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SAVANNAH RESOURCES PLC
Company No 07307107
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
Perivan 263201
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CONTENTS
BUSINESS REVIEW
Chairman’s Statement
Chief Executive’s Report
ESG
Strategic Report
Barroso Lithium Project Overview
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
COMPANY INFORMATION
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IBC
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CHAIRMAN’S STATEMENT
The global events of 2021, while difficult and often tragic
for many, have conversely served to reinforce my view
that your Company owns a vital strategic asset via its
Barroso Lithium Project, (the ‘Project’). Furthermore,
the geopolitical consequences of the invasion of Ukraine
in February seem likely to increase its importance.
Following the sale of our interest in the Mutamba
project in Mozambique to the Rio Tinto Group (‘Rio’),
Savannah is now a “pure lithium” company and is well‐
placed to benefit from the drive to identify alternatives
to fossil fuels and increase in electrification. Moreover,
the US$9.5m termination compensation from Rio along
with
the
over‐subscribed April placing helped take Savannah's
year‐end cash position to £13m, putting us in a good
financial position for the year ahead. It is therefore
particularly frustrating that these matters are not
reflected in our share price.
the £10.3m gross proceeds
from
In terms of market forces, 2021 saw a continuation of
the same market drivers which first triggered the lithium
sector’s strong recovery in the second half of 2020.
Supply again failed to keep up with the demand created
by increasing battery manufacturing and electric vehicle
sales around the world. As a result, lithium raw material
prices moved to new record highs.
However, as in 2020, the positive news our sector
enjoyed was overshadowed by the spectre of the COVID
pandemic. Though COVID’s impact ebbed and flowed
during the period, the rise of the Omicron variant late in
the year acted as a stark reminder that Europe and the
rest of the world still has some way to go to be fully free
of the impacts of this virus. Savannah must continue to
play its part in protecting our staff and those with whom
we work and associate by mitigating risk accordingly.
Hence, we will continue to manage COVID‐related risk
as actively as possible and adhere to relevant laws and
guidance for as long as is necessary.
Responsibility is embedded in our corporate strategy
The Board is determined that your Company should
develop the Project in a responsible and innovative way.
We are pursuing a number of initiatives to reduce the
Project's carbon footprint, as described more fully in the
CEO’s Report, and these will all contribute to our goal of
achieving Scope 1 and 2 net zero emissions during the
life of the Project. We are also targeting a reduction in
Scope 3 emissions. These objectives do not take account
of the estimated 100 million tonnes of greenhouse gas
emissions Savannah’s lithium can help avoid in Europe’s
transport sector. These initiatives will also be tracked as
part of your Company's Environment, Social and
Governance (‘ESG’) programme. An ESG statement was
adopted by the Board during the course of the year and
Social
a
Management System (ESMS) which is in the process of
being rolled out at corporate level will be extended to
our Portuguese operations during 2022.
comprehensive
Environmental
and
Our key focus in Portugal is on the approval of our EIA
We at Savannah share our shareholders' frustration at
the slow rate of progress in obtaining the necessary
approvals required for the Project to progress. Foremost
among these is the approval of the EIA report we first
submitted in 2020 to the Portuguese regulator, Agência
Portuguesa do Ambiente (‘APA’). Our report was
declared in conformity with APA’s requirements in
April 2021 and this was followed by a public consultation
phase, completed in July 2021, when all interested
parties had the opportunity to lodge their comments
with APA.
We had expectations that APA’s decision would be
forthcoming in the final quarter of 2021, but in October
2021 an impromptu General Election was called for
30 January 2022, which has evidently impacted on
decision‐making processes in the relevant Government
departments. Appointments to the relevant cabinet
positions were made in March 2022 and we are hopeful
that the APA decision could be made in coming months.
If APA does approve our EIA, we will re‐initiate the
fieldwork required for completion of the Definitive
Feasibility Study (‘DFS’) and accelerate the build‐out of
our in‐country team.
Given the uncertainty on when a decision from APA will
be received, it would be imprudent of me to give precise
guidance on timing for completion of the DFS.
Furthermore, as our shareholders will understand, given
the second phase of the environmental licencing process
also relates to the Project’s final design, it will have an
important bearing on the DFS. However, I can guide to
the time we estimate for the outstanding work required
for the DFS’ completion as being approximately no more
than 12 months following APA’s approval of the EIA.
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CHAIRMAN’S STATEMENT
Savannah hopes to receive approval for the Barroso Lithium Project EIA in the coming months:
Source: Company photo
The energy transition endorses our strategic move into
lithium
Despite the delays, I still firmly believe that Savannah’s
move into the lithium sector in 2017 remains a good,
long term, strategic decision for our Company. This can
be backed‐up by reference to growing electric vehicles
sales, the record prices now seen in key lithium raw
materials, and the increased corporate activity in the
lithium market
in Europe.
We therefore remain hopeful that the Barroso Lithium
Project will receive environmental regulatory approval,
and have backed our confidence by continuing the land
acquisition programme at the Project throughout the
period.
itself, particularly
In late 2021 we were delighted to see not one, but two
in‐country lithium chemical refinery projects announced
by significant companies in the battery, energy and
chemicals sectors. We also saw the Portuguese
Government move closer to initiating the long‐awaited
tender process for six exploration areas prospective for
lithium across the country. Hence, the lithium industry
in Portugal is really starting to take shape and Savannah
is part of a growing
industrial, academic and
governmental community which is focused on providing
materials and products key to the energy transition in
Europe and has the potential to bring very significant
economic, environmental and social benefits for a large
number of people, while at all times following a
responsible approach to the production of this critical
raw material.
Commercial interest in the Project has increased
On a commercial front, 2021 started on a positive note
with announcement of the Heads of Agreement (‘HoA’)
with Galp Energia, SGPS, S.A (‘Galp’), around a
100,000tpa offtake agreement and project
level
investment. This provided proof of concept that the
Barroso Lithium Project could attract commercial
partners for its spodumene concentrate but, as the first
and second quarters progressed and sentiment and
prices within the lithium sector improved, Savannah
received further commercial inquiries. The expiry of the
HoA at the end of May not only allowed us to continue
negotiations with Galp but also to speak freely with a
host of other parties who have approached us during the
year. This includes European and non‐European groups
either looking for a new source of spodumene for
existing or new conversion plants, or potential strategic
partners looking for exposure to the lithium battery
value chain.
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CHAIRMAN’S STATEMENT
Concessions in 2019 and 2020 which covered the vast
majority of the project’s 4.4 billion tonne resource.
Savannah leaves the Mutamba Mining Concessions in
good order for Rio Tinto with work on securing land use
and utilisation agreements and EIAs progressed during
2021. We wish Rio well with their ongoing development
of the project. Given Rio’s long involvement with
Mutamba, I have no doubt they are the most
appropriate group to take the project forward. I would
also like to thank our former team members for all their
hard work over the years and wish them well with their
new careers at Rio.
Savannah can also be proud of its legacy in Mozambique
which it has left through its extensive community
engagement programmes, more details of which can be
found in the ESG section.
Using our market position to promote a responsible
future
During 2021 we have been consciously attempting to
consolidate Savannah’s position in Portugal’s business
environment and the European and global lithium
industry. To that end, we became a founder member of
Portugal’s new Association for the Battery Cluster, as we
announced
joined the country’s
130‐member strong Business Council for Sustainable
Development. Within the lithium sector, we became one
of the first 12 Associate Members of the newly formed
International Lithium Association, a not‐for‐profit
industry association created by major
industry
participants as a voice for the lithium industry and to
promote ESG and sustainability practices within
the sector.
last June, and
We also continued to add to our own team across a
range of disciplines such as geology and finance, and we
look forward to growing our team further during 2022.
While we had targeted conclusion of a first offtake
agreement by the end of 2021, it is not a concern to the
Board that this self‐imposed deadline was not met.
The developments we have seen in the past eighteen
months in the European and global lithium markets, and
the growing concern around future supply among
consumers of lithium feedstock, lead us to believe that
the delay is working out to our benefit and that securing
suitable offtakes and/or partnerships remains eminently
achievable, and particularly as and when a positive
decision on the EIA is received. In addition to these
‘direct’ commercial relationships and associated
financings, Savannah continues to assess its options on
other sources of development finance such as
government or European Union grants.
Divesting non‐core mineral sands asset supports our
core growth
As our shareholders will know, December 2021 marked
the end of Savannah’s active involvement in the
Mozambiquan mineral sands sector after eight years
including the last five years spent focused on our role as
operator in the unincorporated joint venture with Rio on
the Mutamba Project (‘Mutamba’). As time working in
Mozambique went on it became clear to our team that
to progress both the Mutamba and Barroso Lithium
Projects under Savannah’s leadership simultaneously
would likely overstretch our human and financial
resources. A thorough technical assessment of Mutamba
and a review of the various restructuring and market
opportunities available to us was made assisted by
Farview Solutions and its principal, Bruce Griffin, and it
was amicably agreed that cancelling our unincorporated
joint venture was the best option for both parties and
the project.
Rio has assumed full responsibility for the Mutamba
project (Mining Concessions 9228C and 9229C and
Mining Concession application 9230C) and Savannah’s
in‐country staff have transferred across to Rio to remain
with the project. In return Savannah received a US$9.5m
termination compensation from Rio and is now in the
process of divesting its residual Mozambiquan assets
(Matilda Minerals Lda and Mining Concession 9735C).
As stated, the cash received helped to lift Savannah’s
year end cash position to £13m. During our tenure we
and Rio were able to make some notable progress on
the project, publishing a first economic study in 2017,
and being awarded the three, 25‐year, Mining
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CHAIRMAN’S STATEMENT
European and Global sales of electric vehicles reached new record highs in 2021:
Source: Adobe stock images
Financial Overview
During the year the Board
lifted some of the
COVID‐related cost control measures it had put in place
in early 2020. The accompanying uptick in corporate
activity resulted in a 27% increase in the Group’s
administrative expenses to £3.3m (2020: £2.6m).
Combining this with a £0.2m loss on foreign exchange,
resulted in losses from continuing operations increasing
by 39% to £3.5m (2020: loss £2.5m). However, without
a repeat of the £5.8m non‐cash adjustments recorded
last year in association with the divestment of our
copper projects in Oman, losses before tax of £3.5m
(2020: loss £8.3m) and the total comprehensive loss for
the year of £3.3m
loss £8.2m) were
approximately 60% lower than 2020.
(2020:
The Group’s net assets increased by 33% during the year
to £27.2m with the 18% reduction in intangible assets
to £14.1m (2020: £17.3m) associated with the
termination of the unconsolidated joint venture with Rio
on the Mutamba project, more than offset by the 550%
increase in the Group’s year‐end cash position to £13.0m
(2020: £2.0m). This greatly improved cash position
reflected the income received from the combination of
the oversubscribed £10.3m (gross) placing, the US$9.5m
termination compensation from Rio as part of our exit
from the Mutamba project, and the £0.7m received
from the sale of shares in Force Commodities which
Savannah had received as part of the divestment of its
assets in Oman.
Outlook
2022 is shaping up to be another key year for Savannah.
I am sure I speak for all in saying that our current
thoughts are with the people of Ukraine at this terrible
time and that our sincerest hopes are for the conflict in
their country to be brought to an end as soon
as possible.
Savannah has no direct exposure to Ukraine or Russian
markets but given the European location of this conflict
and the significance of Russia in global geopolitics and
the world’s energy, commodity and financial markets,
ongoing impact of the invasion on international markets
must be expected. As a result, Savannah will continue to
monitor the situation closely and be ready to put plans
in place if required. At present it is hard to accurately
predict what the long‐term outcomes may be, but this
rapidly deteriorating situation has again shown the risk
inherent in many global supply chains which are based
on commodity and energy production in high sovereign
risk jurisdictions. In the lithium sector at least, Savannah
would like to offer Europe a low‐risk alternative.
The Company is now solely focused on lithium and has
the capital at hand to make meaningful progress towards
development and production at the Barroso Lithium
Project. Despite the current uncertainty, the market
backdrop remains highly supportive with high lithium
prices, global EV sales forecast to grow year‐on‐year, and
ever greater emphasis being placed on responsible, low
carbon, manufacturing techniques and products.
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CHAIRMAN’S STATEMENT
All these factors mean that Savannah has real
optionality available to
future
commercial arrangements for the Project.
in regard to
it
We remain hopeful that APA will approve our EIA in the
coming months, and this will then allow us to finalise the
Project’s design and undertake the remaining work
required for the DFS. APA’s decision will also dispel much
of the uncertainty which has bedevilled our share price
and bring clarity for all the Project’s stakeholders as to
its future status in that it will provide assurance to our
potential commercial customers that Savannah is a
responsible operator and that the Project can be a future
source of low carbon, lithium raw material for their
operations and the wider battery value chain.
As ever, my thanks go to all our staff who continue to
make their very best efforts to move Savannah towards
its long‐held goals of responsible production, cash flow
generation, benefit sharing with stakeholders, and
creating greater shareholder value.
I would also like to thank all our shareholders for their
continued interest and support for Savannah and wish
them well as we all try to navigate our way back towards
‘normality’ through the residual challenges of the
pandemic and the fresh uncertainty and alarm caused
by the conflict in Ukraine.
Matthew King
Chairman
Date: 5 April 2022
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CHIEF EXECUTIVE’S REPORT
We have started 2022 in great shape with a strong cash
balance, 100% ownership of one of Europe’s most
strategic lithium projects, no overriding royalties, no
offtakes written at low prices and a clear and defined
path to production as the pre‐eminent, pure lithium play
in one of the world’s largest lithium consuming regions.
For the lithium sector as a whole, it was an exceptional
year with the industry’s three major raw materials,
lithium hydroxide, lithium carbonate, and spodumene
concentrate, seeing spot price rises of over 370%, 450%
and 530% respectively. These large and rapid price rises
show that raw material supply is a major problem in this
market which, in turn, has major implications for the
energy transition and the e‐mobility revolution required
to effectively tackle greenhouse gas emissions from the
energy and transport sectors. Simply put, lithium is in
great demand and the companies that supply or will
supply lithium are in great demand. This is a very
supportive backdrop for Savannah and its goal of
becoming a major European‐based lithium supplier.
What Europe needs now is for the same legislators who
rightly seek to affect the energy transition and cut
emissions, to also facilitate the responsible supply of all
the raw materials with the removal of unnecessary red
tape, siloed bureaucracies and the application of project
management tools to make this target achievable.
By this time, I would have liked to have been discussing
the exciting phase of project development that
Savannah has underway following receipt of the
Project’s environmental approval and completion of the
DFS. However, with market conditions as they now are
and with climate change being front and centre of
government policy, I believe the context for the Project
has never been more promising. In fact, it can be argued
that the opportunity presented by the Barroso Lithium
Project is greater now than at any time during our
ownership, particularly bearing in mind current spot
spodumene lithium prices at US$5,000/t versus the
US$685/t assumed in our 2018 Scoping Study.
The development of the Barroso Lithium Project is
designed to benefit all stakeholders
We are determined that all the relevant stakeholders
benefit from the Project as it progresses. Within Portugal
that means from the National Government, which will
benefit from the economic growth created by a new
pan‐European industry, through to customers and
suppliers, and individuals in the towns and villages near
the Project. This
latter group will see new job
opportunities created, greater demand for local goods
and services, improvements to local infrastructure, and
meaningful and long‐term financial support given to
community projects and groups. Above all, this brings to
light the necessity to support regional energy autonomy.
I note that the average share price performance during
2021 amongst a large group of lithium development and
production companies principally listed outside of the
UK was +218% compared to the flat performance
recorded by Savannah. Our shareholders should
certainly benefit too as we move through value adding
gateways in coming months.
Importantly, our team was agile in the face of the EIA
delay and maintained and adapted plans wherever
possible to ensure that not only was progress made, but
that we are prepared to accelerate quickly as and when
a decision from the regulator is received. The excellent
progress we have seen with our metallurgical test work
and our decarbonisation initiatives are key cases
in point.
Preparation work on key DFS inputs underway
On a technical front, our team prepared as much as
possible for the next phase of the environmental
licencing process ('Relatório de Conformidade Ambiental
do Projeto de Execução', ‘RECAPE’). During this phase,
our team and our panel of consultants will work on the
final detailed design for the Project which adhere to any
conditions set by the regulator.
Preparation work was also undertaken for the drilling
campaigns and fieldwork which is required for input into
the Definitive Feasibility Study. We plan to get back into
the field with an in‐fill resource drilling programme once
a positive EIA decision has been received.
the
route
While we were not able to create as many of the ‘fixed
points’ for the DFS as we may have liked during 2021
because of the need for fieldwork and input from the
environmental regulator, the key elements of the
processing
spodumene
to produce
concentrate and associated by‐products from Barroso
ore have now been fixed following a successful
metallurgical test work programme in Australia during
the year. As announced recently, our expert consultants
and in‐house team have been able to design a circuit
which will produce a high quality, commercial
spodumene concentrate based on the use of processes
and reagents which meet or exceed all relevant
legislation. We have been able to achieve excellent
lithium recoveries in the high 70s per cent range with
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CHIEF EXECUTIVE’S REPORT
coarser grind sizes which will help reduce energy
requirements and operating costs. Alongside the
upcoming pilot testing on the main processing route, we
are also investigating opportunities to recover additional
lithium from some of the waste streams.
Our test work has also involved trade‐off studies where
we have examined the trade‐off between grade of the
product and recovery. While we can produce a nominal
6% product which is the industry standard reference, the
trade‐off studies show that overall revenues are
maximised with a product grade of 5.5%. A 5.5% graded
product is well within acceptable marketing tolerances
although with an arithmetic adjustment for price from
the reference price for 6% material. Rejection limits are
for material less than 5.0%. And we should remember
that the Barroso lithium product benefits from having
one of the lowest levels of iron.
The on‐going decarbonisation programme is also a key
work‐stream for the DFS and we have already made a
great start by commissioning ECOPROGRESSO, part of the
Quadrante Group, to develop our strategy and with the
announcement of a collaboration with the major global
group, ABB, around automation and electrification
aspects.
With the metallurgical work‐stream for the DFS largely
done and the de‐carbonisation work underway we are
well placed to move into the design phase of the DFS
upon receiving EIA approval.
I should hasten to add that the metallurgical work
outcomes are an important de‐risking achievement
as this area has been problematic for many of the
earlier spodumene developments in Australia. This
important from a project financing and
will be
commissioning perspective.
European EV demand is strong and growing even
stronger
There is no doubt as to the level of regional demand for
the product Savannah hopes to make. European car
sales saw strong annual growth again to 2.33m units
(+66%) as part of global sales of 6.75m (+108%, source
EV‐volumes.com), and the latest tally on capacity of
existing or planned European battery plants
is
approximately 800GW. This capacity equates to over
600kt of lithium carbonate equivalent (‘LCE’). At present,
we estimate total future supply from European based
lithium projects to be approximately 130kt of LCE,
including the c.25kt provided by the Barroso Lithium
Project in the form of spodumene concentrate. Hence,
all future supply from Europe, including Savannah’s,
could easily be consumed domestically in the future.
As further proof of this assumption, several of
Savannah’s European peers have announced offtake
agreements in the past year for lithium chemical supply.
European Electric Vehicle Sales
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CHIEF EXECUTIVE’S REPORT
Global Electric Vehicle Sales
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European industrial development to drive demand for
spodumene concentrate
Amongst our European peer group, we believe Savannah
will be the most significant future supplier of spodumene
concentrate, the same material which has made Australia
the world’s largest supplier of lithium raw material. 2021
was the year that the concept of European ‘merchant’
lithium conversion plants really gathered pace. These are
plants which are not integrated with a specific mine but
purchase feedstock, such as spodumene concentrate,
under long term offtake agreements or in the spot
market from mining companies, such as Savannah. When
we originally secured the Project the major source of
demand for our product was China. Europe is now
looking to build out its processing capacity to help
optimise its strategic autonomy, eliminate potential
international bottlenecks and build a decarbonised
lithium value chain in Europe. This is a major shift which
has only benefited Savannah and means our low carbon
spodumene lithium is highly sought after.
Over 2.3m electric vehicles were sold in Europe last year representing 17% of all new cars sold:
Source: Adobe stock images
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CHIEF EXECUTIVE’S REPORT
Looking just at Portugal alone, Galp has already stated its
intention of moving into lithium chemical production
earlier in 2021 with such a plant, but we welcomed the
news in December that it was partnering with Northvolt,
the major Swedish battery manufacturer, to create Aurora,
a new 50:50 joint venture, which will develop a facility in
Portugal targeting 35,000tpa of
lithium hydroxide
production from 2026. Meanwhile, Portuguese chemical
company Bondalti and Australia’s Reed Advanced
Materials (70% Neometals/30% Mineral Resources) are
trialling Reed’s Eli® processing technology at Bondalti’s
chemical plant in Estarreja. This technology can process
brine or hard rock concentrate feeds, and the groups are
targeting a plant capacity of 25,000tpa of lithium hydroxide
or carbonate if the initial pilot plant test work goes well.
Barroso’s concentrate would represent a natural feedstock
for these proposed plants with the added benefit that its
proximity to the likely site locations would help to
minimise the carbon footprint associated with the lithium
chemicals produced. Having both raw material and
chemical production in country would also maximise the
overall economic benefit available to Portugal from its
lithium natural resources. As shareholders will be aware,
our discussions with Galp around possible spodumene
supply continued in the second half of the year, after the
expiry of the previous Heads of Agreement between the
companies at the end of May.
Outside of Portugal, groups in Europe planning to build
merchant plants have reached out to Savannah and a
number of high quality discussions are ongoing. While
transport distances would be longer to these plants than
to potential sites in Portugal, any sales partnerships with
these groups would still represent a wholly European
endeavour, and compared to alternative sources of feed
from Africa, the Americas or Australia, these plants
would be producing ‘low carbon’ lithium chemicals if
they took Barroso concentrate.
Based on our current schedule, we expect to be in
production ahead of any of the conversion plants planned
in Europe. If this proves to be the case, then we may need
to make short‐term selling arrangements for our
concentrate until the conversion plants are commissioned.
Metal and commodity traders may be the best placed
groups to assist us with this, being able to both market the
Project’s concentrate on our behalf and provide financing
support and assistance with logistics. Again, Savannah has
already attracted significant interest from groups in this
sector of the market, many of whom are looking to grow
their businesses into the battery metal space.
Finally, such is the concern about raw material supply
among consumers further downstream in the battery
chain that we have also been contacted in recent
months by some of these groups, both European and
non‐European. They are seeking to secure raw material
supply which they can then direct through their existing
supply chains. Discussions are continuing.
In summary, regarding offtake agreements, Savannah
has multiple options with national, regional or
international avenues remaining open to us whether it
be trading directly with a conversion group, or a
company from downstream in the value chain. With our
strong cash balance, we are in a good position to work
patiently at striking the right agreements and not to just
accept the deals that are available right now.
Responsible Production is core to what we do
While continuing to push on the commercial front, we
have also been preparing to further enhance the Barroso
Lithium Project’s environmental credentials as part of
our wider formalisation of our ESG framework. Our EIA
speaks for itself in terms of the commitments Savannah
will put into action around either eliminating or
minimising the Project’s individual impacts. However, we
will be happy to refine our plans as required based on
feedback we receive from the environmental regulator.
We have an evolving range of programmes to support
the community and the environment including:
•
The Benefit Sharing Programme – provides €500,000
per annum to worthy community programmes
• Good Neighbour Plan – those things that we bring
with us and can have dual use by the community
e.g., water from our storages for firefighting
•
•
Community Owned Service Providers – community
owned companies to provide services to the Project
e.g., progressive rehabilitation
Land Stewardship Programme – reforestation of
unused areas of Project with appropriate native
species
Equally we look to all opportunities for continuous
improvement of the Barroso Lithium Project.
