SAVANNAH RESOURCES PLC
Company No 07307107
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
CONTENTS
BUSINESS REVIEW
Chairman’s Statement
Chief Execu(cid:94)ve’s Report
ESG
Strategic Report
Barroso Lithium Project Overview
GOVERNANCE
Report of the Directors
Remunera(cid:94)on Report
Corporate Governance Statement
Statement of Directors’ Responsibili(cid:94)es
FINANCIAL STATEMENTS
Report of the Independent Auditors
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Posi(cid:94)on
Company Statement of Financial Posi(cid:94)on
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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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
1
CHAIRMAN’S STATEMENT
The energy transi(cid:60)on accelerates
The global energy transi(cid:94)on, in which lithium is set to
play such a cri(cid:94)cal role, moved forward rapidly in 2022.
Russia’s invasion of Ukraine, which is now sadly into its
second year, has led western na(cid:94)ons to rapidly reduce
their reliance on Russia’s produc(cid:94)on of oil & gas. As
energy prices have soared as a result, this has placed
even greater emphasis on the need for signi(cid:2)cant, and
in domes(cid:94)c renewable energy
rapid,
genera(cid:94)on capacity and accompanying energy storage
methods. Lithium ba(cid:55)eries have a key role to play in
renewable energy storage, in addi(cid:94)on to the cri(cid:94)cal role
they are already playing in the ever(cid:59)growing electric
vehicle market.
increases
This global geopoli(cid:94)cal backdrop con(cid:94)nues to create a
favourable economic environment for Savannah’s
planned development of the Barroso Lithium Project
(the ‘Project’) in Portugal. As was the case in 2021, EV
sales have seen signi(cid:2)cant year(cid:59)on(cid:59)year growth (55% to
10.5m worldwide) and the suite of lithium raw material
products – spodumene concentrate, lithium carbonate
and lithium hydroxide saw further notable price rises
during the year, as supply struggled to keep pace with
the rising level of demand. The price rises weren’t quite
as marked as those seen as the global economy began
to reawaken in 2021 (+250%(cid:59)500%). However, all three
key raw materials saw their prices more than double
during 2022, with the spodumene concentrate price,
which is the par(cid:94)cular focus of Savannah, increasing by
over 150% (source: S&P Global Pla(cid:55)s) to nearly
US$7,000/t in December 2022.
During 2022, there was also a notable change in the level
of government support in certain western countries for
strategic mineral produc(cid:94)on and industries key to the
energy transi(cid:94)on. The US, Canada and Australia began
to catalyse the energy transi(cid:94)on they are targe(cid:94)ng for
their economies, with the provision of funding for
projects deemed cri(cid:94)cal to its successful execu(cid:94)on. The
EU’s ‘Cri(cid:94)cal Raw Materials Act’ which was published in
mid(cid:59)March 2023 iden(cid:94)(cid:2)es lithium as both a cri(cid:94)cal and
a strategic raw material and calls for at least 10% of the
EU’s annual demand for strategic raw materials, such as
lithium, to be sourced from domes(cid:94)c supplies by 2030.
Among many other measures the Act also talks of
selected ‘Strategic Projects’ bene(cid:2)(cid:94)ng from support for
access to (cid:2)nance and shorter permi(cid:24)ng (cid:94)meframes.
Whether our own Project receives (cid:2)nancial support will
come down to speci(cid:2)c factors no doubt, but we were
pleased to see that a clear message in support of
domes(cid:94)c, responsibly managed produc(cid:94)on of cri(cid:94)cal
raw materials for use in Europe was given by the region’s
governing body. We (cid:2)rmly believe that our industry,
par(cid:94)cularly when focused on provision of the ‘new’ raw
materials which society so desperately needs if it is to
e(cid:53)ec(cid:94)vely tackle climate change, can sit comfortably
alongside communi(cid:94)es and other industries and earn a
valued place in society.
