on our
application from Oman’s Public Authority for Mining
(“PAM”) would be forthcoming in the second half of the
year, however this has not proved to be the case. Also,
the renewal of the Block 4 exploration licence has been
delayed due to claims by a party in relation to certain
areas within Block 4. According to our legal advisers in
Oman, the Group has the right to renew the Block 4
exploration licence area in full, without any exclusions.
Hopefully, 2019 will bring resolution for the Group with
respect to the mining licence applications but in the
meantime we maintain regular dialogue with PAM and
have provided additional information at PAM’s request.
As stated above, the combination of the licence delays
experienced in Oman and the rapid progress at Mina do
Barroso has meant that our copper projects now have a
lower priority in our overall portfolio. While award of the
outstanding mining licences would significantly advance
these projects, Savannah must evaluate the risk/reward
opportunity currently presented by Oman against those
available elsewhere. Hence we are undertaking a
strategic review to identify Savannah’s best course of
action with regards to these projects.
Corporate Update
Savannah is fortunate to have a large number of long
term supportive shareholders. It was pleasing to see all
of the four largest holders in 2017 increasing their share
positions
in 2018, primarily through our record
oversubscribed £12.6m fundraise in July. Al Marjan
Limited remained the Company’s largest shareholder
during the year, increasing its ownership by over 21m
shares to 208.3m. As the largest of the vendors of the
Mina do Barroso project, Slipstream Resources saw its
stake in Savannah rise to 5.1% as various milestones in
the project acquisition agreement (see Note 19) were
passed. (It should be noted that the issue of shares to
the Mina do Barroso vendors reduced Al Marjan’s
percentage stake in Savannah from 29.4% to 23.6%). It
was also pleasing to welcome a number of institutional
shareholders onto our register through the fundraise.
In line with the increasing significance of Mina do
Barroso in our portfolio, Savannah took up a Secondary
listing on the Frankfurt Stock Exchange (Quotation Board
Segment of the Open Market; FWB: SAV) last September
to increase the company’s visibility to investors in
mainland Europe. The Frankfurt Exchange is the largest
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CHAIRMAN’S STATEMENT
of the seven regional security exchanges in Germany and
is the third largest stock exchange in Europe behind
London and Euronext, based in Amsterdam. While
trading volumes in our shares on FWB have been modest
to date, we plan to increase our marketing efforts into
Germany and other European countries in 2019 to
leverage the opportunity created by the listing.
We also continued to grow our team in 2018 with a
number of new hires across differing parts of the
business. In November we welcomed James Leahy to the
Board of Savannah as an Independent NonExecutive
Director. On top of his significant recent listed company
board experience, including time as Interim Chairman of
the listed lithium company, Bacanora Minerals Ltd,
James spent over 30 years working in the capital markets
with much of his time spent specialising in natural
resources and commodity related activities. We look
forward to James’ input in our capital market activities
in 2019 as we continue to move the Mina do Barroso
project towards the development decision point and
potential financing.
Supported by KPMG LLP, the Remuneration Committee
undertook a review of remuneration packages and
developed a new remuneration policy aimed at
rewarding performance, encouraging retention of key
interests with those of
staff and aligning their
shareholders. As announced on 6 March 2019, a new
longterm incentive plan (“LTIP”) intended to support
this policy was implemented. The LTIP, which was
prepared with advice from KPMG LLP, replaces the
Company’s prior longterm incentive plan which was
implemented in April 2018 (the “2018 Plan”) and for
which all awards under it were terminated with no
rewards being granted.
Furthermore, we
strengthened our Corporate
Governance with the adoption of the Quoted
Companies Alliance’s Corporate Governance Code in
September 2018.
Financial Overview
As is to be expected with an active and expanding
resource development group, the Group is reporting a
loss for the year of £3.4m (2017: £2.8m). During the year
net assets have increased to £25.4m (2017: £13.1m)
predominantly due to the increase in the exploration
activity, the completion of the scoping study and the
ongoing execution of the Definitive Feasibility Study in
the Mina do Barroso lithium project, with additions in
Exploration and evaluation assets in the lithium project
of £6.1m, of which £2.0m are payments of the
contingent consideration milestones triggered during
the year. Another significant driver in the increase of the
net assets is the increase in Cash and cash equivalents
by £5.3m as a result of well supported equity
fundraisings during the year, with a strong cash position
at year end of £7.7m. In April and July 2018, the
Company raised a total of £14.7m cash (before
expenses) through the issue of 177,640,185 new
ordinary shares at a significantly increased average issue
price of 8.25p per ordinary share (2017: 5.25p),
representing a 57% increase compared to 2017. As part
of these equity fundraises, the Company’s largest
shareholder, Al Marjan Ltd, acquired 21,383,839 shares
for £1.6m in cash.
Corporate Social Responsibility (“CSR”)
included a separate Corporate Social
We have
Responsibility section in our Annual Report for the first
time this year (see page 12). CSR considerations have
always been important aspects of how Savannah does
business, but as we move towards a development
decision on our Mina do Barroso project, and hopefully
operating our first producing asset, we believe there is
a need to formalise our CSR agenda for the benefit of all
stakeholders in the Group’s projects.
We look forward to providing more information on our
CSR programmes in the future, and trust in the
in the
meantime that the
community sections of our website, which were
introduced in late 2017, have proved to be a useful
source of additional information for all our project
stakeholders.
information provided
Outlook
2019 is set to be another critical year for Savannah. If we
are able to execute our plans across our project portfolio
our company could see material changes in its size,
status and, potentially, its value.
Our immediate next steps across our projects are clear:
to conclude the appraisal process at Mina do Barroso,
taking us to a development decision point on the
project; to receive the award of the outstanding mining
lease applications in Mozambique and complete the Pre
Feasibility on the Mutamba HMS project; and to conduct
a strategic review on our Omani copper projects, which
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CHAIRMAN’S STATEMENT
will allow us to provide shareholders with clarity on our
plans for those properties in due course.
As ever, I am extremely thankful for the continued
efforts of our management and operational teams which
drive the evolution of Savannah. Equally, their efforts
could not be maintained without the ongoing support
of our shareholders. My thanks to you all, and we look
forward to continuing to build the value of our company
for the benefit of all stakeholders throughout 2019.
Matthew King
Chairman
Date: 20 May 2019
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CHIEF EXECUTIVE’S REPORT
I reiterate the Chairman’s comment that 2018 was a very
important year for the company.
We made exceptional progress with the Mina do Barroso
Lithium Project in northern Portugal where we have
shaped what was a relatively early stage, greenfields
exploration opportunity in 2017 into Europe’s most
significant lithium spodumene Mineral Resource by the
2018year end. Hundreds of billions of Euros are now
being invested by the European battery and electric
vehicle industry to transform European transport to
electric mobility. Mina do Barroso will play a key role in
these developments. We anticipate strong growth for
lithium from increasingly highenergydensity batteries
and increasing sales of EVs based on consumer
preferences, government encouragement and a
broadening EV model range from car manufacturers.
At the same time, while the lengthy approval processes
for our mining lease application approvals in Mozambique
and Oman have been frustrating, they did enable us to
focus our resources on our project in Portugal where we
now have a full Definitive Feasibility Study underway.
Portugal – Mina do Barroso Lithium Project
Our strategic move in 2017 into Portugal’s nascent
lithium spodumene sector appeared to be followed last
year by a growing realisation among EU law makers and
Europe’s wider society that more decisive action must
be taken for the region to meet its longterm goal of
reducing greenhouse gas emissions to limit climate
change. Road transport is the second largest producer
in Europe behind power
of greenhouse gases
generation, and legislators are keen to hasten the
reduction in vehicle emissions. As a result, increasingly
tough emission targets and zero and low emission
vehicle (“ZLEV”) related incentives are being used to
stimulate action by automobile manufacturers. The EU
is also aware of the pressure on the supply of ‘battery
technology’ metals globally caused by the introduction
of similar emission targets in the developed economies
around the world. As a result, there is a growing
realisation that Europe must be able to manufacture
zero emission battery packs for its automobile industry
from raw materials sourced locally to obviate potential
problems
long supply chains and supply
bottlenecks. We believe that Portugal will likely take the
lead in lithium production within Europe and Mina do
Barroso is likely to be the vanguard project.
from
The European Commission is vitally concerned about the
competitive position of the European car industry which
is a key sector for the European economy. The industry
is stepping up to the plate with heavy investments in EVs
– Volkswagen (“VW”) is investing €80 billion and Daimler
€42 billion in their EV model rollouts. This is matched by
heavy investments by both European and international
groups in battery manufacturing and battery pack plants.
The figure below outlines the massive transformation
that is currently underway which, on an industry scale, is
of similar significance to the funds invested under the
Marshall Plan in the postwar period.
Electric Vehicle plans of selected global car brands:
(cid:9)(cid:36)(cid:44)(cid:27)(cid:41)(cid:42)(cid:35)(cid:27)(cid:36)(cid:42)(cid:1)(cid:31)(cid:36)(cid:1)(cid:27)(cid:34)(cid:27)(cid:25)(cid:42)(cid:40)(cid:31)(cid:25)(cid:1)(cid:44)(cid:27)(cid:30)(cid:31)(cid:25)(cid:34)(cid:27)(cid:1)(cid:38)(cid:40)(cid:37)(cid:26)(cid:43)(cid:25)(cid:42)(cid:31)(cid:37)(cid:36)(cid:1)(cid:25)(cid:23)(cid:38)(cid:23)(cid:25)(cid:31)(cid:42)(cid:47)
(cid:58)(cid:41)(cid:27)(cid:34)(cid:27)(cid:25)(cid:42)(cid:27)(cid:26)(cid:1)(cid:35)(cid:23)(cid:36)(cid:43)(cid:28)(cid:23)(cid:25)(cid:42)(cid:43)(cid:40)(cid:27)(cid:40)(cid:41)(cid:59)
(cid:20)(cid:37)(cid:34)(cid:33)(cid:41)(cid:45)(cid:23)(cid:29)(cid:27)(cid:36)
(cid:5)(cid:23)(cid:31)(cid:35)(cid:34)(cid:27)(cid:40)
(cid:8)(cid:47)(cid:43)(cid:36)(cid:26)(cid:23)(cid:31)(cid:56)(cid:10)(cid:31)(cid:23)
(cid:4)(cid:30)(cid:23)(cid:36)(cid:29)(cid:23)(cid:36)
(cid:7)(cid:37)(cid:40)(cid:26)
(cid:7)(cid:31)(cid:23)(cid:42)(cid:1)(cid:4)(cid:30)(cid:40)(cid:47)(cid:41)(cid:34)(cid:27)(cid:40)
(cid:13)(cid:31)(cid:41)(cid:41)(cid:23)(cid:36)(cid:56)(cid:5)(cid:37)(cid:36)(cid:29)(cid:28)(cid:27)(cid:36)(cid:29)
(cid:3)(cid:2)(cid:9)(cid:4)
(cid:17)(cid:2)(cid:9)(cid:4)
(cid:65)
(cid:66)(cid:65)
(cid:67)(cid:65)
(cid:68)(cid:65)
(cid:69)(cid:65)
(cid:70)(cid:65)
(cid:71)(cid:65)
(cid:72)(cid:65)
(cid:73)(cid:65)
(cid:74)(cid:65)
Source: BloombergNEF Electric Vehicle Outlook 2019 and Reuters
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
(cid:19)(cid:17)(cid:1)(cid:5)(cid:37)(cid:34)(cid:34)(cid:23)(cid:40)(cid:41)(cid:1)(cid:62)(cid:1)(cid:58)(cid:24)(cid:31)(cid:34)(cid:34)(cid:31)(cid:37)(cid:36)(cid:41)(cid:59)
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CHIEF EXECUTIVE’S REPORT
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Source: BloombergNEF Electric Vehicle Outlook 2019
At the national level there is a clear focus by the
Portuguese government to foster the development of
the country’s lithium resources. A government study was
completed on the subject in 2017 and a series of areas
in northern Portugal that are regarded as having
excellent lithium prospectivity will be offered by
international tender later in 2019. Savannah is conscious
of the government’s objective to maximize the value add
from its lithium resources and an important feature will
be the development of lithium refining capacity in the
country. Savannah is in dialogue with groups that are
interested in a mineral conversion plant in Portugal
which would refine Mina do Barroso concentrates as a
baseload supplemented potentially by other local or
imported concentrates. This could be the nucleus for a
whole range of new industries for Portugal in the
downstream lithium value chain.
At a global level we are already seeing significant
increases in global EV sales. Sales volumes are up by 63%
year on year, for 2018 to two million units. The Boston
Consulting Group is forecasting that EV sales will move
to 25 million vehicles by 2025 a true tipping point for the
industry. China is preparing itself and its installed
manufacturing capacity for lithiumion batteries rose by
35.6GWh in January to October 2018, up 90% year on
year. Meanwhile Europe is the second largest EV market
with just over 409,000 units sold.
To the project itself, over the year, our inhouse team
and supporting consultants took Mina do Barroso from
an early stage prospect with a modest 3Mt resource as
assessed in late 2017 to an advanced development
project on which a welldefined 20Mt Mineral Resource
(as at 2018 year end and now 23.5Mt) was established
along with very attractive initial economics which
justified commissioning of a full Definitive Feasibility
Study. In simple terms, I believe we demonstrated that
the project is the most significant spodumene lithium
project in Europe. Our task now is to prove this to the
level for financing of the project’s construction
supplemented with offtake arrangements for the
spodumene concentrates, and to show that the project
can be developed and managed in a disciplined and
sustainable manner that will bring benefit for all
stakeholders.
An example of our innovative approach to the project is
the recycling of water used in the lithium concentration
process. This includes recovering water from the inert
waste product stream allowing the storage of dry waste
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
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CHIEF EXECUTIVE’S REPORT
only and negating the need for the construction of dams
to retain waterbearing waste.
years and is a testament to the commitment and skills
of our resource evaluation team.
The Scoping Study in June helped to quantify the scale
of the opportunity presented by Mina do Barroso for
both the investment market along with potential
strategic investors and off takers and drove our decision
to fast track the project into a full Definitive Feasibility
Study. Based on initial capex of US$109m (excluding
contingencies) and average annual production of
175,000t of spodumene lithium concentrate over an 11
year life, the Scoping Study returned a pretax NPV8% of
US$356m, pretax IRR of 63% (post tax US$241m and
48.6% respectively), pretax payback of 1.7 years, and
annual average EBITDA of US$72m. All in all, an
impressive investment case for a mining project and a
major factor in our decision in April 2019 to propose the
acquisition of
the outstanding 25% minority
shareholding in the project to give Savannah 100%
ownership of Mina do Barroso ahead of the
development decision point.
With our balance sheet strengthened by
the
oversubscribed £12.6m equity cash fundraise in July (a
company record and 7th largest fundraise by an AIM
mining company in 2018), we appointed the very
experienced Primero Group as the primary engineering
group and lead on the Feasibility Study. Alongside
Primero we have added a portfolio of leading specialist
consultancy firms covering the range of technical
workstreams required for both a Definitive Feasibility
Impact
Study and the associated Environmental
Assessment. Importantly, the firms consulting on our
project study have recent experience of working on
major international lithium projects and/or in Portugal.
Hence, while every project is unique, we feel satisfied
that we are receiving the most relevant and expert
guidance available.
in mid2017
The drilling campaign which began
continued at pace during the year. Ongoing data
collection through drilling (and surface sampling) is a key
input into many of the Feasibility Study workstreams,
such as resource and reserve definition, mine planning,
groundwater assessment, geotechnics and the layout of
site infrastructure. By year end, the drill hole count had
reached 300 across eight lithium deposits since the
programme began in 2017 and totalled 25,470 metres
drilled. The drilling programme was one of the most
extensive programmes undertaken in Europe in recent
The drilling to date has been highly successful with
respect to all its key goals which include:
•
•
JORC Mineral Resource expansion: By September we
were able to publish the third resource upgrade for
the year with the JORC Mineral Resource estimate
across just the Grandao, Reservatorio and NOA
orebodies reaching 20.1Mt at 1.04% Li2O (209,000t
Li2O contained), and including 50% of the contained
Li2O in the Measured and Indicated categories. This
was subsequently upgraded again in April 2019 to
23.5Mt at 1.02% Li2O with 57% of the contained
lithium in the Measured and Indicated categories
and included the maiden resource estimate for the
Pinheiro deposit (2.0Mt at 1.0% Li2O). This larger
resource will now form the basis for our maiden
JORC Reserve estimate expected later this year.
Confirmation of additional mineralisation: As stated,
the current 23Mt resource is spread across only four
of the eight pegmatite deposits on the Mina do
Barroso (C100) Mining Lease area identified to date.
We plan to add to these resources over time to
extend the anticipated production life of the mine
past the 11 years used in the Scoping Study.
While we continue to add to the Project’s Mineral
Resource inventory and identify new deposits on the
Mina do Barroso Mining Lease area, we also purchased
an option to acquire a suite of adjacent tenement blocks
last September which are currently subject to a separate
Mining Lease application. In total the three blocks
(blocks A to C), currently owned by private Portuguese
company Aldeia & Irmão, S.A. (“Aldeia”) cover an area
of 2.94km². Our initial reconnaissance work identified a
number of similarities to the deposits on the Mina do
Barroso Mining Lease and our intensive due diligence
drilling has now consistently intersected a lithium
bearing, spodumene dominant pegmatite with grades
up to 2.0% Li2O over a strike length of more than 250m
and a vertical depth of over 120m from near surface. We
believe the potential for the presence of a significant
mineralised body has been indicated. Furthermore, we
are confident the Mining Lease application area could
provide further significant resource upside to the overall
Project. The blocks could also help to provide more
flexibility for the layout of the mine infrastructure on
what is currently an irregularly shaped Lease area.
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The Option runs to 25 June 2019 by which time we
would be required to commit to the purchase of the
tenements. If we choose to exercise the option and a
Mining Lease is granted by September 2024, the total
purchase price for the acquisition is €3.3m payable over
a c. 6year period. These payments would likely be made
whilst the overall Mina do Barroso project is in
production.
In addition to the potential to produce significant
volumes of spodumene lithium concentrate, we are
fortunate that Mina do Barroso is not simply a single
commodity project. We also plan to produce and sell
feldspar and quartz coproducts into Portugal’s and
Spain’s large ceramics and glass industries. This will have
the dual benefit of reducing the amount of waste
material which the project produces while providing
additional revenue streams which significantly improve
the net production costs of the lithium concentrate and
will temper overall average commodity price volatility
for the project.
In December, the ongoing metallurgical test work
confirmed that three saleable products; high grade
feldspar, high grade quartz and an unrefined mixed
feldspar and quartz product, could be produced from
the waste stream of the lithium concentrate recovery
process. A simultaneous market study by an industry
expert also reported that current market prices for these
products range from US$65100/t, US$60100/t and
US$4045/t respectively. This is highly encouraging for
our ongoing economic studies as the prices quoted were
significantly higher than those used in our 2018 Scoping
Study (US$39/t for feldspar and US$33/t for quartz).
Further bulk test work is now planned to produce
feldspar and quartz samples for evaluation by potential
customers as well as detailed studies into the market
and capital and operating costs associated with
producing these additional commodities. Work is also
underway on the possibility of producing a high value
mica product to assess its suitability for use in building
materials.
The year also brought the formalisation of the
relationships we have been building with the University
of Porto and Laboratorio Nacional de Energia e Geologia
(“LNEG”), a governmental research and development
institution. The University of Porto has a notable history
in Portugal’s lithium industry with staff member,
Professor Noronha responsible for first identifying the
presence of lithium in Portugal at the Grandao deposit
on our project around thirty years ago. The new
“Protocol of Cooperation” between our groups
formalises the existing working relationship which to
date has included preliminary mineralogical studies and
a first draft processing flowsheet for the treatment,
recovery and concentration of spodumene at Mina do
Barroso. This agreement is the latest in a growing
number of contracts and relationships we have
established with Portuguese groups since the start of our
involvement with Mina do Barosso in 2017. At present
we have Portuguese companies conducting the
Environmental Impact Assessment on the project,
providing us with legal services, advice on public and
investor relations, and community and governmental
engagement.
Away from the project itself, 2018 also saw us begin the
process of engaging with a wide range of groups seeking
to secure long term supplies of lithium. Given the rapid
evolution of this sector, the universe includes a diverse
range of potential counterparties including intermediary
lithium conversion businesses, industrial chemical
companies, battery
manufacturers,
manufacturers, specialist finance groups and trading
houses. These discussions, along with associated due
diligence programmes will continue during 2019 in
parallel with the ongoing project evaluation and
permitting programmes and we continue to receive
enquiries from further groups keen to also be part of
Europe’s growing lithium industry.
automotive
It is worthwhile briefly mentioning the market and
pricing for spodumene concentrates. Some suggest that
burgeoning lithium demand from the fast growing EV
sector will encourage a supply response overreaction by
the lithium hard rock and brines producers. However,
brines producers operating in South America have not
been able to step up production to meet demand and
the Australian hard rock, spodumene producers now
lead global production. The overall investment climate
has become more challenging for developers although
capital is going to those with good quality products from
mines that operate at the lower end of the cost curve.
In our case, Mina do Barroso is a robust project with low
costs as can be seen from the figure below. Additionally,
the project is located in the European setting where we
are seeing strong investment interest.
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CHIEF EXECUTIVE’S REPORT
Savannah’s Mina do Barroso project is set to be a low cost spodumene operation:
Source: Roskill and Piedmont Lithium
During the balance of the year we expect to submit the
project’s Environmental Impact Assessment report for
comment and approval by government and other
stakeholders, complete the Definitive Feasibility Study,
execute supply contracts with customers for our lithium
concentrate and coproducts, which are prerequisites
to securing the finance required to construct the mine.
We also intend to expand our team to equip us with all
the skills necessary to build and operate Portugal’s first
lithium focused mine. To date the work on the Definitive
Feasibility Study has taken longer than originally
expected as we incorporate key learnings from the
Australian spodumene miners into our process flow
sheet design and factor the Pinheiro discovery into the
mining schedule.
We look forward to making further progress with the
Mina do Barroso project in 2019 and in delivering
beneficial outcome to our shareholders, our local
communities and stakeholders and Portugal.
Mozambique – Mutamba Mineral Sands Project
Following the conclusion of the Consortium Agreement
with Rio Tinto in late 2016, and the encouragement
provided by the positive Scoping Study concluded in
2017 on the Consortium project, activity in 2018 was
principally focused on shepherding the Mining Lease
applications submitted at the beginning of the year
through the governmental approval processes.
The process has been rigorous and extensive involving
District and Provincial inputs and we remain hopeful
based on recent discussions with the Ministry of Mineral
Resources and Energy, that Mining Leases will be
granted in coming months. No guarantees can be given,
but if this proves correct, our Consortium with Rio Tinto
will be on a firm footing from which to take the project
through the prefeasibility and feasibility stages and into
anticipated production.
As outlined in the Chairman’s Statement the market
backdrop to our HMS project has continued to
strengthen. The supply of highgrade mineral sands
(ilmenite, rutile and zircon) in 2018 remained tight due
to a combination of grade decline and production
disruptions – and this has underpinned robust prices.