A prime example is our major de‐carbonisation initiative
with our commitment made in November to move
towards net zero Scope 1 and 2 emissions once the Project
is in operation, and to also reduce the Scope 3 (indirect
emissions, i.e., road haulage transport) as much as
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CHIEF EXECUTIVE’S REPORT
possible. Following these commitments, we were pleased
to announce the initiation of a Decarbonisation Strategy
in March 2022, led by the Portuguese environmental
consultant, ECOPROGRESSO, part of the Quadrante Group.
This initiative is only the start of the build out of a strong
coalition of European industrial partnerships around
the Project.
On 30 March 2022 we further strengthened our
‘decarbonisation’ team with the signature of a MoU with
ABB, the global industrial technology business with
revenues of US$28.9b, which is providing its expertise in
automation and electrification in the mineral production
sector to Savannah under MoU. This will help us build
out integrated digital applications for operations,
as
maintenance,
environmental performance optimisation. The Project
will very much be a showcase of European innovation.
and other processes
such
We have also been holding discussions with a number of
major mining equipment manufacturers which are all
planning on developing and commercialising zero or low
emission vehicles during the period the Project will be in
operation. In regard to the electrical power the Project
will use, we continue to evaluate the options available to
increase the provision of renewable power above the
impressive c.60% available through the
already
Portuguese grid. Once our suppliers and offtake partners
are confirmed, we will work with them to plan reductions
of scope 3 emissions associated with offsite haulage to
our customers. Finalisation of the Decarbonisation
Strategy is expected in Q2 2022 and we look forward to
providing more follow‐on news later in the year.
Following on from our commissioning of a Corporate
ESMS in Spring 2021, we have now also commissioned
the creation of a project specific system tailored to the
Barroso Lithium Project. A tendering process was
initiated in Q1 2022, and the selected consultants will
work with our team to enhance and extend our existing
stakeholder
environmental
programmes and policies to cover the current phase of
project development and also the construction and
operating phases of the Project.
engagement
and
Savannah’s lithium can play an important role in reducing emissions from the European transport sector:
Source: Adobe stock images
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CHIEF EXECUTIVE’S REPORT
On the ground in the Barroso
While the more formalised ESMS system for the Project
is being created, we have continued wholeheartedly
with a range of ESG initiatives.
While the pandemic and the associated vulnerability of
the aging local populations tempered our ability to
engage directly with many stakeholders in 2020 and
2021 we did maintain regular contact with the
communities throughout 2021 via advertising in the
local press, radio features and monthly newsletters
distributed in local villages. Regular virtual and physical
meetings were held with community leaders and
stakeholders. We maintained a staffed information
centre in the village of Covas do Barroso, supported local
firefighters and helped with repairs to deteriorated local
housing of villagers. We appointed a village ambassador
who has been instrumental in supporting our local
activities.
An online presentation of the Project was made to
stakeholders on 12 May 2021 and major community
consultation presentation was held in the Boticas
Municipality auditorium on 19 May 2021 to present and
review the Environmental Impact Assessment. This was
supplemented with a site visit the following day.
So far this year we will shortly open a new office and
information centre in the main street of Boticas and we
have launched the “Litio do Barroso” magazine which
will provide local news and information about the
Project to local villages in the area of the Project.
A comprehensive community mapping and opinion
gathering programme was completed in the villages of
Covas do Barroso and Dornelas in recent months and the
results of the survey are being compiled.
We have incorporated the Barroso Lithium Foundation
which will be responsible for the investment of up to
€500,000 per annum, once construction has begun, in
worthy community programmes and initiatives chosen
by
local people on the Foundation board. The
Foundation will also build a corpus of capital that will be
deployed following the conclusion of the Project and so
provide a long‐term legacy for the region.
We continue to receive excellent support from many
members of the community who are excited about the
opportunity that the Project will bring to their families,
their livelihoods and their businesses. Local, regional and
interest in the Project is underscored by the hundreds
of unsolicited job applications that we are receiving.
Unfortunately, much of this has been obscured with
push‐back from a small group of local activists who have
tucked in beneath the umbrella of a number of anti‐
mining groups, much of which is led from outside
Portugal. This in turn has been picked up in some press
articles. Despite his early support for the Project, the
mayor of Boticas has aligned himself with these groups.
Nevertheless, members of the community appreciate
what our Project offers. Like many parts of the Iberian
Peninsula, the region is suffering from a demographic
collapse. The 2011 government census shows that the
population of Boticas declined by 13.0% to 5,002 people
in the ten years to 2011 while the population of the
village of Covas do Barroso declined by 26.7% to a total
of 192 people, the vast majority of whom are elderly.
The Boticas region is one of the poorest in Portugal and
has suffered from the long‐term flight of young people
to Porto, Lisbon and points beyond. The Project will help
to reverse these trends bringing prosperity and
opportunity to the region, drawing young people to
return or to take up residency and to build quality lives
for their families.
We see strong support from people in the region whose
inevitable question is ‘’When are you going to start?’’.
Their eagerness is matched by the hundreds of job
applications we have received and the broad support
and interest of the Boticas business community in seeing
the Project develop.
Perhaps our most significant progress ‘on the ground’
was represented by our land acquisition programme
across the C‐100 Mining Lease area. This has required
significant investigation by our team and consultants
into existing land ownership and has needed to be
handled and transacted with great sensitivity within the
local community setting. To date we have signed
24 purchase and sale contracts and executed 15 deeds
involving 67 individual blocks of land.
We were joined in litigation filed by the Parish of Covas
do Barroso in the Mirandela Fiscal and Administrative
Court in Portugal against the Republic of Portugal and
the Ministry of Economy as defendants. The litigation
seeks to nullify certain administrative actions by the
defendants in June 2016 including the addition of
lithium to and the expansion in the area of the C‐100
Mining Lease. The C‐100 Mining Lease which contains
the Barroso Lithium Project is fully granted, has a term
of 30 years to 2036 and remains in good standing.
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CHIEF EXECUTIVE’S REPORT
Savannah’s lawyers have confirmed their initial advice
that the claim by the Parish is without foundation.
The claim has been challenged by Savannah as the
counter‐interested party alongside and we will be
exploring all potential options, including making a claim
for damages against the plaintiff and its officers. Both
the Republic of Portugal and the Ministry of Economy as
defendants have now filed their defences.
The litigation neither impacts the Project’s activities nor
the current Environmental Impact Assessment process
which we believe is moving to a conclusion.
The Environment – we care
Foremost in our plans is the responsible and innovative
development of the Barroso Lithium Project while
eliminating or mitigating individual impacts. Integral to
this is our policy of using best available techniques (BAT)
to be a global example of economy in the management
of water, materials, energy and resources.
The impact assessment carried out in the EIA study,
establishes the control and evolution of the more
sensitive environmental aspects, such as water
resources quality and potential vulnerability (surface and
underground), air and sound environment, vibrations,
soils (quality and geochemistry), ecological systems,
landscape, social component, and local heritage.
Operations will be controlled, managed and reported to
via a comprehensive Environmental and Social
Management System (ESMS) to help implement and
maintain Savannah's Environmental, Social and
Governance (ESG) commitments for the Project.
The ESMS will be aligned with
internationally
recognised ESG criteria, namely the requirements of
Finance
the
(IFC)
Performance Standards on Environmental and Social
Sustainability, as well as the World Bank Group’s
Environmental, Mining and General Health and Safety
Standards.
International
Corporation
Some 238 individual mitigation measures will be
implemented and an estimated
investment of
€5‐6million in road/transport infrastructure investment
ensuring that the Project’s traffic by‐passes local villages.
Water trucks will suppress dust in dryer periods while
forestation and landscaping will help contain sound and
visual impacts.
A programme of progressive rehabilitation will be
implemented from day one and throughout the life of
the Barroso Lithium Project. We will be evaluating the
potential for the use of the site for pumped storage of
renewable energy generated by wind and/or solar at the
end of the mineral lifecycle.
Our operating times are tailored to minimise discomfort
for local communities and impact on flora and fauna.
Detailed computer simulations show that the operation
will meet the more demanding legal night‐time noise
limit of 43db at all times of the day. The only exception
to this is blasting, each blast will last between
5‐10 seconds and not exceed the legal limit of 55dB.
Blasts will only occur between Monday and Friday,
between 12pm and 3pm on 3 to 4 days per week. There
will be no blasting at weekends.
The Barroso Lithium Project is specifically designed to
be self‐sufficient in and to minimise the amount of water
that it would require to support its operations while at
the same time having no impact on water available for
local communities, villages or towns. Neither will it have
any impact on agriculture. In Savannah’s preferred
model, water will not need to be abstracted from any
local rivers. Water for the project will be sourced from
surface water collected from part of the project’s site
footprint. Savannah is obliged by the Portuguese
environmental regulator to capture surface water from
the site footprint (contact water) in sediment control
structures so as to ensure that untreated contact water
does not flow into creeks, streams or rivers. Contact
water collected in the sediment control structures are
of the type commonly seen beside expressways which
are designed to capture run off from road surfaces.
There will be no impacts on the ecological flow of the
Covas River in summer months.
The area of the contact water catchments to be
developed to collect surface water for the Project
represent only 1.7% of the area of the local Covas River
watershed, 0.3% of the area of the larger Beça River
watershed and an insignificant 0.2% of the main Tâmega
watershed. In overall terms these numbers are not
material to water volumes in the region and, in any case,
potentially overstate the water volumes that will be
captured in any year by the Project.
85% of the water supporting operations will be recycled.
In our preferred model, contact water will be
supplemented by water sourced from the de‐watering
of the open cuts. Again, this is not expected to impact
community water supplies or local agriculture.
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CHIEF EXECUTIVE’S REPORT
Questions have been raised concerning the continued
status of the Barroso region as a Globally Important
Agricultural Heritage Systems (GIAHS) area. This status
was awarded in 2018 and was not intended to impact
the integrity of existing economic activities in the area
such as mineral production. It is also important to
understand that the total Barroso Lithium Project
concession area occupies just 0.53% of the GIAHS area
in the region and, depending on the development
alternative chosen by APA, the area of actual
disturbance on the concession area will be less than
0.25% of the GIAHS area. The Project has no impact on
the GIAHS classification. Agricultural areas represent
10% of the Mining Lease land area. Of the projected area
for mining use and associated activities, agricultural land
represents just 3.1% (18.3ha) of the Mining Lease area.
This area is not material to agriculture in the areas
around the Barroso Lithium Project development. Today,
one of the main threats to this territorial dynamic is the
depopulation and abandonment of land, factors that
pose a major risk of degradation of the existing natural,
cultural and built heritage, and which are decisive for
the classification of this region as a GIAHS Site. As part
of our plan we will look to implement measures with
local partners to recover agrarian system areas that have
deteriorated as a result of demographic changes in
the area.
Preservation of fauna and flora will be a priority for
Savannah. Studies we have supported have shown that
the Project area does not intercept the known territory
of any Iberian Wolf packs although there are packs in
surrounding areas. In the case of local water mole and
mussel populations particular care will be taken to
eliminate or at
least minimise disturbances to
riverbanks.
The quality of the soil will be monitored, managed, and
preserved, since the operation will not use chemical
products that might alter it. Topsoil will be removed,
stored, safeguarded, and cared for appropriately so that
it can be re‐laid during rehabilitation as a basis for
revegetation of native species.
The Barroso Lithium Project will employ local farmers for
progressive land rehabilitation during the life cycle of
operations and we are evaluating expanding this into a
community owned company to provide rehabilitation
services to the Project and so build an enduring new
benefit for the community.
As part of our developing Land Stewardship Programme,
land we are acquiring which will not form an immediate
part of the Project’s developed footprint will be
reforested with guidance from local authorities using
native species appropriate to the area. We will also work
to the recovery of the site at the conclusion of the
Project’s life with the requalification of these areas for
traditional agro‐silvan‐use e.g., honey, chestnuts, meat,
sausages, aromatic herbs, amongst others.
Intensive management of land is a major cause of
biodiversity loss in Portugal. Creating clear initiatives for
removing invasive non‐native species and creating new
native woodland will demonstrate to stakeholders that
we have a responsible stewardship approach and our
overall commitment. As part of this programme we are
also developing a Stewardship Policies Handbook so it
can be used in perpetuity.
transparency we will be
Finally, as another example of both our commitment and
implementing a
our
sophisticated, sensor network that will measure key
environmental operating parameters that will be made
available in real time to stakeholders including regulators
via a mobile phone app.
EIA Progressing
The original 6,000‐page EIA and Mine Plan documents
were lodged with the regulator in May of 2020.
A community consultation process was undertaken in
May of 2021. The completion of APA’s evaluation has
however not been possible while it awaits the result of
a treaty mandated, cross‐border consultation process
with Spain and the formation of a new government in
Portugal following the calling of a snap General Election
held on 30 January 2022.
As our chairman has said, we are hopeful that the
environmental regulator in Portugal will approve our
Project in coming months. Savannah’s team and its large
team of subject matter specialists have put in an
amazing effort to design a project to international
standards and best practices, and we hope that the
Barroso Lithium Project will be held up as a positive case
study for a new generation of mining projects in Europe
which are sourcing minerals critical for European society
in a responsible, low carbon, way which brings economic
and social benefits for all stakeholders.
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CHIEF EXECUTIVE’S REPORT
While we await the outcome of the regulator’s review,
there is much for us to do. In addition to remaining open
to dialogue with APA, we will continue to engage with
all stakeholders and elevate our position in Portuguese
civil society and be as prepared as we can for when a
decision is made, and the next exciting phase can begin.
Divesting Mozambique allows us to focus on our core
business
We achieved our target in 2021 of bringing resolution on
the future of our investment in Mozambique with the
sale of our interest in the Mutamba Project to Rio Tinto.
The long term and sizeable financial and resourcing
commitment we would have needed to make to bring
Mutamba to a final investment decision would have
made it challenging to achieve alongside the imperatives
of the Barroso Project’s development. Our review looked
at various styles of development as well as introducing
alternative corporate structures around the project.
After deliberation, the option to transfer the project
back to Rio, and for Savannah to exit Mozambique with
US$9.5m cash termination compensation represented
the best outcome.
I would like to add my sincere thanks to all our former
staff members for their hard work on what has been, at
times, a challenging project, and to wish them and
journey towards
Rio Tinto well for the exciting
production.
Outlook
Now with a singular focus on lithium in Europe, a strong
cash balance, strong lithium prices and a myriad of
inbound investment and offtake interest makes for an
excellent starting position from which we can push hard
on all fronts to make the Barroso Lithium Project
Europe’s first major lithium raw material production
centre.
It has not been an easy undertaking in the last two years,
a pandemic and now deeper tension at the heart of our
region, and I thank our staff for their efforts and our
shareholders for their support. There remains much to
do but I’m sure we are all in agreement that the prize is
very much worth pursuing.
David Archer
Chief Executive Officer
Date: 5 April 2022
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ESG
We first began reporting on our ‘Corporate Social
Responsibilities’ in a dedicated section of our Annual
Report in 2018. These responsibilities, along with
environmental responsibilities and corporate governance
– collectively referred to as ‘ESG’ ‐ are now, quite rightly,
receiving ever‐growing attention from shareholders and
other stakeholders alike. Hence this section of our Annual
Report has now been renamed and expanded
appropriately. Savannah’s efforts to broaden its own
commitment to these responsibilities including our
future ESG reporting plans was initiated last May when
we announced the development of a new Corporate
Environmental and Social Management System (‘ESMS’)
to aid the implementation of our ESG commitments at a
corporate level and at any projects we operate, including
the Barroso Lithium Project. While we complete the
adoption of the ESMS and begin to comprehensively
apply it to all aspects of our business, we have provided
brief summaries of relevant recent ESG activities along
with our future ESG plans in Portugal.
Savannah recognises the importance of sound environmental, social and corporate governance:
Source: Adobe stock images
Environmental and Social Management System
Savannah’s Board recognises the importance of sound
environmental, social and corporate governance
commensurate with the size and nature of the Company
and the interests of its shareholders. For these reasons,
whilst conducting its business worldwide, Savannah is
committed to developing and maintaining a culture of
integrity, and high standards across health and safety
management, social responsibility, and environmental
awareness and protection.
To help ensure this, Savannah has adopted an ESG
Statement, which outlines the Company’s high‐level ESG
commitments applicable to all its activities, in all
countries in which it operates, on all projects and project
phases.
To deliver this, Savannah
is developing and will
implement and maintain a Corporate Environmental and
Social Management System, that
intends to
it
incrementally roll out on all of its projects.
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ESG
This ESG ‘manual’ will provide the framework for
systematically identifying and managing the most
potentially significant ESG risks and impacts typical of the
mining industry. It also provides a roadmap for each
operating subsidiary to develop their own project‐specific
ESMS, aligned with the Corporate ESMS, and in
compliance with all applicable ESG‐related
laws,
regulations and permits of the host country. We have
initiated this process at the Barroso Lithium Project.
The ESMS is being structured to include individual
sections, corresponding to the key elements outlined by
the International Finance Corporation’s Performance
Standards on Environmental and Social Sustainability, as
well as the World Bank Group’s Environmental Health &
Safety, Mining and General Guidelines. In addition, as a
UK listed entity, the policy will also reflect the applicable
principles and provisions of the Quoted Companies
Alliance’s Corporate Governance Code.
Once adopted, the ESMS will provide a framework to
ensure we plan and schedule our ESG‐ related activities
in accordance with our Policies and the standards we
adhere to. The ESMS approach supports continuous
ESG performance improvement through the proactive
ESG management in our day‐to‐day activities, and the
measurement and evaluation of our performance, so as
to identify improvement opportunities. We then plan
how to incorporate the outcomes of that evaluation back
into the ESMS (feedback loop), by reviewing our plans
and procedures so as to achieve newly established ESG
objectives, and work towards implementing such plans.
Portugal
We were delighted to be able to re‐open our local
Information Centre in May, staffed by a new recruit from
the Boticas area, after its closure due to COVID‐related
restrictions. The Centre now features a new 3D model of
the Barroso Lithium Project which is helping stakeholders
to more easily visualise the Project.
The 3D model of the Project available for viewing at the local Information Centre:
Source: Pepe Nuñez
With the EIA review ongoing throughout the year,
Savannah continued to keep residents informed about
APA’s process, and the Benefit Sharing and the Good
Neighbour Plans which have been proposed by Savannah.
We also maintained our multi‐channel communication
through newsletters, content in local publications, radio
announcements, social media campaigns and via the
project website. Further donations were made of locally
purchased provisions to the area’s firefighting team,
repairs were made to local housing stock to improve the
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ESG
living conditions for some local residents, and sponsorship
was made of local rally car and mountain biking teams.
We also maintained contact and engagement with
multiple local entities. Our programme of land acquisition
across the Mining Lease area was also progressed during
the year. We have been delighted to be able to strike
mutually beneficial agreements with a number of local
landowners which will allow Savannah to own, manage
and remediate these areas responsibly during the
Project’s life, before returning them to the community
once the Project has ceased operating.
level, we engaged regularly with
At a national
government ministers and attended a number of relevant
government‐sponsored events. We also ran information
campaigns on national radio, in the national press and on
social media. As a result, and with interest growing in the
wider lithium value chain, Savannah received significant
coverage in the national media which has given us a
to communicate key messages about
platform
Savannah’s role in Portugal’s future lithium industry to
the wider population.
Further details of other recent and future ESG related activities can be found in the tables below.
Environmental:
This includes just some of the 238 individual measures included in the Barroso Lithium Project EIA designed to
eliminate, mitigate, or minimise the Project’s impact.
Previous & Recent activities/
Consideration* commitments Future activities/commitments
Air quality
management
Baseline monitoring of local air
quality completed
•
• Annual monitoring of local air
quality, during exploitation works
on the NOA pit
• Constant monitoring of local air quality
during operating phase and real‐time
reporting of data to stakeholders
• Future air quality to benefit from targeted
reductions to Scope 1‐2 emissions to net zero
and additional
to Scope
3 emissions
reductions
• Comprehensive action plan prepared to deal
with any pollution incidents
Biodiversity
•
Baseline monitoring of local flora
and fauna completed
•
Survey of local land use completed
• Annual monitoring for the Iberian
Wolf
• Rehabilitation of disturbance footprint and
reforestation of surrounding Savannah
owned lands
• Continue monitoring of
populations in the region
Iberian Wolf
Carbon abatement
•
•
3rd party Scope 1‐3 emissions
assessment completed
Commitment to move towards net
zero Scope 1&2 emissions during
operating phase and
target
additional Scope 3 reductions
announced
• Completion of decarbonisation strategy,
expected in 2Q 2022
• Execution of decarbonisation strategy to
deliver on emissions targets defined through
final project design, ongoing optimisation
during production, and potential offset
schemes during and after the operating
phase
* at the Barroso Lithium Project unless otherwise stated
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ESG
Previous & Recent activities/
Consideration* commitments Future activities/commitments
•
•
by
To meet the above commitments,
initiated a decarbonisation strategy
Portuguese
the
led
environmental
consultant,
ECOPROGRESSO, which will
include:
o An
updated
emissions
assessment for the Project
o Working with
low/zero
vehicle
emission
manufacturers,
renewable
energy providers, automation,
electrification
other
to define key
specialists
decarbonising initiatives
and
o Defining a decarbonisation
roadmap for the Project.