Transi(cid:60)on within a transi(cid:60)on
While the market backdrop to our e(cid:53)orts grew stronger
in 2022, and commercial interest in the Project remained
very encouraging, two events speci(cid:2)c to our own
situa(cid:94)on last July required us to adapt rapidly and e(cid:53)ect
our own transi(cid:94)on to keep our goal of responsible
track. As
lithium raw material produc(cid:94)on on
shareholders will remember, the (cid:2)rst event was the
proposal from Portugal's environmental regulator that
the evalua(cid:94)on process of the Project’s Environmental
Impact Assessment (‘EIA’), the major step in obtaining
the Environmental licence required, should con(cid:94)nue
under ‘Ar(cid:94)cle 16’ of the relevant legisla(cid:94)on. Following
the previous phases of the EIA review process, which
began in 2020, we took the decision to accept this
proposal as this op(cid:94)on featured both a (cid:2)xed (cid:94)me
period, 180 working days, and provided Savannah with
greater opportunity to engage directly with Portugal's
environmental regulator, Agência Portuguesa do
Ambiente (‘APA’) than in previous phases. The second
event was the departure of David Archer from the CEO
role, a(cid:29)er nearly nine years at the helm. Both events
created a sizeable challenge for our Company but
pleasingly, as I discuss below, our team have shown great
for(cid:94)tude and commitment when it has been needed and
have led us to the point we have now reached, awai(cid:94)ng
a decision on the Project’s future in just a few weeks.
Taking responsibility and moving forward
During his long tenure as CEO, David Archer did much to
progress Savannah to a point where it wholly owns, in a
stable European jurisdic(cid:94)on, one of the most signi(cid:2)cant
projects
in one of the market’s most prized
commodi(cid:94)es. A(cid:29)er his departure, it was important that
those remaining make the most of this opportunity. It
was also important that we quickly appointed a new CEO
who could not only take on the CEO’s du(cid:94)es around
market and stakeholder engagement, but also take a
leading role in the upcoming engagement with APA in
the Ar(cid:94)cle 16 process.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CHAIRMAN’S STATEMENT
Dale Ferguson, Savannah’s long (cid:94)me Technical Director
and a signi(cid:2)cant shareholder, was the ideal candidate
and I was delighted he accepted the role on an interim
basis to steer the Company through the then unknown
process of Ar(cid:94)cle 16. With so much to be done against
the clock, it has been equally pleasing to see other
members of the team also step up and take on new and
greater responsibility. In many cases this has meant
managing rela(cid:94)onships with key stakeholders and
poten(cid:94)al partners in addi(cid:94)on to other du(cid:94)es. While we
don’t shy away from the reality of the challenge that
faces us in terms of wider acceptance, I believe that
many of our rela(cid:94)onships with key stakeholders are
improving, even when views on the Project may not
always be shared.
Beyond the CEO change, we have also made other
changes to our board with the focus on broadening the
knowledge and relevant experience of the Group in
readiness
towards
produc(cid:94)on.
the much(cid:59)desired move
for
As Maqbool Ali Sultan (Non(cid:59)Execu(cid:94)ve Director) and
Murtadha Ahmed Sultan (Alternate Director for Imad
Sultan) re(cid:94)red from the Board, Manohar Shenoy
(Alternate Director to Maqbool Sultan) became a
Non(cid:59)Execu(cid:94)ve Director and Mary Jo Jacobi joined last
April as an Independent Non(cid:59)Execu(cid:94)ve Director. Mary
Jo brings a wealth of experience in business and ESG
ma(cid:55)ers gained through (cid:94)me with major energy
companies and banks, as well as periods working in the
public sector both in the UK as a member of the UK
Advisory Commi(cid:55)ee on Business Appointments, and the
US as Assistant United States Secretary of Commerce,
and Special Assistant to US President Ronald Reagan.
Mary Jo has already made a valuable contribu(cid:94)on
providing sage advice around communica(cid:94)on of our key
messages and helping to orientate our focus in the
rapidly evolving landscape of ESG guidelines and
repor(cid:94)ng.