Our joint venture partner, Rio Tinto, expects longterm
demand growth to be solid at 3% per year, driven by
growth in emerging economies. We are fortunate that
in Rio Tinto we are partnered with the market’s single
largest participant.
Oman – Mahab and Maqail Copper Mines
As with Mozambique, our efforts have been focused on
obtaining the necessary Mining Licences for the joint
development of the Mahab 4 and Maqail South copper
deposits on Block 5, applications for which were
submitted in June 2016. We were pleased in May 2018
to receive the last (of the eight) ministerial letters of ‘no
objection’ required for both projects. This final ‘no
objection’, which followed the previous submission of all
the other documentation required, should allow Oman’s
Public Authority for Mining (“PAM”) to process and
approve the Licence applications. Having recently
provided additional information to PAM as part of its
own approval process we are hopeful there will be a
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CHIEF EXECUTIVE’S REPORT
resolution in the coming months. We understand that
the grant of mining licenses for both projects would be
made under the newly announced mining law once fully
implemented.
Summary
My thanks go to the Savannah staff for their efforts
across all aspects of our business in 2018 and to our
shareholders for their ongoing support.
We continue to take the Mina do Barroso Feasibility
Study and the Environmental Impact Statement forward
while intensive offtake and financing activities continue
so that we will be in a position to make a Decision to
Mine by the yearend.
Achieving all the goals we have set ourselves for 2019
means the year is likely to be even busier and more
important for the company than 2018. We welcome that
challenge and look forward to providing Savannah’s
shareholders with regular updates on our progress.
David S Archer
Chief Executive Officer
Date: 20 May 2019
While we await definitive responses to our two mining
licence applications, we demonstrated our commitment
to the projects by completing a drill programme across
two prospects which have the potential to provide
further material to the central processing facility
outlined in our licence applications. The drilling carried
out in late 2018 identified narrow zones of copper
mineralisation. The results are still being analysed and a
further announcement will be made when the process
has concluded.
In relation to Block 4, Savannah recently executed a deed
of variation to extend the second capital contribution
period in the earnin agreement (to Al Thuraya Mining
LLC) by eighteen months, from four years to five years
and six months, thus Savannah has until May 2020 to
earn a stake of 65%. Also, the renewal of the Block 4
exploration licence has been delayed due to claims by a
party in respect of certain areas within Block 4.
According to our legal advisers in Oman, the Group has
the right to renew the Block 4 exploration licence area
in full, without any exclusions.
After the frustrations caused by the continuing licencing
related delays, particularly in respect of the Block 5
mining licence applications in 2018, we hope that the
mining licenses will issue and the exploration licences
will renew. We will continue to engage with PAM and
other key groups in Oman in a constructive and open
manner to move the licencing processes forward.
However, as the Chairman has stated, our Oman copper
assets must now be deemed as a lower priority in our
overall project portfolio given the success we have
achieved in Portugal, and the scale of the opportunity
available in Mozambique. Hence we are conducting a
strategic review in respect of the Oman assets to identify
the best outcome for Savannah and its shareholders.
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CORPORATE SOCIAL RESPONSIBILITY
Savannah Resources (“Savannah”) is committed to
operating in a responsible manner and in full compliance
with the laws and regulations of the countries in which
we do business. Core considerations behind all our
business practices include:
•
Rigorous health and safety standards
• Minimising our environmental impact through
active management
Staff welfare and empowerment
Fair and open engagement with all stakeholders
Sustainability planning and design
•
•
•
Ahead of outlining some of the recent Corporate Social
Responsibility (“CSR”) activities completed by Savannah
in this new section of our Annual Report to shareholders,
we briefly outline the key principals which form the
foundation of our CSR policy.
Health & Safety
Providing a safe and healthy workplace for all those
employed or visiting our projects is Savannah’s top
priority, and we
target a zeroharm working
environment. Compliance with applicable legal and
regulatory requirements is viewed as a minimum
standard and we seek to achieve standards of
international best practice.
Our Health & Safety policies are based on regular risk
assessment and monitoring programmes, seeking to
reduce risks wherever possible through regular reviews
of procedures, appropriate staff training and Health &
Safety
leadership, and comprehensive
emergency response planning.
focused
We are also committed to ensuring the health and safety
of communities located near to our projects. Where
required, this is achieved through offsite monitoring of
relevant physical parameters (such as noise, dust,
vibration and emissions), clear communication on
Health & Safety issues including clear signage and
instructions, and comprehensive traffic management.
Human Resources
Savannah views its staff as its greatest asset. Hence, we
are committed to providing working environments and
policies which comply with all relevant Health & Safety
and labour legislation in our countries of operation.
We seek to recruit high quality individuals who will help
our business to achieve its goals in a responsible way and
our employment policy is based on the principals of
equal opportunities, transparency, fair treatment and
nondiscrimination at all levels of our organisation.
individual’s
Employee selection
qualifications, past experience, potential and suitability
for the role concerned, and we place a strong focus on
training and providing opportunities for continued
professional development.
is based on an
Environmental
Environmental management is integral to all our
business activities and Savannah is committed to
minimising the impact of its operations on the natural
environment. We are also committed to playing an
active role in programmes managed by others which are
designed to generate positive outcomes for the natural
environment in and around our projects.
Regular monitoring of key environmental indicators,
emission offsetting strategies, and emergency response
planning are all fundamental to our environmental
management policy. We are also committed to
minimising our environmental impact and net use of raw
materials and energy through maximising operational
efficiencies and active waste management systems
(including recycling and reuse), and relevant training for
all staff.
our
believe
environmental
We
stewardship
responsibilities extend beyond the active lives of our
operations, and we are committed to sympathetic and
effective decommissioning and rehabilitation of our
operating sites in a timely manner and in line with
relevant legislation.
Community
Savannah is committed to maximising the direct and
indirect benefits that our projects can bring to the
communities we work alongside. We strive to operate in
a way which respects, preserves and enhances
community life, local customs and heritage in the areas
where we work. We expect to go beyond the
requirements set by the relevant legislation regarding
community engagement and support and will seek to
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CORPORATE SOCIAL RESPONSIBILITY
work collaboratively with groups focused on bringing
positive change in the areas in which we operate.
Our community engagement programmes are based
around major themes including:
•
•
•
•
•
Communication: We aim to operate in a transparent
way and are committed to providing accurate
information in a timely manner to all stakeholders
through a variety of channels. We also wish to
encourage productive twoway dialogue with our
communities allowing concerns and opportunities
to be flagged easily and actioned.
Employment & training: We seek to draw staff from
local communities and will provide appropriate
training and support programmes to develop skills
amongst the local communities which are relevant
to our project.
Education: We welcome the opportunity to provide
support to, and work with, local educational
departments and institutions at all levels in the
educational system
(primary, secondary and
tertiary).
Consideration & flexibility: We seek opportunities to
collaborate and provide support to our partner
communities, local and national authorities, and all
relevant groups working to generate positive
outcomes in areas close to our operations. We
welcome ideas and aim to have a flexible and open
in regard to the type of
minded approach
community programmes we engage with, and the
means in which we provide our support.
Supporting local business: We seek to source
produce and services for our operations from local
suppliers whenever possible. We believe the long
term commitment we make to our own projects can
bring significant benefits for other local businesses.
The investment we have, and will, make in community
programmes, other local businesses, education and
training, infrastructure and environmental management
should provide benefits such as hard assets and
transferable skills which will endure well beyond the
operating lives of our own projects.
Recent CSR Activities
Savannah remained committed to the core values of its
CSR policy during 2018, and we hope that the
information provided in the new community sections of
our website, which were introduced in late 2017, proved
to be a useful additional source of background
information for all project stakeholders.
As stated, our top priority is ensuring a safe working
environment. Unfortunately, one loss time injury was
reported during 2018 across all of Savannah’s projects
and sites. Pleasingly, the staff member involved made a
full recovery and was able to return to work quickly. The
relevant equipment and operating procedure were
reviewed following the incident and modified to further
reduce the risk to staff. Savannah will strive to achieve
zero loss time injuries in 2019.
Portugal
We continued to actively engage and communicate
regularly with all potential stakeholders in the Mina do
Barroso project during 2018. Our activities included:
•
Publishing 15 community newsletters
• Hosting 3
formal meetings with
the
local
communities
•
Sponsorship of 7 events
• We also secured use of a property in the centre of
Covas do Barroso village which we subsequently
refurbished and opened as our community office in
April 2019.
Sustainable Development
Through the creation of direct and indirect employment,
generation of tax and royalty revenues, our commitment
to actively engaging with all stakeholders, and mitigating
our impact on the environment, we believe Savannah’s
projects can become a foundation for long term, positive
development in the locations where we operate.
Away from the project, Savannah formalised its working
relationship with the Governmental Research and
Development (‘R&D’) institution, the LNEG and the
Faculty of Sciences from the University of Porto as a
“Protocol of Cooperation”. The partners are working
together on mineralogical studies and flowsheet design
based on samples from Mina do Barroso.
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CORPORATE SOCIAL RESPONSIBILITY
in Europe’s new
A governmentacademiccommercial partnership such
as this complements the Portuguese Government’s
‘lithium strategy’ which was announced during 2018 and
frames the country’s desire to become a significant
industry.
player
Furthermore, we believe, Savannah has already been
making a positive contribution to the Portuguese
economy with 13 Portuguese nationals currently
employed by the Group, and multiple Portuguese firms
contracted to provide a range of incountry services.
lithium battery
As with all our projects, we believe that with considerate
and intelligent management, the development of Mina
do Barroso has the potential to provide long term
benefits for the Boticas region, where the mine
development is located and the wider Portuguese
economy. These benefits include the creation of direct
and indirect jobs as well as a potential source of finance
and other resources for community projects. We will
continue our dialogue with stakeholders during the
current Environmental
Impact Assessment and
Feasibility Study phase of the project. These documents,
once completed, should provide a comprehensive
narrative on the project and will leave Savannah well
placed to present and discuss all aspects of the project
with stakeholders.
Savannah’s Information Centre in the village of Covas do Barroso:
Mozambique
Our ongoing community programmes and partnerships
in 2018 saw Savannah involved with a range of schemes
covering infrastructure, agriculture, trade and public
health. The provision of clean drinking water to
communities on the project licence areas remains a
priority and during the year fresh water supplies were
opened in two villages which we estimate are now
providing clean water to around 2,000 people. Local
agricultural development was supported through the
partnership with The German Society for International
Collaboration (GIZ), whose programmes
included
distribution of 9,500 coconut tree seedlings to over 900
villagers and pineapple tree seedlings to over 170 local
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CORPORATE SOCIAL RESPONSIBILITY
families. We also provided financial support to the
Inhambane Province’s International Trade Fair and a
district investors’ forum, as well as providing materials
and other support in the area on national HIV/AIDS
awareness day.
Local officials at the inauguration of the new water system at Inharrime:
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life
loss of
On 14 March 2019, Intense Tropical Cyclone Idai made
landfall near the city of Beira in Mozambique bringing
severe flooding, damage to infrastructure and property,
and causing significant
in northern
Mozambique, Malawi and Zimbabwe. Idai is estimated
to be the third most significant cyclone on record in the
south hemisphere and the worst in over 45 years. The
World Health Organisation estimate that nearly 2 million
people are in need of urgent humanitarian assistance
following the Cyclone, but rescue and recovery efforts
have been hampered by the landfall of a second cyclone,
Kenneth, which struck the region on 25 April 2019.
Savannah Resources has donated to the Cyclone relief
funds and our colleagues in Mozambique have also
committed their time to provide practical assistance
where possible to the relief efforts. Savannah expresses
its deepest sympathies and sincerest best wishes to all
those affected by these cyclones.
Savannah’s projects
lie
approximately 600km south of Beira, were unaffected
by the Cyclones.
in Mozambique, which
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CORPORATE SOCIAL RESPONSIBILITY
Savannah Staff donating food and medical supplies to INGC (National Disasters Management Institute) as part of
the relief effort following Cyclone Idai:
Oman
Savannah’s community engagement programme
continued in Oman during 2019 where it employs a full
time community
liaison officer. Regular monthly
meetings are held with community leaders providing
updates on the project developments these meeting
involved site visits to explain the locations of the work
and clearly assess impacts. During the field exploration
activities, Savannah utilises local services from within
the communities to assist with supply of water,
accommodation and meals.
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STRATEGIC REPORT
Section 414A of the Companies Act 2006 (the ‘Act’) requires that the Group inform members as to how the Directors
have performed their duty to promote the success of the Group, by way of a Strategic Report.
Set out below are the applicable reporting requirements under the Act for the purposes of the Strategic Report,
together with guidance to other applicable sections of the 2018 Annual Report, which are incorporated by reference
into the Group’s Strategic Report.
Principal Activities, Fair review of the Business and future developments
The following table provides summary reviews of the principal activities of the group in the year, financial results
and potential future developments. The comments below build on the commentary provided in the Chairman’s
Statement on pages 2 to 5 and the Chief Executive’s Report on pages 6 to 11:
Asset & location Ownership Activities undertaken
Mina do Barroso
lithium project,
Portugal
75% of Savannah
Lithium Limitada
(Acquisition of
outstanding 25%
stake for 100%
ownership
proposed and
awaiting subject
to shareholder
approval)
• Exploration and Evaluation: Comprehensive programmes were
completed including mapping, surface and drill based sampling,
assaying of recovered samples, metallurgical test work to assess
recovery rate of lithium and other mineral products.
• JORC Resource expansion and upgrade: Three estimates were
made during the year based on our ongoing sampling programme,
culminating in the estimate made in September 2018 (20.1Mt at
1.04% Li2O).
• Scoping Study completed: The study last June included; mine and
plant designs, production scheduling, metallurgical test work,
infrastructure & transport studies, capital and operating cost
estimation and, financial modelling and economic evaluation of
the project.
• Feasibility Study Commissioned: Following the Scoping Study a
Feasibility Study was commissioned with Primero Group selected
as lead engineering group. This study builds on the Scoping Study
exercise to provide the level of confidence in design and planning
required to secure project financing and includes; JORC resource
and reserve estimation, multiple phases of metallurgical test work,
final designs and schedules for (i) site layout, (ii) mining, (iii)
processing and (iv) storage of waste and infrastructure, capital and
operating cost estimation, labour studies, commodity market
studies, project risk review. We expect the Feasibility Study to be
completed later in 2019.
• Environmental Impact Assessment (“EIA”): The EIA considers all
aspects of the environment which may be potentially impacted by
the project, and also the project’s social and economic context.
The EIA will evaluate the project’s
its
implementation, exploitation, deactivation and postdeactivation
phases. The outcomes of the assessment are a set of actions to be
undertaken throughout all the operating phases of the project to
minimise its environmental and social impact.
impact during
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STRATEGIC REPORT
Asset & location Ownership Activities undertaken
• Licencing and permitting: The company engaged with relevant local
and central government departments, landowners and other
groups involved with the approval processes relating to; the
amendments required to the existing Mining Lease, EIA, land
access, etc. We expect to make formal applications for the
government approvals required in 2019.
• Option acquired over addition ground: Savannah acquired an
option on a suite of land blocks adjacent to the Mina do Barroso
Mining Lease last September. The 3 blocks (blocks AC), owned by
private Portuguese company Aldeia & Irmão, S.A. (“Aldeia”) and
covering an area of 2.94km2 are currently subject to a separate
mining lease application. Based on initial reconnaissance we
believe the Lease application area could provide further resource
upside to the overall project. The blocks could also help optimise
the layout of the proposed mine. The Option runs to 25 June 2019
by when we would be required to commit to the purchase of the
tenement.
• Completion of contingent consideration for 75% stake: In
accordance with the share purchase agreement of 24 May 2017,
the second and final contingent consideration tranche, consisting
of 20m Savannah shares and A$1.5m cash, was settled in October
2018. The second and final consideration was triggered following
the announcement of the updated, 20.1Mt Mineral Resource
estimate at Mina do Barroso in September 2018.
• Community Engagement: in line with the Company’s approach
with each location it operates, it has an active community
engagement plan with the aim being that with considerate and
intelligent management, the development of Mina do Barroso has
the potential to provide long term benefits for the Boticas region,
where the mine development is located.
• Offtake Partner: potential offtake partners identified throughout
the lithium value chain, and active dialogues are ongoing in respect
of this.
• Project Finance: Noah’s Rule were appointed as the Company’s
debt adviser and active dialogues are ongoing with potential
funding providers.
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STRATEGIC REPORT
Asset & location Ownership Activities undertaken
Mutamba Heavy
Mineral Sands,
Mozambique
20% of
consortium with
Rio Tinto
• Submission of Mining Lease applications: In January, Mining Lease
applications were submitted to the Ministry of Mineral Resources
and Energy in Mozambique covering the adjacent Jangamo (188km2)
and Dongane/Ravene blocks (161km2) and the separate, Chilubane
(138km2) deposit to the south. In September, a Mining Lease
application was also made over area EL3617L (119km2). This was the
final Mining Lease application to be lodged that is covered by the
Consortium with Rio Tinto for the Mutamba project (Jangamo,
Dongane/Ravene). By Mozambican law, the Ministry has six months
from the date of submission to respond to applications, but as yet
has not provided a definitive response to any of the applications
made, regular communications are maintained with the relevant
authorities in Mozambique and this process continues to progress.
• PreFeasibility Study: The Scoping phase of the PreFeasibility Study
continued during the year, albeit it was limited by the licencing
situation. Timing of the completion of the PFS is subject to the timing
of Lease approvals.
Block 4 & 5
Copper projects,
Oman
51% of Al Thuraya
LLC (Block 4); 65%
of Al Fairuz
Mining (Block 5)
• Mining Licence applications: In May 2018 we received the last (of the
eight) ministerial letters of ‘no objection’ required for our dual mining
licence applications for the Mahab 4 and Maqail South copper
projects. Receipt of the final ‘No objection’ letter then allowed
Oman’s Public Authority for Mining (PAM) to consider the licence
applications. We were, however, disappointed to learn that there
were administrative deficiencies in the original letters sent to the
Ministries. We understand that all the Ministries have now responded
again, all favourably. However, we still await the licence approvals
and remain in regular communication with PAM which has recently
requested some additional routine information from the Company
which has been provided.
• Drilling programme: A drill programme (12 holes, 1,065m) was
completed across the Bayda (Blocks 4) and Hara Kilab (Block 5)
prospects which have the potential to provide further material to the
central processing facility outlined in our licence applications. The
drilling carried out in late 2018 identified narrow zones of copper
mineralisation. The results are still being analysed and a further
announcement will be made when the process has concluded.
Fair review of
business
• The loss of the Group as set out on page 41 amounts to £3,381,161
(2017: £2,842,285), of which £3,258,458 (2017: £2,835,684) was
related to administrative costs. During 2018 the Group invested
£7,248,950 (2017: £5,040,296) on mineral exploration and evaluation
on the licences it owns and operates, this is capitalised as an
intangible asset as set out in Note 8 in the Financial Statements. This
is including £1,953,368 (of which £283,283 was settled by the issue
of shares) paid as contingent consideration relating to the acquisition
of the lithium asset in Portugal and £4,187,214 on mineral exploration
and evaluation on the licences in the lithium asset.
• A review of the Group’s prospects is included in the Chairman’s
Statement on pages 2 to 5 and the Chief Executive’s Report on
pages 6 to 11.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
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STRATEGIC REPORT
Principal Risks and Uncertainties
The Board has identified various risk factors which taken individually or together may have a materially adverse
effect on the Group’s business. The principal risks and how they are managed are as follows:
Natural Resource Project Development & Construction Risk
There can be no guarantee that mineral exploration and evaluation programmes will result in the delineation of a
commercially viable project. However, to reduce this risk, the Group is focusing its activity primarily on brownfield
locations, previously delineated resources or established exploration targets. For example, the Mina do Barroso
project in Portugal already has a granted Mining Lease following exploration work done by previous owners, Blocks
4 and 5 in Oman feature a number of discontinued mining operations and the areas covered by the Consortium
with Rio Tinto in Mozambique were subject to exploration prior to our involvement.
If a commercially viable project is delineated, Savannah will then be exposed to construction and project delivery
risk factors. These risk factors will include: project financing (see Future Funding Requirements section below);
licence and permitting (see Licence and title risk section below); key person (see Attraction and Retention of Key
People section below); and contractor and contract fulfilment/cost overrun. Risk relating to the main project
contractors will be mitigated by comprehensive tendering and due diligence processes being performed to identify
competent and financial robust service providers. Contract fulfilment and cost management will be mitigated by
structuring of contracts to include adequate penalty and incentive clauses.
Attraction and Retention of Key People
The success of the Group is dependent on the expertise and experience of the Directors and senior management
and the loss of one or more could have a material adverse effect on the Group. The Board has adopted a
remuneration policy aimed at rewarding performance, encouraging retention of key staff and aligning their interests
with those of shareholders.
Future Funding Requirements
The Group has an ongoing requirement to fund its exploration and mine development activities and will need to
obtain additional finance to execute its plans. Potential sources of finance include the established debt and equity
capital markets, offtake partners which could provide prepayment and working capital facilities in exchange for
long term supply contracts, commodity based royalty and stream finance groups which can also provide
prepayments in exchange for exposure to future revenue or production streams, and grants or other facilities from
government or other centralised bodies (e.g. EU). Senior management and the Board closely monitor the cashflows
of the Group and this assists in ensuring expenditure is focussed on areas of greatest exploration potential.
Overheads and administration costs are carefully managed.
Licence and Title
The granting, maintaining, amendment and renewal of the appropriate licence or licence equivalent is essential to
the Group’s exploration and development activities in all the countries in which it operates, and is usually at the
discretion of the relevant government authority. The Group seeks to ensure that its activities are always in
compliance with the relevant licences and associated standards, laws and regulations and will attempt to respond
in a timely manner to any changes in licence regulations. The costs associated with maintaining and renewing
licences and complying with all related licence requirements, together with delays experienced in the issuance of
licences, may have a financial impact on the company through additional costs or extensions to work programmes
or delays in delivering projects. The licences in the Group’s portfolio have been the subject of legal due diligence in
order to establish valid legal title and regular communication is maintained with the relevant government authority
in Portugal, Mozambique and Oman.
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STRATEGIC REPORT
Country Risk
A greater or lesser degree of sovereign and political risk exists in all countries. At the reporting date, the Group
carried out a combination of exploration and mine development work in Portugal, Mozambique and Oman. Each
of these countries presents a very different risk profile. However, this also means the Group benefits from a
diversification of country risk. Country risk is further mitigated by ensuring the Group maintains active programmes,
that it prioritises local incountry employment and that it maintains working relationships at all levels with
government, administrative bodies, local communities and other stakeholders. The Board actively monitors relevant
political and regulatory developments.
Commodity Price
The Group’s primarily commodity focus is lithium, mineral sands and copper and the price movements in these
commodities can be volatile. This volatility can be caused by numerous factors beyond the Group’s control. A
sustained period of significant price volatility may adversely affect the Group operations in the future. Commodities
risk is currently mitigated by ensuring the Group maintains a diverse portfolio of projects. Assuming all previously
highlighted development and construction related risks have been mitigated and production is established at one
or more of our projects, specific commodity price risk may be more actively managed. This could be achieved
through the use of mechanisms such as longterm sales contracts incorporating minimum pricing levels or hedging
strategies. In the case of the Mina do Barroso project, the spodumene lithium and its coproducts are not currently
exchange traded commodities and this necessitates entering into offtake agreements as part of the project
financing.