Signed
a Memorandum of
Understanding (‘MoU') with ABB,
the global technology leader as the
first of
the decarbonisation
‘specialist’ appointments. Under
the MoU, ABB will:
o Apply its industrial automation
and electrification expertise to
develop and co‐ordinate an
extensive suite of production
control and process solutions
for the Project
o Work with ECOPROGRESSO
and its partners to provide
engineering support for the
Barroso
Project
Lithium
Definitive Feasibility Study
Land rehabilitation
• Ongoing rehabilitation of areas
impacted by previous exploration
activities (drill pads and access
routes)
•
Comprehensive and progressive
rehabilitation during and after
operating phase
in
Project plan
included
* at the Barroso Lithium Project unless otherwise stated
• Continue with rehabilitation of exploration
sites
• Execute Project’s finalised rehabilitation
plans at the scheduled times
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ESG
Previous & Recent activities/
Consideration* commitments Future activities/commitments
Noise & light
abatement
Transport
management
Visual impact
abatement
Waste
management
•
Baseline noise studies completed
• Execute Project design and plans at the
• Annual monitoring regarding the
small exploitation works on the
NOA deposit
Processing plant location selected
to reduce light and noise impact on
local communities
Large, vegetated earth berms
included in Project design to curb
noise & light emissions
Time limited, regulated blasting
schedule included in Project plan
Inclusion of new access road in
Project design to mitigate impact
on
and
communities
minimise use of local roads
local
Commitment to daily time limits
on
truck movements during
operating phase
relevant time
• Constant monitoring of noise emissions
during operating phase and real‐time
reporting of data to stakeholders and the
environmental regulator
• Noise levels may be further reduced by the
introduction of zero‐emission mining fleet
and other equipment
• Refine and finalise Project design through
licencing and DFS
the environmental
processes
• Execute access road plan
• Evaluate use of low/zero emission road
trucks as part of decarbonisation strategy
• Visual
impact
proactively
considered
in Project design
(e.g. processing plant location,
road layout)
• Refine and finalise Project design through
licencing and DFS
the environmental
processes
• Execute final Project design
•
Large, vegetated earth berms
included
in Project design to
reduce the visual impact of the
operation on local communities
• Waste to be minimised through
feldspar
sale of quartz and
by‐products
• Refine and finalise Project design through
licencing and DFS
the environmental
processes
• Execute final Project design
• Comprehensive action plan prepared to deal
with any potential pollution incidents
Project waste to be dried and
stacked to avoid risks associated
with wet storage in traditional
tailings dams
Beginning in the operating phase,
waste storage areas to contoured
into existing topography and
progressively re‐vegetated
•
•
•
•
•
•
•
* at the Barroso Lithium Project unless otherwise stated
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ESG
Previous & Recent activities/
Consideration* commitments Future activities/commitments
Water
management
•
•
•
•
• Refine and finalise Project design through
licencing and DFS
the environmental
processes
• Execute final Project design
• Constant monitoring of local water quality
both upstream and downstream of the
process plant during operating phase and
real‐time reporting of data to stakeholder
• Comprehensive action plan prepared to
deal with any potential pollution incidents
Continued baseline monitoring of
including
local water courses,
surface and underground chemical
analysis
3rd party estimate of annual water
requirement for operating phase
Project to be self‐sufficient for
water usage through on‐site water
harvesting,
storage,
wastewater recycling and recovery
of water from concentrate and
waste products
and
Lithium recovery process based on
use of REACH registered chemicals
with low environmental toxicity;
will operate at near neutral pH
* at the Barroso Lithium Project unless otherwise stated
Social
Consideration* Recent activities Future activities
Community
engagement
Community
support
•
•
•
•
•
Information centre re‐opened to
the public May‐21 after COVID
restrictions
• Finalisation of Stakeholder Engagement Plan
to complement future phases of the Project
as part of Project ESMS
Regular
communication
maintained with local communities
in‐person meetings
through
applied),
regulations
(COVID
monthly
and
campaigns in local press and media
newsletters
• Community hearing to receive stakeholders’
views on their preferred Project‐related
benefits
• Refine and finalise the Benefit Sharing and
Good Neighbour Plans submitted as part of
EIA based on stakeholder feedback
programme
• Continue with land acquisition programme
acquisition
Land
continued
• Open two further Information Centres in
Boticas town and Dornelas village
Improvement and formalisation of
draft Stakeholder Engagement Plan
Sponsorship of local cultural and
sporting events & teams
• Donations to
local firefighting
service (forest fire mitigation)
•
•
Significant repairs made to local
housing stock
Prepare for the establishment of a
foundation as part of the Benefit
Share Plan which will invest in
community focused programmes
• Continue with current financial and resource
support for local events, teams and groups;
continue with support for local residents in
need
• The Foundation will receive yearly
endowments from Savannah of €500,000
per annum from the income generated
during the Project’s operating life
* at the Barroso Lithium Project unless otherwise stated
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ESG
Consideration* Recent activities Future activities
Government
engagement
Health & Safety
Local business
engagement
Other stakeholder
engagement
• Continue and increase engagement with key
government ministers &
national
departments, and local administrators
• Maintain
contact with British
and
US Embassies in Portugal
• Maintain
relevant
relationships with
EU bodies (see Membership section in
Governance box below)
Engagement/Meetings held with:
•
•
•
•
•
•
Portuguese
of
Environment and Energy Transition
Minister
Portuguese Secretary of State of
Energy
Environmental regulator, APA; EIA
submission
as
compliant in April 2021
confirmed
Institute for Nature Conservation
and Forests
The Northern Portugal Regional
Coordination and Development
Commission (CCDR‐N)
The Directorate‐General
Energy and Geology (DGEG)
for
• Mayor of Boticas
• Mayors of Dornelas parish, Covas
do Barroso parish, Ribeira de Pena
•
British Ambassador to Portugal
• US trade delegation at US Embassy
•
•
•
•
Continued
to prioritise high
standards of Health & Safety,
including relevant COVID‐related
protocols
Zero Health & Safety incidents or
loss time injuries reported in 2021
(2020: 0)
Became member of Mais Boticas
(local Chamber of Commerce)
Preference given to local suppliers
of goods & services
• Attendance
at
relevant
government and trade events in
Portugal and elsewhere in the
Europe
• Active engagement with national
and international press and media
resulting in significant coverage of
Savannah and the Barroso Lithium
Project in Portugal and across
Europe
• Maintain priority focus on Health & Safety,
including COVID‐safe working practices, and
associated staff training
• Maintain and increase engagement with local
suppliers of goods and services
• Maintain and increase engagement with
suppliers of goods and services across
Portugal
• Maintain presence at relevant government
and industry events in Portugal, UK and
across Europe
• Maintain public relations campaigns across
multiple media channels in Portugal and
beyond to highlight importance of domestic
battery raw material supply in Europe and
Savannah’s responsible approach to its own
lithium operation
* at the Barroso Lithium Project unless otherwise stated
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ESG
Consideration* Recent activities Future activities
•
(April‐July
Public consultation phase of EIA
2021)
completed
‘in‐person’
including
meetings
arranged
by
environmental regulator
public
• Met with the Food and Agriculture
Organisation of the United Nations
Staff
•
14 members of staff as at February
2022 with 60:40 male: female
from
demographic with 12%
minority ethnic groups; currently
29% of Project staff are from the
local community
• Add to the existing team across the range of
disciplines required to develop the Project
• Project expected to generate over 300
construction jobs during its development,
around 215 long term direct jobs during the
operating phase, and 400‐600 indirect jobs
• Continue to seek opportunities to recruit
from the local population and within Portugal
Other activities
• Maintained sponsorship of FST
Lisboa, the Lisbon University
student electric vehicle racing
team
• Evaluate other sponsorship and support
opportunities with relevant groups
* at the Barroso Lithium Project unless otherwise stated
Governance
Consideration* Recent activities Future activities
Board Composition
•
Establishment of a Nominations
Committee
• Appointment of Directors to meet needs
identified by the Nomination Committee
• Annual evaluation of the Board
• Adoption of annual Board performance
performance implemented
Environmental &
Social Management
System
•
ESG Reporting
• Commence
reporting
to specific ESG
Process
initiated to create a
Corporate level ESMS, aligned with
internationally recognised ESG
standards
•
institutional
• Work initiated on development of
a project‐level ESMS for the
Barroso Lithium Project
Completion of ESG questionnaires
for
investors and
lithium industry analysts
Joined Digbee ESGTM, an open
access online ESG disclosure
platform for the mining industry
which is aligned to key global
standards
•
• Finalise Corporate ESMS and initiate use
• Finalise Barroso Lithium Project ESMS to
provide complementary framework for
environmental management and social
engagement alongside licence commitments
standards
• Provision of relevant data into the Digbee
system for public disclosure
* at the Barroso Lithium Project unless otherwise stated
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ESG
Consideration* Recent activities Future activities
Lithium Industry:
Membership of
industry Trade
bodies &
Associations
•
•
• Maintain current memberships and evaluate
membership of additional initiatives which
would support our efforts to follow industry
best practices and complement other ESG
and corporate goals
International Lithium Association
British
Institute
Standards
Technical Committee on Lithium
Industry Standardisation (UK is a
participant member of
the
Standards
International
Organisation’s
Technical
Committee on Lithium Industry
Standardisation)
European Union Associated initiatives:
•
•
•
•
Business
managed by EIT InnoEnergy
Investment Platform
European Battery Alliance
EIT Raw Materials
European Raw Materials Alliance
Portuguese initiatives:
• Association for the Battery Cluster
(founding member)
• Mineral Resources Cluster
•
Business Council for Sustainable
Development
• Mais Boticas
(Chamber of
Commerce in Boticas area)
•
Forest
Trás‐os‐Montes
Association
Association
of
Forestry
UK:
• Quoted Company Alliance
Policies and
Procedures
•
•
Implementation of software to
manage training and certification
for Group polices
• Introduction of policies to reflect the Group’s
growing maturity and transition to building
and operating a mine
Review and update of the Group’s
Code of Conduct and Anti‐Bribery
Code (including face‐to‐face and
webinar training, and translation
of these into Portuguese)
* at the Barroso Lithium Project unless otherwise stated
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ESG
Consideration* Recent activities Future activities
Risk Management
•
•
•
Review and update of Group’s
Code internal audit procedures
Risk register and Board Risk
workshop facilitated by Institute of
Director’s adviser
Refinement of Group’s insurance
coverage
in conjunction with
leading global brokers, Marsh
• Review and update of Group’s Financial
Reporting Procedure
• Adoption of annual Board Risk workshop
• Ongoing review of Risk Register and other
items detailed as actioned in 2021
• Nomad’s attendance at Board
Meeting to keep the Directors
abreast
governance
developments
of
•
•
of
in
Investment
Governance and Compliance
Officer role
creation
Enhancement of
protocols
IT
security
* at the Barroso Lithium Project unless otherwise stated
Mozambique
In what was Savannah’s last year operating the Mutamba Project in Mozambique, the Company made COVID‐19
vaccinations available to all staff and their adult family members, and also purchased and donated 200 double
vaccines to the Ministry of Health in Inhambane Province to help protect vulnerable individuals. We were also
delighted to provide support to the Provincial Environment Day which helped to raise awareness of Environmental
issues in the Province and we remained committed to, and supportive of, other community interventions in Jangamo
and Inharrime districts.
Savannah is particularly proud of the extensive community engagement programmes it undertook during its eight
years in Mozambique, which covered infrastructure, agriculture, trade, education and public health. Our enduring
legacies include the establishment of infrastructure that continues to provide clean drinking water for around
1,200 families and off grid solar power for 5,300 families. Over 600 local farmers were able to derive higher income
from the sale of donated crops, while 430 graduates benefited from the vocational training centres established in
Jangamo and Inhambane with the majority quickly finding employment related to their training.
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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 2021 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 and Chief Executive’s Report:
Asset & location Ownership Activities undertaken
The Barroso
Lithium project,
Portugal
100%
• Exploration and Evaluation: Fieldwork in Portugal was limited
during the first half of the year by COVID‐19 related restrictions
and in the second half by Savannah’s choice not to re‐initiate the
programme until a positive decision on the Environmental Impact
Assessment was received from APA, the environmental regulator.
In the interim, the technical team’s work focused on providing the
additional information requested by APA (see EIA section below),
making advanced preparations for the second, RECAPE phase of
the environmental licencing process and for the return to the field
to complete the outstanding work required for the Definitive
Feasibility Study.
• Environmental Impact Assessment (“EIA”): The Group submitted
the EIA to APA on 1 June 2020 along with an accompanying Mine
Plan. To date in its review, APA has made two requests for clarifying
information to be supplied. Savannah made its first submission of
additional material in November 2020 and made its second
submission in March 2021. The conformity of the content of the
EIA was declared by APA on 16 April 2021 and the public
consultation period began on 22 April and ended on 16 July 2021.
Savannah has remained engaged with APA during its ongoing
review of the EIA and the submissions received during the public
consultation period. Savannah believes that the calling of a snap
general election in Portugal in early November 2021 for 30 January
2022 impacted the decision‐making processes in government
agencies such as APA during that period. The Board remains
hopeful that the Environmental Impact Declaration (‘DIA’) for the
Project will be made in coming months.
The EIA evaluates the Project’s environmental and social impact
implementation, exploitation, deactivation and
its
during
post‐deactivation 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 impact.
• Definitive Feasibility Study (“DFS”): The Company and its
consultants continued to revise and refine some key inputs to the
DFS. With fieldwork limited, the major advance made in DFS‐
related workstreams was in metallurgical test work which resulted
26
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STRATEGIC REPORT
Asset & location Ownership Activities undertaken
in the process flowsheet for the concentrator plant being finalised
in Q1 2022. The EIA process once finalised will provide more key
inputs, as will the outstanding fieldwork programme. The DFS will
include: JORC resource and reserve estimates; final designs and
schedules for (i) site layout, (ii) mining, (iii) processing and
(iv) storage of processed materials and (v) infrastructure; capital
and operating cost estimation; labour studies; commodity market
studies; and a project risk review. Assuming no further
COVID‐related delays, we expect the DFS to be completed no later
than 12 months following APA’s approval of the EIA.
• Licencing process: The DIA award is the first approval in a
multi‐stage environmental licencing process. Receipt of the DIA
would allow the approval process to move on to the subsequent
RECAPE and Environmental Licence stages during which approval
of the Project’s detailed final designs are received (‘DCAPE’) and
the Project’s environmental title (Título Único Ambiental, ‘TUA’) is
awarded. These stages are expected to run in parallel.
Once the DCAPE declaration has been made and environmental
licence received, Savannah will then be able to apply for the
remainder of the licences required for the Project’s development
and operation. These licences cover permissions for construction
and use of services on site such as power and water.
During the period Savannah remained engaged with key
stakeholders in the licencing process such as the environmental
regulator, the Minister for the Environment and Climate Action,
and local authority leaders.
• Community Engagement: To observe COVID‐related restrictions &
guidance, the Group adapted its active community engagement
plan during 2021, reducing direct contact with the local
communities in favour of communication through indirect
channels such as newsletters, social media, and via local TV and
radio. The Group believes that with considerate and intelligent
management, the development of the Barroso Lithium Project has
the potential to provide multiple long‐term benefits for the area.
Further details on our community engagement activities can be
found in the ESG section.
• Commercial discussions: In January 2021 Savannah announced a
non‐binding Heads of Agreement announcement with Galp in
January 2021 regarding an offtake agreement for up to 100,000tpa
of spodumene concentrate and a US$6.4m investment in the
Project for a 10% stake. The HoA expired on 31 May 2021 and
discussions in relation to a strategic investment and offtake
agreement have continued outside of the exclusive terms of the
HoA. Discussions also continued with other groups focused on
lithium chemical production and traders.
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STRATEGIC REPORT
Asset & location Ownership Activities undertaken
Mutamba Heavy
Mineral Sands,
Mozambique
20% of consortium
with Rio Tinto
• Licence management: Savannah’s in‐country team worked during
the year to ensure the ongoing obligations associated with the
3 Mining Concessions awarded in 2019/20 were met. This included
continuing with land access studies and agreements, and EIAs for
each of the licences.
• Savannah and Farview Solutions completed the strategic review
initiated in October 2020 in December 2021. As announced, the
review concluded with
the cancellation of Savannah’s
unincorporated joint venture agreement on the Mutamba project
with Savannah’s former project partner, Rio Tinto, assuming full
responsibility for the project going forward and taking on
Savannah’s
in‐country staff. Savannah received US$9.5m
termination compensation from Rio Tinto and is now in the process
of divesting its residual interests in Mozambique (primarily Matilda
Minerals and Mining Concession 9735C).
Fair review of
business
• A review of the Group’s performance during the period and
prospects is included in the Chairman’s Statement and the Chief
Executive’s 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:
Environmental Impact Assessment Approval Risk
As noted in the Licence and Title Risk and Social Licence Risk sections below, the Group understands and takes
proactive steps in order to mitigate or eliminate those risks, and an intersection of these is demonstrated in the
Environmental Impact Assessment (“EIA”) approval process, the failure to do so could result in the Project’s approval
being delayed or withheld. Specifically, in June 2020 the Group submitted the EIA to APA along with an accompanying
Mine Plan. To date in its review, APA has made two requests for clarifying information to be supplied. Savannah made
its first submission of additional material in November 2020 and made its second submission in March 2021.
The conformity of the content of the EIA was declared by APA on 16 April 2021 and the public consultation period
began on 22 April and ended on 16 July 2021. Savannah has remained engaged with APA during its ongoing review
of the EIA and the submissions received during the public consultation period. Savannah believes that the calling of
a snap general election in early November 2021 for 30 January 2022 impacted the decision‐making processes in
government agencies such as APA during that period. The Board remains confident that the Environmental Impact
Declaration (‘DIA’) for the Project will be made during 2022. The Group’s innovative Benefit Sharing Plan (“BSP”) and
Good Neighbour Plan (“GNP”) were part of the overall EIA submission. Both plans have been designed after extensive
analysis by the Group and with input from key local stakeholders to address a number of area specific social,
economic, and environmental themes. Via the BSP and GNP, Savannah is demonstrating its desire to become a valued
member of the local community through the commitments it is making to operate the Barroso Lithium Project in a
responsible and sustainable way and to share with stakeholders the many benefits the Project can bring.
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 focused its activity primarily on brownfield
locations, previously delineated resources or established exploration targets. Notably, the Barroso Lithium Project
in Portugal which already has a granted Mining Lease following exploration work done by previous owners.
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STRATEGIC REPORT
When a commercially viable project is delineated, the Group 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 financially 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, supported by the
Remuneration Committee and professional advisers, has adopted a remuneration framework aimed at rewarding
performance, encouraging retention of key staff, and aligning their interests with those of shareholders, including
its Long‐Term Incentive Plan.
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 (which themselves may be impacted by macro‐economic, political or environmental trends), offtake or other
industrial 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, major suppliers, and grants or other facilities from government or
other centralised bodies (e.g. EU which is focusing particularly on the clean energy revolution the Barroso Lithium
Project helps to underpin). Finance could also be raised through the sale of a stake in a project. Senior Management
and the Board closely monitor the cashflows of the Group. Cashflow projections are presented regularly to the Board
for review and this assists in ensuring expenditure is focused on areas of greatest development potential. Overheads
and administration costs are carefully managed.
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. Being a member of the EU,
Portugal operates within the framework of the EU, and in January 2022 elected a majority government for the first
time since 2005, and it is a pro‐lithium industry government. Country risk is further mitigated by ensuring the Group
prioritises local in‐country employment and maintains working relationships at all levels with government,
administrative bodies, local communities, and other stakeholders. The Board actively monitors relevant political
and regulatory developments.
Licence and Title Risk
The granting, maintaining and renewal of the appropriate licence or licence equivalent is essential to the Group’s
exploration, mineral development, and mining activities, 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 or conversion of exploration licences
into mining licences, may have a financial impact on the Group through additional costs or extensions to work
programmes. The mining licence relating to the Barroso Lithium Project has been the subject of legal due diligence
in order to establish valid legal title. It is in good standing and regular communication is maintained with the relevant
government authority (Direção‐Geral de Energia e Geologia (DGEG)). Such actions mitigate the risks posed by
challenges from anti‐mine groups in respect of licence and title risk, as do the actions taken in respect of Social
Licence Risk.
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STRATEGIC REPORT
Social Licence Risk
In parallel with obtaining the necessary licences and permits to operate from national and local administrators, natural
resource companies must also operate in a way that is acceptable to local community stakeholders and broader civil
society. Obtaining social acceptance is deemed by the industry to be the one of the most significant risk factors it
faces, and failure to achieve and maintain broad social acceptance could have a temporary or permanent material
adverse impact on the ability of a business to operate. The Group places great importance on its relationships with its
neighbouring communities and wider stakeholder groups and looks to mitigate ‘social licence’ risk through its proactive,
community engagement programmes, and through its wider group policies, including those relating to environmental
standards, corporate governance, conduct, and reporting and communication. See ESG section for more details.
Commodity Price Risk
The Group’s commodity focus is lithium and the price movement in this commodity can be volatile. This volatility
can be caused by numerous factors beyond the Group’s control. A sustained period of significant price volatility
has the potential to adversely affect the Group operations.
Assuming all previously highlighted development and construction related risks have been mitigated and production
is established at the Barroso Lithium Project, specific commodity price risk can be more actively managed. This
could be achieved in the case of the Barroso Lithium Project, where spodumene lithium and its co‐products are
not currently exchange traded commodities and entering into off‐take agreements as part of the Project financing
is an attractive option.
Global and Regional External Shocks
Operating in an increasingly globally mobile economy and population, the Group may be affected by global or
regional shocks such as pandemics, energy crisis, inflation, or military conflicts. The worldwide COVID‐19 pandemic
impacted the Group’s day to day operations (e.g. ability to perform field‐work) to undertake a variety of activities),
although, the rapid approval and distribution of multiple vaccines provides an improved back‐drop for future activity.
Global or regional shocks potentially impact the worldwide economy and the Group’s financial outlook (e.g. in the
event of a global depression impacting demand for commodities), thus the Group maintains a minimum cash
balance to mitigate any such adverse impacts. However, actions by the EU and governments show that funds
designed to generate economic recovery will be targeted at projects which are deemed to have a positive impact
on climate goals, such as the Barroso Lithium Project.
Analysis of the Development and Performance of the Business
This information is contained in the Chairman’s Statement, and the Chief Executive’s Report.
Analysis of the Position of the Business
This information is contained in the Chairman’s Statement, and the Chief Executive’s Report.
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.
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STRATEGIC REPORT
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
Share price
Cash balance available to
continue with the activity
of the Group.
At the reporting date the Group’s cash balance was £13m
(2020: £2.0m). The major sources of cash funding during the
year were an oversubscribed £10.3m equity placing and
subscription in April 2021 and the US$9.5m termination
compensation from Rio Tinto on cancellation of the
unconsolidated Mutamba joint venture in December. The
Directors have reviewed the cashflow projection for the Group
and consider that it has sufficient ability to meet its financial
commitments for at least 12 months and that it is appropriate
to prepare the Financial Statements on a going concern basis.
To
continue with
its
operating activities as an
active and growing mineral
development group, the
Group has raised funds
from the market.
During 2021 the Company raised gross cash proceeds of
£10.3m (2020: £2.3m) via the issuance of ordinary shares
in relation to a significantly oversubscribed equity fundraise.
the
Group
The price reflects the value
of
as
determined by the free
trading of
its ordinary
shares on public stock
exchanges such as the AIM.
From an opening at 4.4p, and despite some volatility,
Savannah’s share price enjoyed a strong period of growth
through to mid‐March, breaking through the 5p for the first
time since 2019 and reaching the year’s high at 5.46p. This
period of increasing value coincided with the continuing
improvement in the prices of spodumene and lithium
chemicals, which had begun
in H2 2020, and the
announcement of Savannah’s Heads of Agreement with
Galp. Following some further volatility during late March
and April, the share price was reset at 4p by the £10.3m
oversubscribed fundraise in late April. This period also saw
the largest trading volumes of the year. During the summer
with the Environmental Impact Assessment review process
extended by the Portuguese regulator, the price remained
below 4p, reaching a low of 3.2p in late July. September saw
a brief return to the 4p level, but it wasn’t until mid‐October
that a meaningful move above 4p was achieved again.
Despite the continuing improvement in lithium raw material
pricing, the Savannah share price continued to remain
volatile, ranging from 4.61p in mid‐November to a low for
Q4 2021 of 3.81p in mid‐December. Pleasingly, from this
point the share price rallied again to end the year at 4.35p,
all but flat with the year’s opening price.
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STRATEGIC REPORT
KPIs Description Performance
Investment in
Exploration &
Evaluation Assets
(“E&E Assets”) and
Property, Plant and
Equipment (“PPE”)
investment
As an active and expanding
mine development group,
in E&E
the
Assets and PPE Assets
show
the volume of
activity which is adding
value.
During 2021 the Company continued its investment in
exploration activity, but with field work still relatively limited
the increase in E&E Assets was only 13% higher year‐on‐year
at £1.8m (2020: £1.6m). As in 2020, there was no significant
equipment purchasing required during the year, but with
£0.6m committed to land acquisition at the Barroso Lithium
Project, PPE investment increased to £0.63m (2020:
£0.02m).
Analysis Using Other Key Performance Indicators and Milestones
KPIs Description Performance
Project pipeline
Mining Lease
Applications
active mine
an
As
development
group,
Management is up to date
in the
on the changes
looking for
market and
new opportunities
to
increase the potential of
the Company.
impacting on global
In recent years there has been (and continues to be) an
increase in the importance of the lithium‐ion battery
markets,
lithium demand with
projections showing significant increases in demand. In
2016 the Group started its investment in lithium projects
with the acquisition of exploration licences in Finland
(subsequently relinquished). Following the acquisition of
the Barroso lithium Project in the north of Portugal in 2017
(100% ownership achieved in 2019), the Group has the
potential to become the first significant lithium spodumene
producer in Europe. As the Company moves the Barroso
Lithium Project towards production it plans to further
develop its lithium business in the Iberian Peninsula and has
been assessing potential
lithium exploration targets
accordingly.
As a mineral development
company, the grant of
a
mining
leases
to
precursor
of
commencement
production is a significant
milestone.
as
Portugal:
A 30‐year Mining Lease (the C‐100 Lease) was granted on
the Project in 2006. To be allowed to execute its plan of
developing a large scale spodumene mine and concentrator
operation of the Lease, Savannah is required to obtain a
new environmental licence for the Project and associated
licences covering areas such as construction and use of
services on site (power, water, etc).
In June 2020, the Group submitted a new Environmental
Impact Assessment and Mine Plan to APA, the Portuguese
environmental regulator, for the Barroso Lithium Project as
part of the overall licencing process for the Project. The
conformity of the content of the EIA was declared by APA
on 16 April 2021 and the public consultation period began
on 22 April and ended on 16 July 2021. To date APA has not
completed its review of EIA and is yet to award the DIA, the
first major milestone in the overall environmental licencing
process. Savannah expects to receive the DIA during 2022.
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STRATEGIC REPORT
KPIs Description Performance
Mozambique:
As part of the cancellation of Savannah’s unincorporated
joint venture with Rio Tinto on the Mutamba project,
Mining Concessions 9228C and 9229C were transferred to
sole ownership of Rio Tinto, along with the Mining
Concession application, 9230C. Savannah is now in the
process of divesting its residual interest in Mozambique
which includes Mining Concession 9735C.
Mineral resources
As a mineral development
company the reporting of
satisfactory
mineral
resource estimates is a key
indicator of the potential
its
of the Group and
projects.
Portugal:
There was no update to the 2019 JORC resource estimates
in 2021. Hence the JORC resource estimates
made
remained at:
• Lithium: Measured Resources of 6.6Mt @ at 1.1% Li2O;
Indicated Resources of 8.4Mt @ at 1.0% Li2O; and
Inferred Resources of 12.0Mt @ at 1.1% Li2O for a total
of 27.0Mt at 1.06% Li2O containing 285,900t of Li2O.
In addition to the JORC Mineral Resource estimate, the
Exploration Target1 also remained unchanged from
2019 at 11.0‐19.0Mt at 1.0%‐1.2% Li2O.
• Co‐products
(Grandao deposit only): Measured
resources of 7.1Mt at 32.6% quartz and 42.8% feldspar,
Indicated Resources of 6.3Mt at 34.6% quartz and
42.6% feldspar; and Inferred resources of 1.0Mt at
30.9% quartz and 40.3% feldspar for a total Mineral
Resource of 14.4Mt at 33.4% quartz and 42.6% feldspar
contained 4.79Mt of quartz and 6.11Mt of feldspar.
Mozambique:
There was no update to the 2017 JORC resource estimate
on the Mutamba JV during the year. Hence the JORC
resource estimate remained at:
• Indicated Resource of 1.78 billion tonnes @ 3.8% Heavy
Minerals (“HM”); Inferred Resources of 2.57 billion
tonnes @ 4.0% HM for a total Mineral Resource of
4.4 billion tonnes at 3.9% HM (ilmenite represents 60%
of the total HM contained)
Economic Studies
Satisfactory completion of
economic studies is a key
indicator of the viability of
mine
Group’s
the
development projects.
The Barroso Lithium Project, Portugal:
Fieldwork in Portugal was limited during the year by
COVID‐19 related restrictions and its interdependency with
the Environmental Impact Assessment’s pending approval.
With fieldwork limited, the major advance made in DFS‐
related workstreams was in metallurgical test work which
resulted in the process flowsheet for the concentrator plant
being finalised in Q1 2022. The EIA process once finalised
1 Cautionary Statement: The potential quantity and grade of the Additional Resource Targets is conceptual in nature, there has been insufficient prospecting work to estimate
a mineral resource and it is uncertain if further prospecting will result in defining a mineral resource.
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STRATEGIC REPORT
KPIs Description Performance
will provide more key inputs, as will the outstanding
fieldwork programme. Assuming no further COVID‐related
delays, we expect the DFS to be completed no later than
12 months following APA’s approval of the EIA.
Section 172(1) Statement
The following disclosure describes how the directors have had regard to the matters set out in section 172(1)(a) to
(f) and forms the directors’ statement required under section 414CZA of the Companies Act 2006.
Information is presented below on a number of ‘principal decisions’ which the Board made during the course of
2021. Principal decisions are not defined in legislation, but are considered material by the Board from the
perspective of the Company, impacted stakeholder group, or both.
The table below sets out our key stakeholder groups and how we engaged with them during the year:
How did the Board and/or
Stakeholder Group Importance of engagement management engage
trade
bodies &
Industry
associations
A list of the relevant industry trade
bodies and associations of which
is pleased to be a
Savannah
in the
member can be found
Governance table
in the ESG
section
For Savannah:
•
and
Trade association can offer
industry specific networking,
training
education,
technical advice, and support in
interactions with governments,
government
departments,
agencies, regulators, the media,
and other stakeholders
For trade associations:
•
Savannah
Interacting with
offers a
trade association
industry
another source of
expertise; an opportunity to
extend its network and reach,
and an additional source of
income and sponsorship
During the year members of the
Savannah team regularly attended
interacted with
meetings, and
relevant trade associations. The
Company also joined the following
trade associations during the year:
Lithium Industry trade associations:
Lithium
•
International
Association
Portuguese trade associations:
• Association for the Battery
Cluster (founding member)
Business Council for Sustainable
Development
• Mais Boticas
(Chamber of
•
•
Commerce in Boticas area)
Trás‐os‐Montes
Association
Forestry
UK trade associations:
Quoted Company Alliance
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STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
Shareholders/Investors
A table of significant shareholders
can be found on the Report of the
Directors section and on the
Company’s website.
Key metrics are:
•
•
•
Cash
Investment in Exploration &
Evaluation Assets
Share price
The Company has not
issued
additional investment instruments
beyond shares and share‐related
warrants, such as corporate bonds,
and therefore has no other class of
investors.
For Savannah:
•
•
To maintain access to capital in
support of achieving
the
Group’s stated business goals
To receive feedback/advice/
assistance on performance and
execution of the Company’s
business plan
For the Shareholder/Investor:
•
•
To be kept informed on the
Company’s
performance,
changes to strategy and other
developments
To assist ongoing investment
decision making
Workforce
The average number of monthly
staff employed by the Company
during 2021 was 46 (2020: 53) – see
Note 3 for further details.
The Company’s day to day running
and long‐term development relies
on the recruitment, retention and
incentivisation of
and
safe working
provision of a
environment.
staff,
The key means of engagement with
shareholders include:
• AGM (held online in 2021)
•
Investor
online in 2021)
roadshows
(held
• Ad hoc meetings in relation to
key news/questions (largely
held online in 2021)
•
•
Social media including Twitter
and LinkedIn
at
Presentations
investor‐
focused events (largely held
online in 2021)
• Attending
industry‐related
conferences and events (largely
held online in 2021)
•
Regular video interviews with
Proactive Investors
• Maintenance of a corporate
website and a website for the
Barroso Lithium Project
The key means of engagement with
staff include:
•
•
Regular internal calls, meetings
(largely held online in 2021)
and visits to project sites by
members of the Board and
executive team (with COVID
regulations observed)
Remuneration
framework
including Long Term Incentive
Plan
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STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
As part of its strategic review
exercise on the Mutamba Mineral
Sands Project, Savannah engaged
regularly with Rio Tinto, its project
partner,
technical,
regarding
legal matters
commercial and
relating to the future of the project.
As announced in December 2021,
the strategic review was concluded
by the partners amicably agreeing
to cancel their unincorporated joint
venture agreement on the project
full
with Rio Tinto, assuming
responsibility for the project going
forward and taking on Savannah’s
in‐country
Savannah
staff.
termination
received US$9.5m
compensation from Rio Tinto and is
now in the process of divesting its
residual interests in Mozambique.
Joint Venture Partners
For Savannah:
•
•
Partnering can help reduce
project‐related risks across a
number of disciplines, and/or
provide exposure to projects or
commodity sectors which may
be difficult for Savannah to
access when acting alone
Effective engagement with a
project partner ensures shared
goals and challenges can be
met most efficiently through a
combination of each parties’
skills and resources
For the partner:
•
•
Partnering can help reduce
project‐related risks across a
number of disciplines, and/or
provide exposure to projects or
commodity sectors which may
be difficult for the partner to
access when acting alone
Effective engagement with a
project partner ensures shared
goals and challenges can be
met most efficiently through a
combination of each parties’
skills and resources
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STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
has
Community
alongside
works
Savannah
communities at all its project sites
and
active
community
programmes underway
in each
location. The Company aims to act
with integrity, transparency and
honesty
its dealings with
stakeholders and communities and
wishes for its host communities to
benefit from its projects.
in
Full details of
the Group’s
community‐related activities across
its businesses can be found in the
ESG section.
For Savannah:
•
•
•
•
To ensure that Health & Safety
standards and other regulations
relating
Savannah’s
interaction with the general
public and public services are
being met
to
To ensure
it secures and
maintains social acceptance of
its business activities among
the communities
it works
through effective
alongside
engagement
community
programmes
To ensure that indirect benefits
are
its operations
from
maximised among the local
community
To receive feedback/advice/
assistance on these above
topics
For Communities:
• Opportunity to receive up to
date information on Savannah’s
and
business
programmes
to
communities
activities
relevant
•
•
To register for and to take part
in
community
programmes
relevant
To provide feedback on relevant
topics
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STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
The Company’s engagement with
current and potential service
suppliers has been widespread
during the year. For example,
considerable time has been spent
working with existing suppliers of
goods and services to the Barroso
Lithium Project, and identifying and
evaluating other groups which may
provide key contract services during
the construction and/or production
phases
operation.
Additionally, the Company is a
member of the local chamber of
commerce in Portugal and where
possible the use of local service
providers will be prioritised.
the
of
Management maintained its efforts
to build relationships with multiple
potential customers for its lithium
and co‐product concentrates from
the Barroso Lithium Project as
discussed
the Chairman’s
in
Statement and CEO’s Report.
A Heads of Agreement (‘HoA’) was
announcement in January 2021
with Galp around a
lithium
concentrate offtake and a project
level investment. This HoA expired
on 31 May 2021 and discussions in
relation to a strategic investment
and offtake agreement with Galp
have continued outside of the
the HoA
terms of
exclusive
alongside discussions with other
potential customers.
Suppliers
Savannah requires a wide range of
services to maintain its business
activities and uses a wide range of
domestic and overseas suppliers to
meet its needs. When Savannah
moves into the development and
production phases at one or more
of its operations, supplier numbers
are expected to rise significantly in‐
line with the scale up of the project
concerned.
Customers
As a pre‐production business,
Savannah is yet to start generating
revenue from sales of product to
customers. However, the Company
expects to supply products to a
number of industrial customers
over
beginning with
customers buying its lithium and co‐
product concentrate products from
the Barroso Lithium Project.
time,
For Savannah:
•
•
To maintain good working
relationships and credit terms
with suppliers to ensure the
cost‐effective
timely
and
and
delivery of
supplies
services
To aid planning for future
supply requirements and to
identify suitable suppliers
For Suppliers:
•
a working
To maintain
relationship with its customer
and
product
information
provide
•
identify future business
To
opportunities with an existing
client
For Savannah:
•
•
To
and
identify
relationships with
customers
projects
commercial businesses
build
future
to ensure our
viable
become
To access capital for project
development either directly
from customers, or from other
investors which view
the
establishment of customer
relationships as a key de‐risking
factor in an investment decision
For Customers:
•
•
To build a working relationship
with a well‐managed, long term
raw material supplier
a
secure
To
long‐term
sustainable supply of product
from a responsible producer in
markets where the outlook is
for
global
competition for supply, such as
lithium and mineral sands
increasing
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STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
has
Lenders
no
currently
Savannah
corporate bonds or project finance
loans but expects project finance to
be a part of the financing mix for
the development of its projects,
such as the Barroso Lithium Project.
Regulators/Government
jurisdiction,
Depending on the
multiple departments and agencies
of national, regional and/or local
government can be involved in the
licencing and monitoring of mining
activities.
For Savannah:
•
build
and
identify
To
relationships with
future
lenders to ensure sufficient
finance can be secured to
support project development
For Lenders:
•
To secure a future
lending
agreement with a listed mining
company
For Savannah:
•
To build strong and supportive,
working relationships with all
relevant
government
departments and to ensure that
the Company receives and
complies with the required
licences and authorities to
operate its projects
For governments:
•
•
To ensure that the Company is
meeting its responsibilities as
per its licences
To understand the needs of
Savannah as an operating entity
relevant
with
legislation
respect
to
Management maintained
a
dialogue with potential project
lenders in relation to the Barroso
Lithium Project during the year.
Discussions with these groups is
expected to increase as the once
the DFS is completed as that study
will be a key part of a lending bank’s
evaluation of the Project.
the
As outlined
in the Chairman’s
Statement and CEO’s Report,
Management has had
regular
interaction with
relevant
departments and personnel in the
various levels of government in both
countries where it had operations
during the period. Savannah views
the establishment of active, two‐
way, relationships with government
stakeholders as critical
in the
successful development of
its
projects and in its decision‐making
regarding the Company’s long‐term
commitment to any jurisdiction.
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STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
for
the
APA
priority
In parallel with all our project
for
a
stakeholders,
Savannah’s management
is to
minimise
Company’s
the
environmental impact, and work
undertaken across all its project
sites to date has been completed in
accordance with
relevant
environmental regulations. Having
and
collected baseline data
engaged with relevant groups since
2018, Savannah submitted the EIA
for the Barroso Lithium Project in
June 2020 to the Portuguese
regulator,
Savannah
APA.
subsequently received requests
additional
from
information, which it responded to
accordingly. APA
subsequently
declared conformity of the EIA on
The public
16 April 2021.
consultation phase of the process
then began on 22 April 2021 and
ended on 16 July 2021. Savannah
has remained engaged with APA
during its ongoing review of the EIA
and
the submissions received
during the public consultation
period. Savannah believes that the
calling of a snap general election in
early
for
30 January 2022 impacted the
decision‐making
in
government agencies such as APA
during that period. The Board
remains
the
Environmental Impact Declaration
(‘DIA’) for the Project will be made
during 2022.
November
processes
confident
2021
that
Environment
to
committed
is
Savannah
minimising
the environmental
impact of its operations through
design, monitoring, mitigation and
remediation.
For Savannah:
•
places
great
Savannah
emphasis on minimising the
environmental impact of its
operations and also realises the
importance placed on good
environmental management by
stakeholders
all
governments,
including
communities,
customers,
investors and lenders.
project
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STRATEGIC REPORT
Principal decisions
Savannah defines principal decisions as those which are material to the Group and its key stakeholder groups
detailed above.
In making the following principal decisions during the year the Board considered the outcome based on the relevant
stakeholders as well as the need to maintain a reputation for high standards of business conduct and the need to
act fairly between the members of the Group:
Principal decision 1: Agreement to amicably cancel Unincorporated Joint Venture with Rio Tinto
The Group completed the strategic review on its mineral sands operations in Mozambique, and in December 2021
exited the Consortium Agreement with Rio Tinto (entered into in October 2016), and the Group will also exit its remaining
assets in Mozambique. Rio Tinto agreed a termination compensation of US$9.5m cash to the Group in respect of the
termination of the Consortium Agreement and the transfer of the in‐country Savannah team to Rio Tinto.
In making the decision the Board considered:
•
Shareholders: Considering the global focus increasingly on decarbonisation and the role that lithium can play
in the fast‐growing electric vehicles and storage systems industries which play a major role in achieving that,
the Barroso Lithium Project had become the Group’s flagship project. The exit from Mozambique allows the
Group’s existing cash resources, plus $9.5m additional cash, to be focused on lithium and eliminates the need
for cash resources and ongoing management time to be devoted to what had become a non‐core asset for the
Group.
• Mozambique: Workforce, Community, and Government: The Board believes in Mutamba’s potential as a world‐
class asset and is confident that, given its long involvement with Mutamba, Rio Tinto is the most appropriate
group to take the project forward for the benefit of the local communities and Mozambique. Rio Tinto has
provided an excellent partnership and support over the past five years and the Group wishes them every success
in the future development of Mutamba. With the Group’s in country team transferring to Rio Tinto they will
benefit from having a new, responsible, blue‐chip employer.
The Group is also particularly proud of the extensive community engagement programmes it has undertaken,
which covered infrastructure, agriculture, trade, education and public health and which Rio Tinto are well placed
to continue. The Group’s enduring legacies include the establishment of infrastructure that continues to provide
clean drinking water for around 1,200 families and off grid solar power for 5,300 families; over 600 local farmers
deriving higher income from the sale of donated crops; and the 430 graduates that have benefited from the
vocational training centres established in Jangamo and Inhambane, the majority of which quickly found
employment related to their training.
•
Portugal Workforce: Community, and Government: The exit from Mozambique will allow reduced complexity
for staff previously engaged on both the Barroso Lithium Project and the Mozambique project, and the Barroso
Lithium Project, the local community and the Portuguese Government will benefit from this.
Principal decision 2: £10.3m equity placing
In April 2021 the Company completed a significantly oversubscribed equity issue which took place through an
accelerated book‐building process managed by Clarksons Platou Securities AS, finnCap Group Plc and WH Ireland
Group Plc, raising £10.3m before expenses. In consultation with Management and the Group’s capital market
advisers, the Board decided that a £10m equity fundraise should be undertaken to allow the achievement of the
activities detailed subsequently. This fundraise was duly completed, with investment from new and existing
shareholders, in a significantly oversubscribed offering extended to £10.3m to accommodate a small portion of the
oversubscriptions. Alongside Savannah’s existing working capital, the majority of the net proceeds raised were
allocated to progressing and enhancing the Barroso Lithium Project the Company’s flagship asset. Including
expanding the Project’s team in preparation for the upcoming development phase, conducting further exploration
on the Project to increase its resources, and evaluating opportunities to maximise its ESG credentials. With the
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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STRATEGIC REPORT
balance of funds allocated to further developing Savannah’s lithium business in the Iberian Peninsula, completing
the technical and corporate appraisal exercise on the Mutamba mineral sands project in Mozambique, and for
general corporate purposes.
In making the decision the Board considered:
• All stakeholders: Maintaining the Group as a going concern in the interest of all its stakeholders.
•
Shareholders: The impact on existing shareholders of raising additional equity was considered with the Board
weighing up the need to maintain the Group as a going concern and to be well‐place to take advantage of the
strong market conditions and opportunities in the lithium sector, against the resulting equity dilution. The
fundraising was also seen as an opportunity to attract new institutional equity investors into the Group which
was considered a benefit to the Group’s long‐term financial stability, with the introduction of Clarksons Platou
Securities AS into the fundraising process providing an introduction for Savannah to a variety of European
investors.
The funds raised provided a greater position of strength from which to develop Savannah’s lithium amid the
backdrop of the global lithium industry experiencing a period of strong recovery after a two‐year period of
falling prices. Savannah was already one of the leading players in Europe’s new lithium raw material supply
industry and is able to leverage its hard‐earned position to further expand its lithium supply business in Europe
to maintain and grow its future share of the market.
•
Employees and Suppliers: The Board also concluded that securing more working capital would help the Group
to retain key staff and suppliers who can help the Group achieve its business objectives.
Principal decision 3: Heads of Agreement with Galp for strategic investment & offtake
In January 2021 Savannah entered into a Heads of Agreement (‘HoA’) with Galp around a 100,000tpa offtake
agreement and project level investment. This provided proof of concept that the Barroso Lithium Project could
attract commercial partners for its spodumene concentrate, but as the first and second quarters progressed and
sentiment and prices within the lithium sector improved, Savannah received more and more commercial inquiries.
The HoA expired on 31 May 2021 and discussions in relation to a strategic investment and offtake agreement have
continued outside of the exclusive terms of the HoA, and have commenced with other groups focused on lithium
chemical production and traders. This includes European and non‐European groups either looking for a new source
of spodumene for existing or new conversion plants, or potential strategic partners looking for exposure to the
lithium battery value chain.
In making the decision the Board considered:
•
Shareholders: Amongst our European peer group, Savannah stands alone as a future supplier of spodumene
concentrate, the same material which has made Australia the world’s largest supplier of lithium raw material.
2021 was the year that the concept of European ‘merchant’ lithium conversion plants really gathered pace.
These are plants which are not integrated with a specific mine but purchase feedstock, such as spodumene
concentrate, under long term offtake agreements or in the spot market from mining companies, such as
Savannah. While we had targeted conclusion of a first offtake agreement by the end of 2021, it is not a concern
to the Board that this self‐imposed deadline was not met. The developments we have seen in the past eighteen
months in the European and global lithium markets, and the growing concern around future supply among
consumers of lithium feedstock, leads us to believe that securing offtakes and/or partnerships will be well within
Savannah’s grasp in the days ahead. This is particularly true once a positive decision on the EIA has been
received. In addition to these ‘direct’ commercial relationships and associated financing, Savannah continues
to assess its options on other sources of finance such as government or European grants, which may become
available.
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STRATEGIC REPORT
•
Customers: The HoA provided a proof of concept that the Barroso Lithium Project could attract commercial
partners for its spodumene concentrate and, Savannah received has more and more commercial inquiries since.
Principal decision 4: Matching the ICMM’s Net Zero Scope 1 & 2 Commitments
In November 2021, whilst the 26th UN Climate Change Conference of the Parties (“COP26”) was underway, Savannah
took the opportunity to endorse the recent commitment made to a goal of net zero Scope 1 and 2 greenhouse gas
emissions by the members of the International Council on Mining and Metals (“ICMM”) by 2050 or sooner. Savannah
is committed to moving towards the same Scope 1 and 2 net zero emissions goals but doing this in the 2020s and
2030s during the operating phase of its wholly owned Barroso Lithium Project. Furthermore, in line with the ICMM
membership, Savannah is additionally targeting the reduction of its Scope 3 emissions. Producing a ‘net zero’ lithium
product at the Barroso Lithium Project would help to ensure that lithium entering the European value chain
generates the maximum environmental benefit it can when operating in batteries.
In making the decision the Board considered:
•
Shareholders: The roadmap to Net Zero established by Savannah further emphasises the strong ESG credentials
of Savannah, and in addition to its own Net Zero plans, Savannah estimates that the lithium from the Barroso
Lithium Project could help to remove approximately 100 million tonnes of CO2 from the EU transport sector
once it is active in electric vehicle batteries. The groups developing greener technologies, which Savannah could
adopt, are doing so using innovations that are designed to be both environmentally friendly and cost
competitive, so this, combined with the prospects of increasing financial burdens (taxes and duties) relating to
CO2 equivalent emissions, provide an opportunity for reduced operational costs compared to traditional mining
operations.
• All stakeholders: For the Barroso Lithium Project Environmental Impact Assessment study, consultancy
Ecoprogresso estimated that, when operating, the Project would produce a maximum of c.62,000t CO2
equivalent emissions per annum across Scopes 1 and 2, and a maximum of 96,200t CO2 equivalent emissions
per annum across Scopes 1‐3. By reducing the Project’s Scope 1 and 2 emissions to zero, Savannah would reduce
the Project’s overall emissions during its operating phase by over 60%.
Principal decision 5: Grant of Share Options under Long‐Term Incentive Plan
In June 2021, announced that upon the recommendation of the Company’s Remuneration Committee it had granted
share options under the Company’s existing long‐term incentive plan (the “LTIP”) which is designed to incentivise
the Company’s Executive Directors, Executive Management team and other key individuals.
In making the decision the Board considered:
•
Shareholders: The LTIP was established in 2019 to encourage long‐term 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. The LTIP is a share option scheme of the kind commonly
adopted by listed companies and the Remuneration Committee took advice and recommendations from leading
remuneration consultancy, Alvarez and Marsal, which formed the basis of quantum and key commercial features
of the share options granted.
• Workforce: The Board believes 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 Barroso Lithium
Project.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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STRATEGIC REPORT
Approval of the Board
This Strategic Report contains certain forward‐looking statements that are subject to the usual risk factors and
uncertainties associated with mineral development businesses. 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 forward‐looking statements.
On behalf of the Board:
David Archer
Chief Executive Officer
Date: 5 April 2022
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BARROSO LITHIUM PROJECT OVERVIEW
The Barroso Lithium Project, Portugal
Located less than 2 hours’ drive northeast of the city of Porto, the Barroso Lithium project covers an area of 8.36km2
in the Barroso hills of northeast Portugal and consists of the C‐100 Mining Lease2 (5.42km2) and an adjacent, three
block, Mining Lease Application area (2.94km2). Through Savannah’s successful exploration programme, the Barroso
Lithium Project (the ‘Project’) has been defined as the most significant source of spodumene lithium in western
Europe. In recent years, spodumene lithium deposits have surpassed brine deposits as the major source of lithium
raw material production globally, and Savannah believes that The Barroso Lithium Project can become an important
source of this ‘conventional’ lithium mineral for Europe’s burgeoning domestic lithium battery industry.