Analysis of the Development and Performance of the Business
This information is contained in the Chairman’s Statement on pages 2, and the Chief Executive’s Report on pages 6.
Analysis of the Position of the Business
This information is contained in the Chairman’s Statement on pages 2, and the Chief Executive’s Report on pages 6.
Key Financial Performance Indicators and Milestones
Our key performance indicators (‘KPIs’) help the Board and executive management assess performance against our
strategic priorities and business plans.
Analysis Using Key Financial Performance Indicators and Milestones
KPIs Description Performance
Cash balance (for
exploration,
development and
going concern
purposes)
Subscription and
placing of shares
Cash balance available to
continue with the activity
of the Group.
To continue with its
operating activities as an
active and growing
mineral development
group, Savannah is
required to raise funds
from the market.
At the reporting date the Group’s cash balance was £7.7m
(2017: £2.5m). This, in conjunction with the raising of future
cash, which the Directors believe can be secured, will allow
the Group to continue working on its development /
exploration activities and to meet its financial commitments
for at least 12 months.
During 2018 the Company raised gross proceeds of £14.7m
(2017: £8.47m) cash via issuance of ordinary shares in
relation to equity fundraises.
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STRATEGIC REPORT
KPIs Description Performance
Share Price
Share price reflects the
value added by the
Company’s Board and
management teams.
Investment on
Exploration &
Evaluation assets
(‘E&E assets’) and
Property, Plant and
Equipment (‘PPE’)
As an active and
expanding mining
development group, the
investment on E&E assets
and PPE assets show the
volume of activity which is
adding value.
Having opened at 6.625p and risen by 104% to a 51month
high of 13.55p on 12 June 2018, the share price fell to close
the year at 5.3p, a 20% decline (2017: +26.3%). Funds were
raised at an average price of 8.25p in 2018 (2017: 5.25p),
representing an increase of 57% yoy.
During 2018 the Group increased its investment in
exploration activity with additions in E&E assets of £7.2m
(2017: £5.0m), of which £2.0m (2017: £1.9m) are payments
of the contingent considerations associated to the
Portuguese lithium project triggered during the period
following the reporting of significant increases in the size of
the Mineral Resource Estimate. Also, there was a decrease
in the investment in PPE with additions of £0.3m (2017:
£1.1m) compared to the additions in 2017 which primarily
related to the oneoff nature of the construction of a pilot
plant in Mozambique in 2017.
Analysis Using Other Key Performance Indicators and Milestones
KPIs Description Performance
Project pipeline
As an active mine
development group,
management is up to date
on the changes in the
market and looking for
new opportunities to
increase the potential of
the Group.
impacting on global
In recent years there has been (and continues to be) an
increase in the importance of the lithiumion battery
markets,
lithium demand with
projections showing significant increases in demand. In
2016 the Group started its investment in lithium projects
and in 2018 acquired an option to acquire a suite of
tenement blocks which are currently subject to a separate
Mining Lease application adjacent to Mina do Barroso from
Aldeia.
Mining Lease
Applications
As a mining development
group, the grant of mining
leases as a precursor to
commencement of
production is a significant
milestone.
During 2018 the Group’s mining licence applications for the
Maqail South and Mahab 4 copper projects in Oman
received the final ministerial ‘no objection’ required to be
considered by the Public Authority of Mining (PAM) for the
final approval. However, we were, disappointed to learn
subsequently that there were administrative deficiencies in
the original letters sent by PAM to the Ministries. We
understand that all the Ministries have now responded
again favourably, to the replacement letters, however, we
still await the licence approvals and remain in regular
communication with PAM which has recently requested
some additional routine information from the Company
which has been provided. Also, the renewal of the Block 4
exploration licence has been delayed due to claims by a
party in relation to certain areas within Block 4. According
to our legal advisers in Oman, the Group has the right to
renew the Block 4 exploration licence area in full, without
any exclusions.
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STRATEGIC REPORT
KPIs Description Performance
Mining Lease applications were also submitted to the
Ministry of Mineral Resources and Energy in Mozambique
covering; (i) the Jangamo, Dongane/Ravene and Chilubane
deposits and (ii) EL3617L, the final Mining Lease application
to be lodged covered by the Consortium with Rio Tinto for
the Mutamba project. As yet, no formal responses to the
applications have been received. Regular communications
are maintained with the relevant authorities in Mozambique
and this process continues to progress.
Results in mineral
resources
As a mining development
group, the report of
satisfactory mineral
resource results is a key
indicator of the potential
of the Group and its
projects.
Portugal: Three JORC resource updates were announced
during the year. The last, in September, estimated a total
resource of 20.1Mt at 1.04% Li2O (vs. 3.2Mt at 1.0% Li2O in
December 2017). The resource estimate consisted of
Measured resources of 5.5Mt @ at 1.08% Li2O; Indicated
resources of 4.9Mt @ at 0.93% Li2O; and Inferred resources
of 9.7Mt @ at 1.1% Li2O for 209,000t of total contained Li2O.
In addition to the JORC resource estimate, an Exploration
Target* was estimated at 9.015.0Mt at 1.01.2% Li2O.
* Cautionary Statement: The potential quantity and grade of the Exploration
Targets is conceptual in nature, there has been insufficient exploration work
to estimate a mineral resource and it is uncertain if further exploration will
result in defining a mineral resource.
Economic Studies
Satisfactory completion of
economic studies is a key
indicator of the viability of
the Group mining
development projects.
Mina do Barroso, Portugal: A Scoping study was completed
in June. Based on initial capex of US$125m (including a 25%
contingency) and average annual production of 175,000t of
spodumene lithium concentrate over an 11year life, the
Scoping Study returned a pretax NPV8% of US$356m, pre
tax IRR of 63% (post tax US$241m and 48.6% respectively),
pretax payback of 1.7 years, and annual average EBITDA of
US$72m. A Feasibility Study was commissioned in the
second half of the year which we expect to be completed
later in 2019.
Mutamba, Mozambique: Scoping work on the Pre
Feasibility Study continued. Subject to licencing, we expect
to complete the PreFeasibility Study in 2019.
Mahab 4 & Maqail South, Oman: The Scoping Study on the
dual mine development and wider project remains pending
completion due to the delays associated with licencing and
associated agreements.
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STRATEGIC REPORT
Approval of the Board
This Strategic Report contains certain forwardlooking statements that are subject to the usual risk factors and
uncertainties associated with a mineral development business. While the Directors believe the expectation reflected
herein to be reasonable in view of the information available up to the time of the Board’s approval of this Strategic
Report, the actual outcome may be materially different owing to factors either beyond the Group’s control or
otherwise within the Group’s control but, for example, resulting from a change of strategy. Accordingly, no reliance
may be placed on the forwardlooking statements.
On behalf of the Board:
David S Archer
Chief Executive Officer
Date: 20 May 2019
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PROJECT OVERVIEWS
The Mina do Barroso Lithium project, Portugal
Savannah Resources has been involved with the Mina do Barroso lithium project in Northern Portugal since May
2017 and currently owns a 75% stake in the project. In April 2019, the Group proposed to acquire the residual 25%
share in the project from the minority owners in an all share transaction. Shareholder approval is currently being
sought to allow the issue of the new Savannah shares necessary to complete the transaction.
Mina do Barroso location:
Western Europe’s largest spodumene lithium resource
Located less than 2 hours’ drive from the city of Porto in northern Portugal, the Mina do Barroso project consists
of a Mining Lease* (5.42km2), which was granted to previous owners of the project in 2006 and is valid for 30 years.
To date Savannah’s extensive exploration programme, which includes 30,000m of drilling, has identified 8 deposits
bearing spodumene lithium mineralisation on the Lease. JORC compliant Mineral Resources have been estimated
on four of these deposits which together represent the largest spodumene lithium resource in Western Europe,
(currently 23.5Mt at 1.0% Li2O). Many of the lithium deposits on the project remain open to possible extensions
through further exploration. In addition to the current JORC Resource, an Exploration Target has also been estimated
on two of the orebodies, Grandao and Reservatorio. which ranges from 9Mt to15Mt at 1.01.2% Li2O. Hence,
Savannah believes significant exploration upside exists beyond the current 23.5Mt Resource.
* The existing mining lease will need amendment or replacement for Savannah’s proposed mine and concentraitor development.
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PROJECT OVERVIEWS
Mina do Barroso JORC Mineral Resource Estimate & Exploration Target
JORC Mineral Resource Estimate (April 2019, 0.5% Li2O cutoff)
Deposit
Grandao
Resource
Category
Measured
Indicated
Inferred
Subtotal
Tonnes
(Mt)
6.6
6.4
4.8
17.7
–
–
3.2
3.2
–
–
2.0
2.0
–
0.4
0.3
0.6
6.6
6.8
10.2
23.5
Reservatorio
Measured
Pinheiro
NOA
All Deposits
Indicated
Inferred
Subtotal
Measured
Indicated
Inferred
Subtotal
Measured
Indicated
Inferred
Subtotal
Measured
Indicated
Inferred
Grand total
Exploration Target Summary*
Deposit
Reservatorio
Grandao
Total
Li2O grade
(%)
Fe2O3 grade
(%)
Li2O
contained (t)
1.1
1.0
1.0
1.04
–
–
1.0
1.0
–
–
1.0
1.0
–
1.2
1.0
1.1
1.1
1.0
1.0
1.02
0.7
0.8
0.7
0.7
–
–
1.4
1.4
–
–
0.7
0.7
–
0.8
0.9
0.9
0.7
0.8
0.9
0.8
71,600
61,300
48,900
181,800
–
–
32,000
32,000
–
–
20,000
20,000
–
4,200
2,900
7,100
71,600
65,400
103,900
241,000
Tonnage
High
7.0
8.0
15.0
Low
5.0
4.0
9.0
Li2O grade (%)
1.01.2
1.01.2
1.01.2
Source: April 2019 JORC Resource update RNS
* Cautionary Statement: The potential quantity and grade of the Exploration Targets is conceptual in nature, there has been insufficient
exploration work to estimate a mineral resource and it is uncertain if further exploration will result in defining a mineral resource
Positive Scoping Study triggered Feasibility Study
Following the completion of a Scoping Study on the project in June 2018, Savannah has commissioned a Definitive
Feasibility Study and an Environmental Impact Assessment Study on the project. Savannah expects the Definitive
Feasibility Study to be completed later this year and the economic case presented in the Study will form the basis
for a development decision on the project.
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PROJECT OVERVIEWS
Drilling underway at the Mina do Barroso project:
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A major source of lithium for Europe’s emobility transition
As the following table highlights, Savannah’s Mina do Barroso project is expected to produce at least 175ktpa of
battery grade spodumene concentrate from late 2020. This concentrate output, containing 10.5ktpa of Li2O
(equivalent to ~26ktpa of lithium carbonate or ~29ktpa lithium hydroxide preprocessing losses) could represent
around 40% of the forecast lithium requirement for the European auto industry in 2025 and 22% of the 2030
demand. Hence, Mina do Barroso alone could form the base load for a new lithium processing and battery material
industry in Portugal, which would be of major significance within the EU. Such strategic significance provides
additional opportunities to Savannah in terms of the customer base it appeals to, and this has been reflected in
the high calibre of potential offtake partners and / or strategic partners with whom active dialogues are ongoing.
Not just a lithium project
In addition to the production of significant volumes of spodumene lithium concentrate, Mina do Barroso also has
the potential for feldspar and quartz production which is in demand from Portugal’s large ceramics and glass
industries. Sales of these ‘coproducts’ would have the dual benefits of reducing the amount of waste material
which the project must store and provide additional revenue streams which could significantly improve the net
production costs of the lithium concentrate.
Expansion Opportunity
To complement the ongoing work to identify and delineate more resources on the Mining Lease, Savannah
purchased an option to acquire a suite of adjacent tenement blocks in September 2018 which are currently subject
to a separate Mining Lease application. In total the three blocks (blocks AC), currently owned by private Portuguese
company Aldeia & Irmão, S.A. (‘Aldeia’), cover an area of 2.94km2. To date intensive due diligence drilling has
consistently intersected a lithium bearing, spodumene dominant pegmatite with grades of up to 2.00% Li2O over a
strike length of more than 250m and vertical depth of more than 120m from near surface. We are confident the
Lease application area could provide both further significant resource upside to the overall Project and more
flexibility around the layout of the proposed mine. The Option runs to 25 June 2019 by when we would be required
to commit to the purchase of the tenements.
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PROJECT OVERVIEWS
Mina do Barroso Project Scoping Study Key Facts (100% basis):
Operating Parameters and assumptions
Mineable resource used in Scoping
(June 2018)
14.4Mt at 1.07% Li2O. All open pit.
Life of mine strip ratio (waste: ore): 5.2: 1, years 14: 1.6:1
Initial life of mine
11 years at 1.3Mtpa throughput rate
Processing route & recovery rate
CrushgrindDense Media Separationflotation (80% recovery)
Concentrate production & spec
175ktpa (minimum), 6% spodumene
Concentrate production as LCE/LHyE
(Preprocessing losses)
~26ktpa; ~29ktpa. Sufficient for ~0.5M 60kWh car battery packs
per annum
Coproducts
Initial capex
Feldspar (~276ktpa), quartz (~173ktpa) for use in the ceramics and other
industries
US$109m (Additional contingency of US$24.9m, inc. in financial model)
Sustaining capital & closure costs
US$17.2m
LoM Operating cost (US$/t conc)
US$271/t (US$210/t average in Years 14). Costs include all mining,
processing, transport, shipping/freight, corporate, admin, marketing &
royalty costs and are net of byproduct credits. Yr14 costs 1st quartile
and LoM average 2nd quartile on 2023F global cost curve (source: Roskill)
Financial & economic outcomes
Pricing assumptions (Average
life of mine)
Spodumene concentrate: US$685/t; Feldspar US$39/t; Quartz US$33/t
Revenue (LoM; Avg pa)
US$1,555m; US$140m
EBITDA (LoM, Avg pa)
US$805m; US$73m
Pretax FCF (LoM; Avg pa)
US$651m; US$59m
Net FCF (LoM; Avg pa)
US$458m; US$41m
NPV (8% discount rate)
Pretax US$356m; Posttax US$241m
IRR
Payback
Pretax 63.2%; Posttax 48.6%
Pretax 1.7 years; Posttax 2.1 years
Source: June 2018 Scoping Study and subsequent company press releases
Mutamba Mineral Sands Project, Mozambique
Savannah has been active in the Mineral Sands sector (titanium minerals and zircon) in southern Mozambique since
2013 and in October 2016 completed a Consortium Agreement with Rio Tinto which combined Savannah’s Jangamo
Project with Rio Tinto’s adjacent Mutamba Project (which included three deposit areas – Jangamo, Dongane and
Ravene), and its Chilubane Deposit, located 180km to the south west of the Mutamba Project. The enlarged
collective Mutamba Project, which is in the Gaza and Inhambane provinces and about 450km northeast of
Mozambique’s capital, Maputo, benefits from good infrastructure, including road, power and access to the nearby
ports of Inhambane and Maxixie approximately 40km away.
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PROJECT OVERVIEWS
The Mutamba project location:
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Partnered with Rio Tinto, but Savannah taking the lead
Savannah is the project operator and currently holds a 20% share in the Consortium. The Group may increase its
stake in the Consortium up to a 51% by funding and completing PreFeasibility and Feasibility Studies on the project.
Rio Tinto contributes its existing Mutamba camp, facilities and associated equipment, and the Consortium
Agreement includes an offtake agreement on commercial terms for the sale of 100% of production to Rio Tinto (or
an affiliate). Savannah completed a Scoping Study on the project in 2017 and is currently completing the Pre
Feasibility Study.
Mutamba’s Mineral Resources: A project of global scale
The global Mineral Resource estimate for the Mutamba project (Jangamo, Dongane and Ravene) currently stands
at 4.4 Billion tonnes at 3.9% total heavy minerals (“THM”) comprising both Indicated and Inferred category material
and containing ilmenite, rutile and zircon. The resource estimate includes a highgrade portion of 92Mt at 6.2%
THM, which was defined at Ravene. Significant potential also remains to expand the resource beyond its current
boundaries, which will be the focus of future prospecting activities.
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PROJECT OVERVIEWS
Mutamba JORC Mineral Resource Estimate (May 2017)
Deposit
Resource
Category
Jangamo (13336L)
Indicated
Inferred
Jangamo (3617L)
Inferred
Dongane
Ravene
Total
Inferred
Inferred
Sand
(Mt)
1,780
200
65
1,400
900
4,400
Source: Mutamba Scoping Study RNS, May 2017
Heavy
Minerals
(%)
Ilmenite (%
in Heavy
Minerals)
Ilmenite
(% in sand)
Rutile
(% in sand)
Zircon
(% in sand)
3.8
3.5
4.2
3.8
4.1
3.9
62
63
60
61
56
60
2.4
2.2
2.5
2.3
2.3
2.3
0.06
0.03
0.08
0.07
–
0.05
0.11
0.11
0.15
0.10
0.10
0.11
Project development concept outlined by 2017 Scoping Study
The Mutamba Project has the potential for the definition of a large orebody able to sustain a significant mining operation.
The mineralisation is amenable to a combination of dry mining and dredge mining, with ilmenite being the dominant
heavy mineral present. Savannah’s overall objective is to build, together with Rio Tinto, a commercial mineral sands presence
in Mozambique, delivering, via Rio Tinto’s offtake, stable supplies of titanium feedstock and zircon to global markets.
Mineral sands industry expert TZMI was commissioned to conduct a scoping study to evaluate an initial, low capex, long
life, dry mining operation. Key findings of the study, which was published in May 2017, are given in the following table.
Mutamba Mineral Sands: Scoping Study key data (100% basis)
Operating Parameters and assumptions
Mineable resource
Life of mine (LOM)
Mining rate
Life of mine strip ratio (waste: ore)
Mutamba TZMI Base
Case Prices
(US$/t)
Management Case
One +10% Product
Price
(US$/t)
Management Case
Two +20% Product
Price
(US$/t)
451Mt at 6.0% THM (Conceptual mine plan utilising 33% Indicated
and 67% Inferred resource)
30 years
15Mtpa
2:451
Average annual production
456,000t of ilmenite and 118,000t of nonmagnetic concentrate
Preproduction capital expenditure
Contingency
Ilmenite Price (Free on Board, FOB)
Nonmagnetic Concentrate (FOB)
Financial & economic outcomes
PreTax Free Cashflow (LOM)
PreTax Average Annual Free Cashflow
PreTax NPV (10% discount)
IRR (pretax)
Payback Period (pretax)
Source: Mutamba Scoping Study RNS, May 2017
US$152m
US$74m
185
250
204
275
222
300
US$1,007M
US$1,347M
US$1,686M
US$41M
US$154M
19%
5yrs
US$52M
US$245M
23%
4yrs
US$62M
US$335M
27%
3yrs
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PROJECT OVERVIEWS
Current work and key developments to come: PreFeasibility Study & Mining Lease applications
In August 2017, phase one of the PreFeasibility Study into the potential development of the Mutamba Mineral
Sands Project commenced. TZMI was again appointed to complete this phase of the work. Alongside work on the
PreFeasibility Study, a 20 tonne per hour pilot plant was constructed to produce bulk samples of concentrate for
metallurgical and product test work.
In January 2018 Submissions for Mining Leases were made to the Ministry of Mineral Resources and Energy in
Mozambique covering the adjacent Jangamo (188km2) and Dongane/Ravene blocks (161km2) and the separate,
Chilubane (138km2) deposit to the south. These were followed in September 2018 by a Mining Lease applications
over area EL3617L (119km2), which was the final Mining Lease application to be lodged for deposits on the
Consortium’s ground. To date a definitive response has not been received from the Ministry to any of the
applications made. However, Savannah and its partner, Rio Tinto, remain confident that the Mining Leases will be
granted in the coming months. Once received, these Leases will be a major step towards eventual production at
Mutamba. However, this will need to be preceded by completion of the current PreFeasibility Study and, if the
PreFeasibility carries a positive conclusion on the project’s economics, a Feasibility Study too.
The mineral sands pilot plant at Mutamba:
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REPORT OF THE DIRECTORS
therefore confident that funding will continue to be
secured and that it is appropriate to prepare the
Financial Statements on a going concern basis. The
Company currently has a number of options in respect
of future financing and has engaged with potential
financiers and sources of capital. However, although the
Company has been successful in the past in raising
equity finance, the lack of formal agreements means
there can be no certainty that the additional funding
required by the Group and the Company in the next
twelve months will be secured within the necessary
timescale. These conditions indicate the existence of a
material uncertainty which may cast significant doubt
about the Group and the Company’s ability to continue
as a going concern, however as aforementioned and
evidenced by announcements the Company has
routinely been able to raise funds to progress its highly
prospective portfolio. The Financial Statements do not
include the adjustments that would result if the Group
and the Company was unable to continue as a going
concern.
Statement as to Disclosure of Information to Auditors
So far as the Directors are aware, there is no relevant
audit information (as defined by Section 418 of the
Companies Act 2006) of which the Group’s auditors are
unaware, and each Director has taken all the steps that
he ought to have taken as a Director in order to make
himself aware of any relevant audit information and to
establish that the Group’s auditors are aware of that
information.
Auditors
The auditors, BDO LLP, will be proposed for reappointment
at the forthcoming Annual General Meeting.
The Directors present their report with the Financial
Statements of the Company and the Group for the year
ended 31 December 2018.
Dividends
The Directors do not recommend the payment of a
dividend (2017: £nil).
Events Since the Reporting Date
This information is contained in Note 24 to the Financial
Statements.
Directors
The Directors who have held office during the period
from 1 January 2018 to the date of this report (unless
otherwise stated) are as follows:
David S Archer
Dale J Ferguson
Matthew J King
Maqbool Ali Sultan
Imad Kamal Abdul Redha Sultan
James Leahy2
Manohar Pundalik Shenoy1
Murtadha Ahmed Sultan1
1 Alternate Director
2 Appointed on 26 November 2018
Directors’ Indemnity
The Group has agreed to indemnify its Directors against
third party claims which may be brought against them
and has in place a Directors and Officers’ insurance
policy.
Financial Instruments Risk
This information is contained in Note 18 to the Financial
Statements.
information
Future Development
in the Chairman’s
is contained
This
Statement on pages 2 to 5 and the Chief Executive’s
Report on pages 6 to 11.