Savannah Resources has operated the Project since May 2017 when an initial 75% stake was acquired (with all the
milestones relating to purchase completed by October 2018). Savannah became the sole owner of the project in
June 2019 following the acquisition of the residual 25% stake from the project’s minority shareholders in an all‐share
transaction. June 2019 also saw the Group exercise the option it had taken in September 2018 to acquire the
adjacent three block Mining Lease Application area from the Portuguese company Aldeia & Irmão, S.A. (“Aldeia”)
following a period of technical and legal due diligence. This increased the tenement portfolio footprint by over 50%
to its current size.
Drilling on the Barroso Lithium Project:
Source: Company photo
Western Europe’s most significant spodumene lithium resource
To date Savannah’s extensive exploration programme, which includes over 31,000m of drilling, has identified 8 deposits
bearing spodumene lithium mineralisation on the project. From being a ‘pre‐resource’ project when acquired, JORC
compliant Mineral Resources have now been estimated on five of these deposits (4 on the C‐100 licence and 1 on
Aldeia Block A) which, as of May 2019, totalled 27.0Mt at 1.06% Li2O (containing 285.9kt of Li2O or 707kt of lithium
carbonate equivalent), representing the most significant spodumene lithium resource in Western Europe.
Many of the lithium deposits on the project remain open to possible extensions through further exploration and an
Exploration Target3 ranging from 11‐19Mt at 1.0‐1.2% Li2O has been estimated on three of the deposits as of May 2019.
The project currently has a combined resource and exploration target of 38‐48Mt at 1.0 to 1.2% Li2O hence, Savannah
believes significant exploration upside remains with the potential to significantly extend the Project’s operational life.
2 The existing mining lease was granted to the previous project owners in 2006 and is valid for 30 years, but will need amendment or replacement for Savannah’s proposed
mine and concentrator development.
3 Cautionary Statement: The potential quantity and grade of the Additional Resource Targets is conceptual in nature, there has been insufficient prospecting work to estimate
a mineral resource and it is uncertain if further prospecting will result in defining a mineral resource.
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BARROSO LITHIUM PROJECT OVERVIEW
The Barroso Lithium Project’s Lithium JORC Mineral Resource Estimate & Exploration Target4:
JORC Mineral Resource Estimate (May 2019, 0.5% Li2O cut‐off)
Deposit
Grandao
Resource Tonnes Li2O
Category (Mt) Li2O grade (%) Fe2O3 grade (%) contained (t)
Measured 6.6 1.1 0.7 71,600
Indicated 6.4 1.0 0.8 65,300
Inferred 4.8 1.0 0.7 48,900
Sub‐total 17.7 1.04 0.7 181,800
Reservatorio
Measured – – – –
Indicated – – – –
Inferred 3.2 1.0 1.4 32,000
Sub‐total 3.2 1.0 1.4 32,000
Pinheiro
Measured – – – –
Indicated – – – –
Inferred 2.0 1.0 0.7 20,000
Sub‐total 2.0 1.0 0.7 20,000
NOA
Measured – – – –
Indicated 0.4 1.2 0.8 4,200
Inferred 0.3 1.0 0.9 2,900
Sub‐total 0.6 1.1 0.9 7,100
Aldeia
Measured – – – –
Indicated 1.6 1.3 0.5 21,300
Inferred 1.8 1.3 0.4 23,700
Sub‐total 3.5 1.3 0.4 45,000
All Deposits
Measured 6.6 1.1 0.7 71,600
Indicated 8.4 1.0 0.7 86,700
Inferred 12.0 1.1 0.9 127,600
Grand Total 27.0 1.06 0.8 285,900
Rounding discrepancies may occur
Source: May 2019 JORC Resource update RNS
4 Cautionary Statement: The potential quantity and grade of the Additional Resource Targets is conceptual in nature, there has been insufficient prospecting work to estimate
a mineral resource and it is uncertain if further prospecting will result in defining a mineral resource.
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BARROSO LITHIUM PROJECT OVERVIEW
Exploration Target5 Summary (May 2019)
Deposit
Reservatorio
Grandao
Aldeia
Total
Rounding discrepancies may occur
Source: May 2019 JORC Resource update RNS
Tonnage Range (Mt)
Low
5.0
4.0
High
7.0
8.0
Li2O grade (%)
1.0‐1.2
1.0‐1.2
2.0
4.0
1.0‐1.3
11.0
19.0
1.0‐1.2
Not just a lithium project
In addition to the production of significant volumes of spodumene lithium concentrate, The Barroso Lithium Project
also has the potential to produce large volumes of feldspar and quartz which is in demand from the large ceramics
and glass industries in Portugal and Spain. Sales of these ‘co‐products’ would have the dual benefits of reducing
the amount of processed material which the project must store on‐site and provide additional revenue which could
significantly improve the net production costs of the lithium concentrate.
During 2019 the Group estimated its first co‐product resource on the project, based only on pegmatite material
located inside the proposed Grandao pit (i.e., wholly within the existing lithium mineral resource model). Hence,
this resource is expected to increase further once similar estimates are performed on the NOA, Reservatorio,
Pinheiro and Aldeia deposits. Savannah also completed marketing and test work studies during 2019 to confirm
the co‐products’ suitability for various applications within the ceramic and glass industries.
The Barroso Lithium Project’s Co‐product JORC Mineral Resource Estimate:
JORC Mineral Resource Estimate (September 2019, no lithium cut‐off grade applied)
Resource Tonnes Quartz Feldspar
Deposit Category (Mt) Grade (%) Mt Grade (%) Mt
Grandao Measured 7.1 32.6 2.32 42.8 3.05
Indicated 6.3 34.6 2.17 42.6 2.67
Inferred 1.0 30.9 0.30 40.3 0.39
Sub‐total 14.4 33.4 4.79 42.6 6.11
Rounding discrepancies may occur
Source: September 2019 JORC Resource update RNS
This independent work, completed on separate quartz and feldspar samples and a mixed bulk tail product,
confirmed that all three materials were suitable for commercial use. Specifically, the test work showed that both
the separate quartz and feldspar products could be used in a variety of applications in both industries such as
hotel‐ware quality ceramics and container glass while the mixed bulk tail product could be used in ceramic
applications, such as vitrification and bone china. Encouragingly, the marketing study confirmed that prices for all
the products could be potentially higher (in the range of US$40‐100/t) than had been assumed in the 2018 Scoping
Study (US$39 per tonne for feldspar and US$33 per tonne for quartz) as summarised below. Furthermore,
production of the bulk material would also potentially eliminate approximately US$15m from the estimated
processing plant capex that would otherwise be required to produce separate quartz and feldspar co‐products.
5 Cautionary Statement: The potential quantity and grade of the Additional Resource Targets is conceptual in nature, there has been insufficient prospecting work to
estimate a mineral resource and it is uncertain if further prospecting will result in defining a mineral resource.
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BARROSO LITHIUM PROJECT OVERVIEW
Positive Scoping Study completed in 2018
Based on the rapid delineation of an initial JORC Mineral Resource estimate and Exploration Target during late 2017
and early 2018, Savannah commissioned a Scoping Study on the project. This was completed in June 2018 and
reported very positive project economics based on a 1.3Mtpa operation producing an average of 175ktpa of
spodumene concentrate and associated co‐products over an 11‐year life.
The Barroso Lithium Project 2018 Scoping Study Key Facts:
Operating Parameters and assumptions
Mineable resource (June 2018)
14.4Mt at 1.07% Li2O. All open pit. Life of mine strip ratio
(waste: ore): 5.2: 1, years 1‐4: 1.6:1
Initial life of mine
11 years at 1.3Mtpa throughput rate
Processing route & recovery rate
Crush‐grind‐Dense Media Separation‐flotation (80%
recovery)
Concentrate production & spec
175ktpa (minimum), 6% spodumene
Concentrate production as LCE/Lithium
Hydroxide Equivalent (net of assumed
processing losses in a chemical conversion plant)
~22ktpa; ~25.5ktpa. Sufficient for ~0.5M 60kWh
car battery packs per annum
Co‐products
Initial capex
Feldspar (~276ktpa), quartz (~173ktpa) for use in the
ceramics and other industries
US$109m (Additional contingency of US$24.9m, included in
financial model)
Sustaining capital & closure costs
US$17.2m
LoM C1 Cash Operating cost (US$/t conc)
Financial & economic outcomes
Pricing assumptions (Average life of mine)
US$271/t (US$210/t average in Years 1‐4). Costs include all
mining, processing, transport, shipping/freight, corporate,
admin, marketing & royalty costs and are net of co‐product
credits (included in gross revenue).
Spodumene concentrate: US$685/t; Feldspar US$39/t;
Quartz US$33/t
Gross Revenue (LoM; Avg pa)
US$1,555m; US$140m (includes co‐product revenue)
EBITDA (LoM, Avg pa)
Pre‐tax FCF (LoM; Avg pa)
Net FCF (LoM; Avg pa)
NPV (8% discount rate)
IRR
Payback
US$805m; US$73m
US$651m; US$59m
US$458m; US$41m
Pre‐tax US$356m; Post‐tax US$241m
Pre‐tax 63.2%; Post‐tax 48.6%
Pre‐tax 1.7 years; Post‐tax 2.1 years
Source: June 2018 Scoping Study and subsequent company press releases
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BARROSO LITHIUM PROJECT OVERVIEW
Definitive Feasibility Study and Environmental Impact Assessment
As a result of the positive Scoping study, Savannah commissioned a Definitive Feasibility study (DFS) and associated
Environmental Impact Assessment (EIA)6 study on the project in the second half of 2018.
The EIA study, which identifies all the potential environmental and social impacts the Project may have and details
how Savannah would monitor and minimise these, was submitted along with a comprehensive ‘Mine Plan’ for
review and approval by the Portuguese Environmental Authority, APA in June 2020. Approval of the EIA is a key
part of the overall licencing process for the expanded project, and Savannah expects to receive the project’s
‘Environmental Impact Declaration’ (‘DIA’) from the regulator in 2022. The DIA award is the first approval in a multi‐
stage environmental licencing process. Receipt of the DIA would allow the approval process to move on to the
subsequent RECAPE and Environmental Licence stages during which approval of the Project's detailed final designs
are received ('DCAPE') and the Project’s environmental title (Título Único Ambiental, 'TUA') is awarded. These stages
are expected to run in parallel. The conditions set by the DIA and the agreement of the Project’s final designs in
the RECAPE phase will also provide important input parameters for the DFS.
Once the DCAPE declaration has been made and environmental licence received, Savannah will then be able to
apply for the remainder of the licences required for the Project’s development and operation. These licences cover
permissions for construction and use of services on site such as power and water.
Subject to any further COVID‐related delays to the outstanding fieldwork required, Savannah expects to complete
the DFS no later than 12 months receipt of the DIA. The DFS will draw upon the latest JORC Mineral Resource
estimate available as a basis for the project’s maiden JORC Reserve estimate and final mine plan. To maximise the
reserve tonnage, which can only be drawn from the Measured and Indicated categories (currently 15Mt) of the
JORC resource, a programme of infill drilling is planned to upgrade sections of the existing 12Mt Inferred resource.
As a result of the c.90% increase in overall resources defined since the 2018 scoping study, the DFS is considering
the possibility of increasing the annual throughput rate to 1.5Mtpa resulting in an average annual output of
c.200ktpa lithium concentrate.
Developing and commercialising the project
A final investment decision on the project’s development will be taken by the Company once the DFS has been
completed. Alongside receiving the necessary regulatory approvals and social acceptance of the project, Savannah
also needs to secure the capital required to fund the project’s construction. The Company expects to obtain the
capital it needs from multiple sources including the debt capital markets in the form of a project finance loan, new
strategic partners investing directly in the project or Savannah’s equity, finance linked to offtake agreements for
the project’s lithium concentrate, government and/or EU grants or loans, and from the equity capital markets.
6 An EIA on the project was submitted and approved alongside the 2006 Mining Lease award, but a new study is required in‐line with Savannah’s proposed mine and
concentrator development
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BARROSO LITHIUM PROJECT OVERVIEW
Drillcore from the Grandao orebody:
Source: Company photo
The Barroso Lithium Project – a first for Portugal in the new lithium battery industry
Portugal is already established as Europe’s ‘largest’ lithium producer with approximately 800t produced in 2020.
However, all of the country’s current lithium production is used in the domestic ceramics and glassware industries,
and not in lithium battery production. Significant lithium mineralisation exists in Portugal, including at Barroso
Lithium Project, and in 2018 the Portuguese Government announced its ‘lithium strategy’ to support the
development of a new national manufacturing industry to service the growing lithium battery market in Europe.
As part of this strategy, the Portuguese Government has identified eight areas prospective for lithium mineralisation
which will be made available for exploration via a public tender process in due course. This follows the publication
of strategic environmental assessments on these areas and a public consultation round which was completed in
December 2021. As the most advanced lithium development company in the country, Savannah plans to participate
in the tender process when it is initiated.
In parallel with its plans to develop its lithium mining industry the government published new legislation relating
to mineral deposits in 2021, Decree‐Law 30/2021 from 7th May, which sets more demanding standards of
environmental sustainability, the sharing of economic benefits with the populations and gives more powers to
municipality‐level administrators in regard to mineral project development. This new Regulatory Decree is designed
to ensure that the exploration and development of mineral deposits complies with the principles of ‘green mining’.
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BARROSO LITHIUM PROJECT OVERVIEW
Given its own focus on low impact project design and maximising the benefits which can flow from mineral project
development to stakeholders, Savannah welcomes this new legislation. The Company is already committed to
developing The Barroso Lithium Project in a responsible way and by applying the best international practices that
minimise the impact associated with the operation so that the maximum overall environmental benefit is gained
from the lithium once it is incorporated into a battery. It also means that Savannah is dedicated to ensuring the
best outcomes for the project’s stakeholders in terms of social, demographic and economic benefits.
While larger scale lithium mining alone would represent a new industry for Portugal, the government has stated
that it wants to develop a domestic lithium industry that goes beyond mining and features downstream stages such
as lithium chemical production. Hence, the Barroso Lithium Project must be seen as part of the first phase in the
development of a much larger national concern as demonstrated recently by the large lithium chemical production
plant proposals announced by two partnerships in December 2021. As a result of these objectives, the Barroso
Lithium Project has received strong support at national government level. When lithium production is achieved at
the Barroso Lithium Project, Portugal will be placed at the centre of the new European lithium battery supply chain
which the European Commission is so keen to establish as part of its efforts to combat climate change while
maintaining the region’s large automotive industry. The transport sector is the second largest generator of emissions
(CO2 equivalent) in the EU behind energy supply, and the transition to mass adoption of zero or low emission
vehicles is a key part of the European Commission’s target of achieving a net zero carbon economy by 2050.
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REPORT OF THE DIRECTORS
The Directors present their report with the Financial
Statements of the Company and the Group for the year
ended 31 December 2021.
Streamlined Energy & Carbon Reporting (‘SECR’)
The Group does not meet the SECR requirements and
therefore is not required to perform this reporting.
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
for
The auditors, BDO LLP, will be proposed
re‐appointment at the forthcoming Annual General
Meeting.
Dividends
The Directors do not recommend the payment of a
dividend (2020: £nil).
Events Since the Reporting Date
This information is contained in Note 25 to the Financial
Statements.
Directors
The Directors who have held office during the period
from 1 January 2021 to the date of this report (unless
otherwise stated) are as follows:
David Stuart Archer
Dale John Ferguson
Matthew James Wyatt King
James Gerald Leahy
Imad Kamal Abdul Redha Sultan
Maqbool Ali Sultan
Manohar Pundalik Shenoy1
Murtadha Ahmed Sultan1
1 Alternate Director
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.
Future Development
This
Statement and the Chief Executive’s Report.
is contained
information
in the Chairman’s
Going Concern
This information is contained in the Strategic Report in
the Key Financial Performance Indicators and Milestones
section.
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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:
David Stuart Archer
Dale John Ferguson
James Gerald Leahy
Matthew James Wyatt King
Imad Kamal Abdul Redha Sultan1
Maqbool Ali Sultan1
Manohar Pundalik Shenoy1
Murtadha Ahmed A Sultan1
No. of shares held at
31 December 2021
No. of shares held at
31 December 2020
40,656,649
49,581,6042
1,150,000
2,916,528
–
–
5,809,524
–
39,756,649
49,581,6042
1,150,000
2,604,028
–
–
5,809,524
–
1 The Directors indicated are representatives of Al Marjan Ltd which held 268,262,589 shares at the reporting date (2020: 268,262,589 shares).
2 45,993,750 shares (2020: 45,993,750 shares) held indirectly through Slipstream Resources Investments Pty Ltd.
Details of Directors’ remuneration are disclosed in Note 3.
Details of Directors' interests in Share Options and Investor Warrants are disclosed in Note 23.
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 Capital1:
No. of shares
268,262,589
147,180,000
%
15.88%
8.71%
Name of Shareholder
Al Marjan Ltd (Directors2)
Slipstream Resources Investments Pty Ltd
1 Except those exempts under DTR 5.1.5 regulation.
2 Two Directors are representatives of Al Marjan.
On behalf of the Board:
David Archer
Chief Executive Officer
Date: 5 April 2022
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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/corporate‐governance/.
Company
website
the
on
The Code is described as a practical, outcome orientated
approach to corporate governance that is tailored for
small and mid‐size 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.
Following the appointment to the Board of James Leahy
as an independent non‐executive Director in November
2018, the Company’s Chairman relinquished his roles as
Chairman of the Remuneration Committee and Chairman
of the Audit and Risk Committee, and subsequently left
both Committees, thus strengthening the independence
of those Committees from the Board itself.
In February 2021, the Company established a
Nominations Committee, prior to that the Board itself
was responsible for the matters falling under the
responsibility of this Committee, and on an annual
basis had reviewed the need for a Nominations
Committee. The rationale for the creation of the
Committee is to reflect the Company’s growing
maturity and its planned transition from explorer /
developer into mine operator.
The Board of Directors
The Board comprises of two executive Directors, four
non‐executive Directors and two alternate Directors.
Ordinarily, the Board formally meets approximately
every quarter, however owing to the unique challenges
and opportunities presented in 2021 the Board met
more regularly to focus on priority matters. The Board 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 and Risk Committee comprises one
non‐executive Director and one alternate Director –
James Leahy (who chairs the Committee), and
Manohar Shenoy.
The Committee’s key responsibilities with respect to
audit are 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 key responsibilities with respect to
risk are supporting 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. The Group operates 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. The Committee
facilitates the management of the Risk Register,
in conjunction with the Board, senior managers and
appropriate professional advisers. The Committee also
reviews any items reported under the Company’s Code
of Conduct and whistleblowing procedure.
The Remuneration Committee
The Remuneration Committee
comprises one
non‐executive Director and one alternate Director –
James Leahy (who chairs the Committee) and Manohar
Shenoy. It is responsible for reviewing the performance
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CORPORATE GOVERNANCE STATEMENT
The necessary controls and procedures required in order
to comply with the UK Bribery Act 2010 were updated
by the Board in 2021 and will continue to be monitored
for appropriateness and effectiveness.
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 and the
performance of the Group. The remuneration of the
Chairman and any non‐executive 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
non‐executive 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
and the Market Abuse Regulations. The Committee is
responsible for the Company’s Corporate Governance
Code management. The Committee is also responsible
for ensuring
the executive Directors and
Management are communicating effectively with the
Company’s Nominated Adviser.
that
Furthermore, the Committee
for
monitoring the Company’s compliance with the Market
Abuse Regulations.
is responsible
Nominations Committee
The Nominations Committee, established in February
2021, comprises two non‐executive Directors – Matthew
King (who chairs the Committee) and Imad Sultan. It is
responsible for reviewing the structure, size, and
composition of the Board of Directors, giving
consideration to succession planning for Directors and
senior executives, and identifying and nominating
candidates for the approval of the Board as required.
It is also responsible for monitoring the performance of
the Board of Directors.
Anti‐Bribery 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 zero‐tolerance
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.
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES
governing the preparation and dissemination of
Financial Statements, which may vary from legislation in
other jurisdictions. The maintenance and integrity of the
Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing
integrity of the Financial Statements contained therein.
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 are required to prepare the Group and
Company Financial Statements in accordance with UK
adopted international accounting standards. 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.
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;
•
•
in
state whether they have been prepared
accordance with UK adopted
international
accounting standards, 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.
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 (www.savannahresources.com) in
accordance with legislation in the United Kingdom
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Opinion on the financial statements
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 2021 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
the Parent Company financial statements have been properly prepared in accordance with UK adopted
international accounting standards 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.
We have audited the financial statements of Savannah Resources Plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) for the year ended 31 December 2021 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 Flows and notes to the consolidated financial
statements, including a summary of significant accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK adopted international accounting standards and, as regards the
Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion.
Independence
We remain 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.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment
of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included:
• Assessing the reasonableness of Directors’ forecast expenditure for a period of at least twelve months from
the date of approval of the financial statements by reference to Directors’ budgeted activity and actual
expenditure in 2021.
• Agreeing the current cash resources to supporting documentation.
• Obtaining and reviewing management’s downside sensitivity analysis which included modelling the impacts of
increasing forecast costs and/or delaying approval of the mining licence and confirming that liquidity is
maintained under such scenarios.
• We considered the mitigating actions available to management, which included deferring uncommitted capital
expenditure on the Portugal Lithium Project, and confirmed that these are reasonable and within management’s
control.
•
Reviewing the adequacy of the disclosures within the financial statements in respect of going concern in respect
of the key judgements made by the Directors.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Overview
Coverage
100% (2020:100%) of Group profit before tax
100% (2020: 99%) of Group total assets
Key audit matters
2021 2020
Carrying value of Exploration and
Evaluation assets ✓ ✓
Going concern x ✓
Following receipt of funds from the relinquishment of
the Group’s Mozambique project and the equity fund
raise carried out in 2021, going concern is no longer
considered to be a key audit matter.
Group financial statements as a whole
£430,000 (2020: £320,000) based on 1.5% (2020: 1.5%)
of total assets
Materiality
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. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence
of bias by the Directors that may have represented a risk of material misstatement.
Our Group audit scope focused on the Group’s principal operating location being the Mina do Barroso lithium
project in Portugal held in Savannah Lithium Unipessoal Lda, and the Parent Company, both of which were subject
to full scope audits. These represent the significant components of the Group.
The remaining components of the Group were considered non‐significant and these components were principally
subject to analytical review procedures by the Group Engagement team, together with additional substantive testing
over UK components subject to a statutory audit where applicable.
BDO LLP performed the audit of the Parent Company and the Portuguese component, Savannah Lithium Unipessoal
Lda, was audited by a BDO network member firm in Portugal.
Our involvement with component auditors
For the work performed by component auditors, we determined the level of involvement needed in order to be
able to conclude whether sufficient appropriate audit evidence has been obtained as a basis for our opinion on the
Group financial statements as a whole. Our involvement with component auditors included the following:
• Detailed Group reporting instructions were sent to the component auditor, which included the significant areas
to be covered by the audit (including areas that were considered to be key audit matters as detailed below),
and set out the information required to be reported to the Group audit team.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
•
•
•
The Group audit team was actively involved in the direction of the audits performed by the component auditor
for the Group reporting purposes along with the consideration of findings and determination of conclusions drawn.
The Group audit team reviewed the component auditor’s work papers remotely, including review of group
reporting documents, attended clearance meetings virtually for the significant component and engaged with
the component auditor regularly during their fieldwork and completion phases.
The Group audit team performed additional procedures in respect of the significant risk areas that represented
Key Audit Matters in addition to the procedures performed by the component auditor.
Key audit matters
Key audit matters are those matters that, in our professional judgement, 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) that 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. These matters
were 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 these matters.