Going Concern
In common with many mineral exploration companies,
the Company raises equity funds for its activities in
discrete share placements. The Directors believe that the
Group’s project portfolio is attractive and the cash sums
of £2.1m and £12.6m raised for new equity, including
£1.6m from 23.6% shareholder Al Marjan, in Q2 and Q3
2018 respectively support this view. The Directors are
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REPORT OF THE DIRECTORS
The Directors’ beneficial interests (including the beneficial interests of their immediate family) in the ordinary shares
of the Company are as follows:
No. of shares held at
31 December 2018
No. of shares held at
31 December 2017
31,792,519
David S Archer
Matthew J King
1,104,028
Dale J Ferguson 15,962,8542 4,391,0782
–
Maqbool Ali Sultan1
–
Imad Kamal Abdul Redha Sultan1
James Leahy
–
3,809,524
Manohar Pundalik Shenoy1
–
Murtadha Ahmed A Sultan1
–
–
–
3,809,524
–
41,756,649
1,104,028
1 The Directors indicated are representatives of Al Marjan Ltd which held 208,262,589 shares at the reporting date (2017: 186,878,750 shares).
2 12,375,000 shares (2017: 4,125,000 shares) held indirectly through Slipstream Resources Investments Pty Ltd.
Details of Directors’ remuneration are disclosed in Note 3.
Details of Directors’ interests in the share options and warrants are disclosed in Note 22.
Substantial Shareholding
At the date of this report the Company has been notified or is aware of the following interest in the Shares of the
Company of 3% or more of the Company’s total issued Share capital:
Name of Shareholder
Al Marjan Ltd (Directors1)
Slipstream Resources Investments Pty Ltd
Husain Salman Ghulam AlLawati
David Archer (Director)
KarlErik von Bahr
No. of shares
208,262,589
45,000,000
42,019,792
41,756,649
30,052,525
%
23.63%
5.11%
4.77%
4.74%
3.41%
On behalf of the Board:
David S Archer
Chief Executive Officer
Date: 20 May 2019
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
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CORPORATE GOVERNANCE STATEMENT
The Company strives to ensure that its corporate
governance policies and procedures which are in place
across the Group are of a high standard. The Board
acknowledges the importance of good corporate
governance and in light of the Group’s size and rate of
progression, decided to adopt the provisions of the QCA
Corporate Governance Code in September 2018 (“the
Code”).
The Corporate Governance Statement in relation to the
principles of the QCA Corporate Governance Code is
provided
at
http://www.savannahresources.com/investor
relations/corporategovernance/.
Company
website
the
on
The Code is described as a practical, outcome orientated
approach to corporate governance that is tailored for
small and midsize companies. It is a valuable reference
for growing companies wishing to follow good
governance practice. The Company has adopted the
Code because it allows it to take a flexible yet adequate
approach to corporate governance, ensuring that the
Company places the right people in the right roles and
to ensure that right things are being done to deliver
value for all its stakeholders.
The Board of Directors
The appointment of Mr. James Leahy as a nonexecutive
Director in November 2018 means that the Board
currently comprises of two executive, four nonexecutive
Directors and two alternate Directors. The Board
formally meets approximately every quarter and is
responsible for setting and monitoring group strategy,
reviewing budgets and financial performance, ensuring
adequate
funding, examining major portfolio
management matters, formulating policy on key issues
and reporting to the shareholders.
Internal Financial Control
The Board is responsible for establishing and maintaining
the Group’s system of internal financial controls. Internal
financial control systems are designed to meet the
particular needs of the Group and the risk to which it is
exposed, and by its very nature can provide reasonable,
but not absolute, assurance against material
misstatement or loss. The Directors continue to review
the effectiveness of the procedures presently in place to
ensure that they are appropriate to the nature and scale
of the operations of the Group.
The Audit and Risk Committee
The Audit Committee has been expanded to include a
risk function and is now the Audit and Risk Committee.
In particular, the committee is reviewing inter alia also
items reported under the Company’s Compliance Policy
as well as the AIM Rules Compliance meeting and
facilitates the management of the Group’s Risk Register,
in conjunction with the Board, senior managers and
appropriate professional advisers.
It comprises two nonexecutive Directors and one
alternate Director – Matthew King (who chairs the
Committee), James Leahy and Manohar Shenoy. The
Committee’s audit arm is responsible for ensuring that
the financial performance of the Group is properly
reported on and monitored, and for meeting the
auditors and reviewing the reports from the auditors
relating to accounts and internal controls. It also reviews
the Group’s annual and interim Financial Statements
before submission to the Board for approval. The
Committee’s risk function provides input to the Board in
its assessment of enterprise risk and the determination
of risk appetite as part of the overall setting of strategy
for the Group. It also assists the Board in its oversight of
the Group’s risk management framework including
monitoring its effectiveness.
All members of the Board attended a risk workshop in
December 2018. The purpose of the workshop was to
further enhance the Board’s consideration of risk so as
to reset the framework for risk management as the
Group progresses from exploration to production and to
expand
to corporate
governance.
the Company’s approach
Finally, the Group has taken steps to develop a risk
register, with the intention of allowing risks to be
identified, tracked and addressed in order to mitigate
any potential damage to the Group or its businesses.
Reporting on identified risks as per the Group’s risk
register has been included as a standard recurring item
on the Board’s and executive management’s meetings.
The Remuneration Committee
The Remuneration Committee comprises two non
executive Directors and one alternate Director –
Matthew King (who chairs the Committee), James Leahy
and Manohar Shenoy. It is responsible for reviewing the
performance of the executive Directors and for setting
the scale and structure of their remuneration, paying
due regard to the interests of shareholders as a whole
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CORPORATE GOVERNANCE STATEMENT
and the performance of the Group. The remuneration
of the Chairman and any nonexecutive Director is
determined by the Board as a whole, based on a review
of the current practices in other companies.
AIM Rule Compliance Committee
The AIM Rule Compliance Committee comprises one
nonexecutive and one executive Director – Matthew
King (who chairs the Committee) and David Archer, the
CEO. It is responsible for ensuring that resources and
procedures are in place to ensure the Company is at all
times in compliance with the AIM Rules for Companies.
the timely
The Committee helped
implementation of the new AIM Rules regarding
Corporate Governance prior to the 28 September 2018
deadline. The Committee is also responsible for ensuring
that the executive Directors are communicating
effectively with the Company’s Nominated Adviser.
to ensure
is overseeing
the Committee
Moreover,
the
implementation of specific software for the purpose of
facilitating tracking insiders as defined in MAR and AIM
Rules and updating the corresponding insider list on an
ongoing basis.
Nominations Committee
The Company does not currently have a Nominations
Committee as the Board regards nominations matters
are best dealt with by the full Board having regard to the
current size of the Company. The desirability for a
Nominations Committee will be reviewed on an annual
basis.
AntiBribery and Corruption
It is the Group’s policy to conduct business in an honest
way, and without the use of corrupt practices or acts of
bribery to obtain an unfair advantage in line with the UK
Bribery Act 2010. The Group takes a zerotolerance
approach to bribery and corruption and is committed to
acting professionally, fairly and with integrity in all its
business dealings and relationships wherever it operates
and implementing and enforcing effective systems to
counter bribery.
The necessary controls and procedures, updated by the
Board in 2017, in order to comply with the UK Bribery
Act 2010, continue to be reviewed to ensure
compliance.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the Company and enable them to ensure that the
Financial Statements comply with the requirements of
the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
Website Publication
The Directors are responsible for ensuring the Annual
Report and the Financial Statements are made available
on a website. Financial Statements are published on the
Company’s website in accordance with legislation in the
United Kingdom governing the preparation and
dissemination of Financial Statements, which may vary
from legislation in other jurisdictions. The maintenance
is the
and
responsibility of
the Directors. The Directors’
responsibility also extends to the ongoing integrity of the
Financial Statements contained therein.
integrity of the Company’s website
Directors’ Responsibilities
The Directors are responsible for preparing the Strategic
Report, the Report of the Directors and the Financial
Statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare Financial
Statements for each financial year. Under that law the
Directors have elected to prepare the Group and
Company Financial Statements in accordance with
International Financial Reporting Standards (IFRSs) as
adopted by the European Union. Under Company law
the Directors must not approve the Financial Statements
unless they are satisfied that they give a true and fair
view of the state of affairs of the Group and Company
and of the profit or loss of the Group for that period. The
Directors are also required to prepare Financial
Statements in accordance with the rules of the London
Stock Exchange for companies trading securities on the
Alternative Investment Market.
In preparing these Financial Statements, the Directors
are required to:
•
select suitable accounting policies and then apply
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
•
•
state whether they have been prepared
in
accordance with IFRSs as adopted by the European
Union, subject to any material departures disclosed
and explained in the Financial Statements; and
prepare the Financial Statements on the going
concern basis unless it is inappropriate to presume
that the Company will continue in business.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Opinion
We have audited the financial statements of Savannah
Resources Plc (the ‘parent company’) and its subsidiaries
(the ‘group’) for the year ended 31 December 2018
which comprise the consolidated statement of
comprehensive income, the consolidated and company
statements of financial position, the consolidated and
company statements of changes
in equity, the
consolidated and company statements of cash flow and
notes to the financial statements, including a summary
of significant accounting policies.
The financial reporting framework that has been applied
in the preparation of the group financial statements is
applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European Union
and, as regards the parent company financial
statements, as applied in accordance with the provisions
of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of
the state of the group’s and of the parent company’s
affairs as at 31 December 2018 and of the group’s
loss for the year then ended;
the group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been
properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in
accordance with the provisions of the Companies
Act 2006; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Basis for opinion
We conducted our audit
in accordance with
International Standards on Auditing (UK) (ISAs (UK)) and
law. Our responsibilities under those
applicable
standards are further described in the Auditor’s
responsibilities for the audit of the financial statements
section of our report. We are independent of the group
and the parent company in accordance with the ethical
requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we
have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Material uncertainty in relation to going concern
We draw attention to note 1 in the financial statements
concerning the group and parent company’s ability to
continue as a going concern. The matters explained in
the note indicate that the group and parent company
will require additional funding within the next twelve
months and that there is no certainty that the funding
required by the group and the parent company will be
secured within the necessary timescale. These
conditions, along with the other matters as set out in
note 1, indicate that a material uncertainty exists that
may cast significant doubt on the group and parent
company’s ability to continue as a going concern. Our
opinion is not modified in respect of this matter.
Given the conditions and uncertainties noted above we
considered going concern to be a Key Audit Matter. We
performed the following work as part of our audit:
• We critically challenged the directors’ forecasts to
assess the group and parent company’s ability to
meet their financial obligations as they fall due for a
period of at least 12 months from the date of
approval of the financial statements and assessed
and corroborated the key underlying assumptions,
including:
o
o
o
Assessing the reasonableness of forecast
expenditure by reference to Management’s
planned activity.
Verification of the available funds to supporting
documentation.
Discussion with Management whether there
are any other matters that may adversely
impact upon their assessment of going concern.
o We reviewed documents which demonstrate
ongoing activity in respect of the potential non
binding financing options.
We reviewed the disclosures in the financial statements.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Key audit matters
In addition to the matter described in the material uncertainty related to going concern section, key audit matters
are those matters that, in our professional judgment, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether
or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the
allocation of resources in the audit; and directing the efforts of the engagement team. This matter was addressed
in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on this matter.
KEY AUDIT MATTER
Impairment of Exploration and Evaluation assets
As detailed in note 8, at the year end the group held three groups of exploration and evaluation assets: lithium projects
in Portugal, mineral sands in Mozambique and copper projects in Oman.
Management is required to carry out an assessment at least annually for any indicators of impairment.
Reviewing indicators of impairment often require significant estimates and judgements and therefore we identified
this as a key audit matter.
OUR RESPONSE
We considered Management’s assessment of the indicators of impairment, and confirmed there is an ongoing plan to
develop each of the licence areas. We reviewed the licence agreements and we noted the Mozambique and Oman
licences expired during the period. We reviewed the application for renewal of the licences and the application for
new mining licences, and we reviewed written correspondence with the Mozambique and Oman Authorities. We
confirmed with Management that they expect the licences applications to be approved.
Given the fact that the licences have currently expired and require government approval for renewal and new mining
applications, we assessed the appropriateness of the disclosures included in the financial statements given in note 8
and 1, which describe the uncertainty.
Our application of materiality
Group materiality
£420,000 (2017: £250,000)
Basis for determining materiality
1.5% of total assets (2017: 1.75%)
Group performance materiality
Basis for performance materiality
Parent company materiality
Basis for determining materiality
£315,000 (2017: £187,500)
75% of group materiality
£310,000 (2017: £225,000)
1.5% of total assets, capped at 74% of group materiality
(2017: 1.75% of total assets, capped at 90% of group
materiality)
Parent company performance materiality
£232,500 (2017: £168,750)
Basis for performance materiality
75% of parent company materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the particular circumstances of their occurrence, when
evaluating their effect on the financial statements as a whole.
We consider total assets to be the most significant determinant of the group’s financial performance used by
members as the group continues to bring its mining assets through to production.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
A lower level of materiality, performance materiality, is
used to determine the financial statement areas that are
included within the scope of our audit and the extent of
sample sizes during the audit.
BDO UK performed the audits of the parent company
and all components except the Portuguese component,
Savannah Lithium Lda, which was audited by the BDO
network member firm in Portugal.
Whilst materiality for the financial statements as a whole
was £420,000, each significant component of the group
was audited to a lower level of materiality ranging from
£46,000 to £310,000.
We agreed with the Audit Committee that we would
report to the Committee all individual audit differences
identified during the course of our audit in excess of
£8,400 (2017: £12,000). We also agreed to report
differences below these thresholds that, in our view,
warranted reporting on qualitative grounds.
An overview of the scope of our audit
Our group audit was scoped by obtaining an
understanding of the group and its environment,
including the group’s system of internal control, and
assessing the risks of material misstatement in the
financial statements at the group level.
Our group audit scope focused on the group’s principal
operating locations being:
•
•
•
the Mina do Barroso lithium project in Portugal held
in Savannah Lithium Lda,
the Block 4 and Block 5 copper projects in Oman
held in Al Thuraya LLC and Al Fairuz Mining Co LLC,
respectively, and
the Mutamba mineral sands project in Mozambique
held in AME East Africa Ltd and Matilda Minerals
Lda,
which all were subject to a full scope audit. Together
with the parent company and its group consolidation,
which was also subject to a full scope audit, these
represent the significant components of the group.
These locations which were subject to full scope audit
procedures represent the principal business units and
account for 99% of the group’s total assets.
The remaining components of the group were
considered nonsignificant and these components were
principally subject to analytical review procedures,
together with additional substantive testing over the risk
areas detailed above where applicable to that
component.
The Group audit team was actively involved in the
direction of the audits performed by the component
auditors along with the consideration of findings and
determination of conclusions drawn. As part of our audit
strategy, a senior member of the audit team performed
a review of the component audit file which was audited
by BDO Portugal. We performed the audit procedures in
respect of the significant risk area that represented the
Key Audit Matter.
Other information
The directors are responsible for the other information.
The other information comprises the information
included in the annual report, other than the financial
statements and our auditor’s report thereon. Our
opinion on the financial statements does not cover the
other information and, except to the extent otherwise
explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial statements,
our responsibility is to read the other information and,
in doing so, consider whether the other information is
materially inconsistent with the financial statements or
our knowledge obtained in the audit or otherwise
appears to be materially misstated. If we identify such
inconsistencies or apparent material
material
misstatements, we are required to determine whether
there is a material misstatement in the financial
statements or a material misstatement of the other
information. If, based on the work we have performed,
we conclude that there is a material misstatement of this
other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, based on the work undertaken in the
course of the audit:
•
the information given in the strategic report and the
directors’ report for the financial year for which the
financial statements are prepared is consistent with
the financial statements; and
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
•
the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by
exception
In the light of the knowledge and understanding of the
group and the parent company and its environment
obtained in the course of the audit, we have not
identified material misstatements in the strategic report
or the directors’ report.
We have nothing to report in respect of the following
matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by
the parent company, or returns adequate for our
audit have not been received from branches not
visited by us; or
the parent company financial statements are not in
agreement with the accounting records and returns;
or
certain disclosures of directors’ remuneration
specified by law are not made; or
• we have not received all the information and
explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement, the directors are responsible for the
preparation of the financial statements and for being
satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary
to enable the preparation of financial statements that
are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the directors are
responsible for assessing the group’s and the parent
company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting
unless the directors either intend to liquidate the group
or the parent company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about
whether the financial statements as a whole are free
from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
financial statements.
A further description of our responsibilities for the audit
of the financial statements is located on the Financial
Reporting
at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
Council’s
website
Use of our report
This report is made solely to the parent company’s
members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has
been undertaken so that we might state to the parent
company’s members those matters we are required to
state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other
than the company and the parent company’s members
as a body, for our audit work, for this report, or for the
opinions we have formed.
Stuart Barnsdall (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
55 Baker Street
London
W1U 7EU
United Kingdom
20 May 2019
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2018
CONTINUING OPERATIONS
Revenue
Administrative expenses
Impairment of intangible assets
OPERATING LOSS
Finance income
Finance costs
LOSS BEFORE AND AFTER TAX ATTRIBUTABLE
TO EQUITY OWNERS OF THE PARENT
OTHER COMPREHENSIVE INCOME
Items that will not be reclassified to profit or loss:
Net change in Fair value through other comprehensive income
of Equity Investments
Items that will or may be reclassified to profit or loss:
Exchange gains/(losses) arising on translation of foreign operations
OTHER COMPREHENSIVE INCOME FOR THE YEAR
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT
Loss per share attributable to equity owners of the parent
expressed in pence per share:
Basic and diluted
From Operations
Notes
8
2018
£
2017
£
–
(3,258,458)
(140,024)
(3,398,482)
17,321
–
–
(2,835,684)
–
(2,835,684)
948
(7,549)
4
(3,381,161)
(2,842,285)
11
(73,345)
45,644
384,248
310,903
(197,120)
(151,476)
(3,070,258)
(2,993,761)
7
(0.44)
(0.53)
The notes form part of these Financial Statements.
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254655 Savannah pp41-pp47.qxp 23/05/2019 17:59 Page 42
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
ASSETS
NONCURRENT ASSETS
Intangible assets
Other intangible assets
Property, plant and equipment
Other receivables
Other noncurrent assets
TOTAL NONCURRENT ASSETS
CURRENT ASSETS
Investments
Trade and other receivables
Other current assets
Cash and cash equivalents
Assets classified as held for sale
TOTAL CURRENT ASSETS
TOTAL ASSETS
EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
Share premium
Foreign currency reserve
Warrant reserve
Share based payment reserve
FVTOCI Reserve
Retained earnings
Notes
2018
£
2017
£
8
9
10
13
15
11
13
15
14
16
22
22
17,413,168
342,881
1,437,068
–
253,188
9,809,994
–
1,196,084
239,300
220,213
19,446,305
11,465,591
18,007
330,774
223,733
7,715,435
8,287,949
–
8,287,949
170,203
155,959
20,011
2,455,968
2,802,141
138,543
2,940,684
27,734,254
14,406,275
8,814,518
31,060,554
579,126
1,000,221
508,051
(58,737)
(16,485,626)
6,358,504
18,105,108
194,878
1,405,958
691,194
–
(13,612,758)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
25,418,107
13,142,884
LIABILITIES
NONCURRENT LIABILITIES
Loans and borrowings
TOTAL NONCURRENT LIABILITIES
CURRENT LIABILITIES
Loans and borrowings
Trade and other payables
Liabilities classified as held for sale
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
21
21
17
25,813
25,813
22,847
22,847
16,895
2,273,439
2,290,334
–
2,290,334
2,316,147
10,276
1,228,757
1,239,033
1,511
1,240,544
1,263,391
27,734,254
14,406,275
The Financial Statements were approved by the Board of Directors on 20 May 2019 and were signed on its behalf
by:
David S Archer
Chief Executive Officer
Company number: 07307107
The notes form part of these Financial Statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 December 2018
ASSETS
NONCURRENT ASSETS
Investments in subsidiaries
Other intangible asset
Other receivables
Other noncurrent assets
TOTAL NONCURRENT ASSETS
CURRENT ASSETS
Investments
Trade and other receivables
Other current assets
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
Share premium
Warrant reserve
Share based payment reserve
FVTOCI Reserve
Retained earnings
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
2018
£
2017
£
11
9
13
15
11
13
15
14
16
22
22
17
458,667
333,353
20,844,330
36,800
342,883
–
13,699,270
19,035
21,673,150
14,061,188
17,225
130,438
202,180
7,368,469
7,718,312
170,116
44,841
–
2,125,504
2,340,461
29,391,462
16,401,649
8,814,518
31,060,554
1,000,221
508,051
(58,737)
(12,883,510)
6,358,504
18,105,108
1,405,958
691,194
–
(10,502,403)
28,441,097
16,058,361
950,365
950,365
343,288
343,288
29,391,462
16,401,649
The Company total comprehensive loss for the financial year was £2,523,008 (2017: £1,886,723) (Note 6).
The Financial Statements were approved by the Board of Directors on 20 May 2019 and were signed on its behalf
by:
David S Archer
Chief Executive Officer
Company number: 07307107
The notes form part of these Financial Statements.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
(151,476)
9,746,605
(2,993,761)
Total
equity
£
6,069,945
(2,842,285)
Share
Foreign based
Share Share currency Warrant payment FVTOCI Retained
capital premium reserve reserve reserve reserve earnings
£ £ £ £ £ £ £
At 1 January 2017 4,509,465 11,226,706 391,998 386,794 455,309 – (10,900,327)
Loss for the year – – – – – – (2,842,285)
Other comprehensive
income – – (197,120) – – – 45,644
Total comprehensive
income for the year – – (197,120) – – – (2,796,641)
Issue of share capital
(net of expenses) 1,849,039 7,897,566 – – – – –
Share based
payment charges – – – – 320,095 – –
Lapse of options – – – – (84,210) – 84,210
Issue of warrants – (1,019,164) – 1,019,164 – – –
At 31 December
2017 6,358,504 18,105,108 194,878 1,405,958 691,194 – (13,612,758) 13,142,884
Loss for the year – – – – – – (3,381,161)
(3,381,161)
Other comprehensive
income – – 384,248 – – (58,737) (14,608)
Total comprehensive
income for the year – – 384,248 – – (58,737) (3,395,769)
Issue of share
capital (net of
expenses) 2,056,014 12,967,604 – – – – –
Contingent
consideration – – – – 283,283 – –
Contingent
consideration
shares issued 400,000 – – – (283,283) – (116,717)
Share based
payment charges – – – – 38,580 – –
Exercised options – – – – (202,521) – 202,521
Lapse of options – – – – (19,202) – 19,202
Issue of warrants – (12,158) – 12,158 – – –
Exercised warrants – – – (326,755) – – 326,755
Lapse of warrants – – – (91,140) – – 91,140
At 31 December
2018 8,814,518 31,060,554 579,126 1,000,221 508,051 (58,737) (16,485,626) 25,418,107
38,580
–
–
–
–
–
320,095
–
–
(3,070,258)
15,023,618
310,903
283,283
–
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve
Share capital
Share premium
Description and purpose
Amounts subscribed for share capital at nominal value.
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
FVTOCI Reserve
Represents the accumulated balance of share based payment charges recognised in respect of asset acquired
and share options granted by Savannah Resources Plc, less transfers to retained losses in respect of options
exercised, lapsed and forfeited.
Cumulative changes in fair value of equity investments classified at fair value through other comprehensive income
(FVTOCI).
Retained earnings
Cumulative net gains and losses recognised in the consolidated Statement of Comprehensive Income.