Key audit matter
Carrying value of the Exploration and Evaluation Assets (note 1 and 8)
The Group now holds one exploration and evaluation asset being the lithium project in Portugal. Accounting standards
require Management to carry out an assessment at least annually for any indicators of impairment. This requires
significant management judgements, which are explained in the section on key judgements relating to Exploration and
Evaluation assets in note 1 to the financial statements, and we therefore considered this to be a key audit matter.
How the scope of our audit addressed the key audit matter
Management’s impairment indicator review indicated that no impairment charge was required.
We reviewed and challenged Management’s assessment of the indicators of impairment, which was prepared in
accordance with the requirements of IFRS 6, Exploration for and Evaluation of Mineral Resources, by performing the
following procedures:
• We agreed management’s assessment to third party supporting documentation, including:
o
o
o
Technical data relating to mineral resources
Scoping studies where available
Exploration and mining licence permits
• We read the key licence agreements and confirmed that the Group has contractual rights for exploration in the
licence areas. We assessed and obtained evidence regarding the commitments and obligations associated with
the licences and read correspondence with local authorities to determine compliance with the licences.
• We reviewed Management’s plans and budgets to establish whether the Group is committed to the development
of the projects and that substantive expenditure on further exploration for and evaluation of mineral resources in
the area is budgeted and planned.
• We considered whether the asset would be commercially viable with reference to the finalised process flowsheet
and future lithium prices as per forecasts by Consensus Economics.
• We reviewed RNS announcements, minutes from the meetings of Directors and press releases to check whether
there were any other potential impairment indicators.
Key observations:
We consider the judgements made in the assessment of the impairment indicators assessment of Exploration and
Evaluation Assets prepared by Management to be reasonable.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Our application of 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.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use
a lower materiality level, performance materiality, to determine the extent of testing needed. 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.
Based on our professional judgement, we determined materiality for the financial statements as a whole and
performance materiality as follows:
Group financial statements Parent company financial statements
2021 2020 2021 2020
£’000 £’000 £’000 £’000
Materiality 430 320 340 270
Basis for determining
materiality
1.5% of total
assets
1.5% of total
assets
79% of Group
materiality
84% of Group
materiality
Rationale for the
benchmark applied
We consider total assets to be the
most significant determinant of the
Group’s financial performance for
users of the financial statements as
the Group continues to bring its
mining assets through to production.
Calculated as a percentage of Group
materiality for Group reporting
purposes given the assessment of
aggregation risk
Performance materiality
322
240
255
202
Basis for determining
performance materiality
75% of Group materiality considering
the nature of activities and historic
value of audit adjustments.
75% of Group materiality considering
the nature of activities and historic
value of audit adjustments.
Component materiality
We set materiality for each component of the Group based on a percentage of between 64% and 81% of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component.
Component materiality ranged from £270,000 to £340,000. In the audit of each component, we further applied
performance materiality levels of 75% of the component materiality to our testing to ensure that the risk of errors
exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of
£8,600 (2020: £6,400). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report and financial statements 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. 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 course of the audit, or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the financial statements themselves. 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.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are
required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic report and the Report of the Directors for the financial year for which the
financial statements are prepared is consistent with the financial statements; and
the Strategic report and the Report of the Directors' have been prepared in accordance with applicable legal
requirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the Strategic report or the Report of the Directors’.
Matters on which we are required to report by exception
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.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Responsibilities of Directors
As explained more fully in the Statement of Directors’
Responsibilities, 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.
Extent to which the audit was capable of detecting
irregularities, including fraud
Irregularities, including fraud, are instances of non‐
compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of
irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities,
including fraud is detailed below:
• Holding discussions with management and the audit
committee to understand the laws and regulations
relevant to the Group and Parent Company. These
included elements of financial reporting framework,
legislation and
Companies Act 2006,
environmental regulations in the UK, Portugal and
Mozambique;
tax
• Holding discussions with management and the audit
committee and considering any known or suspected
instances of non‐compliance with
laws and
regulations or fraud identified by them;
• Assessing the susceptibility of the Group’s financial
statements to material misstatement, including how
fraud might occur. In addressing the risk of fraud
including the management override of controls, we
tested the appropriateness of journal entries made
throughout the year by applying specific criteria
such as unusual account combinations, performing
a detailed review of the Group’s year end adjusting
entries and investigating any that appear unusual as
to nature or amount;
• Assessing whether the
in
accounting estimates were indicative of a potential
bias (refer to Carrying value of the Exploration and
Evaluation Assets KAM);
judgements made
•
•
Reviewing minutes from board meetings of those
charged with governance to identify any instances
of non‐compliance with laws and regulations;
identified
Communicating relevant
laws and
regulations and potential fraud risks to all
engagement team members and remaining alert to
any indications of fraud or non‐compliance with
laws and regulations throughout the audit; and
• Directing the component auditor to ensure an
assessment is performed on the extent of the
components compliance with the relevant local and
regulatory framework.
Our audit procedures were designed to respond to risks
of material misstatement in the financial statements,
recognising that the risk of not detecting a material
misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve
deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are
inherent limitations in the audit procedures performed
and the further removed non‐compliance with laws and
regulations is from the events and transactions reflected
in the financial statements, the less likely we are to
become aware of it.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
A further description of our responsibilities is available
on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditor’s report.
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 Parent Company and the Parent Company’s
members as a body, for our audit work, for this report,
or for the opinions we have formed.
Peter Acloque (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
Date: 5 April 2022
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2021
Notes
2021
£
2020*
£
CONTINUING OPERATIONS
Revenue
Other Income
Administrative Expenses
Foreign exchange (loss)/gain
OPERATING LOSS
Finance Income
Finance Costs
LOSS FROM CONTINUING OPERATIONS BEFORE AND AFTER TAX
GAIN/(LOSS) ON DISCONTINUED OPERATIONS BEFORE AND AFTER TAX
4
24
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 Losses arising on translation of foreign operations
OTHER COMPREHENSIVE INCOME FOR THE YEAR
TOTAL COMPREHENSIVE LOSS 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
From Continued Operations
From Discontinued Operations
–
–
(3,305,649)
(213,088)
(3,518,737)
671
(139)
(3,518,205)
2,371
–
26,099
(2,595,738)
37,580
(2,532,059)
4,819
(765)
(2,528,005)
(5,797,753)
(3,515,834)
(8,325,758)
82,006
320,151
154,815
236,821
(163,284)
156,867
(3,279,013)
(8,168,891)
7
7
7
(0.22)
(0.22)
0.00
(0.62)
(0.19)
(0.43)
* The disclosures as at 31 December 2020 have been re‐presented so that the operations that are discontinued at the end of the 2021 financial year
are classified as discontinued.
The notes form part of these Financial Statements.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2021
ASSETS
NON‐CURRENT ASSETS
Intangible Assets
Right‐of‐Use Assets
Other Intangible Assets
Property, Plant and Equipment
Other Non‐Current Assets
Bank Deposits
TOTAL NON‐CURRENT ASSETS
CURRENT ASSETS
Equity instruments at FVTOCI
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
Merger Reserve
Foreign Currency Reserve
Warrant Reserve
Share Based Payment Reserve
FVTOCI Reserve
Retained Earnings
Notes
2021
£
2020
£
8
21
9
15
15
11
13
15
14
16
23
23
14,137,817
5,390
–
676,536
69,542
–
17,246,222
21,709
6,682
973,528
73,530
590,175
14,889,285
18,911,846
31,575
962,058
19,300
13,002,084
14,015,017
606,245
194,301
13,670
2,000,209
2,814,425
28,904,302
21,726,271
16,889,598
41,693,178
6,683,000
(38,726)
–
305,095
(21,437)
(38,284,665)
14,309,910
34,474,884
6,683,000
(193,541)
12,157
393,865
276,712
(35,450,713)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
27,226,043
20,506,274
LIABILITIES
NON‐CURRENT LIABILITIES
Lease Liabilities
TOTAL NON‐CURRENT LIABILITIES
CURRENT LIABILITIES
Lease Liabilities
Trade and Other Payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
21
21
17
–
–
1,130
1,130
1,132
1,677,127
1,678,259
1,678,259
11,608
1,207,259
1,218,867
1,219,997
28,904,302
21,726,271
The Financial Statements were approved and authorised for issue by the Board of Directors on 5 April 2022 and
were signed on its behalf by:
David 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 2021
ASSETS
NON‐CURRENT ASSETS
Investments in Subsidiaries
Other Intangible Asset
Other Receivables
Other Non‐Current Assets
TOTAL NON‐CURRENT ASSETS
CURRENT ASSETS
Equity instruments at FVTOCI
Trade and Other Receivables
Cash and Cash Equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Share Capital
Share Premium
Merger Reserve
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
2021
£
2020
£
10
13
15
11
13
14
16
23
23
17
333,831
–
26,184,402
6,776
621,582
5,948
32,995,016
6,776
26,525,009
33,629,322
31,575
207,129
11,085,944
11,324,648
604,136
47,908
1,237,876
1,889,920
37,849,657
35,519,242
16,889,598
41,693,178
6,683,000
–
305,095
(21,437)
(28,707,640)
14,309,910
34,474,884
6,683,000
12,157
393,865
276,712
(21,455,793)
36,841,794
34,694,735
1,007,863
1,007,863
824,507
824,507
37,849,657
35,519,242
The Company total comprehensive loss for the financial year was £7,851,723 (2020: £4,833,165) (Note 6).
The Financial Statements were approved and authorised for issue by the Board of Directors on 5 April 2022 and
were signed on its behalf by:
David Archer
Chief Executive Officer
Company number: 07307107
The notes form part of these Financial Statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Share
Foreign Based
Share Share Merger Currency Warrant Payment FVTOCI Retained Total
Capital Premium Reserve Reserve Reserve Reserve Reserve Earnings Equity
£ £ £ £ £ £ £ £ £
At 1 January 2020 12,974,598 33,511,787 6,683,000 (30,257) 975,679 410,121 (43,439) (28,163,712) 26,317,777
Loss for the year – – – – – – – (8,325,758) (8,325,758)
Other Comprehensive
Income – – – (163,284) – – 320,151 – 156,867
Total Comprehensive
Income for the year – – – (163,284) – – 320,151 (8,325,758) (8,168,891)
Issue of share capital
(net of expenses) 1,300,113 920,537 – – – – – – 2,220,650
Shares issued in lieu 20,199 16,160 – – – – – – 36,359
Share based payment
charges – – – – – 58,979 – – 58,979
Exercise of options 15,000 26,400 – – – (16,650) – 16,650 41,400
Lapse of options – – – – – (58,585) – 58,585 –
Lapse of warrants – – – – (963,522) – – 963,522 –
At 31 December 2020 14,309,910 34,474,884 6,683,000 (193,541) 12,157 393,865 276,712 (35,450,713) 20,506,274
Loss for the year – – – – – – – (3,515,834) (3,515,834)
Other Comprehensive
Income – – – 154,815 – – 82,006 – 236,821
Total Comprehensive
Income for the year – – – 154,815 – – 82,006 (3,515,834) (3,279,013)
Issue of share capital
(net of expenses)
(Note 16) 2,579,688 7,218,294 – – – – – – 9,797,982
Share based payment
charges – – – – – 200,800 – – 200,800
Lapse of options – – – – – (289,570) – 289,570 –
Lapse of warrants (12,157) – – 12,157 –
Disposal of FVTOCI
investments – – – – – – (380,155) 380,155 –
At 31 December 2021 16,889,598 41,693,178 6,683,000 (38,726) – 305,095 (21,437) (38,284,665) 27,226,043
The following describes the nature and purpose of each reserve within owners' equity:
Reserve
Share Capital
Share Premium
Merger 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.
Amounts subscribed for share capital in excess of nominal value in respect of the consideration paid in an
acquisition arrangement, when the issuing company takes its interest in another company from below 90% to
90% or above equity holding.
Foreign Currency Reserve
Gains/losses arising on retranslating the net assets of group operations into Pound Sterling.
Warrant Reserve
Share Based Payment Reserve
FVTOCI Reserve
Retained Earnings
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).
Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income and other
transactions recognised directly in Retained Earnings.
The notes form part of these Financial Statements.
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COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2021
Share
Based
Share Share Merger Warrant Payment FVTOCI Retained Total
Capital Premium Reserve Reserve Reserve Reserve Earnings Equity
£ £ £ £ £ £ £ £
At 1 January 2020 12,974,598 33,511,787 6,683,000 975,679 410,121 (43,439) (17,341,234) 37,170,512
Loss for the year – – – – – – (5,153,316) (5,153,316)
Other Comprehensive
Income – – – – – 320,151 – 320,151
Total Comprehensive
Income for the year – – – – – 320,151 (5,153,316) (4,833,165)
Issue of share capital
(net of expenses) 1,300,113 920,537 – – – – – 2,220,650
Shares issued in lieu 20,199 16,160 – – – – 36,359
Share based payment
charges – – – – 58,979 – – 58,979
Exercise of options 15,000 26,400 – – (16,650) – 16,650 41,400
Lapse of options – – – – (58,585) – 58,585 –
Lapse of warrants – – – (963,522) – – 963,522 –
At 31 December 2020 14,309,910 34,474,884 6,683,000 12,157 393,865 276,712 (21,455,793) 34,694,735
Loss for the year – – – – – – (7,933,729) (7,933,729)
Other Comprehensive
Income – – – – – 82,006 – 82,006
Total Comprehensive
Income for the year – – – – – 82,006 (7,933,729) (7,851,723)
Issue of share capital
(net of expenses)
(Note 16) 2,579,688 7,218,294 – – – – – 9,797,982
Share based payment
charges – – – – 200,800 – – 200,800
Lapse of options – – – – (289,570) – 289,570 –
Lapse of warrants – – – (12,157) – – 12,157 –
Disposal of FVTOCI
investments – – – – – (380,155) 380,155 –
At 31 December 2021 16,889,598 41,693,178 6,683,000 – 305,095 (21,437) (28,707,640) 36,841,794
The following describes the nature and purpose of each reserve within owners’ equity:
Reserve
Share Capital
Share Premium
Merger Reserve
Warrant Reserve
Share Based Payment Reserve
FVTOCI Reserve
Retained Earnings
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.
Amounts subscribed for share capital in excess of nominal value in respect of the consideration paid in an
acquisition arrangement, when the issuing company takes its interest in another company from below 90% to
90% or above equity holding.
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).
Cumulative net gains and losses recognised in the Consolidated Statement of Comprehensive Income and other
transactions recognised directly in Retained Earnings.
The notes form part of these Financial Statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
Cash flows used in operating activities
Loss for the year
Depreciation and amortisation charges
Impairment of other assets
Share based payment charge
Shares issued in lieu of payments to suppliers
Finance income
Finance expense
Exchange losses / (gains)
Loss on sale of discontinued operations
Gain on relinquishment of the rights and obligations
of discontinued operations
Cash flow used in operating activities before changes
in working capital
(Increase) /Decrease 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 right‐to‐use assets
Purchase of tangible fixed assets
Proceeds from sale of investments
Bank deposits for mining licences
Interest received
Proceeds from sale of discontinued operations
Proceeds from relinquishment of the rights and
obligations of discontinued operations
Net cash from/(used in) investing activities
Cash flow from financing activities
Proceeds from issues of ordinary shares (net of expenses)
Proceeds from exercise of share options
Principal paid on lease liabilities
Interest paid on lease liabilities
Net cash from financing activities
Increase/(Decrease) 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
9,21
4,23
16
4
2021
£
2020
£
(3,515,834)
35,369
5,948
200,800
–
(671)
139
213,088
–
(8,325,758)
44,663
–
58,979
36,359
(38,747)
765
(37,580)
5,373,633
24
(627,078)
–
(3,688,239)
(267,267)
451,801
(2,887,686)
176,312
443,541
(3,503,705)
(2,267,833)
(1,603,208)
(798)
(633,090)
654,347
–
671
–
(1,577,532)
–
(2,721)
3,272
57,319
38,747
27,543
6,506,852
4,924,774
–
(1,453,372)
9,797,982
–
(11,607)
(139)
2,220,650
41,400
(18,310)
(765)
9,786,236
2,242,975
11,207,305
2,000,209
(205,430)
(1,478,230)
3,484,781
(6,342)
13,002,084
2,000,209
8
21
9
11
24
16
16
21
21
14
14
The notes form part of these Financial Statements.
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COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2021
Cash flows used in operating activities
Loss for the year
Impairment of financial assets
Impairment of other assets
Share based payment reserve charge
Shares issued in lieu of payments to suppliers
Finance income
Exchange losses / (gains)
Loss on sale of subsidiaries
Loss on relinquishment of the rights and obligations
of discontinued operations
Cash flow used in operating activities before changes in working capital
(Increase)/Decrease 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
Proceeds from repayment of loans to subsidiaries
Proceeds from sale of investments
Proceeds from sale of subsidiaries
Interest received
Net cash from/(used in) investing activities
Cash flow from financing activities
Proceeds from issues of ordinary shares (net of expenses)
Proceeds from exercise of share options
Net cash from financing activities
Increase/(Decrease) 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
4,23
16
11
16
16
14
14
2021
£
2020
£
(7,933,729)
39,215
5,948
200,800
–
(671)
1,756,702
–
4,439,229
(1,492,506)
(181,160)
34,184
(1,639,482)
–
(4,784,700)
6,014,021
654,347
–
671
(5,153,316)
(404,684)
–
58,979
36,359
(4,819)
(1,289,781)
5,438,172
–
(1,319,090)
258,071
439,527
(621,492)
(36,180)
(3,658,442)
–
–
27,543
4,819
1,884,339
(3,662,260)
9,797,982
–
9,797,982
10,042,839
1,237,876
(194,771)
2,220,650
41,400
2,262,050
(2,021,702)
3,277,943
(18,365)
11,085,944
1,237,876
The notes form part of these Financial Statements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. ACCOUNTING POLICIES
Basis of Preparation
These Consolidated Financial Statements and the Company Financial Statements have been prepared in
accordance with UK adopted international accounting standards. The Consolidated Financial Statements and
the Company Financial Statements have been prepared under the historical cost convention with the exception
of FVTOCI investments.
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 has raised equity finance to fund its activities.
The Group had cash balance of £13m at 31 December 2021.
The Directors have reviewed the cash‐flow projection for the Group and concluded that it has sufficient finance in
place to meet its financial commitments for at least 12 months from the date of approval of the financial statements.
In forming their view, the directors have considered the impacts of COVID‐19 related restrictions and potential future
delays on the work schedule. Whilst the potential future impacts are unknown, the Board has considered the effect
that additional delays in the work schedule could have on the Group’s available cash resources. Similarly, the Directors
also considered the impact of the conflict in Ukraine and its potential impacts, which is likely to accelerate the EU’s
move to renewable energy sources and away from carbon fuels, assisting the ongoing transition to EVs and the
related need for lithium. Having factored in reasonably plausible scenarios and reasonable mitigating actions (for
example, the ability to reduce its uncommitted future expenditure), the director’s consider sufficient cash balance
are maintained under each scenario and that the Company will be able to meet its obligations as they fall due.
Accordingly, the Directors have concluded that these circumstances form a reasonable expectation that the Group
has adequate resources to continue in operational existence, for the foreseeable future. For these reasons, the
Directors continue to adopt the going concern basis in preparing the Annual Report and Accounts.
Basis of Consolidation
Where the company has control over an investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power over the investee, exposure to variable returns
from the investee, and the ability of the investor to use its power to affect those variable returns. Control is
reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of
control.
The Group accounts consolidate the accounts of Savannah Resources Plc and its domestic and foreign
subsidiaries, refer to Note 10. The foreign subsidiaries have been consolidated in accordance with IFRS 10
“Consolidated Financial Statements” and IAS 21 "The effects of Foreign Exchange Rates".
The consolidated financial statements present the results of the Company and its subsidiaries ("the Group") as
if they formed a single entity. Intercompany transactions and balances between group companies are therefore
eliminated in full.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
Equity Investments
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 the Statement of Comprehensive Income.
All equity investments, excluding subsidiaries, held are quoted and traded in an active market. 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 Non‐Current 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 project‐by‐project 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
for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
Acquisitions of Mineral Exploration Licences
Acquisitions of Mineral Exploration Licences through acquisition of non‐operational 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.
Property, Plant and Equipment
Tangible non‐current assets used in exploration and evaluation are classified within Tangible Non‐Current 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
These assets arise principally from the provision of goods and services to customers (e.g. trade receivables),
but also incorporate other types of financial assets where the objective is to hold these assets in order to collect
contractual cash flows and the contractual cash flows are solely payments of principal and interest. 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 IFRS 9, impairment provisions are recognised based on a forward‐looking 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.
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.
Bank Deposits
Bank Deposits represents deposits that are not expected to be converted into cash within less than a year and
therefore are classified as Non‐Current Assets. Bank Deposits are measured at cost, less any impairment.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
Guarantees
Guarantees represents deposits held 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 a year and therefore are classified as Other Non‐Current Assets and considered restricted
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 Statement of Comprehensive Income.
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.
Leases
All leases are accounted for by recognising a right‐of‐use asset and a lease liability except for:
•
•
Leases of low value assets; and
Leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically
the case) this is not readily determinable, in which case the Group’s incremental borrowing rate on
commencement of the lease is used.
On initial recognition, the carrying value of the lease liability also includes:
•
•
•
amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to exercise
that option; and
any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis
of termination option being exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for:
•
•
•
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the Group is contractually required to dismantle, remove
or restore the leased asset.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on
the balance outstanding and are reduced for lease payments made. Right‐of‐use assets are amortised on a
straight‐line basis over the remaining term of the lease or over the remaining economic life of the asset if,
rarely, this is judged to be shorter than the lease term.
Amounts payable for leases covered by the short‐term exemption are charged to the income statement on a
straight‐line basis over the term of the relevant lease.
Share‐Based 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.
Non‐market 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 non‐vesting conditions being
satisfied are included in the fair value recognised at the measurement date.
On lapse of the share options and warrants the cumulative fair value registered in the Share Based Payment
Reserve and Warrant Reserve respectively is transferred to Retained Earnings.
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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
Non‐Current Assets Held for Sale and Discontinued Operations
Non‐Current Assets Held for Sale
Non‐current 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.
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 non‐controlling interest in its former subsidiary after the sale.
Non‐current 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.
Discontinued Operations
The results of operations disposed during the year are included in the Consolidated Statement of
Comprehensive Income up to the date of disposal.
A discontinued operation is a component of the Group's business that represents a separate major line of
business that has been disposed of, has been abandoned or that meets the criteria to be classified as held for
sale.
Discontinued operations are presented in the Consolidated Statement of Comprehensive Income as a single
line which comprises the Post‐Tax Profit or Loss of the discontinued operation along with the Post‐Tax Gain or
Loss recognised on the re‐measurement to fair value less costs to sell or on disposal of the assets or disposal
groups constituting discontinued operations.
Contingent Consideration
The Group measures Contingent Consideration at the date of disposal at fair value and recognises the relevant
financial asset. The Group measures the Contingent Consideration at fair value at each reporting date and
changes in fair value are recognised in profit and loss.
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 judgements are set out below:
(a) 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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
1. ACCOUNTING POLICIES continued
(b) 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 the timing of granting
licences by the relevant ministers and governments, and the information provided by the Group's local
teams based on communications with these bodies.
(c) 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.
(d)
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 12‐months 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 compared with the present value of the loans to calculate the expected credit losses.
(e) Classification of Joint Arrangement
In determining the accounting treatment of the agreements signed with other non‐group 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 2020 and until the
termination of the Consortium Agreement in December 2021 Management concluded that there were no
relevant changes affecting the relationship between the Group and the other parties and therefore there
were no changes to the initial accounting treatment of these agreements. In December 2021 the
consortium agreement was terminated (Note 24).
(f) Fair Value Consideration of Disposed Operations
The Management applied judgement in the calculation of the fair value of the contingent consideration
received on disposal of the Omani Operations in 2020. The Management defined several scenarios and
their likelihoods with the expected cash flows associated to the recovery of the third‐party loan and
amounts receivable from the royalty rights. There has not been changes during 2021 affecting the
conclusion from prior year and the fair value is still nil.