The notes form part of these Financial Statements.
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COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018
Share Share
capital premium
£ £
Warrant
reserve
£
Share
based
payment
reserve
£
FVTOCI
reserve
£
Retained
earnings
£
Total
equity
£
At 1 January 2017 4,509,465 11,226,706
Loss for the year – –
Other comprehensive
income – –
Total comprehensive
income for the year – –
Issue of share capital
(net of expenses) 1,849,039 7,897,566
Share based payment
charges – –
Lapse of options – –
Issue of warrants – (1,019,164)
At 31 December 2017 6,358,504 18,105,108
Change in accounting
policy – IFRS 9 (Note 23) – –
At 1 January 2018 6,358,504 18,105,108
Loss for the year – –
Other comprehensive
income – –
Total comprehensive
income for the year – –
Issue of share capital
(net of expenses) 2,056,014 12,967,604
Shares issued 400,000 –
Share based payment
charges – –
Exercised options – –
Lapse of options – –
Issue of warrants – (12,158)
Exercised warrants – –
Lapse of warrants – –
At 31 December 2018 8,814,518 31,060,554
386,794
–
455,309
–
–
–
–
–
–
–
–
–
1,019,164
1,405,958
–
1,405,958
–
320,095
(84,210)
–
691,194
–
691,194
–
–
–
–
–
–
(8,699,890) 7,878,384
(1,932,367) (1,932,367)
45,644
45,644
(1,886,723) (1,886,723)
– 9,746,605
320,095
–
–
–
84,210
–
–
–
–
– (10,502,403) 16,058,361
(556,454)
–
(556,454)
– (11,058,857) 15,501,907
(2,449,663) (2,449,663)
–
–
–
–
–
–
–
–
–
(58,737)
(14,608)
(73,345)
(58,737)
(2,464,271) (2,523,008)
–
–
– 15,023,618
400,000
–
–
–
–
12,158
(326,755)
(91,140)
1,000,221
38,580
(202,521)
(19,202)
–
–
–
508,051
–
–
–
–
–
–
38,580
–
–
202,521
–
19,202
–
–
–
326,755
–
91,140
(58,737) (12,883,510) 28,441,097
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve
Share capital
Share premium
Warrant reserve
Share based payment reserve
FVTOCI Reserve
Description and purpose
Amounts subscribed for share capital at nominal value.
Amounts subscribed for share capital in excess of nominal value less costs of fundraising.
Fair value of the warrants issued.
Represents the accumulated balance of share based payment charges recognised in respect of asset acquired
and share options granted by Savannah Resources Plc, less transfers to retained losses in respect of options
exercised, lapsed and forfeited.
Cumulative changes in fair value of equity investments classified at fair value through other comprehensive income
(FVTOCI).
Retained earnings
Cumulative net gains and losses recognised in the consolidated Statement of Comprehensive Income.
The notes form part of these Financial Statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
Cash flows used in operating activities
Loss for the year
Depreciation and amortisation charges
Impairment of assets
Share based payment charge
Shares issued in lieu of payments to extinguish liabilities
Finance income
Finance expense
Exchange (gains)/losses
Cash flow from operating activities before changes
in working capital
Increase in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flow used in investing activities
Purchase of intangible exploration assets
Purchase of other intangible assets
Purchase of tangible fixed assets
Purchase of investments
Proceeds from sale of investments
Payments for guarantees for mining activity
Guarantees for acquisition of intangible exploration assets
Interest received
Net cash used in investing activities
Cash flow from financing activities
Interest paid
Proceeds from issues of ordinary shares (net of expenses)
Net cash from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange losses on cash and cash equivalents
Cash and cash equivalents at end of year
Notes
2018
£
2017
£
10
8
3, 22
3, 16
4
8
9
11
11
15
(3,381,162)
31,194
140,024
38,580
–
(17,321)
–
(54,076)
(2,842,285)
14,895
–
320,095
98,630
(948)
7,549
75,156
(3,242,761)
(179,376)
562,925
(2,326,908)
(71,288)
39,620
(2,859,212)
(2,358,576)
(6,317,118)
(131,173)
(328,768)
(695)
104,461
–
(202,180)
17,321
(3,276,715)
–
(1,069,056)
(87)
–
(199,755)
–
948
(6,858,152)
(4,544,665)
–
14,986,546
14,986,546
5,269,182
2,455,968
(9,715)
(7,549)
8,257,418
8,249,869
1,346,628
1,172,347
(63,007)
7,715,435
2,455,968
The notes form part of these Financial Statements.
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COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2018
Cash flows used in operating activities
Loss for the year
Impairment of financial assets
Share based payment reserve charge
Shares issued in lieu of payments to extinguish liabilities
Finance income
Finance expense
Exchange (gains)/losses
Cash flow from operating activities before changes in working capital
Increase in trade and other receivables
Increase in trade and other payables
Net cash used in operating activities
Cash flow used in investing activities
Investment in subsidiaries
Loans to subsidiaries
Purchase of other intangible assets
Guarantees for acquisition of intangible exploration assets
Proceeds from sale of investments
Interest received
Net cash used in investing activities
Cash flow from financing activities
Interest paid
Proceeds from issues of ordinary shares
Net cash from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Exchange losses on cash and cash equivalents
Cash and cash equivalents at end of year
Notes
13
3, 22
3, 16
11
9
15
11
2018
£
2017
£
(2,449,736)
1,325,790
38,580
–
(17,321)
–
(628,473)
(1,731,160)
(103,289)
477,736
(1,932,367)
–
320,095
98,630
(948)
4,348
75,156
(1,435,086)
(21,078)
44,228
(1,356,713)
(1,411,936)
(115,784)
(8,049,798)
(131,173)
(202,180)
104,461
17,321
(51,643)
(5,631,693)
–
–
–
948
(8,377,153)
(5,682,388)
–
14,986,546
14,986,546
5,252,680
2,125,504
(9,715)
(4,348)
8,257,418
8,253,070
1,158,746
1,029,765
(63,007)
7,368,469
2,125,504
The notes form part of these Financial Statements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
Basis of Preparation
These Consolidated Financial Statements and the Company Financial Statements have been prepared in
accordance with International Financial Reporting Standards, International Accounting Standards (collectively
“IFRSs”) as adopted by the EU and IFRIC and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The Consolidated Financial Statements and the Company Financial Statements
have been prepared under the historical cost convention.
Presentational and Functional Currency
The functional currency of the Company is Pound Sterling. Each entity in the Group determines its own
functional currency and items included in the Financial Statements of each entity are measured using that
functional currency. The presentational currency of the Group is Pound Sterling.
Going Concern
In common with many mineral exploration companies, the Company raises equity funds for its activities in
discrete share placements. The Directors believe that the Group’s project portfolio is attractive and the cash
sums of £2.1m and £12.6m raised for new equity, including £1.6m from 23.6% shareholder Al Marjan, in Q2
and Q3 2018 respectively support this view. The Directors are therefore confident that funding will continue to
be secured and that it is appropriate to prepare the Financial Statements on a going concern basis. The Company
currently has a number of options in respect of future financing and has engaged with potential financiers and
sources of capital. However, although the Company has been successful in the past in raising equity finance,
the lack of formal agreements means there can be no certainty that the additional funding required by the
Group and the Company in the next twelve months will be secured within the necessary timescale. These
conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group
and the Company’s ability to continue as a going concern, however as aforementioned and evidenced by
announcements the Company has routinely been able to raise funds to progress its highly prospective portfolio.
The Financial Statements do not include the adjustments that would result if the Group and the Company was
unable to continue as a going concern.
Basis of Consolidation
The Group accounts consolidate the accounts of Savannah Resources Plc and its domestic and foreign
subsidiaries, refer to Note 11. The foreign subsidiaries have been consolidated in accordance with IFRS 10
“Consolidated Financial statements” and IAS 21 “The effects of Foreign Exchange Rates”.
Intercompany transactions and balances between group companies are eliminated in full.
Equity Investments
Before the application of IFRS 9, equity investments, excluding subsidiaries, were accounted for as available for
sale financial instruments and included on the Statement of Financial Position at fair value with value changes
being recognised in other comprehensive income. When these equity investments were disposed, the
cumulative value changes recognised in other comprehensive income were transferred to the income statement
as a realised profit or loss on disposal. Their change in market value was up to the date of disposal.
After the application of IFRS 9, equity investments, excluding subsidiaries, are classified at fair value through
other comprehensive income (FVTOCI). They are carried at fair value with changes in fair value recognised in
other comprehensive income and accumulated in the fair value through other comprehensive income reserve.
Upon disposal any balance within fair value through other comprehensive income reserve is reclassified directly
to retained earnings and is not reclassified to profit or loss.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES continued
All equity investments, excluding subsidiaries, held are quoted and traded in an active market. The variability
in the range of reasonable fair value estimated for these instruments is not significant, therefore, when there
is no active market for these equity investments the fair value will be estimated using historical market data.
When there are no active market and a reliable measure of the fair value of the investments is not available
these are carried at cost, this being the fair value carrying amount on the date of the reclassification. The change
in market value represents the fair value of shares held at the reporting date less the cost or fair value at the
start of the financial year.
An impairment is recognised for equity investments where there is a significant and sustained decrease in the
market value of the investment.
Investments in Subsidiaries and Associates
Investments in subsidiaries, associates and jointly controlled entities are accounted for at cost within the
individual accounts of the parent company. These investments are classified as noncurrent assets on the
Statement of Financial Position of the parent company.
Foreign Currencies
Transactions in foreign currencies are initially recorded in the functional currency by applying spot exchange
rate ruling at the date of transaction. Monetary assets and liabilities denominated in foreign currencies are
retranslated at the functional currency rate of exchange ruling at the reporting date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or
loss.
The income statements of individual group companies with functional currencies other than Pound Sterling
are translated into Pound Sterling at the average rate for the period, on the basis the average rate is a reasonable
approximation of the spot rates throughout the year, and the Statement of Financial Position translated at the
rate of exchange ruling on the reporting date. Exchange differences which arise from retranslation of the
opening net assets and results of such subsidiary undertakings are taken to equity (“foreign currency reserve”).
On disposal of such entities, the deferred cumulative amount recognised in equity relating to that particular
operation is transferred to the consolidated Statement of Comprehensive income as part of the profit or loss
on disposal.
Intangible Assets
Exploration and evaluation assets
Once an exploration licence or an option to acquire an exploration licence has been obtained, all costs
associated with mineral property development and investments are capitalised on a projectbyproject basis
pending determination of the feasibility of the project. Costs incurred include appropriate technical and
administrative expenses but not general overheads. If a mining property development project is successful, the
related expenditures will be transferred to property, plant and equipment and subsequently amortised over
the estimated life of the commercial ore reserves on a unit of production basis. Where a licence is relinquished,
a project is abandoned, or is considered to be of no further commercial value to the Group, the related costs
will be written off.
Unevaluated mineral properties are assessed annually at reporting date for indicators of impairment in
accordance with IFRS 6. For the purposes of assessing indicators of impairment, assets are grouped at the
lowest level for which there are separately identifiable cash flows (cash generating units) as disclosed in Note 8.
If commercial reserves are developed, the related deferred development and exploration costs are then
reclassified as development and production assets within property, plant and equipment.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES continued
Acquisitions of Mineral Exploration Licences
Acquisitions of Mineral Exploration Licences through acquisition of nonoperational corporate structures that
do not represent a business, and therefore do not meet the definition of a business combination, are accounted
for as the acquisition of an asset. Related future cash consideration is contingent and is not recognised as an
asset or liability.
Other Intangible Assets
Once an option to acquire an exploration licence has been obtained by a Group holding company, with the
expectation that on execution the exploration licence is to be acquired by a subsidiary, costs are capitalised in
Other intangible assets. Costs incurred include appropriate technical and administrative expenses but not
general overheads. On execution of the option by a subsidiary the Other intangible assets are reclassified to
investments in the Group holding company and classified as exploration and evaluation assets by the subsidiary
that acquired the licence.
Property, Plant and Equipment
Tangible noncurrent assets used in exploration and evaluation are classified within tangible noncurrent assets
as property, plant and equipment. To the extent that such tangible assets are consumed in exploration and
evaluation the amount reflecting that consumption is recorded as part of the cost of the intangible asset.
Depreciation is provided on all items of property, plant and equipment in order to write off the cost less
estimated residual value of each asset over its estimated useful life.
Plant & Machinery 4 – 10 years
Office Equipment 1 – 4 years
Motor Vehicles 4 years
Financial Instruments
Financial assets and financial liabilities are recognised in the Group’s Statement of Financial Position when the
Group becomes a party to the contractual provisions of the instrument.
Financial Assets
Trade and other receivables
Trade and other receivables are nonderivative financial assets with fixed or determinable payments that are
not quoted in an active market. They are initially recognised at fair value plus transaction costs that are directly
attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective
interest rate method, less provision for impairment.
Under IAS 39, impairment provisions were recognised when there was objective evidence (such as significant
financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group
or the Company would be unable to collect all of the amounts due under the terms receivable, the amount of
such a provision being the differences between the net carrying amount and the present value of the future
expected cash flows associated with the impaired receivable.
Under IFRS 9, impairment provisions are recognised based on a forwardlooking expected credit loss model. The
methodology used to determine the amount of the provision is based on whether there has been a significant
increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not
increased significantly since initial recognition of the financial asset, twelve month expected credit losses along
with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime
expected credit losses along with the gross interest income are recognised. For those that are determined to be
credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES continued
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset
expires or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to
another entity.
There is no significant difference between carrying value and fair value of trade and other receivables.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand and balances held with banks. Cash equivalents are short
term, highly liquid accounts that are readily converted to known amounts of cash.
Guarantees
Guarantees represents deposits held at banks as security required by the local mining / environmental
authorities in relation to exploration / mining licences and applications thereof. They are not expected to be
converted into cash within less than year and therefore are classified as other noncurrent assets. Guarantees
are measured at cost, less any impairment.
Financial Liabilities
Other liabilities
Other liabilities consist of loan and borrowings and trade and other payables, which are initially recognised at
fair value and subsequently carried at amortised cost, using the effective interest method.
Financial liabilities are derecognised when they are extinguished, that is when the obligation is discharged,
cancelled or has expired. When a financial liability is derecognised, the cumulative gain or loss in equity (if any)
is transferred to the consolidated income statement.
There is no significant difference between the carrying value and fair value of other liabilities.
Taxation
Current taxes are based on the results shown in the Financial Statements and are calculated according to local
tax rules, using tax rates enacted or substantively enacted by the reporting date.
Deferred tax is recognised in respect of all temporary differences that have originated but not reversed at the
reporting date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits
will be available against which timing differences can be utilised.
Operating Leases
Rentals payable under operating leases are charged to the income statement on a straightline basis over the
term of the relevant lease.
Finance Leases
Leases of property, plant and equipment where the group, as lessee, has substantially all the risks and rewards
of ownership are classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair
value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding
rental obligations, net of finance charges, are included in other shortterm and longterm payables. Each lease
payment is allocated between the liability and finance cost. The finance cost is charged to the profit or loss
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period. The property, plant and equipment acquired under finance leases is depreciated over
the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable
certainty that the group will obtain ownership at the end of the lease term.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES continued
Sharebased Payments
Where equity settled share options are awarded to Directors and employees, the fair value of the options at
the date of grant is charged to the Consolidated Statement of Comprehensive Income over the vesting period.
Nonmarket vesting conditions are taken into account by adjusting the number of equity instruments expected
to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is
based on the number of options that eventually vest. Market vesting conditions are factored into the fair value
of the options granted. As long as all other vesting conditions are satisfied, a charge is made irrespective of
whether the market vesting conditions are satisfied. The cumulative expense is not adjusted for failure to
achieve a market vesting condition.
Where the terms and conditions of options are modified before they vest, the change in the fair value of the
options, measured immediately before and after the modification, is also charged to the Consolidated Statement
of Comprehensive Income over the remaining vesting period.
Where equity instruments are granted to persons other than employees for goods and services received, the
fair value of goods and services received is recognised in either the Statement of Comprehensive Income or
the Statement of Financial Position in accordance with the group’s relevant accounting policies. Where it is not
possible to reliably value the goods or services received, the fair value is measured by valuing the equity
instruments granted using an option an option pricing model. The probability of nonvesting conditions being
satisfied are included in the fair value recognised at the measurement date.
Where warrants are granted as part of cash subscriptions of new shares in the Company these are designated
as Investors Warrants. The fair value of the Investors Warrants at the date of grant is charged thus decreasing
the value of the Share Premium. Fair value is measured by use of a warrant pricing model.
Joint Arrangements
The Group is a party to a joint arrangement when there is a contractual arrangement that confers joint control
over the relevant activities of the arrangement to the Group and at least one other party. Joint control is
assessed under the same principles as control over subsidiaries.
The Group classifies its interests in joint arrangements as either: (a) Joint ventures: where the Group has rights
to only the net assets of the joint arrangement; (b) Joint operations: where the Group has both the rights to
assets and obligations for the liabilities of the joint arrangement.
In assessing the classification of interests in joint arrangements, the Group considers: (a) The structure of the
joint arrangement; (b) The legal form of joint arrangements structured through a separate vehicle; (c) The
contractual terms of the joint arrangement agreement; and (d) Any other facts and circumstances (including
any other contractual arrangements).
The Group accounts for its interests in joint operations by recognising its share of assets, liabilities, revenues
and expenses in accordance with its contractually conferred rights and obligations.
Noncurrent assets held for sale
Noncurrent assets and disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met
only when the asset (or disposal group) is available for immediate sale in its present condition subject only to
terms that are usual and customary for sales of such asset (or disposal group) and its sale is highly probable.
Management must be committed to the sale, which should be expected to qualify for recognition as a
completed sale within one year from the date of classification.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES continued
When the Group is committed to a sale plan involving loss of control of a subsidiary, all the assets and liabilities
of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether
the Group will retain a noncontrolling interest in its former subsidiary after the sale.
After the disposal takes place, the Group accounts for any retained interest in the associate or joint venture
unless the retained interest continues to be an associate or a joint venture, in which case the Group uses the
equity method.
Noncurrent assets (and disposal groups) classified as held for sale are measured at the lower of their carrying
amount and fair value less costs to sell.
Key Accounting Estimates and Judgements
The preparation of financial information in conformity with IFRS requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities at the date of financial information and the reported
amounts of expenses during the reporting periods. Although these estimates are based on management’s best
knowledge of the amounts, event or actions, actual results ultimately may differ from those estimates.
The key accounting estimates and assumptions are set out below:
(a) Carrying value of exploration and evaluation assets
The Group assesses at each reporting period whether there is any indication that these assets may be
impaired. If such indication exists, the Group estimates the recoverable amount of the asset. In the early
stages of exploration an indication of impairment may arise from drilling and assay results or from
management’s decision to terminate the project. Further details are set out in Note 8.
(b) Sharebased payments
In determining the fair value of sharebased payments made during the period, a number of assumptions
have been made by management. The details of these assumptions related to share options and warrants
are set out in Note 22. For the calculation of the fair value of the contingent considerations paid in shares
(Note 19) management has evaluated the probability of each milestone to be triggered.
(c) Going concern
In determining the Group’s ability to continue as a going concern the Directors consider a number of factors
including cashflow forecasts prepared by management. The detail of these factors are set out in Note 1
Going Concern heading.
The key judgements are set out below:
(a) Exploration and evaluation costs
The Group has to apply judgement in determining whether exploration and evaluation expenditure should
be capitalised within intangible assets as exploration and evaluation costs or expensed. The Group has a
policy of capitalising all costs which relate directly to exploration and evaluation costs (as set out above).
The total value of exploration and evaluation costs capitalised as at each of the reporting dates is set out
in Note 8. When the Group has applied for exploration and mining licences and these have not been granted
at the reporting date the management apply judgement in determining if this should be considered as an
impairment indicator. Management takes into account historic information about timing granting licences
by the relevant ministers and governments, and the information provided by the Group’s local teams base
on communications with these bodies.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES continued
(b)
Impairment of amounts due from subsidiaries
When applying the expected credit loss model under IFRS 9 Management apply judgement to evaluate if
there was a significant increase in the credit risk of the loans since initial recognition to determine the
stage of these loans to conclude if need to be calculated the 12months expected credit losses or the
lifetime expected credit losses. To calculate the expected credit losses Management apply judgement to
define several scenarios and their likelihood with the expected cash flows associated to the recovery of
the loans, which are compare with the present value of the loans to calculate the expected credit losses.
(c) Classification of Joint Arrangement
In determining the accounting treatment of the agreements signed with other nongroup companies
(Note 12) management needed to determine if joint control exists and therefore apply IFRS 11 Joint
Arrangements. Also, when applying IFRS 11 it was necessary to evaluate the rights and obligations relating
to the agreements to conclude if it was a Joint Operation or a Joint Venture. During 2017 and 2018
management concluded that there were no relevant changes affecting the relationship between the Group
and the other parties and therefore there is no changes to the initial accounting treatment of these
agreements.
Accounting Developments During 2018
The accounting policies adopted are consistent with those of the previous financial year except for those
included below. Management has reviewed the new standards and amendments to IFRS effective as of 1 January
2018. The most significant of these, and the effect that these had on the Financial Statements of the Group or
Company are:
•
•
IFRS 15 Revenue from Contracts with Customers (mandatorily effective for periods beginning on or after 1
January 2018): Management has reviewed the effect in the Group and Company Financial Statements, and
it was concluded that this new standard does not have effect in any of these financial statements as the
Group currently has no revenue.
IFRS 9 Financial Instruments (mandatorily effective for periods beginning on or after 1 January 2018): This
does not have a material impact in the Group Financial Statements as the main financial instruments are
cash and cash equivalents and trade payables. The main financial instruments in the Company Financial
Statements are cash and cash equivalents and amounts due from subsidiaries. After application of IFRS 9
the Company has recognised an impairment on the amounts due from subsidiaries (Note 13 and Note 23).
Accounting Developments Not Yet Adopted
There are a number of standards and interpretations which have been issued by the International Accounting
Standards Board that are effective in future accounting periods that the Group has decided not to adopt early.
The most significant of these, and the effect that this will have on the Financial Statements of the Group or
Company is IFRS 16 Leases (mandatorily effective for periods beginning on or after 1 January 2019). This will
not have a material impact in the Group and Company Financial Statements as they do not have significant
leases in place.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2. SEGMENTAL REPORTING
The Group complies with IFRS 8 Operating Segments, which requires operating segments to be identified on
the basis of internal reports about components of the Group that are regularly reviewed by the chief operating
decision maker, which the Company considers to be the Board of Directors. In the opinion of the Directors, the
operations of the Group comprise of exploration and development in Oman, exploration and development in
Mozambique, exploration and development in Portugal, exploration in Finland, headquarter and corporate
costs and the Company’s third party investments.
Based on the Group’s current stage of development there are no external revenues associated to the segments
detailed below. For exploration and development in Oman, Mozambique, Portugal and Finland the segments
are calculated by the summation of the balances in the legal entities which are readily identifiable to each of
the segmental activities. In the case of the Investments, this is calculated by analysis of the specific related
investment instruments. Recharges between segments are effectively at cost and included in each segment
below. Intercompany loans are eliminated to zero and not included in each segment below.