Accounting Developments During 2021
The accounting policies adopted are consistent with those of the previous financial year. New standards and
amendments to IFRS effective as of 1 January 2021 have been reviewed by the Group and there has been no
material impact on the Financial Statements as a result of these standards and amendments.
Accounting Developments Not Yet Effective
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 Group is currently assessing the impact of these new accounting standards and amendments and does not
expect a material impact on the Group Financial Statements.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 Portugal, headquarter and corporate
costs, the Company’s third party investments and the discontinued operation in Mozambique.
Based on the Group’s current stage of development there are no external revenues associated to the segments
detailed below. For exploration and development in Portugal and the discontinued operation in Mozambique
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 at cost (although a transfer pricing markup
is required) and included in each segment below. Intercompany loans are eliminated to zero and not included
in each segment below.
Discontinued
Operation
Mozambique Portugal HQ and
Mineral Sands Lithium corporate Investments Elimination
£ £ £ £ £
2021
Revenue1 – 1,654,5672 1,032,274 – (2,686,841)
–
(5,948)
Impairment of other assets – – (5,948) – –
(139)
Finance Costs – (139) – – –
671
Interest Income – – 671 – –
Share based payments – – (200,800) – –
(200,800)
Gain/(Loss) for the year 2,371 (1,643,426) (1,874,779) – – (3,515,834)
Total Assets 676,357 15,487,686 12,708,684 31,575 – 28,904,302
Total Non‐Current Assets 1,483 14,881,026 6,776 – – 14,889,285
Additions to Non‐Current Assets – 1,891,109 – – –
1,891,109
Total Current Assets 674,874 606,660 12,701,908 31,575 – 14,015,017
Total Liabilities (130,940) (299,648) (1,247,671) – – (1,678,259)
Total
£
Discontinued
Discontinued Operation
Operation Mozambique
Oman Mineral Portugal HQ and
Copper Sands Lithium corporate Investments Elimination
£ £ £ £ £ £
Total
£
2020
Revenue1 – 57,607 1,110,8302 926,819 – (2,095,256)
–
(765)
Finance Costs – – (765) – – –
38,747
Interest Income – 33,928 – 4,819 – –
(58,979)
Share based payments – – – (58,979) – –
Loss for the year (5,401,176) (396,577) (1,219,127) (1,308,878) – –
(8,325,758)
Total Assets – 5,403,090 13,917,231 1,799,705 606,245 – 21,726,271
Total Non‐Current Assets – 5,274,621 13,624,502 12,723 – – 18,911,846
Additions to Non‐Current Assets – 86,342 1,095,311 – – –
1,181,653
2,814,425
Total Current Assets – 128,469 292,729 1,786,982 606,245 –
(1,219,997)
Total Liabilities – (65,977) (260,023) (893,997) – –
1 Revenues included the intercompany recharges within the Group which are eliminated.
2 Included in the Portugal Lithium segment is £1,654,567 (2020: £1,110,830) relating to intercompany recharges within this segment and therefore
eliminated in Elimination column.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
3. EMPLOYEES AND DIRECTORS
The average monthly number of employees (including Directors that receive remuneration) during the year
was as follows:
Group
Company
Operational
Non‐operational
Staff Costs (excluding Directors)
2021
No
28
18
46
2021
£
Group
2020
No
34
19
53
2020
£
Salaries
Bonus
Social security and other employee expenses
Pension
Share based payment expense (Note 23)
1,248,268
245,5491
179,784
58,056
93,195
1,247,351
187,6221
176,435
48,620
36,159
1,824,852
1,696,187
1 Bonuses unpaid as at 31 December 2021 and 31 December 2020
2021
No
1
7
8
2021
£
484,426
112,1961
74,545
58,056
93,195
822,418
2020
No
1
6
7
Company
2020
£
367,571
118,8001
60,655
48,620
36,159
631,805
The Group numbers in the above table includes £245,799 (2020: £472,569) which was capitalised as an
intangible asset.
Directors’ Remuneration
Salaries
Bonus
Social security and taxes
Pension
Share based payment expense (Note 23)
2021
£
564,837
206,5561
70,484
43,400
86,854
972,131
2020
£
478,401
287,8761
71,432
45,725
21,190
904,624
1 Bonuses unpaid as at 31 December 2021 and 31 December 2020
The numbers in the above table include £181,854 (2020: £240,337) of Directors’ Remuneration which was
capitalised as an intangible asset in relation to the provision of specific technical services.
In 2020 a gross loss (before taxes) of £5,400 on the exercise of share options was attributable to the Directors.
The costs related to these exercised share options were charged in the Consolidated Statement of
Comprehensive Income when the options were vested in prior years. No share options were exercised
during 2021.
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
for the year ended 31 December 2021
3. EMPLOYEES AND DIRECTORS continued
The remuneration of Directors who held office during the year was as follows:
Directors’ Directors’
emoluments 2021 emoluments 2020
Salary Bonus Pension Non‐ Total Salary Bonus Pension Non‐
cash cash
share share
options options
£ £ £ £ £ £ £ £ £
Executive Directors
Dale Ferguson 149,837 82,5561 – 35,071 267,464 125,651 94,1261 – 21,190
David Archer 310,000 124,0001 43,400 51,783 529,183 263,500 193,7501 45,725 –
Non‐Executive Directors
Matthew King 65,000 – – – 65,000 55,250 – – –
James Leahy 40,000 – – – 40,000 34,000 – – –
Maqbool Sultan – – – – – – – – –
Imad Sultan – – – – – – – – –
Manohar Shenoy – – – – – – – – –
Murtadha Sultan – – – – – – – – –
564,837 206,556 43,400 86,854 901,647 478,401 287,876 45,725 21,190
Total
£
240,967
502,975
55,250
34,000
–
–
–
–
833,192
1 Bonuses unpaid as at 31 December 2021 and 31 December 2020
In response to the coronavirus pandemic, all the Directors (who receive remuneration) volunteered to a temporary
salary reduction of 20% effective from March 2020. Salaries were returned to their original levels as and from
31 December 2020. This is the only driver (except for foreign exchange rate differences) of the year over year
increase in the Salary numbers in the above table.
As in 2020, the bonus amount payable to the Chief Executive Officer for 2021 financial year related to performance
against key, previously agreed objectives. These objectives included corporate and strategic initiatives; Barroso
Lithium Project progress; strategic outcome for Mutamba; DFS progress for Barroso Lithium Project; community
relations; development of the Company’s ESG agenda; senior management team development and succession;
development of a collaborative, goal oriented, ethical company with harmonious working relationships and personal
contribution. Performance against these criteria was assessed by the Remuneration Committee, against a maximum
potential bonus of 150% of base salary, at 40% of £310,000 (2020: 62.5% of £310,000). Notably, none of the 2021
bonus related to the pending matters of the EIA and the offtake agreement(s) relating to the Barroso Lithium Project.
As in 2020, the amount payable to the Technical Director for 2021 bonus related to performance against key,
previously agreed objectives. These objectives included progress on the Barroso Lithium Project EIA and DFS;
commercial development support, a strategic outcome for Mutamba and personal commitment. Performance
against these criteria was assessed by the Remuneration Committee, against a maximum potential bonus of 100%
of base salary, at 55% of AUD 275,004 (£149,837) (2020: 63.75% of AUD 275,004 (£147,824)). Notably, none of
the 2021 bonus related to the pending matter of the EIA for the Barroso Lithium Project.
Remuneration Policy and Long‐Term Incentive Plan
In 2019, 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. This resulted in a long‐term incentive plan (“LTIP”) intended to support this
policy being implemented in March 2019 which is designed to incentivise the Company’s executive Management
Team and other key employees. Along with the implementation of the LTIP, the Remuneration Committee
established an overall remuneration policy which included benchmarking exercises, feedback institutional
shareholders and engaging internationally recognised consulting firm Alvarez and Marsal. This resulted in a
remuneration policy for the executive Directors which combines short term incentives (“STI” – cash bonus which
is assessed against key business objectives) and long‐term incentives (“LTI” – under the Company’s LTIP). The STI
is based upon maximum potential bonus of 150% / 100% of base salary for the CEO / Technical Director respectively
and is assessed against key business objectives. The LTI element of the remuneration policy is currently being
addressed and will be guided by recommendations from Alvarez and Marsal, with related awards under it expected
to be issued under the Company’s existing LTIP.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
3. EMPLOYEES AND DIRECTORS continued
The LTIP was established to encourage long‐term 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”). 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 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 are reviewed annually by the
Company’s Remuneration Committee and did not change between 2020 and 2021. The LTIP also includes malus
and clawback clauses.
The LTIP is a share option scheme of the kind commonly adopted by listed companies. The Remuneration
Committee took advice and recommendations from leading remuneration consultancy, Alvarez and Marsal, which
formed the basis of quantum and key commercial features of the share options granted in 2021. Specifically, in
June 24,485,000 Options were issued with an exercise price of 4.68p and 24,485,000 with an exercise price of
6.24p, and in October 2021 3,840,000 Options were issued with an exercise price of 4.74p and 3,840,000 Options
with an exercise price of 6.32p (Note 23). The 4.68p and 4.74p exercise prices represented a 20% premium and
the 6.24p and 6.32p represented a 60% premium, both to the closing share price on the preceding business day
to the grant of the Options. The Company does not expect to issue further Options for the roles relating to the
Options issued in 2021 for three years following their issue. No share options were issued in 2020 under the LTIP.
The detail of the LTIP share options granted to the Executive Directors in 2021 is as follows:
Executive Directors
Dale Ferguson
David Archer
Total
No share options under the LTIP were granted to the Non‐Executive Directors.
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
– Non‐audit services (tax advice)
Fees payable to associated firms of the auditor for audit of subsidiaries
Fees payable to associated firms of the auditor for non‐audit services
of subsidiaries – tax services
Fees payable to associated firms of the auditor for non‐audit services
of subsidiaries – Research services
Professional fees
Foreign exchange loss / (gain)
Short term lease payments (Note 21)
Share based payments
Share Options
Quantity
7,250,000
20,000,000
27,250,000
2021
£
2020
£
35,369
44,663
62,074
24,348
19,473
59,970
34,968
16,009
9,021
8,638
5,503
1,044,713
213,088
11,593
200,800
–
771,712
(37,580)
72,612
58,979
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
5.
INCOME TAX
Analysis of the Tax Charge
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2021 nor for the
year ended 31 December 2020.
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:
2021
£
2020
£
Loss on ordinary activities before tax
(3,515,834)
(8,325,758)
Loss on ordinary activities multiplied by the standard rate
of corporation tax in the UK of 19% (2020: 19%)
Effects of:
Expenses not deductible for tax purposes
Different tax rates applied in overseas jurisdictions
Tax losses carried forward
Total Income Tax
(668,009)
(1,581,894)
1,280,750
173,218
(785,959)
1,401,351
(31,917)
212,460
–
–
Deferred Tax
The Group has carried forward losses amounting to £12,111,229 as at 31 December 2021 (2020: £15,272,1891).
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.
1 In the previous year the comparative figure was stated as £14,884,544 and following submission of definitive tax computations for the year
ended 31 December 2020 has been updated.
Tax losses related to the subsidiaries in Mozambique can be carried forward for a 5 year period. Tax losses related
to the subsidiaries in Portugal can be carried forward for a 14 year period for losses related to the 2016‐2019 tax
years and for a 12 year period for losses related to the 2020‐2021 tax years. There is no expiry date for tax losses
carried forward in the UK. The aging of the tax losses carried forward in Portugal and Mozambique is as follows:
Valid until
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2032
2033
No expiry date
Total
82
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
2021
£
388,564
148,404
298,979
226,425
689,023
–
–
–
21,562
133,665
445,575
899,209
1,060,981
1,475,968
6,322,874
12,111,229
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
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 £7,851,723 (2020: £4,833,165).
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
and Investor Warrant are not considered dilutive because the exercise of these would have the effect of reducing
the loss per share.
Reconciliations are set out below:
2021
£
2020
£
Basic Loss Per Share
Losses attributable to ordinary shareholders:
Total loss for the year
Total loss for the year from continuing operations
Total gain/ (loss) for the year from discontinued operations
Weighted average number of shares
Loss per share – total loss for the year
Loss per share – total loss for the year from continuing operations
Gain/(Loss) per share – total loss for the year from discontinued operations
8.
INTANGIBLE ASSETS
Cost
At 1 January 2020
Additions
Transfer to Assets classified as Held for Sale
Disposal assets on liquidation
Foreign exchange movements
At 31 December 2020
Additions
Disposal assets on relinquishment of rights and obligations (Note 24)
Foreign exchange movements
At 31 December 2021
(3,515,834)
(3,518,205)
2,371
(8,325,758)
(2,528,002)
(5,797,753)
1,609,019,120 1,343,743,432
(0.00620)
(0.00188)
(0.00432)
(0.00219)
(0.00219)
0.00000
Exploration and
Evaluation
£
21,208,400
1,508,794
(5,649,981)
(140,024)
319,033
17,246,222
1,817,570
(4,702,323)
(223,652)
14,137,817
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
8.
INTANGIBLE ASSETS continued
Amortisation and impairment
At 1 January 2020
Reverse on disposal of assets on liquidation
Impairment charged in the year
Transfer to Assets classified as Held for Sale
At 31 December 2020
Impairment charged in the year
At 31 December 2021
Net Book Value
At 1 January 2020
At 31 December 2020
At 31 December 2021
Exploration and
Evaluation
£
140,024
(140,024)
5,370,130
(5,370,130)
–
–
–
21,068,376
17,246,222
14,137,817
Included in additions is capitalised Plant and Machinery depreciation amounting to £107,136 (2020: £99,189)
(Note 9).
In December 2021 a Deed of Termination was signed with Rio Tinto in relation to the Consortium Agreement
signed in October 2016. Under this Deed of Termination the rights and obligations provided to Savannah Group
on Rio Tinto’s licences under the Consortium Agreement were relinquished, and agreed that no exploration or
development activities should be undertaken by any Savannah Group entity. Therefore all exploration and
evaluation assets related to the Mozambique licences are registered as disposed (Note 24).
In 2020 the Intangible Assets related to the disposed Omani operations were transferred to Assets classified as
held for sale. Intangible Assets classified as held for sale were measured at the lower of their carrying amount
and fair value less costs to sell. Management concluded that the fair value of the consideration and other
payments less costs to sell was lower than the carrying amount and therefore an impairment loss of £5,370,130
was recognised on the date of the transfer.
The Exploration and Evaluation Assets referred to in the table above comprise expenditure in relation to
exploration licences in Portugal. The Directors consider that for the purposes of assessing impairment, the
above exploration and evaluation expenditure is allocated to the following licence areas:
Portugal Lithium
Mozambique Minerals Sands
2021
£
2020
£
14,137,817
–
13,457,655
3,788,567
14,137,817
17,246,222
The Directors have reviewed the carrying value of the CGUs and have not identified any indicators of impairment
for the assets allocated to the licences in Portugal, and therefore there is no impairment charge in 2021 or 2020
for Portugal.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
9. PROPERTY, PLANT AND EQUIPMENT
Motor
Vehicles
£
Cost
At 1 January 2020 87,902
Additions 1,662
Transfer to Assets classified
as Held for Sale (36,770)
Foreign exchange movements 5,432
At 31 December 2020 58,226
Additions –
Disposal assets on
relinquishment of rights and
obligations (Note 24) –
Foreign exchange movements (3,825)
At 31 December 2021 54,401
Depreciation
At 1 January 2020 54,548
Charge for year 14,399
Transfer to Assets classified
as Held for Sale (36,770)
Foreign exchange movements 3,691
At 31 December 2020 35,868
Charge for year 11,959
Disposal assets on
relinquishment of rights and
obligations (Note 24) –
Foreign exchange movements (1,494)
At 31 December 2021 46,333
Net Book Value
At 1 January 2020 33,354
At 31 December 2020 22,358
At 31 December 2021 8,068
Office
Equipment
£
Plant and
Machinery
£
Land
£
Total
£
43,026
1,059
1,241,756
–
53,332
–
1,426,016
2,721
(10,293)
(1,378)
32,414
22,126
–
(249,869)
991,887
–
–
3,005
56,337
610,964
(47,063)
(242,810)
1,138,864
633,090
(16,784)
(8)
37,748
(1,182,880)
190,993
–
–
(18,121)
649,180
(1,199,664)
169,039
741,329
34,239
7,908
(10,293)
(1,575)
30,279
7,359
(18,645)
(533)
18,460
–
99,189
–
–
99,189
107,136
(224,012)
17,687
–
–
–
–
–
–
–
–
–
–
88,787
121,496
(47,063)
2,116
165,336
126,454
(242,657)
15,660
64,793
8,787
2,135
19,288
1,241,756
892,698
–
53,332
56,337
649,180
1,337,229
973,528
676,536
Plant and Machinery depreciation charged for the year amounting to £107,136 (2020: £99,189) is capitalised
in Exploration and Evaluation assets (Note 8).
As consequence of the signature of the Deed of Termination with Rio Tinto in relation to the Consortium
Agreement signed in October 2016 all property, plant and equipment related to the Mozambique licences are
registered as disposed (Note 24).
The additions in land reflect the land acquisition program that Savannah has in place in Portugal to acquire the
land required for the future development of the Barroso Lithium project.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
9. PROPERTY, PLANT AND EQUIPMENT continued
The above Property, Plant and Equipment is allocated to the following licence areas, representing the Group’s
Cash Generating Units (“CGUs”):
Mozambique Minerals Sands
Portugal Lithium
2021
£
–
676,536
676,536
2020
£
892,695
80,833
973,528
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, and therefore there is no impairment charge in
2021 or 2020 for Portugal.
10. INVESTMENT IN SUBSIDIARIES
Company
Non‐Current
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
Impairment charge
Disposal on relinquishment of rights and obligations (Note 24)
At 31 December 2021
Investment in
subsidiaries
£
894,993
3,776,651
(4,050,062)
621,582
–
(30)
(287,721)
333,831
The disposal on relinquishment of rights and obligations reflects the write‐off of assets associated to the historical
acquisition of the Mozambique project after the signing of the Deed of Termination with Rio Tinto (Note 24).
The Company had the following subsidiary undertakings, either directly or indirectly, at 31 December 2021,
which have been included in the Consolidated Financial Statements:
Subsidiary Registered office Nature of business Class of % Holding
share
Savannah Advisory Services Limited1 United Kingdom5 Holding Company Ordinary 100%
AME East Africa Limited1 United Kingdom5 Holding Company Ordinary 100%
Matilda Minerals Limitada3 Mozambique6 Mining & exploration Ordinary 100%
Panda Recursos Limitada2 Mozambique7 Mining & exploration Ordinary 99.99%
African Mining & Exploration Limited1 United Kingdom5 Dormant Ordinary 100%
Savannah Resources Portugal B.V.1 Netherlands8 Holding Company Ordinary 100%
AME Portugal Pty Ltd2 Australia9 Holding Company Ordinary 100%
Slipstream PORT Pty Ltd2 Australia9 Holding Company Ordinary 100%
Savannah Lithium Unipessoal Limitada2,4 Portugal10 Mining & exploration Ordinary 100%
Savannah Resources Lithium B.V.1 Netherlands8 Holding Company Ordinary 100%
Savana Matinal – Mining,
Unipessoal Limitada2 Portugal10 Mining & exploration Ordinary 100%
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
10. INVESTMENT IN SUBSIDIARIES continued
1 Directly held by Savannah Resources Plc
2 Indirectly held by Savannah Resources Plc
3 99.99% Indirectly held by AME East Africa Limited and 0.01% Directly held by Savannah Resources Plc.
4 Formerly Slipstream Resources Portugal Limitada, and formerly Savannah Lithium Limitada
5 Salisbury House, London Wall, London, EC2M 5PS, United Kingdom
6 Damiao de Gois, no 438, Sommerschield, Maputo, Mozambique
7 Rua 1301, Num 97, Sommerschield, Maputo, Mozambique
8 Herikerbergweg 88,1101 CM, Amsterdam, The Netherlands
9 Level 20, 16 Carrington Street, Sydney, NSW 2000, Australia
10 Rua Jose Eigenmann, No 90, parish of Nogueira, municipality of Braga, Portugal, 4715‐199
11. EQUITY INSTRUMENTS AT FVTOCI
Group
At 1 January 2020
Additions at cost
Disposals
Change in market value of investment
At 31 December 2020
Reclassification to Other current assets
Disposals
Change in market value of investment
At 31 December 2021
Company
At 1 January 2020
Additions at cost
Change in market value of investment
At 31 December 2020
Additions at cost
Disposals
Change in market value of investment
At 31 December 2021
Shares in
Investments at
FVTOCI
£
36,762
252,604
(3,272)
320,151
606,245
(2,109)
(654,347)
81,786
31,575
Shares in
Investments at
FVTOCI
£
33,935
250,050
320,151
604,136
–
(654,347)
81,786
31,575
Equity Investments are designated as Fair Value Through Other Comprehensive Income (FVTOCI).
In 2020 the Company received 46 million shares (net of costs) in Force Commodities Limited (‘Force’), a listed
company on the Australian Stock Exchange (AXS), as part of the consideration for the disposal of the Omani
operations in October 2020. In May 2021 Force changed its name to Critical Resources Limited (‘Critical Resources’).
During 2021 the Company sold all the shares held in Critical Resources (formerly Force Commodities Limited).
The fair value of the shares held by the Company is the quoted value at the reporting date. The fair value
hierarchy in 2021 and 2020 for these shares is level 1 as the valuation is based wholly on quoted prices.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
12. JOINT ARRANGEMENTS
Unincorporated consortium Mutamba Project
In December 2021 Savannah through its subsidiary AME East Africa Limited (‘AME’) signed a Deed of Termination
with Rio Tinto Mining and Exploration Limited (Rio Tinto) to terminate the Consortium Agreement signed
between these entities in 2016 (Note 24).
13. TRADE AND OTHER RECEIVABLES
Non‐Current:
Amounts due from Subsidiaries
Total Non‐Current Trade and Other Receivables
Current:
VAT Recoverable
Other Receivables
Total Current Trade and Other Receivables
Group
2020
£
Company
2021
£
2020
£
–
–
26,184,402
32,995,016
26,184,402
32,995,016
2021
£
–
–
66,867
895,191
962,058
98,852
95,449
194,301
12,744
194,385
207,129
–
47,908
47,908
The carrying value of trade and other receivables classified at amortised cost approximates fair value.
The Group and the Company applies the expected credit loss model to measure expected credit losses for
amounts due from subsidiaries and amounts due from third parties. The Group and 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 loans 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. Repayment of the intercompany 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 its 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 projects is the most important factor that will drive credit
losses. 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 in obtaining or renewing 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. In
the current period the Company estimates that an expected credit loss calculated of £4.0m (2020: reversal of
£0.4m) arises on the receivables from the subsidiaries, increasing the 2020 balance of £0.6m for the expected
credit loss.
The Group has a receivable from Gentor Resources Limited, a subsidiary of Critical Resources, which represents
contingent consideration from the disposal of the Oman operations in 2020 and has been valued at £nil as at
31 December 2021 and 31 December 2020.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
13. TRADE AND OTHER RECEIVABLES continued
Movements in the impairment allowance for the year ended 31 December 2021 is as follows:
Company
At 1 January 2020
Reversed during the year
Reversal of loan written‐off on disposal of discontinued operations
Reversed on liquidation of subsidiary
At 31 December 2020
Impairment charge
Foreign exchange movements
At 31 December 2021
Impairment
from Subsidiaries
£
2,917,871
(404,684)
(1,749,148)
(168,884)
595,155
4,047,901
(61,915)
4,581,141
Of the impairment charge for the year £4,008,685 is related to the exit of the Mozambique Mineral Sands
project.