Mozambique
Oman Mineral Portugal Finland HQ and
Copper Sands Lithium Lithium corporate Investments Elimination
£ £ £ £ £ £ £
Total
£
2018
Revenue – – – – 1,398,308 – (1,398,308)
Interest Income – 157 – – 17,164 – –
Share based
payments – – – – 38,580 – –
38,580
Loss for the year (247,895) (647,656) (646,033) (152,485) (1,687,093) – – (3,381,162)
Total assets 5,213,999 5,077,253 9,334,988 933 8,089,074 18,007 – 27,734,254
Total noncurrent
assets 5,017,160 4,928,172 9,130,820 – 370,153 – – 19,446,305
Additions to
7,623,090
noncurrent assets 553,846 505,256 6,212,870 – 351,118 – –
Total current assets 196,839 149,081 204,168 933 7,718,921 18,007 –
8,287,949
Total liabilities (116,311) (50,060) (933,626) (2,258) (1,213,891) – – (2,316,146)
–
17,321
Mozambique
Oman Mineral Portugal Finland HQ and
Copper Sands Lithium Lithium corporate Investments Elimination
£ £ £ £ £ £ £
Total
£
2017
Revenue – – – – 639,108 – (639,108)
Interest Income – – – – 948 – –
Finance costs (2,035) (1,166) – – (4,348) – –
Share based
320,095
payments – – – – 320,095 – –
Loss for the year (308,616) (631,731) (171,056) (8,164) (1,722,718) – –
(2,842,285)
Total assets 4,365,898 4,640,081 2,902,257 138,543 2,189,293 170,203 – 14,406,275
Total noncurrent
assets 4,224,672 4,387,977 2,833,907 – 19,035 – – 11,465,591
Additions to
noncurrent assets 951,312 2,801,960 2,823,802 – 19,035 – –
Total current assets 141,226 252,104 68,350 138,543 2,170,258 170,203 –
Total liabilities (112,807) (398,825) (411,302) (1,511) (338,946) – –
6,596,109
2,940,684
(1,263,391)
–
948
(7549)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. EMPLOYEES AND DIRECTORS
The average monthly number of employees during the year was as follows:
Operational
Nonoperational
Staff Costs (excluding Directors)
Salaries
Bonus
Social security and other employee expenses
Pension
Share based payment expense (see Note 22)
Group
Company
2018
No
39
17
56
2018
No
Group
2017
No
43
15
58
2017
No
1,527,761
131,752
106,112
24,241
38,580
1,828,446
1,266,934
150,467
66,262
13,187
85,195
1,582,045
2018
No
1
5
6
2018
No
395,134
88,805
51,922
24,241
38,580
598,682
2017
No
1
4
5
Company
2017
No
332,833
142,208
29,145
13,187
85,195
602,568
The Group numbers in the above table includes £666,922 (2017: £654,947) which was capitalised as an
intangible asset.
The Group bonus in 2017 included £98,630 paid in Company shares. No bonus in shares has been paid in 2018.
Directors’ Remuneration
Salaries
Bonus
Social security
Pension
Share based payment expense (see Note 22)
£
2018
435,786
170,191
57,656
19,704
–
683,337
£
2017
428,066
76,927
56,039
16,750
234,900
812,682
The numbers in the above table include £125,541 (2017: £116,658) of Directors’ Remuneration which was
capitalised as an intangible asset in relation to the provision of specific technical services.
A gross gain (before taxes) of £337,933 (2017: nil) on the exercise of share options was attributable to the
Directors. The costs related to these exercised options were charged in the Consolidated Statement of
Comprehensive Income when the options were vested in prior years.
The Directors’ remuneration is paid by the Company.
The Directors are considered to be the key management of the Group.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
3. EMPLOYEES AND DIRECTORS continued
The remuneration of Directors who held office during the year was as follows:
Directors’ Directors’
emoluments 2018 emoluments 2017
Salary Bonus Noncash Pension Total Salary Bonus Noncash Pension
share share
options options
Total
£ £ £ £ £ £ £ £ £
£
Executive Directors
Dale J Ferguson 144,484 71,3111 – – 215,795 148,066 28,9272 52,200 – 229,193
David S Archer 247,200 98,8801 – 19,704 365,784 240,000 48,0002 182,700 16,750 487,450
NonExecutive Directors
Matthew J King 40,000 – – – 40,000 40,000 – – –
James Leahy 4,103 – – – 4,103 – – – –
Maqbool
Ali Sultan – – – – – – – – –
Imad Kamal
Abdul Redha Sultan – – – – – – – – –
Manohar
Pundalik Shenoy – – – – – – – – –
Murtadha
Ahmed A Sultan – – – – – – – – –
40,000
–
–
–
–
–
435,787 170,191 – 19,704 625,682 428,066 76,927 234,900 16,750 756,643
1 Bonuses unpaid as at 31 December 2018
2 Bonuses unpaid as at 31 December 2017
Supported by KPMG LLP, the Remuneration Committee undertook a review of remuneration packages and
developed a new remuneration policy aimed at rewarding performance, encouraging retention of key staff and
aligning their interests with those of shareholders. A new longterm incentive plan (“LTIP”) LTIP intended to
support this policy was implemented in March 2019 and is designed to incentivise the Company’s Executive
Management Team. The LTIP, which was prepared with advice from KPMG LLP, replaces the Company’s prior
longterm incentive plan which was implemented in April 2018 (the “2018 Plan”). The 2018 Plan and all awards
under it were terminated with no rewards being granted.
The LTIP has been established to encourage longterm value creation for Savannah’s shareholders and to align
the interests of the participants with shareholders. Awards under the LTIP take the form of options over the
Company’s ordinary shares of 1 pence each, (the “Options”) which are only exercisable from the third anniversary
of the date of grant (subject to several market standard specific exceptions), at an exercise price determined by
the Remuneration Committee. Once exercised, these shares cannot be sold until five years from the date of grant
of the Option, except to the extent necessary to meet the costs of exercise, or where the Remuneration
Committee agrees to any reasonable request from an Option holder to make an earlier disposal. The Board
believes that the implementation of the LTIP will incentivise the participants and will also help Savannah to attract
and retain talented individuals in the future as the Company expedites the development of its mining projects.
The LTIP allows for up to 7.5% of the Company’s issued share capital to be allocated to employees. The
Remuneration Committee has adopted a policy whereby up to 5% of the Company’s issued share capital should
be made available via the LTIP to the Executive Management Team only, with the balance being available to
other employees. These percentages will be reviewed annually by the Company’s Remuneration Committee.
The LTIP also includes malus and clawback clauses.
The LTIP is a share option scheme of the kind commonly adopted by listed companies and 8,950,000 Options
with an exercise price of 10p were issued in March 2019. The exercise price of 10p represented an 87% premium
to the closing share price on the preceding business day.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
4. LOSS BEFORE INCOME TAX
The loss before income tax is stated after charging
Depreciation and amortisation
Auditors’ remuneration:
– Statutory audit of the Group Financial Statements
– Nonaudit services
Fees payable to associated firms of the auditor for audit of subsidiaries
Fees payable to associated firms of the auditor for nonaudit services
Foreign exchange loss / (gain)
Operating lease payments
Share based payments
Bonus paid in shares
2018
£
2017
£
31,194
14,895
46,700
21,358
25,415
9,527
(54,076)
94,920
38,580
–
44,000
30,960
14,700
8,056
90,759
119,082
320,095
98,630
5.
INCOME TAX
Analysis of the Tax Charge
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2018 nor for the
year ended 31 December 2017.
Factors Affecting the Tax Charge
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation
tax in the United Kingdom applied to the result for the year are as follows:
2018
£
2017
£
Loss on ordinary activities before tax
(3,381,161)
(2,842,285)
Loss on ordinary activities multiplied by the standard rate
of corporation tax in the UK of 19% (2017 20%)
Effects of:
Expenses not deductible for tax purposes
Different tax rates applied in overseas jurisdictions
Tax losses carried forward
Total income tax
(642,421)
(568,457)
116,593
31,777
494,051
–
133,229
101,268
333,960
–
Deferred Tax
The Group has carried forward losses amounting to £8,993,040 as at 31 December 2018 (2017: £6,937,380).
As the timing and extent of taxable profits are uncertain, the deferred tax asset arising on these losses has not
been recognised in the Financial Statements.
6. LOSS OF PARENT COMPANY
As permitted by Section 408 of the Companies Act 2006, the profit and loss account of the parent company is
not presented as part of these Financial Statements. The parent company’s total comprehensive loss for the
financial year was £2,523,008 (2017: £1,886,723).
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share is calculated using the weighted average number of shares adjusted to assume the
conversion of all dilutive potential ordinary shares.
In accordance with IAS 33 as the Group is reporting a loss for both this and the preceding year the share options,
warrant options and warrants are not considered dilutive because the exercise of share options would have
the effect of reducing the loss per share.
Reconciliations are set out below.
Basic Loss Per Share
Losses attributable to ordinary shareholders:
Total loss for the year
Weighted average number of shares
Loss per share – total loss for the year from continuing operations
8.
INTANGIBLE ASSETS
Cost
At 1 January 2017
Additions
Transfer to Assets classified as Held for Sale
Exchange differences
At 31 December 2017
Additions
Transfer from Assets classified as Held for Sale
Exchange differences
At 31 December 2018
Amortisation and impairment
At 1 January 2017
At 31 December 2017
Impairment charged in the year
At 31 December 2018
Net Book Value
At 1 January 2017
At 31 December 2017
At 31 December 2018
2018
£
2017
£
(3,381,161)
766,442,525
0.0044
(2,842,285)
538,585,436
0.0053
Exploration and
evaluation
£
5,066,750
5,040,296
(118,804)
(178,248)
9,809,994
7,248,950
137,128
357,120
17,553,192
–
–
140,024
140,024
5,066,750
9,809,994
17,413,168
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
8.
INTANGIBLE ASSETS continued
Refer to Note 11, Note 16 and Note 19 for detail of additions with consideration satisfied by the issue of shares.
The exploration and evaluation assets referred to in the table above comprise expenditure in relation to
exploration licences in Oman, Mozambique, Portugal and Finland. The Directors consider that for the purposes
of assessing impairment, the above exploration and evaluation expenditure is allocated to the following licence
areas, representing the Group’s Cash Generating Units (“CGUs”).
Mozambique Minerals Sands
Oman Copper
Portugal Lithium
2018
£
2017
£
3,645,207
4,868,220
8,899,741
17,413,168
3,047,021
4,087,859
2,675,114
9,809,994
The Directors have reviewed the carrying value of the CGUs and have not identified any indicators of
impairment, except in Finland. Therefore, there is no impairment charge in 2018 or 2017 for Oman,
Mozambique and Portugal. After review of the impairment indicators for the licence areas in Finland an
impairment charge of £140,024 has been recognised for the total value of the assets allocated to that licences.
There were no disposals in 2018.
In Oman, during 2018 the Group’s mining licence applications for the Maqail South and Mahab 4 copper projects
in Block 5 received the final ministerial ‘no objection’ required to be considered by the Public Authority of
Mining (PAM) for the final approval. However, there were administrative deficiencies in the original letters sent
to the Ministries. Management understand that all the Ministries have now responded again favourably, and
the Group is awaiting for the licence approvals and remains in regular communication with PAM.
Block 4 exploration licence renewal has been delayed by around six months due to claims by a party claiming
to have rights to certain areas within Block 4. According to our legal advisers in Oman, the Group has the right
to renew the Block 4 exploration licence area in full, without any exclusions. The Board expects the matter to
be resolved and the Block 4 licence renewed in due course.
In Mozambique the “Rights to work over areas” relating to licences number 9230C (562L), 9229C (566L), and
9228C (1336L), held by Rio Tinto, cover the Jangamo, Dongane, Ravene and Chilubane deposits. These “Rights
to work over areas” expired in January 2018, prior to which an application for three mining concessions over
the same areas were submitted. The licences were issued with provisional Concession numbers on the 11 April
2018. Legally the Ministry had 6 months to respond to the applications but in practise it is not uncommon to
have significant overruns on this timing due to the sheer volume of information provided. The Ministry has
been in regular contact with Matilda Minerals and Rio Tinto and the Ministry has verbally confirmed that the
process is proceeding positively. The Board is confident that the Concessions will be issued in due course.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
9. OTHER INTANGIBLE ASSETS
Group:
Cost
At 1 January 2017
At 31 December 2017
Additions
At 31 December 2018
Net Book Value
At 1 January 2017
At 31 December 2017
At 31 December 2018
Company:
Cost
At 1 January 2017
At 31 December 2017
Additions
At 31 December 2018
Net Book Value
At 1 January 2017
At 31 December 2017
At 31 December 2018
Other intangible
assets
£
–
–
342,881
342,881
–
–
342,881
Other intangible
assets
£
–
–
333,353
333,353
–
–
333,353
In July 2018 the Company entered into an exclusive due diligence and option agreement for the potential
acquisition of a three block Mining Lease for lithium, feldspar and quartz (the “Proposed Licence Area”) (once
granted) totalling 2.94 km². Following the completion of the due diligence procedures with satisfactory results,
in September 2018 the Company elected to enter into an option to acquire the Proposed Licence Area which
is governed by a certain Pledge and Purchase Agreement following the grant of a mining lease from relevant
government/competent authorities (the “Aldeia Option”). The Aldeia Option would, if not exercised earlier,
endure until no later than 25 June 2019 whereby the Company would be required to commit to the purchase
of the Proposed Licence Area once granted by the relevant Portuguese government bodies. The total
consideration of the exclusive due diligence and the Aldeia Option was Eur 373,000 (GBP £333,353), of which
the Company paid Eur 148,000 (GBP £131,173) during 2018.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
10. PROPERTY, PLANT AND EQUIPMENT
Motor
vehicles
£
Cost
At 1 January 2017 36,607
Additions 41,197
Exchange differences (2,441)
At 31 December 2017 75,363
Additions 72,419
Exchange differences 3,631
At 31 December 2018 151,413
Depreciation
At 1 January 2017 21,164
Charge for year 12,539
Exchange differences (2,059)
At 31 December 2017 31,644
Charge for year 21,352
Exchange differences 2,219
At 31 December 2018 55,215
Net Book Value
At 1 January 2017 15,443
At 31 December 2017 43,719
At 31 December 2018 96,198
Office
Equipment
£
Plant and
Machinery
£
–
1,044,021
50,444
1,094,465
164,179
18,870
1,277,514
–
–
–
–
–
–
–
11,401
12,760
(249)
23,912
5,176
2,110
31,198
10,674
2,356
(743)
12,287
9,842
2,058
24,187
727
11,625
7,011
Land
£
–
45,656
619
46,275
9,361
709
56,345
–
–
–
–
–
–
–
Total
£
48,008
1,143,634
48,373
1,240,015
251,135
25,320
1,516,470
31,838
14,895
(2,802)
43,931
31,194
4,277
79,402
–
1,094,465
1,277,514
–
46,275
56,345
16,170
1,196,084
1,437,068
The pilot plant located in Mozambique has not been depreciated during the year because is not fully
commissioned.
The above property, plant and equipment is allocated to the following licence areas, representing the Group’s
Cash Generating Units (“CGUs”):
Mozambique Minerals Sands
Oman Copper
Portugal Lithium
2018
£
2017
£
1,282,458
–
154,610
1,437,068
1,102,890
5,776
87,418
1,196,084
The Management has evaluated the existence of impairment indicators of the property, plant and equipment
allocated to the licence areas together with the impairment review performed for the exploration and evaluation
assets, and it has concluded that there are no indicators of impairment. The carrying value of the property,
plant and equipment assets is not impaired and therefore an impairment charge has not been included in 2018
or 2017.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. INVESTMENTS
Group
At 1 January 2017
Additions at cost
Change in market value of investment
At 31 December 2017
Additions at cost
Disposals
Change in market value of investment
Impairment
At 31 December 2018
Shares in
investments at
FVTOCI
£
124,472
87
45,644
170,203
25,610
(104,461)
(71,910)
(1,435)
18,007
After the application of IFRS 9 management has elected to designate these equity investments as fair value
through other comprehensive income (FVTOCI).
In 2018 the Company disposed of 6.9 million shares in a listed company, with a realised gain of £68,717 that
was already recognised in Retained Earnings as part of the calculation of the change in market value of the
investment. There was no disposal of shares in 2017. At 31 December 2018 the Company does not hold
additional shares in this company.
In January 2018 as part of the agreement with its partners in Al Fairuz Mining Company LLC (note 11) the
Company issued 1,000,000 ordinary shares in the Company and received 312,500 shares in a listed company
(Note 16). The fair value of these shares is the quoted value at the reporting date, being the fair value hierarchy
level 1.
The fair value of the rest of shares held by the Company is the quoted value at the reporting date. The fair value
hierarchy in 2018 and 2017 for these shares is level 1 as the valuation is based wholly on quoted prices.
Company
NonCurrent
At 1 January 2017
Additions
At 31 December 2017
Additions
At 31 December 2018
Shares in
subsidiaries
£
291,031
51,852
342,883
115,784
458,667
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
11. INVESTMENTS continued
Current
At 1 January 2017
Change in market value of investment
At 31 December 2017
Additions at cost
Disposals
Change in market value of investment
Impairment
At 31 December 2018
Shares in
investments at
FVTOCI
£
124,472
45,644
170,116
24,915
(104,461)
(71,910)
(1,435)
17,225
In November 2018 the Group incorporated a new subsidiary Savannah Advisory Services Ltd, to deal with the
Group’s service contracts. The company is a whollyowned subsidiary of Savannah Resources Plc (“SAV”).
During May 2017, the Group incorporated two new subsidiary entities: Savannah Resources Portugal B.V.
(“SRPBV”), being a whollyowned subsidiary of SAV, and AME Portugal Pty Ltd (“AMEPPty”), being a wholly
owned subsidiary of SRPBV. In May 2017, the Company entered into an agreement to acquire 100% of
Slipstream PORT Pty Ltd (“SPPty”), thereby acquiring an effective 75% interest in Savannah Lithium Lda (“SL”)
(formerly Slipstream Resources Portugal Lda) . SL is a Portuguese entity which is the holder of a series of highly
prospective lithium projects with nearterm production potential in the north of Portugal.
In consideration for acquiring 100% of the issued share capital of SPPty, the Group paid AUD$ 1,000,000 (~GBP
£560,000) in cash and issued 20,000,000 (equivalent to GBP £1,300,000) ordinary shares in the Company. In
addition, the purchase of SPPty dictated future milestone payments, which were satisfied in 2018, as disclosed
in Note 19.
In August 2017, the Group acquired a further 20% of the issued share capital of Matilda Minerals Lda, increasing
its interest in the entity to 100%. The Group paid an aggregate consideration of AUD$ 100,000 (~GBP £56,000),
satisfied by the issue of 1,194,074 ordinary shares in the Company.
In September 2017 a new 100% subsidiary company, Savannah Resource Lithium B.V. was set up with an initial
investment of €100 (~£92) in the ordinary share capital.
In October 2016 Savannah Resources Plc, through its subsidiary AME East Africa Limited (“AME”), entered into
a Consortium Agreement (“CA”) with Rio Tinto Mining and Exploration Limited (“Rio Tinto”) whereby both
parties would combine their respective projects in Mozambique to form an unincorporated consortium. On
signing of this CA, AME owned 10% of the combined Mutamba Project and Rio Tinto owned the remaining
90%. After delivery of Scoping Study in May 2017, AME’s interest in the Mutamba Consortium increased to
20%. AME can earn into up to 51% in the Project by achieving prescribed milestones. Based on the terms of
the CA, both AME and Rio Tinto have joint control, and therefore this is a joint arrangement under IFRS. Detailed
information about the CA is included in Note 12.
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11. INVESTMENTS continued
On 11 May 2016 the Group through its subsidiary African Mining & Exploration Limited acquired 100% of
Finkallio Oy, paying a consideration of EUR 6,000 (~£5,310). The Group subsequently obtained through Finkallio
Oy licences for lithium exploration projects in Finland. The Group is in the process of divesting its investment
in Finkallio Oy, and at 31 December 2018 the exploration and evaluation assets held on the Company have
been fully impaired.
In November 2014 the Group entered into an earnin agreement (“Earnin”) to acquire up to a 65% interest in
Al Thuraya LLC (“Al Thuraya”) which wholly owns the highly prospective Block 4 Copper Project in Oman. As
per the Earnin agreement, in order for the Group to achieve a 51% shareholding in Al Thuraya, they were
required to make a capital contribution of USD $2,000,000 (~GBP £1,498,000) within two years of entering the
earnin agreement and a further USD $2,600,000 (~GBP £1,948,000) cash within four years to receive a further
14% shareholding in Al Thuraya. In March 2019 a deed of variation was executed between the parties to extend
the second capital contribution period, by eighteen months, to five years and six months. These funds will be
used for geological development activities. During the 2018 financial year the Group made capital contributions
of USD $441,763 (GBP £331,000) (2017: USD $595,096), being the total contribution as at 31 December 2018
of USD $3,512,249 (GBP £2,758,000) (2017: USD $3,070,486). In September 2016 the Group earned the 51%
interest in Al Thuraya after achieving the capital contribution of USD $2,000,000 as per the Earnin agreement.
In October 2016 a novation agreement was executed between Savannah Resources Plc, Savannah Resources
B.V. (“SRBV”), Al Thuraya and the existing shareholders of Al Thuraya, in which Savannah Resources Plc assigned
to SRBV its rights and obligations pursuant to the EarnIn agreement to acquire up to 65% interest in Al Thuraya.
The consideration to be paid by SRBV for this assignment amount to EUR 1,909,403 (£1,716,000), was calculated
based on the capital contributions made by Savannah Resources Plc to Al Thuraya in USD at that date of
executing the novation agreement of the contract.
In 2014 a new 100% subsidiary company, SRBV was set up to be the immediate parent company of Gentor
Resources Limited (“GRL”) with an initial investment of €100 (~£81) in the ordinary share capital. On 10 April
2014 the Group entered into an agreement to acquire 100% of Gentor Resources Inc.’s subsidiary, GRL, which
in turn holds interests in Al Fairuz Mining Co LLC (“Al Fairuz”), Sohar Mining LLC (formerly Gentor Resources
LLC), and Al Zuhra Mining LLC (“Al Zuhra”) (subsequently disposed in 2016) through its subsidiary, SRBV. GRL
has a 65% interest in Al Fairuz (Block 5).
In 2014 as consideration for acquiring 100% of the issued share capital of GRL, the Company initially paid cash
consideration of USD $800,000. Additionally milestone payments, to be satisfied (up to 50% payable in ordinary
shares in the Company) as follows: (a) USD $1,000,000 (~GBP £785,000) upon a formal final investment decision
for the development of the Block 5 Licence; (b) USD $1,000,000 (~GBP £785,000) upon the production of the
first saleable concentrate or saleable product from ore derived from the Block 5 Licence; (c) USD $1,000,000
(~GBP £785,000) within six months of the payment of the Contingent Consideration in (b). The Company will
be responsible for all of the funding of the projects. This funding will be in the form of loans which would be
reimbursed prior to any dividend distribution to shareholders (Note 19).
The Company had the following subsidiary undertakings, either directly or indirectly, at 31 December 2018,
which have been included in the Consolidated Financial Statements.
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11. INVESTMENTS continued
Subsidiary
Registered office
Nature of business
Savannah Advisory Services
Limited2
AME East Africa Limited2
Matilda Minerals Limitada5
Panda Recursos Limitada3
Savannah Resources B.V.2
Gentor Resources Limited3
Sohar Mining L.L.C3,17
Finkallio Oy3
African Mining &
Exploration Limited2
Savannah Resources
Portugal B.V2
AME Portugal Pty Ltd3
Slipstream PORT Pty Ltd3
Savannah Lithium Limitada3,6
Savannah Resources
Lithium B.V2
Joint Operations
Al Fairuz Mining L.L.C.3
Al Thuraya Mining L.L.C.3
Holding Company
Holding Company
Mining & exploration
Mining & exploration
United Kingdom7
United Kingdom7
Mozambique8
Mozambique9
The Netherlands10 Holding Company
Holding Company
British Virgin Is.11
Dormant
Oman12
Mining & exploration
Finland14
Class of
share
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
% Holding
100%
100%
100%
99.99%
100%
100%
70%1
100%
United Kingdom7
Dormant
Ordinary
100%
Netherlands10
Australia16
Australia15
Portugal16
Holding Company
Holding Company
Holding Company
Mining & exploration
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
100%
75%1
Netherlands10
Holding Company
Ordinary
100%
Oman12
Oman13
Mining & exploration
Mining & exploration
Ordinary
Ordinary
65%4
51%4
1 These entities have been consolidated 100% despite the Group owning less than 100% of the voting rights.
This is due to the Company having earnin contracts whereby the Company is the only contributing party and
has the ability to control the operations.
2 Directly held by Savannah Resources Plc
3 Indirectly held by Savannah Resources Plc
4 See details of joint operations in Note 12
5 99.99% Indirectly held by AME East Africa Limited and 0.01% Directly held by Savannah Resources Plc.
6 Formerly Slipstream Resources Portugal Limitada
7 Salisbury House, London Wall, London, EC2M 5PS, United Kingdom
8 Damiao de Gois, no 438, Sommerschield, Maputo, Mozambique
9 Rua 1301, Num 97, Sommerschield, Maputo, Mozambique
10 Strawinskylaan 3127, 8e verdieping, 1077ZX Amsterdam, The Netherlands
11 Trident Chambers, P.O. Box 146, Road Town, Tortola, VG1110, Virgin Islands, British
12 P.O.Box 1053, P.C.130, Azaiba, Muscat, Sultanate of Oman
13 P.O.Box 54, P.C.100, Muscat, Sultanate of Oman
14 c/o Bokf.byrå Mattans Ab, Storalånggatan 57 A 1, 65100 VASA, Finland
15 Level 20, 16 Carrington Street, Sydney, NSW 2000, Australia
16 Rua Jose Eigenmann, No 90, parish of Nogueira, municipality of Braga, Portugal, 4715199
17 Formerly Gentor Resources L.L.C
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12. JOINT ARRANGEMENTS
Unincorporated consortium Mutamba Project
In October 2016 Savannah Resources Plc, through its subsidiary AME East Africa Limited (AME), entered into a
consortium agreement (“Consortium Agreement”) with Rio Tinto Mining and Exploration Limited (Rio Tinto)
whereby both parties would combine their respective projects in Mozambique to form an unincorporated
consortium. On signing of this Consortium Agreement AME own 10% of the combined Mutamba Project and
Rio Tinto own the remaining 90%. AME can earn into up to 51% in the Project by achieving the following
milestones:
(a) Upon the Group completing the Phase 1 work programme (Scoping Study) it will have a 20% participating
interest in the Project;
(b) Upon the Group completing Phase 2 of the work programme (PreFeasibility study) it will have a 35%
participating interest in the Project;
(c) Upon the Group completing Phase 3 of the work programme (Feasibility study) it will have a 51%
participating interest in the Project.
In May 2017 the Group completed the Phase 1 milestone with the delivery of the Scoping Study, increasing its
interest in the combined Mutamba Project to 20%.
The Consortium is managed by a Consortium committee with two representatives from each party, and chaired
by an AME representative. AME is the operator of the Project, and it is responsible for preparing and
implementing the work programme and budget approved by the Consortium committee. Based on the terms
of the agreement both AME and Rio Tinto have joint control, and therefore this is a joint arrangement under
IFRS.
The Consortium is currently unincorporated, and each party have rights to the assets, and obligations to the
liabilities, relating to the arrangement, therefore it is considered a Joint Operation. AME is responsible for all
funding related to the combined Project up until the delivery of a Feasibility Study. Since the execution of the
Consortium Agreement in 2016 the Group has capitalised £2,366,186 (2017: £1,853,458) in exploration and
evaluation assets and £1,122,092 (2017: £1,102,890) in property, plant and equipment, relating to the combined
project.
Shareholders’ agreement for Al Fairuz Mining L.L.C.
In 2014 Savannah Resources Plc, through the acquisition of its subsidiary Gentor Resources Limited, became
party to a shareholders’ agreement for Al Fairuz with The Al Fairuz Brothers.
Al Fairuz is managed by a Management Committee which, up until completion of a feasibility study, consist of
four members, two representatives from each party, and is chaired by a Savannah member. After completion
of the feasibility study Savannah is entitled to appoint a fifth member.
Savannah is the operator of the Project, and it is responsible for preparing and implementing the work
programme and budget approved by the Management Committee. Based on the terms of the agreement both
Savannah and The Al Fairuz Brothers have joint control, and therefore this is a joint arrangement under IFRS.
Each party has rights to the assets, and obligations to the liabilities, relating to the arrangement, therefore it is
considered a Joint Operation. Savannah is responsible for all of the funding of the projects. This funding will be
in the form of loans which would be reimbursed prior to any dividend distribution to shareholders. Since the
acquisition of Al Fairuz the Group has capitalised £2,718,627 (2017: £2,313,216).
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12. JOINT ARRANGEMENTS continued
Earnin agreement for Al Thuraya Mining L.L.C.
In 2014 Savannah Resources Plc entered into an earnin agreement in Al Thuraya Mining LLC.
Savannah Resources plc is the operator of the Project and has appointed two of the four members in the Board
or Al Thuraya. According with the Earnin agreement there are certain activities that shall only be undertaken
by the Company if all Shareholders have given their prior consent. Based on the terms of the agreement both
Savannah and the other Shareholders have joint control, and therefore this is a joint arrangement under IFRS.
Each party has rights to the assets, and obligations to the liabilities, relating to the arrangement, therefore it is
considered a Joint Operation. Savannah is responsible for all of the funding of the project. This funding will be
in the form of capital contributions. Since the acquisition of Al Thuraya the Group has capitalised £2,149,594
(2017: £1,774,644).
13. TRADE AND OTHER RECEIVABLES
NonCurrent:
Other receivables – VAT
Amounts due from subsidiaries
Current:
VAT recoverable
Other receivables
Group
Company
2018
£
2017
£
2018
£
2017
£
–
–
–
239,300
–
239,300
–
20,844,330
–
13,699,270
20,844,330
13,699,270
133,728
197,046
330,774
51,069
104,890
155,959
–
130,438
130,438
9,207
35,634
44,841
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
The Company applies the expected credit loss model to measure expected credit losses for amounts due from
subsidiaries. The company considered the probability of a default. The loans to subsidiaries are interest free
and are repayable on demand.
The Company expects that the carrying value of the intercompany loan receivable may not be fully recoverable
as the subsidiaries may not generate sufficient future profits to settle the amounts owing and accordingly, these
amounts have been partially impaired owing to the adoption of IFRS 9 (see Note 23). Repayment of the loans
is subject to the Directors’ assessment of the Group’s requirements and availability of appropriate liquid
resources. Among other things, the Company’s expected credit loss model includes consideration of various
risks affecting the success of underlying projects of subsidiaries. When determining the expected credit losses
Management has taken into account that the intercompany loans are related to projects that are in the
exploration stage. Management has concluded that the success of the project is the most important factor that
will drive credit losses. During the next 12 months this will be affected by the results in mineral resources, the
commodity prices, the capability of the Parent Company to obtain funds to develop the projects and the success
obtaining exploration and mining licences. Several scenarios and their likelihood have been considered to
calculate the expected cash flows for the loans associated to each project and the expected credit losses as at
the reporting date. The Company has applied IFRS 9 in the current period and estimates that an expected credit
loss calculated of £1.3m arises on the receivables from the subsidiaries, and £0.6m relating to prior periods.
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13. TRADE AND OTHER RECEIVABLES continued
Movements in the impairment allowance for amounts due from subsidiaries for the year ended 31 December
2018 is as follows:
Company
At 31 December 2017
Restated through opening retained earnings under IFRS 9
At 1 January 2018
Charged during the year
At 31 December 2018
Amounts due
from subsidiaries
£
–
556,454
556,454
1,325,790
1,882,244
The breakdown of the Amounts due from subsidiaries as at 31 December is as follows:
Company
Amounts due from subsidiaries:
Outstanding amount
Impairment
14. CASH AND CASH EQUIVALENTS
2018
£
2017
£
22,726,574
(1,882,244)
13,699,270
–
20,844,330
13,699,270
Group
Company
2018
£
2017
£
2018
£
2017
£
Cash at bank and in hand
7,715,435
2,455,968
7,368,469
2,125,504
15. OTHER CURRENT AND NONCURRENT ASSETS
NonCurrent:
Guarantees
Other
Other NonCurrent Assets
Current:
Guarantees
Other
Group
Company
2018
£
213,645
39,543
253,188
202,180
21,553
223,733
2017
£
199,755
20,458
220,213
–
20,011
20,011
2018
£
–
36,800
36,800
202,180
–
202,180
2017
£
–
19,035
19,035
–
–
–
The NonCurrent Assets – Guarantees are deposits required by the local mining / environmental authorities in
relation to exploration / mining licences and applications thereof.
The Current Assets – Guarantees are guarantees required as part of the Aldeia Option (Note 9) executed as
part of the Portuguese project during September 2018.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
16. SHARE CAPITAL
Allotted, issued and fully paid
At beginning of year
Issued during year:
Share placements1
Bonus paid in shares
Exercise of share options2
Exercise of warrants2
In lieu of cash for acquisition of assets3
Issued as condition of JV agreement4
2018
2017
£0.01
ordinary
shares
number
£0.01
ordinary
shares
number
£
£
635,850,386
6,358,504
450,946,455
4,509,465
177,640,185
–
12,980,112
13,981,112
40,000,000
1,000,000
1,776,402
–
129,801
139,811
400,000
10,000
161,423,950
1,688,870
–
–
21,791,111
–
1,614,239
16,889
–
–
217,911
–
6,358,504
At end of year
881,451,795
8,814,518
635,850,386
1 In respect of the Share placements in 2018 the net proceeds were £14,010,819 of which £12,234,417 has
been recorded in share premium. The gross proceeds were £14,651,253.
2 Refer to Note 22 for details of share options and warrants exercised.
3 Refer to Note 11 and Note 19 for details of shares issued in lieu of cash for acquisition of assets and payment
of contingent consideration. No share premium has been recorded for these transactions.
4 Refer to Note 11 for details of shares issued to joint venture partner. £14,915 has been recorded in share
premium for this transaction.
The par value of the Company’s shares is £0.01.
17. TRADE AND OTHER PAYABLES
Current:
Trade payables
Other payables
Accruals
Amounts owing to subsidiaries
Group
2018
£
2017
£
1,027,100
82,571
1,163,768
–
2,273,439
481,436
45,054
702,267
–
1,228,757
Company
2018
£
183,914
69,711
692,380
4,360
950,365
2017
£
149,155
28,052
161,740
4,341
343,288
Accruals represent mainly work done in 2018 in the projects in Portugal (feasibility study and drilling
programme), professional fees in the Group for which invoices have not been received at the reporting date,
and the payment to be made during 2019 in relation to the Aldeia Option executed as part of the Portuguese
project during September 2018. Trade and other payables amounts relate mainly to balances that are capitalised
and therefore these are included in investing not operating cash flows.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS
Financial Instruments – Risk Management
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those risks and
the methods used to measure them. Further quantitative information in respect of these risks is presented
throughout these Financial Statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives,
policies and processes for managing those risks or the methods used to measure them from previous periods
unless otherwise stated in this note.
Principal Financial Instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:
•
•
•
•
•
•
•
•
loan receivables
trade and other receivables
cash at bank
trade and other payables
loans and borrowings
investments
other noncurrent assets – guarantees
other current assets – guarantees
Trade and other payables fall due for payment within 3 months from the reporting date.
Liquidity Risk
At the reporting date the Group’s cash balance was £7.7m (2017: £2.5m). This, in conjunction with the raising
of future cash, which the Directors believe can be secured, will allow the Group to continue working on its
development/exploration activities and to meet its financial commitments for at least 12 months. In common
with many nonrevenue generating companies, the Company will need to raise funds for its development
activities. The Group’s policy continues to be to ensure that it has adequate liquidity by careful management
of its working capital.
Foreign Exchange Risk
The Group is exposed through its operations to foreign exchange risk which arises because the Group has
overseas operations located in Mozambique whose functional currency is MZN, in Oman whose functional
currency is OMR which is pegged to the USD at a rate of 1 OMR to 2.6 USD and in Portugal and Finland whose
functional currency is Euro. The Group’s net assets arising from overseas operations are exposed to currency
risk resulting in gains or losses on retranslation into Pound Sterling.
Foreign exchange risk also arises when individual group entities enter into transactions denominated in a
currency other than their functional currency. The Group’s policy is, where possible, to allow group entities to
settle liabilities denominated in their functional currency (Euro, OMR, MZN or Pound Sterling) with the cash
remitted to their own operations in that currency where practical. Where group entities have liabilities
denominated in a currency other than their functional currency (and have insufficient reserves of that currency
to settle them) cash already denominated in that currency will, where possible, be transferred from elsewhere
within the Group.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS continued
Market Risk
The Group holds equity investments in companies traded on active markets (see Note 11). The Directors believe
that the exposure to market price risk from this activity is acceptable in the Group’s circumstances.
The effect of a 10% increase in the value of the equity investments held at the reporting date would, all other
variables held constant, have resulted in an increase in other comprehensive income and net assets of £1,723
(2017: increase in other comprehensive income and net assets of £17,011). A 10% decrease in their value would,
on the same basis, have decreased other comprehensive income and net assets by the same amount.
Credit Risk
The Company is exposed to credit risk on its receivables from its subsidiaries. The subsidiaries are exploration
and development companies with no current revenue and therefore, whilst the receivables are due on demand,
they are not expected to be paid until there is a successful outcome on a development project resulting in
revenue being generated by a subsidiary. In application of IFRS 9 the Company has calculated the expected
credit loss from these receivables (Note 13).
The Group is exposed to credit risk in cash and cash equivalents and deposits with banks and financial
institutions. Only reputable banks and financial institutions which are rated by recognised rating agencies are
accepted by the Company in the UK. The Group policy is to maintain the majority cash and cash equivalents
within the Company in the UK and funds are remitted to other Group entities on a monthly basis to settle
liabilities as they fall due, to avoid credit risk associated to foreign jurisdictions banks. The Group policy is also
to operate at least with two banks in each country when possible.
Financial instruments by category (Group)
Financial assets
Amortised cost
Fair value
through Other
comprehensive
income
(Loans and (Available for
receivables
sale at fair
value 2017)
2017)
£
£
–
253,188
223,733
7,715,435
8,192,356
–
220,213
2,455,968
2,676,181
18,007
–
–
–
18,007
125,062
–
–
125,062
Available
for sale
at cost
£
–
–
–
–
–
45,141
–
–
45,141
Total
£
18,007
253,188
223,733
7,715,435
8,210,363
170,203
220,213
2,455,968
2,846,384
As at 31 December 2018
Investments
Other noncurrent assets
Other current assets
Cash and cash equivalents
Total financial assets
As at 31 December 2017
Investments
Other noncurrent assets
Cash and cash equivalents
Total financial assets
See review of the fair value hierarchy of available for sale assets measured at fair value in Note 11.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
18. FINANCIAL INSTRUMENTS continued
Financial liabilities
As at 31 December 2018
Trade and other payables
Loans and borrowings
Total financial liabilities
At 31 December 2017
Trade and other payables
Loans and borrowings
Total financial liabilities
Financial liabilities
at amortised cost
£
Total
£
2,273,439
42,708
2,316,147
2,273,439
42,708
2,316,147
1,228,757
33,123
1,261,880
1,228,757
33,123
1,261,880
The Group’s net exposure to foreign exchange risk at the reporting date was as follows:
Functional Currency of Entity
GBP
2017
£
Total
2018
£
MZN
2018
£
EUR
2018
£
GBP
2018
£
MZN
2017
£
Total
2017
£
Foreign currency
financial assets
USD
EUR
AUD
Total
2,468,014
2,381,502
797,215
5,646,731
76,259
–
–
76,259
56,688 2,600,961
– 2,381,502
802,634
5,419
271,964
359,004
37
181,138
–
–
453,102
359,004
37
62,107 5,785,097
631,005
181,138
812,143
Functional Currency of Entity
GBP MZN OMR EUR Total GBP MZN OMR
2018 2018 2018 2018 2018 2017 2017 2017
£ £ £ £ £ £ £ £
Foreign currency
financial liabilities
USD 47,525 9,366 5,595 – 62,486 35,842 245,137 – 280,979
AUD 407,826 – – – 407,826 107,706 – 24,697 132,403
1,128
EUR 224,050 – – – 224,050 1,128 – –
OMR 9,249 – – – 9,249 1,541 – –
1,541
GBP – – – 3,430 3,430
Total
2017
£
Total 688,650 9,366 5,595 3,430 707,041 146,217 245,137 24,697 416,051
The effect of a 10% strengthening of the USD against GBP at the reporting date on the USD denominated cash
and equivalents carried at that date would, all other variables held constant, have resulted in a decrease in
pretax loss for the year and increase of net assets of GBP £236,689 (2017: £41,191). A 10% weakening in the
exchange rate would, on the same basis, have increased pretax loss and decreased net assets by GBP £288,705
(2017: £50,345).
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18. FINANCIAL INSTRUMENTS continued
The effect of a 10% strengthening of the EUR against GBP at the reporting date on the EUR denominated cash
and equivalents carried at that date would, all other variables held constant, have resulted in a decrease in pre
tax loss for the year and increase of net assets of GBP £216,917 (2017: £36,194). A 10% weakening in the
exchange rate would, on the same basis, have increased pretax loss and decreased net assets by GBP £264,102
(2017: £44,237).
The effect of a 10% strengthening of the AUD against GBP at the reporting date on the EUR denominated cash
and equivalents carried at that date would, all other variables held constant, have resulted in a decrease in pre
tax loss for the year and increase of net assets of GBP £73,178. A 10% weakening in the exchange rate would,
on the same basis, have decreased pretax loss and increased net assets by GBP £88,924.
Capital Disclosures
The Group’s objectives when maintaining capital are:
•
•
to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns
for shareholders and benefits for other stakeholders, and
to maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may issue new shares and seek other financial
structures as debts (project finance), royalties, equity, or combinations thereof.
19. GROUP CONTINGENT LIABILITIES
Details of contingent liabilities where the probability of future payments is not considered remote are set out
below, as well as details of contingent liabilities, which although considered remote, the Directors consider
should be disclosed. The Directors are of the opinion that provisions are not required in respect of these matters,
as at the reporting date have not been triggered, it is not probable that a future sacrifice of economic benefits
will be required or the amount is not capable of reliable measurement.
Deferred consideration payable in relation to the acquisition of Gentor Resources Ltd (Oman copper project)
On 15 July 2014 the Company completed the acquisition of interests in the highly prospective Block 5 and
Block 6 copper projects in the Semail Ophiolite belt in the Sultanate of Oman from the TSXVenture listed Gentor
Resources Inc. The Company paid initial consideration of USD $800,000 (~GBP £628,000) with the following
deferred consideration required to complete the acquisition of 100% of the issued share capital of Gentor
Resources Ltd (“GRL”):
1. Deferred Consideration (up to 50% payable in Savannah Resources Plc shares)
(a) a milestone payment of USD $1,000,000 (~GBP £785,000) upon a formal final investment decision for the
development of the Block 5 Licence;
(b) a milestone payment of USD $1,000,000 (~GBP £785,000) upon the production of the first saleable
concentrate or saleable product from ore derived from the Block 5 Licence; and
(c) a milestone payment of USD $1,000,000 (~GBP £785,000) within six months of the payment of the Deferred
Consideration in (b).
2. Other Information
(a)
the Company will be responsible for all of the funding of the projects. This funding will be in the form of a
loan which would be reimbursed prior to any dividend distribution to shareholders.
In September 2016 Savannah Resources B.V. terminated its interest in Al Zuhra Mining LLC (Block 6). This has
not impacted the aforementioned deferred consideration.
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19. GROUP CONTINGENT LIABILITIES continued
Contingent consideration payable in relation to the acquisition of Slipstream PORT Pty Ltd (Portugal lithium
project)
On 24 May 2017 the Group acquired a series of highly prospective lithium projects with nearterm production
potential in the north of Portugal. The Group paid an initial consideration of AUD$ 1,000,000 (~GBP £554,000)
in cash and issued 20,000,000 ordinary shares in the Company, with additional milestone payments, to be
satisfied by cash and the issue of ordinary shares in SAV. All the milestones were triggered during 2018 and
settlement of the contingent consideration in cash and shares was also completed during 2018 as follows:
(a)
(b)
In February 2018 the Company announced the completion of a revised JORC 2012 – Compliant Inferred
Mineral Resource Estimate of 9.1Mt at 1.03% Li2O and first milestone was triggered. The Company paid
AUD$ 1,500,000 (~GBP £842,028) in cash and issued 20,000,000 ordinary shares in the Company in March
2018 (Note 16).
In September 2018 the Company announced the completion of a revised JORC 2012 – Compliant Inferred
Mineral Resource Estimate of 20.1Mt at 1.04% Li2O and second milestone was triggered. The Company
paid AUD$ 1,500,000 (~GBP £828,058) in cash and issued 20,000,000 ordinary shares in the Company in
October 2018 (Note 16).
The equity contingent considerations of £283,283 is measured at fair value as at 24 May 2017, the acquisition
date, and recognised this year using a valuation technique based on estimated fair value of the assets as at
acquisition date and management’s assessment of the probability of the milestones being achieved. This equity
contingent consideration should have been recognised in the prior year financial statements. It is considered
to be an immaterial amount and has been included as a share based payment this year. The difference of
£116,717 between the fair value of the equity contingent considerations as at 24 May 2017 and the nominal
value of the shares issued was debited to the retained earnings.
At 31 December 2018 all contingent considerations payables in relation to the Portugal lithium project has been
paid and there are no additional contingent liabilities.