The breakdown of the Amounts due from Subsidiaries as at 31 December 2021 is as follows:
Company
Amounts due from Subsidiaries:
Outstanding amount
Impairment
14. CASH AND CASH EQUIVALENTS
2021
£
2020
£
30,765,543
(4,581,141)
33,590,171
(595,155)
26,184,402
32,995,016
Group
2021
£
2020
£
Company
2021
£
2020
£
Cash at Bank and in Hand
13,002,084
2,000,209
11,085,944
1,237,876
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
15. OTHER CURRENT AND NON‐CURRENT ASSETS
Non‐Current:
Guarantees
Bank Deposits
Other
Total Other Non‐Current Assets
Current:
Other
Total Other Current Assets
Group
Company
2021
£
61,284
–
8,258
69,542
19,300
19,300
2020
£
65,592
590,175
7,938
663,705
13,670
13,670
2021
£
–
–
6,776
6,776
–
–
2020
£
–
–
6,776
6,776
–
–
The Non‐Current Assets ‐ Guarantees are deposits required by the local mining / environmental authorities in
relation to exploration / mining licences and applications thereof.
Non‐Current Assets – Bank Deposit of £nil (2020: £590,175) is a bank deposit with maturity lower than 3 months
as of the signing date but with the obligation to be renewed on the termination date and therefore classified
as Non‐Current Assets. This cash is associated to the bank guarantee necessary for the grant of mining licences
in Mozambique and is restricted cash until the end of the bank guarantee in 2023. This bank deposit has been
impaired after the signing of the Deed of Termination (Note 24).
16. SHARE CAPITAL
Allotted, issued and fully paid
At beginning of year
Issued during year:
Share placements
Exercise of share options
In lieu of cash for professional services
At end of year
2021
2020
£0.01
ordinary
shares
number
1,430,991,035
£0.01
ordinary
shares
number
14,309,910 1,297,459,820
£
257,968,7851
–
–
1,688,959,820
2,579,688
–
–
130,011,2701
1,500,0002
2,019,9453
16,889,598 1,430,991,035
£
12,974,598
1,300,113
15,000
20,199
14,309,910
1 In respect of the Share placements in 2021 the net proceeds were £9,797,982 (2020: £2,220,650) of which £7,218,294 (2020: £920,537) has
been recorded in Share Premium. The gross proceeds were £10,320,901 (2020: £2,340,203) and the costs of the Share placements £522,919
(2020: £119,553).
2 Refer to Note 23 for details of exercise of share options. £26,400 was recorded in Share Premium.
3 In respect of shares issued in lieu of cash for payment of professional fees. £16,160 was recorded in Share Premium.
The par value of the Company’s shares is £0.01.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
17. TRADE AND OTHER PAYABLES
Group
Company
Current:
Trade Payables
Other Payables
Accruals
2021
£
866,053
79,236
731,838
2020
£
357,247
136,935
713,077
2021
£
501,283
46,260
460,320
Total Current Trade and Other Payables
1,677,127
1,207,259
1,007,863
2020
£
178,901
110,841
534,765
824,507
In 2021 and 2020 accruals represent mainly bonuses to be paid to employees, insurance, and professional fees
in the Group for which invoices have not been received at the reporting date.
Part of Trade and other payables amounts relate to work performed in the projects which balances are
capitalised and therefore these are included in Investing not Operating cash flows.
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:
•
•
•
•
•
•
•
Intercompany Loan Receivables
Trade and Other Receivables
Cash and Cash Equivalents
Trade and Other Payables
Loans and Borrowings
Leases Liabilities
Investments
• Other Non‐Current Assets – Guarantees
Trade and other payables fall due for payment within 3 months from the reporting date.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
18. FINANCIAL INSTRUMENTS continued
Liquidity Risk
At the reporting date the Group’s cash balance was £13m (2020: £2m). This, in conjunction with the raising of
future cash through different options, 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 non‐revenue generating companies, the Company routinely raises 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 Portugal whose functional currency is Euro and in Mozambique whose functional
currency is MZN.
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, 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.
In addition, the Group is exposed through the cash held in foreign currencies. To mitigate this risk the Group’s
policy is to review the cash flow forecast identifying the currencies that will be required to settle liabilities in
future and hold the cash balances in the required currencies. From time to time when there is no certainty
about the currencies that will required for future expenditure the Group spreads its cash balances across globally
recognised reserve currencies to mitigate against adverse changes in exchanges rates, and the Company
monitors this regularly.
Market Risk
The Group holds equity investments in companies traded on active markets (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 £3,157
(2020: increase in other comprehensive income and net assets of £60,414). 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 Group and the Company are exposed to credit risk on its receivables from its subsidiaries and third parties.
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. The third‐party receivable is due
when its related mining project generate positive cash flow, the project is in the exploration phase and the
Group 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.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
18. FINANCIAL INSTRUMENTS continued
Financial instruments by category (Group)
Financial Assets
Fair Value
Through Other
Amortised Comprehensive
Cost Income Total
£ £ £
As at 31 December 2021
Investments – 31,575 31,575
Other Non‐Current Assets 69,542 – 69,542
Trade and Other Receivables 696,430 – 696,430
Other Current Assets 19,300 – 19,300
Cash and Cash Equivalents 13,002,084 – 13,002,084
Total Financial Assets 13,787,356 31,575 13,818,931
As at 31 December 2020
Investments – 606,245 606,245
Other Non‐Current Assets 73,530 – 73,530
Cash Deposits 590,175 – 590,175
Trade and Other Receivables 34,752 – 34,752
Other Current Assets 13,670 – 13,670
Cash and Cash Equivalents 2,000,209 – 2,000,209
Total Financial Assets 2,712,336 606,245 3,318,581
See review of the fair value hierarchy of fair value through other comprehensive income assets in Note 11.
Financial Liabilities
Financial
Liabilities at
Amortised Cost Total
£ £
As at 31 December 2021
Trade and Other Payables 1,677,127 1,677,127
Lease Liabilities 1,132 1,132
Total Financial Liabilities 1,678,259 1,678,259
As at 31 December 2020
Trade and Other Payables 1,207,259 1,207,259
Lease Liabilities 12,738 12,738
Total Financial Liabilities 1,219,997 1,219,997
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
18. FINANCIAL INSTRUMENTS continued
The Group's net exposure to foreign exchange at the reporting date was as follows:
Functional Currency of Entity
GBP MZN EUR Total GBP MZN EUR Total
2021 2021 2021 2021 2020 2020 2020 2020
£ £ £ £ £ £ £ £
Foreign currency financial assets
USD 7,466,462 69,649 317 7,536,428 99,575 26,865 22,184 148,624
EUR 3,958,196 – – 3,958,196 423,988 – – 423,988
AUD 307,035 – 4,184 311,219 874,112 – 5,523 879,635
OMR 8,558 – – 8,558 8,558 – – 8,558
GBP – – – – – – 821 821
Total 11,740,251 69,649 4,501 11,814,401 1,406,233 26,865 28,528 1,461,626
Functional Currency of Entity
GBP Total GBP Total
2021 2021 2020 2020
£ £ £ £
Foreign currency financial liabilities
USD 71,383 71,383 29,699 29,699
AUD 225,086 225,086 173,072 173,072
EUR 103,604 103,604 16,429 16,429
OMR 6,900 6,900 6,900 6,900
Total 406,973 406,973 226,100 226,100
The effect of changes in foreign currencies exchange rates against GBP at the reporting date on the foreign
currency denominated Cash and Cash Equivalents carried at that date would, all other variables held constant,
have resulted in the following:
USD EUR AUD
As at 31 December 2021 £ £ £
Movement exchange rates
against GBP +10% ‐10% +10% ‐10% +10%
Pre‐tax loss for the year (775,904) 634,831 (434,386) 355,407 (31,072)
Net assets 775,904 (634,831) 434,386 (355,407) 31,072
‐10%
25,422
(25,422)
USD EUR AUD
As at 31 December 2020 £ £ £
Movement exchange rates
against GBP +10% ‐10% +10% ‐10% +10%
Pre‐tax loss for the year (16,300) 13,336 (46,511) 38,054 (30,611)
Net assets 16,300 (13,336) 46,511 (38,054) 30,611
‐10%
25,045
(25,045)
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
18. FINANCIAL INSTRUMENTS continued
Financial instruments by category (Company)
Financial Assets
Fair Value
Through Other
Amortised Comprehensive
Cost Income Total
£ £ £
As at 31 December 2021
Other Receivables 26,184,402 – 26,184,402
Other Non‐Current Assets 6,776 – 6,776
Investments – 31,575 31,575
Trade and Other Receivables 12,105 – 12,105
Cash and Cash Equivalents 11,085,944 – 11,085,944
Total Financial Assets 37,289,227 31,575 37,320,802
As at 31 December 2020
Other Receivables 32,995,016 – 32,995,016
Other Non‐Current Assets 6,776 – 6,776
Investments – 604,136 604,136
Trade and Other Receivables 15,883 – 15,883
Cash and Cash Equivalents 1,237,876 – 1,237,876
Total Financial Assets 34,255,551 604,136 34,859,687
See review of the fair value hierarchy of fair value through other comprehensive income assets in Note 11.
Financial liabilities
Financial
Liabilities at
Amortised Cost Total
£ £
As at 31 December 2021
Trade and Other Payables 1,007,863 1,007,863
Total Financial Liabilities 1,007,863 1,007,863
As at 31 December 2020
Trade and Other Payables 824,507 824,507
Total Financial Liabilities 824,507 824,507
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
18. FINANCIAL INSTRUMENTS continued
The Company’s net exposure to foreign exchange risk at the reporting date was as follows:
Functional Currency of Entity
GBP Total GBP Total
2021 2021 2020 2020
£ £ £ £
Foreign currency financial assets
USD 6,876,165 6,876,165 3,939,068 3,939,068
EUR 29,552,010 29,552,010 23,324,327 23,324,327
AUD 224,044 224,044 808,618 808,618
OMR 8,558 8,558 8,558 8,558
Total 36,660,777 36,660,777 28,080,571 28,080,571
Functional Currency of Entity
GBP Total GBP Total
2021 2021 2020 2020
£ £ £ £
Foreign currency financial liabilities
USD – – – –
AUD 94,825 94,825 104,001 104,001
EUR 11,134 11,134 2,155 2,155
OMR 6,900 6,900 6,900 6,900
Total 112,859 112,859 113,056 113,056
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 or seek other financial
structures such as debt (project finance), royalties, streaming, mezzanine finance, 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 it is not probable that a future sacrifice of economic benefits will be required and the
amount is not capable of reliable measurement.
Consideration payable in relation to the acquisition of the Aldeia Mining Lease Application for lithium,
feldspar and quartz (Portugal lithium project)
In June 2019 the Company exercised its option to acquire a Mining Lease Application for lithium, feldspar and
quartz from private Portuguese company, Aldeia & Irmão, S.A.. The total purchase price for the acquisition is
EUR €3,250,000 (~GBP £2,730,000), which will only become due once the Mining Lease Application has been
granted and the Mining Rights transferred to an entity within the Group, at which point the agreed payment
schedule will consist of an initial EUR €55,000 (~GBP £46,000) payment with the balance due in 71 equal
monthly instalments. Upon delivery of the request for transfer of the Mining Rights to an entity within the
Group, the Group shall provide with a bank guarantee of EUR €3,195,000 (~GBP £2,680,000) that will be reduced
in accordance with the 71 monthly instalments. As at 31 December 2021 the mining lease has not been granted.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
20. RELATED PARTY DISCLOSURES
Details of Directors’ remuneration are disclosed in Note 3. During the year £214,413 (2020: £204,735) was
payable to Blue Bone Consulting Pty Ltd (a company controlled by Dale Ferguson) for consultancy fees of which
£93,303 (including bonus) (2020: £103,170 (including bonus)) remained unpaid. The amounts payable to Blue
Bone Consulting Pty Ltd have been included in the Directors’ remuneration in Note 3.
During the year Matthew King acquired 312,500 shares as part of the April 2021 fundraise for a consideration
of £12,500. No shares were acquired by the management in 2020.
21. LEASES
Right‐of‐Use Assets
Vehicles
£
Cost
At 1 January 2020 64,925
Additions –
Foreign exchange movements 3,658
At 31 December 2020 68,583
Additions 798
Foreign exchange movements (4,524)
At 31 December 2021 64,857
Depreciation
At 1 January 2020 27,140
Charge for year 18,008
Foreign exchange movements 1,726
At 31 December 2020 46,874
Charge for year 16,051
Foreign exchange movements (3,458)
At 31 December 2021 59,467
Net Book Value
At 1 January 2020 37,785
At 31 December 2020 21,709
At 31 December 2021 5,390
Lease Liabilities
Vehicles
£
At 1 January 2020 31,049
Additions –
Lease payments (19,843)
Foreign exchange movements 1,532
At 31 December 2020 12,738
Additions –
Lease payments (11,108)
Foreign exchange movements (498)
At 31 December 2021 1,132
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
21. LEASES continued
Current Liabilities
Non‐Current Liabilities
Total lease liabilities
2021
£
1,132
–
1,132
2020
£
11,608
1,130
12,738
The right‐of‐use assets and related lease liabilities are for the lease of motor vehicles. Total 2021 cash flow
outflow amount is £11,746 (2020: £19,075).
Other Leases
The Group has registered £11,593 (2020: £72,612) in the Statement of Comprehensive Income related to short‐
term leases. Short‐term leases meet the requirements to not be accounted for by recognising a right‐of‐use
asset and a lease liability, having a duration of 12 months or less and without reasonable certainty about their
renewal.
At 31 December 2021 the Other Lease commitments for the next 12 months is £12,385 (2020: £13,024).
These leases are for business premises in Mozambique and Portugal.
22. GROUP COMMITMENTS
As a condition of being granted with mining licence 9735C in Mozambique the Group, through Matilda Minerals
Lda, signed a bank guarantee of MZN 60,143,680 (~GBP £697,340) to be assigned to the Ministério Dos Recursos
Minerais e Energia (Ministry of Natural Resources and Energy). The guarantee is valid until the
28 November 2023 and Matilda Minerals Lda is obligated to maintain funds for the same amount as the
guarantee in a bank account (Note 15).
23. SHARE OPTIONS AND INVESTOR WARRANTS
Share Options and Investor 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.
2021 2020
Weighted Weighted
average Weighted average Weighted
remaining
exercise remaining exercise
Number price life Number price
life
Share Options
Opening Balance 20,150,000 8.5p 1.41 24,750,000 8.0p
Granted 58,650,000 5.5p 7.43 – –
Lapsed (11,200,000) 7.5p – (3,100,000) 7.4p
Exercised – – – (1,500,000) 2.8p
2.21
–
–
–
Closing Balance 67,600,000 6.0p 6.71 20,150,000 8.5p
1.41
98
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
23. SHARE OPTIONS AND INVESTOR WARRANTS continued
2021 2020
Weighted Weighted
average Weighted average Weighted
remaining
exercise remaining exercise
Number price life Number price
life
Investor Warrants
Opening Balance 343,432 11.3p 0.62 48,713,979 6.1p
Lapsed (343,432) 11.3p – (48,370,547) 6.0p
0.74
–
Closing Balance – – – 343,432 11.3p
0.62
Share schemes outstanding as at 31 December 2021 are as follows:
Outstanding Exercisable Outstanding Exercisable
31 December 31 December 31 December 31 December Exercise
2021 2021 2020 2020 Price
Share Options
March 2017 – – 10,700,000 10,700,000 7.6p
August 2017 – – 500,000 500,000 6.2p
January 2018 1,000,000 1,000,000 1,000,000 1,000,000 8.0p
March 2019 7,950,000 – 7,950,000 – 10.0p
June 2021 750,000 750,000 – – 4.7p
June 2021 750,000 750,000 – – 6.2p
June 2021 24,485,000 – – – 4.7p
June 2021 24,485,000 – – – 6.2p
October 2021 250,000 250,000 – – 4.7p
October 2021 250,000 250,000 – – 6.3p
October 2021 3,840,000 – – – 4.7p
October 2021 3,840,000 – – – 6.3p
67,600,000 3,000,000 20,150,000 12,200,000
Expiry
Date
28/02/21
17/08/21
25/01/22
11/03/24
30/06/26
30/06/26
30/06/29
30/06/29
01/10/26
01/10/26
01/10/29
01/10/29
Investor Warrants
August 2018 – – 343,432 343,432 11.3p
13/08/21
– – 343,432 343,432
All of the Share Options granted attract a share based payment charge.
The fair value of the Share Options and Investor Warrants at the date of grant have been measured using the
Black‐Scholes 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.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
99
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
23. SHARE OPTIONS AND INVESTOR WARRANTS continued
The Directors' interests in the Share Options and Investor Warrants of the Company are as follows:
At 31 December 2021
Options/
Warrants at
1 Jan 2021
Quantity
granted
during
the year
Exercised
during
the year
Options/
Lapsed Warrants
during
the year
at 31 Dec Exercise
price
2021
Date of
the grant
First
date of
exercise
Final
date of
exercise
Share Options
Dale Ferguson
David Archer
Dale Ferguson
David Archer
David Archer
Dale Ferguson
Dale Ferguson
2,000,000
7,000,000
3,000,000
–
–
–
– 10,000,000
– 10,000,000
– 3,625,000
– 3,625,000
At 31 December 2020
–
– (2,000,000)
–
– (7,000,000)
–
–
3,000,000
– 10,000,000
–
– 10,000,000
–
3,625,000
–
–
3,625,000
–
–
7.59p
7.59p
10.0p
4.7p
6.2p
4.7p
6.2p
01/03/17 01/03/17 28/02/21
01/03/17 01/03/17 28/02/21
11/03/19 11/03/22 11/03/24
30/06/21 30/06/24 30/06/29
30/06/21 30/06/24 30/06/29
30/06/21 30/06/24 30/06/29
30/06/21 30/06/24 30/06/29
Options/
Warrants at
1 Jan 2020
Quantity
granted
during
the year
Exercised
during
the year
Options/
Lapsed Warrants
during
the year
at 31 Dec Exercise
price
2020
Date of
the grant
First
date of
exercise
Final
date of
exercise
Share Options
Matthew King
Dale Ferguson
David Archer
Dale Ferguson
Investor Warrants
David Archer
Al Marjan Ltd1
Manohar
Shenoy2
1,500,000
2,000,000
7,000,000
3,000,000
2,857,143
4,952,381
1,904,762
– (1,500,000)
–
–
–
–
–
–
–
–
–
–
–
2,000,000
7,000,000
3,000,000
2.76p 16/03/16 16/03/16 15/03/20
01/03/17 28/02/21
7.59p
01/03/17 28/02/21
7.59p
11/03/22 11/03/24
10.0p
01/03/17
01/03/17
11/03/19
–
–
–
– (2,857,143)
– (4,952,381)
– (1,904,762)
–
–
–
6.0p
6.0p
14/07/17
14/07/17
14/07/17 14/07/20
14/07/17 14/07/20
6.0p
14/07/17
14/07/17 14/07/20
1 Two Directors are representatives of Al Marjan Ltd
2 Alternate Director
The range of inputs of the Share Options granted during 2021 were as follows:
Share Options June 2021 June 2021 June 2021
Stock price 3.9p 3.9p 3.9p
Fair value of option 1.7p 1.4p 1.2p
Exercise Price 4.7p 6.2p 4.7p
Expected volatility 55% 55% 59%
Expected life 5.5 years 5.5 years 2.5 years
Risk free rate 0.2% 0.2% 0.2%
June 2021
3.9p
0.9p
6.2p
59%
2.5 years
0.2%
Share Options October 2021 October 2021 October 2021 October 2021
4.0p
Stock price 4.0p 4.0p 4.0p
0.9p
Fair value of option 1.7p 1.4p 1.2p
6.3p
Exercise Price 4.7p 6.3p 4.7p
Expected volatility 55% 55% 59%
59%
2.5 years
Expected life 5.5 years 5.5 years 2.5 years
0.7%
Risk free rate 0.7% 0.7% 0.7%
100 SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
23. SHARE OPTIONS AND INVESTOR 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 non‐market vesting conditions (as noted above), is revised at each
period end.
Share Options granted
During the 2021 financial year 56,650,000 Share Options were issued to employees to assist with the
recruitment, reward and retention of key employees. These Share Options vest upon the employee meeting
service and/or performance conditions.
Additionally 2,000,000 Share Options were issued to Group advisors, which vest immediately.
No Share Options were issued in 2020.
The detail of the LTIP share options granted to the Directors is disclosed in Note 3.
Investor Warrants issued
No Investor Warrants were issued in 2021 or 2020.
24. DISCONTINUED OPERATIONS
In October 2016 Savannah, AME and Rio Tinto entered into a Consortium Agreement (‘CA’), whereby both
Savannah Group and Rio Tinto combined their respective projects in Mozambique to form an unincorporated
consortium. On the 1 December 2021 Savannah signed a Deed of Termination relating to the CA.
Under the Deed of Termination the following was agreed:
•
•
the relinquishment of the rights and obligations provided under the CA, including that AME EA will not
have an interest in Mutamba Rio and Rio Tinto will not have an interest in Matilda Minerals Lda’s Mining
Concession 9735C;
the transfer of Savannah’s in country team to Rio Tinto and that Savannah will commence the process of
divesting its residual interests in Mozambique and will not undertake exploration or development mining
activities in its licence;
•
Termination compensation amounting to $9.5m cash.
The post‐tax gain on relinquishment of the rights and obligations of Discontinued Operations was determined
as follows:
£
Termination Compensation 6,996,875
Net assets relinquished
Intangible Assets (4,702,323)
Tangible Assets (957,007)
Other non‐current assets (710,467)
Total net assets relinquished (6,369,797)
Pre‐tax gain on relinquishment of the rights and obligations
of discontinued operation 627,078
Related tax –
Gain on relinquishment of the rights and obligations of discontinued operations 627,078
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021 101
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2021
24. DISCONTINUED OPERATIONS continued
The detail of the result of discontinued operations is as follows:
Expenses other than finance costs
Gain on relinquishment of the rights and obligations
of discontinued operations after tax
Profit / (loss) on discontinued operations for the year
Earnings per share from discontinued operations
Basic and diluted loss per share
2021
£
2020
£
(624,707)
(430,505)
627,078
2,371
–
(430,505)
0.00000
(0.00032)
The statement of cash flows includes the following amounts relating to discontinued operations:
Net cash used in operating activities
Net cash from/(used in) investing activities
Net cash (used in)/from financing activities
Net cash (used in)/ from discontinued operations
25. EVENTS SINCE THE REPORTING DATE
There were no Events Since the Reporting Date to report.
2021
£
2020
£
(438,441)
6,105,942
(5,674,201)
(6,700)
(146,460)
(214,243)
387,205
26,502
102 SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2021
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DIRECTORS:
SECRETARIES:
COMPANY INFORMATION
for the year ended 31 December 2021
Matthew James Wyatt King
David Stuart Archer
Dale John Ferguson
James Gerald Leahy
Imad Kamal Abdul Redha Sultan
Maqbool Ali Sultan
Manohar Pundalik Shenoy
Murtadha Ahmed Sultan
Chairman
Executive Director
Executive Director
Non‐Executive Director
Non‐Executive Director
Non‐Executive Director
Alternate Director
Alternate Director
Christopher Michael McGarty
c/o Salisbury House
London Wall
London EC2M 5PS
Dominic Traynor
Salisbury House
London Wall
London EC2M 5PS
REGISTERED OFFICE:
Salisbury House
London Wall
London EC2M 5PS
REGISTERED NUMBER:
07307107 (England and Wales)
AUDITORS:
BANKERS:
NOMINATED ADVISOR:
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
35‐39 Maddox Street
London W1S 2PP
JOINT BROKERS:
finnCap Ltd
One Bartholomew Close
London EC1A 7BL
RBC Capital Markets
100 Bishopsgate
London EC2N 4AA
SOLICITORS:
REGISTRARS:
WH Ireland Limited
24 Martin Lane
London EC4R 0DR
Druces LLP
Salisbury House
London Wall
London EC2M 5PS
Share Registrars
3 The Millennium Centre, Crosby Way
Farnham
Surrey GU9 7XX
WEBSITE:
www.savannahresources.com