20. RELATED PARTY DISCLOSURES
Details of Directors’ remuneration are disclosed in Note 3. During the year £198,287 (2017: £159,224) was
payable to Blue Bone Consulting Pty Ltd (a company controlled by Dale Ferguson) for consultancy fees and
bonus of which £83,196 (2017: £33,924) remained unpaid. The amounts payable to Blue Bone Consulting Pty
Ltd have been included in the Directors’ remuneration in Note 3.
21. GROUP COMMITMENTS
Finance lease
2018
Finance Lease Commitments
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Total finance lease commitments
Current liabilities
Noncurrent liabilities
Minimum
lease
payments
£
18,367
26,533
–
Interest
£
1,472
720
–
Present
value
£
16,895
25,813
–
42,708
16,895
25,813
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
21. GROUP COMMITMENTS continued
2017
Finance Lease Commitments
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Total finance lease commitments
Current liabilities
Noncurrent liabilities
Minimum
lease
payments
£
11,234
24,088
–
Interest
£
958
1,241
–
Present
value
£
10,276
22,847
–
33,123
10,276
22,847
The finance leases are for the lease of motor vehicles in Portugal. The Group has the right to purchase the
vehicle outright at the end of the lease term by paying a nominal amount. The Group intention is to exercise
this option and the value of the lease has been classified in Property, Plant and Equipment (Note 10).
Operating lease
Operating Lease Commitments
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
Total operating lease commitments
2018
£
196,337
1,078
–
197,415
2017
£
111,249
351
–
111,600
The operating lease commitments are for business premises in Oman, Mozambique, Portugal and the UK.
Other Commitments
In 2014 the Group entered into an agreement to acquire shares in Al Thuraya LLC (“Al Thuraya”), owner of the
highly prospective Block 4 Copper Project. In September 2016 the Group earned a 51% interest in Al Thuraya
after achieving the capital contribution of USD $2,000,000 as per the Earnin agreement. The total contributions
as at 31 December 2018 are USD $3,512,249, and therefore a further USD $1,087,751 cash contribution is
required if the Company wishes to guarantee a further 14% shareholding in Al Thuraya to achieve a 65% interest
(Note 11).
In October 2016 Savannah Resources Plc, through its subsidiary AME East Africa Limited (AME), entered into a
consortium agreement (“CA”) with Rio Tinto Mining and Exploration Limited whereby both parties would
combine their respective projects in Mozambique to form an unincorporated consortium. See details of the CA
in Note 12.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. SHARE OPTIONS AND WARRANTS
Share options and warrants to subscribe for Ordinary Shares in the Company are granted to certain employees,
Directors and investors. Some of the options issued vest immediately and others over a vesting period and may
include performance conditions. Options are forfeited if the employee leaves the group before the options
vest.
2018 2017
Weighted Weighted
average Weighted average Weighted
remaining
exercise remaining exercise
life
Number price life Number price
Share Options
Opening Balance 31,923,443 5.7p 24,523,443 4.8p
Granted 1,000,000 8.0p 3.07 11,700,000 7.5p
Lapsed (1,143,334) 5.1p – (4,300,000) 5.5p
Exercised (12,980,109)1 3.6p – – –
Closing Balance 18,800,000 7.2p 1.78 31,923,443 5.7p
Investor Warrants
Opening Balance 66,562,109 5.7p – 15,321,561 4.6p
Granted 343,432 11.3p 2.62 51,240,548 6.0p
Lapsed (2,800,000) 11.0p – – –
Exercised (13,981,113)2 3.6p – – –
Closing Balance 50,124,428 6.1p 1.71 66,562,109 5.7p
–
3.20
–
–
1.77
–
2.73
–
–
2.24
1 Weighted average share price at the date of exercise was 9.3p.
2 Weighted average share price at the date of exercise was 10.6p.
Share schemes outstanding at 31 December 2018 are as follows:
Outstanding Exercisable Outstanding Exercisable
31 December 31 December 31 December 31 December Exercise
2018 2018 2017 2017 Price
Share Options
February 2014 3,000,000 3,000,000 3,000,000 3,000,000 8.8p
March 2016 2,100,000 2,100,000 2,100,000 2,100,000 2.8p
December 2016 1,500,000 1,500,000 1,500,000 750,000 7.6p
March 2017 10,700,000 10,700,000 10,700,000 10,700,000 7.6p
August 2017 500,000 – 500,000 – 6.2p
January 2018 1,000,000 500,000 – – 8.0p
18,800,000 17,800,000 17,800,000 16,550,000
Investor Warrants
September 2016 1,410,449 1,410,449 1,410,449 1,410,449 5.0p
March 2017 1,480,952 1,480,952 1,480,952 1,480,952 7.4p
July 2017 11,165,477 11,165,477 12,542,977 12,542,977 6.0p
October 2017 35,724,118 35,724,118 37,216,619 37,216,619 6.0p
August 2018 343,432 343,432 – – 11.3p
50,124,428 50,124,428 52,650,997 52,650,997
Expiry
Date
25/02/19
16/03/20
21/12/20
28/02/21
17/08/21
25/01/22
30/09/19
07/03/20
14/07/20
25/10/20
13/08/21
All of the options granted attract a share based payment charge.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. SHARE OPTIONS AND WARRANTS continued
The fair value of the options and warrants at the date of grant have been measured using the BlackScholes
pricing model that takes into account factors such as the option life, share price volatility and the risk free rate.
Volatility was calculated with reference to the Company’s historical share price volatility up to the grant date
to reflect a term approximate to the expected life of the option.
The Directors’ interests in the share options and warrants of the Company are as follows:
At 31 December 2018
Quantity at
1 Jan 2018
5,321,776
2,000,000
1,500,000
7,000,000
11,111,112
2,857,143
Share Options
Dale Ferguson
Dale Ferguson
Matthew King
David Archer
Warrants
David Archer
David Archer
At 31 December 2017
Quantity
granted
during
the year
Exercised
during
the year
Options /
Warrants
at 31 Dec
2018
Exercise
price
Date of
the grant
–
–
–
–
(5,321,776)
–
–
–
–
2,000,000
1,500,000
7,000,000
3.0p
7.59p
3.0p
7.59p
21/07/13
01/03/17
16/03/16
01/03/17
First
date of
exercise
20/07/14
01/03/17
16/03/16
01/03/17
Final
date of
exercise
20/07/18
28/02/21
15/03/20
28/02/21
– (11,111,112)
–
–
–
2,857,143
3.0p
6.0p
24/09/13
14/07/17
24/09/13
14/07/17
19/07/18
14/07/20
Quantity
granted
during
the year
Lapsed
during
the year
Quantity at
1 Jan 2017
Share Options
Dale Ferguson
Dale Ferguson
Matthew King
David Archer
Warrants
David Archer
David Archer
5,321,776
–
1,500,000
–
–
2,000,000
–
7,000,000
11,111,112
–
–
2,857,143
–
–
–
–
–
–
Options /
Warrants
at 31 Dec
2017
5,321,776
2,000,000
1,500,000
7,000,000
Exercise
price
Date of
the grant
3.0p
7.59p
3.0p
7.59p
21/07/13
01/03/17
16/03/16
01/03/17
First
date of
exercise
20/07/14
01/03/17
16/03/16
01/03/17
Final
date of
exercise
20/07/18
28/02/21
15/03/20
28/02/21
11,111,112
2,857,143
3.0p
6.0p
24/09/13
14/07/17
24/09/13
14/07/17
19/07/18
14/07/20
The range of inputs of the options and warrants granted in the financial year were as follows:
Share Options
Stock price
Fair value of option
Exercise Price
Expected volatility
Expected life
Risk free rate
Investor Warrants
Stock price
Fair value of option
Exercise Price
Expected volatility
Expected life
Risk free rate
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January 2018
6.2p
2.9p
8.0p
70%
4 years
1.1%
August 2018
8.9p
3.5p
11.3p
70%
3 years
0.9%
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
22. SHARE OPTIONS AND WARRANTS continued
This fair value is the cost that is charged to the Statement of Comprehensive Income and is spread over the
expected vesting period which, for nonmarket vesting conditions (as noted above), is revised at each period
end. If the issue was a share issue cost, the charge is to the Share Premium account.
Share options granted
During the 2018 financial year 1,000,000 (2017: 11,700,000) share options were issued to employees to assist
with the recruitment, reward and retention of key employees. These options vest upon the employee meeting
service and/or performance conditions.
Investor warrants issued
During the 2018 financial year 343,432 (2017: 51,240,548) warrants were issued in relation to placements in
2018. The warrants vested immediately on issue.
23. EFFECTS OF CHANGES IN ACCOUNTING POLICIES
The Group and the Company adopted IFRS 9 with a transaction date of 1 January 2018. The Group and the
Company have chosen not to restate comparatives on adoption of IFRS 9 and, therefore, the changes due to
the application of IFRS 9 are not reflected in the prior year financial statements. Rather, these changes have
been processed at the date of initial application and recognised in the opening equity balances. The application
of IFRS 9 has not had significant impact in the Group financial instruments and therefore no changes were
required.
The following tables show the adjustments recognised for each line item of the Company financial statements
affected.
Total comprehensive loss
ASSETS
NONCURRENT ASSETS
Other receivables
TOTAL NONCURRENT ASSETS
TOTAL ASSETS
EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY
Retained earnings
TOTAL EQUITY
TOTAL EQUITY AND LIABILITIES
Adjustment
(a)
31/12/2017
£
1,886,723
IFRS 9
£
556,454
01/01/2018
£
2,443,177
(a)
13,699,270
(556,454)
13,142,816
14,061,188
16,401,649
(556,454)
13,504,734
(556,454)
15,845,195
(a)
(10,502,403)
(556,454)
(11,058,857)
16,058,361
16,401,649
(556,454)
15,501,907
(556,454)
15,845,195
(a) The company applied the expected credit loss model when calculating impairment losses on its financial
assets measured at amortised costs, being the financial assets affected the Amounts due from subsidiaries.
This resulted in increased impairment provisions and greater judgement due to the need to factor in
forward looking information when estimating the appropriate amount of provisions. In applying IFRS 9 to
the amounts due from subsidiaries the company considered the probability of a default. The Company has
considered the risk of default and the expected cash flow in several scenarios at 01 January 2018,
concluding that there is an expected credit loss of £556,454, resulting in an increased charge in the
statement of profit or loss and other comprehensive income for the year ended 31 December 2017
compared to IAS 39.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
24. EVENTS SINCE THE REPORTING DATE
In March 2019 a deed of variation was executed to extend the second capital contribution period included in
the earnin agreement entered to acquire Al Thuraya. The period has been extended by eighteen months, from
four years to five years and six months (note 11).
In March 2019 a new longterm incentive plan (“LTIP”) LTIP prepared with advice from KPMG LLP was
implemented. The LTIP replaces the Company’s prior longterm incentive plan which was implemented in April
2018 (see Note 3 for further details).
In April 2019 the Company entered into a “term sheet” to acquire the minority 25% shareholding in Savannah
Lithium Lda, which owns the Mina do Barroso Lithium Project in Portugal. The transaction will take Savannah’s
ownership of the Project to 100%. Consideration is to be satisfied through the issue of 163 million new ordinary
shares in Savannah at USD $0.073 (circa. 5.63p) per share valuing the transaction at circa USD $11.9m. The
transaction is subject to Savannah entering into a legally binding Share Purchase Agreement with the Vendors
and will be subject to shareholders approving the requisite resolutions to issue new ordinary shares at the
Company’s 2019 AGM.
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NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of Savannah Resources Plc (‘the Company’) will be held at
St. James Room 1, Institute of Directors, 116 Pall Mall, London, SW1Y 5ED, on 18 June 2019 at 10:00 am for the
purpose of considering and, if thought fit, passing the following resolutions which will be proposed as ordinary
resolutions in the cases of resolutions 16 and as special resolutions in the cases of resolution 7 and 8.
ORDINARY BUSINESS
1
To receive the report of the Directors and the audited Financial Statements of the Company for the year ended
31 December 2018.
2
3
4
5
To reappoint James Leahy who retires as a Director in accordance with article 23.2(a) of the Articles of
Association at the conclusion of the meeting and, being eligible, offering himself for reelection as a Director
of the Company.
To reappoint Matthew King who retires as a Director in accordance with article 23.2(b) of the Articles of
Association at the conclusion of the meeting and, being eligible, offering himself for reelection as a Director
of the Company.
To reappoint Imad Kamal Abdul Redha Sultan who retires as a Director in accordance with article 23.2(b) of
the Articles of Association at the conclusion of the meeting and, being eligible, offering himself for reelection
as a Director of the Company.
To reappoint BDO LLP as auditors of the Company to act until the conclusion of the next Annual General
Meeting and to authorise the Directors to determine the remuneration of the auditors.
ORDINARY RESOLUTION
6
That in substitution for all existing and unexercised authorities, the Directors of the Company be and they are
hereby generally and unconditionally authorised for the purpose of section 551 of the Companies Act 2006
(‘the Act’) to exercise all or any of the powers of the Company to allot equity securities (within the meaning of
Section 560 of the Act) up to a maximum nominal amount of £6,510,000 provided that this authority shall,
unless previously revoked or varied by the Company in general meeting, expire on the earlier of the conclusion
of the next Annual General Meeting of the Company or 15 months after the passing of this Resolution, unless
renewed or extended prior to such time except that the Directors of the Company may before the expiry of
such period make an offer or agreement which would or might require equity securities to be allotted after the
expiry of such period and the Directors of the Company may allot relevant securities in pursuance of such offer
or agreement as if the authority conferred hereby had not expired.
SPECIAL RESOLUTION
7
Subject to the passing of the immediately preceding Resolution, the Directors of the Company be and they are
hereby empowered pursuant to section 570 of the Act to allot equity securities (as defined in section 560 of
the Act) pursuant to the authority conferred upon them by the preceding Resolution as if section 561(1) of the
Act did not apply to any such allotment provided that the power conferred by the Resolution, unless previously
revoked or varied by special resolution of the Company in general meeting, shall be limited to a maximum
aggregate nominal value of £1,630,000 pursuant to the share purchase agreement for 25% of the issued quota
capital of Savannah Lithium Lda and shall expire on the earlier of the date of the next Annual General Meeting
of the Company or 15 months from the date of the passing of this Resolution save that the Company may before
such expiry make an offer or agreement which would or might require equity securities to be allotted after
such expiry and the Directors may allot equity securities in pursuance of such offer or agreement as if the power
conferred hereby had not expired.
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NOTICE OF ANNUAL GENERAL MEETING
8
That in substitution for all existing and unexercised authorities, save for that granted pursuant to Resolution 7
above, and subject to the passing of Resolution 6 above, the Directors of the Company be and they are hereby
empowered pursuant to section 570 of the Act to allot equity securities (as defined in section 560 of the Act)
pursuant to the authority conferred upon them by the preceding Resolution as if section 561(1) of the Act did
not apply to any such allotment provided that the power conferred by the Resolution, unless previously revoked
or varied by special resolution of the Company in general meeting, shall be limited:
(a) to the allotment of ordinary shares arising from the exercise of options, warrant options and warrants
outstanding at the date of this resolution;
(b) to the allotment of equity securities in connection with a rights issue or open offer in favour of ordinary
shareholders where the equity securities respectively attributable to the interest of all such shareholders
are proportionate (as nearly as may be) to the respective numbers of the ordinary shares held by them
subject only to such exclusions or other arrangements as the Directors of the Company may consider
appropriate to deal with fractional entitlements or legal and practical difficulties under the laws of, or the
requirements of any recognised regulatory body in, any territory;
(c) the grant of a right to subscribe for, or to convert any equity securities into Ordinary Shares otherwise than
under subparagraph (a) above, up to a maximum aggregate nominal amount of £580,000; and
(d) to the allotment (otherwise than pursuant to subparagraphs (a), (b) and (c) above) of equity securities up
to an aggregate nominal amount of £3,140,000 (approximately 30% of the Company’s issued share capital
plus 30% of the shares expected to be issued under resolution 7 above) in respect of any other issues for
cash consideration;
and shall expire on the earlier of the date of the next Annual General Meeting of the Company or 15 months
from the date of the passing of this Resolution save that the Company may before such expiry make an offer
or agreement which would or might require equity securities to be allotted after such expiry and the Directors
may allot equity securities in pursuance of such offer or agreement as if the power conferred hereby had not
expired.
If you are a registered holder of Ordinary Shares in the Company, whether or not you are able to attend the meeting,
you may use the enclosed form of proxy to appoint one or more persons to attend and vote on a poll on your behalf.
A proxy need not be a member of the Company.
A form of proxy is provided.
This may be sent by facsimile transfer to 01252 719 232 or by mail using the reply paid card to:
The Company Secretary
Savannah Resources Plc
c/o Share Registrars Limited
The Courtyard
17 West Street
Farnham
Surrey GU9 7DR
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NOTICE OF ANNUAL GENERAL MEETING
In either case, the signed proxy must be received no later than 48 hours (excluding nonbusiness days) before the
time of the meeting, or any adjournment thereof.
Registered Office: By order of the Board
Salisbury House Christopher Michael McGarty
London Wall Company Secretary
London
EC2M 5PS
20 May 2019
Registered in England and Wales Number: 07307107
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NOTICE OF ANNUAL GENERAL MEETING
Notes to the Notice of Annual General Meeting
Entitlement to Attend and Vote
1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only
those members registered on the Company’s register of members 48 hours (excluding nonbusiness days) before
the time of the Meeting shall be entitled to attend and vote at the Meeting.
Appointment of Proxies
2.
If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint a proxy to
exercise all or any of your rights to attend, speak and vote at the Meeting and you should have received a proxy
form with this notice of meeting. You can only appoint a proxy using the procedures set out in these notes and
the notes to the proxy form.
3. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details
of how to appoint the Chairman of the Meeting or another person as your proxy using the proxy form are set
out in the notes to the proxy form. If you wish your proxy to speak on your behalf at the Meeting you will need
to appoint your own choice of proxy (not the Chairman) and give your instructions directly to them.
4. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different
shares. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint more
than one proxy, please contact the registrars of the Company, Share Registrars Limited on 01252 821 390.
5. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes
for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his
or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other
matter which is put before the Meeting.
Appointment of Proxy Using Hard Copy Proxy Form
6. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their
vote.
To appoint a proxy using the proxy form, the form must be:
–
–
–
Completed and signed;
Sent or delivered to Share Registrars Limited at The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR,
sent by facsimile transmission to 01252 719 232 or emailed to voting@shareregistrars.uk.com; and
Received by Share Registrars Limited no later than 48 hours (excluding nonbusiness days) prior to the
Meeting.
In the case of a member which is a Company, the proxy form must be executed under its common seal or signed
on its behalf by an officer of the Company or an attorney for the Company.
Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of
such power or authority) must be included with the proxy form.
Appointment of Proxy by Joint Members
7.
In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the
appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in
which the names of the joint holders appear in the Company’s register of members in respect of the joint
holding (the firstnamed being the most senior).
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NOTICE OF ANNUAL GENERAL MEETING
Changing Proxy Instructions
8. To change your proxy instructions simply submit a new proxy appointment using the methods set out above.
Note that the cutoff time for receipt of proxy appointments (see above) also apply in relation to amended
instructions; any amended proxy appointment received after the relevant cutoff time will be disregarded.
Where you have appointed a proxy using the hardcopy proxy form and would like to change the instructions
using another hardcopy proxy form, please contact Share Registrars Limited on 01252 821 390.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for
the receipt of proxies will take precedence.
Termination of Proxy Appointments
9.
In order to revoke a proxy instruction you will need to inform the Company using one of the following methods:
By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Share
Registrars Limited at The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR or by facsimile transmission to
01252 719 232. In the case of a member which is a Company, the revocation notice must be executed under its
common seal or signed on its behalf by an officer of the Company or an attorney for the Company. Any power
of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such
power or authority) must be included with the revocation notice.
In either case, the revocation notice must be received by Share Registrars Limited no later than 48 hours
(excluding nonbusiness days) prior to the Meeting.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then,
subject to the paragraph directly below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have
appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated.
Issued shares and total voting rights
10. As at 20 May 2019, the Company’s issued share capital comprised 881,451,795 ordinary shares of £0.01 each.
Each ordinary share carries the right to one vote at a general meeting of the Company and, therefore, the total
number of voting rights in the Company as at 20 May 2019 is 881,451,795.
Communications with the Company
11. Except as provided above, members who have general queries about the Meeting should telephone the
Company Secretary, Christopher Michael McGarty, on 0207 117 2489 (no other methods of communication
will be accepted). You may not use any electronic address provided either in this notice of general meeting; or
any related documents (including the chairman’s letter and proxy form), to communicate with the Company
for any purposes other than those expressly stated.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2018
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NOTICE OF ANNUAL GENERAL MEETING
CREST
12. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service
may do so for the Annual General Meeting and any adjournment(s) thereof by using the procedures described
in the CREST Manual.
CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed
a voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able
to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK &
Ireland Limited’s specifications and must contain the information required for such instructions, as described
in the CREST Manual (available via euroclear.com/CREST).
The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the
instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received
by the issuer’s agent (ID: 7RA36) by the latest time(s) for receipt of proxy appointments specified above. For
this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which the issuer’s agent is able to retrieve the message by
enquiry to CREST in the manner prescribed by CREST. After this time, any change of Instructions to proxies
appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK & Ireland Limited does not make available special procedures in CREST for any particular messages.
Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal
member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST
sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is
transmitted by means of CREST by any particular time. In this connection, CREST members and, where
applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the
CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a)
of the Uncertificated Securities Regulations 2001.
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COMPANY INFORMATION
DIRECTORS:
SECRETARY:
REGISTERED OFFICE:
Matthew James Wyatt King
David Stuart Archer
Dale John Ferguson
Maqbool Ali Sultan
Imad Kamal Abdul Redha Sultan
James Leahy
Manohar Pundalik Shenoy
Murtadha Ahmed Sultan
Dominic Traynor
Salisbury House
London Wall
London EC2M 5PS
Salisbury House
London Wall
London EC2M 5PS
Chairman
Executive Director
Executive Director
NonExecutive Director
NonExecutive Director
NonExecutive Director
Alternate Director
Alternate Director
C M McGarty
c/o Salisbury House
London Wall
London EC2M 5PS
REGISTERED NUMBER:
07307107 (England and Wales)
AUDITORS:
BANKERS:
NOMINATED ADVISOR:
BROKER:
EQUITY ADVISOR:
SOLICITORS:
REGISTRARS:
BDO LLP
Chartered Accountants & Statutory Auditors
55 Baker Street
London W1U 7EU
NatWest Bank Plc
St James’ & Piccadilly Branch
PO Box 2DG, 208 Piccadilly
London W1A 2DG
SP Angel Corporate Finance LLP
Prince Frederick House
3539 Maddox Street
London W1S 2PP
finnCap Ltd
60 New Broad Street
London EC2M 1JJ
Whitman Howard Ltd
Connaught House
13 Mount Street
London W1K 3NB
Druces LLP
Salisbury House
London Wall
London EC2M 5PS
Share Registrars
The Courtyard, 17 West Street
Farnham
Surrey GU9 7DR
WEBSITE:
www.savannahresources.com
254655 Savannah cover 3mm spine.qxp 23/05/2019 17:40 Page ofc1
SAVANNAH RESOURCES PLC
Company No 07307107
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2018
Perivan Financial Print 254655