In November, Diogo da Silveira joined as another
Independent Non(cid:59)Execu(cid:94)ve Director. As a former
McKinsey Partner, CEO of Portuguese forestry operator,
Navigator, and current Chair of Floene Energias, the
leading Gas Distribu(cid:94)on System Operators in Portugal,
Diogo has signi(cid:2)cant business experience, par(cid:94)cularly
within Portugal. As a result, he has a comprehensive
network among Portugal’s leading players in mul(cid:94)ple
industries as well as amongst poli(cid:94)cians, key decision
makers, and opinion leaders. Diogo is now taking a
leading role in communica(cid:94)ng the key messages from
the revised EIA to the Portuguese poli(cid:94)cal and business
communi(cid:94)es and the media.
Meanwhile the search for a permanent CEO con(cid:94)nues.
If we are fortunate enough to receive a posi(cid:94)ve decision
from APA and can move ahead with the Project’s
ongoing evalua(cid:94)on and development, it would be ideal
to have a new CEO in place as early as possible for that
journey. However, we are looking for a very speci(cid:2)c
combina(cid:94)on of skills, not least the ability to lead what
is e(cid:53)ec(cid:94)vely a Portuguese business, making sure it
integrates e(cid:53)ec(cid:94)vely into Portuguese business and social
frameworks, while also being comfortable with the
technical and social challenges of mining and dealing
with interna(cid:94)onal investors and other stakeholders. We
look forward to making an appointment during 2023.
EIA: We listened and responded
When wri(cid:94)ng my statement for last year’s Annual Report
I said that our key focus for 2022 would be on ge(cid:24)ng
the approval of the EIA for the Barroso Lithium Project
in Portugal. It was indeed the main focus of all of 2022,
but not in the way we expected at the beginning of the
year. At the start of 2022, we had expected to receive a
decision on the ini(cid:94)al EIA during the year. However, as
shareholders will now be very well aware, the regulator,
APA, suggested in July that in order to progress its review
of the EIA, the applica(cid:94)on should move into the so(cid:59)
called 'Ar(cid:94)cle 16' process. Updates on this process are
given throughout our Annual Report but as we stated in
our 6 July announcement, a(cid:29)er the extended previous
phases of the review process we welcomed this phase’s
strict (cid:94)me(cid:59)control element and the opportunity it brings
to engage regularly
in(cid:59)person with APA. Having
submi(cid:55)ed our revised EIA by the 17 March deadline set
by the Ar(cid:94)cle 16 process, we now expect a decision from
APA on or before 31 May 2023.
Dale Ferguson and his team have certainly taken on
board the feedback received from APA and have adapted
the Project’s design to re(cid:3)ect these preferences
including with respect to the road layout, the storage of
mine waste and tailings, protec(cid:94)on of water courses and
aqua(cid:94)c ecosystems and shorter hours of opera(cid:94)on in
the mining opera(cid:94)ons. We hope our team’s e(cid:53)ort has
resulted in a (cid:2)nal design which is to APA's sa(cid:94)sfac(cid:94)on so
we can move forward with the Project.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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CHAIRMAN’S STATEMENT
Being responsible and respec(cid:4)ul to stakeholders
We have persistently tried to engage with all
stakeholders, par(cid:94)cularly local communi(cid:94)es, through a
variety of formats during our (cid:94)me on the Project. During
the year, for example, we increased the number of
informa(cid:94)on centres in the area with shop space taken
in the centre of Bo(cid:94)cas town and we were pleased to
recruit new sta(cid:53) from the local popula(cid:94)on to sta(cid:53) the
centres and to represent Savannah in the community.
However, during this extended period of EIA review, it
has been di(cid:37)cult to provide comprehensive and (cid:94)mely
informa(cid:94)on on the Project and its status while signi(cid:2)cant
uncertain(cid:94)es persist.
Pleasingly, some good progress is being made with a
Social Impact Assessment (the 'Assessment' or the 'SIA')
in rela(cid:94)on to the Project. In the (cid:2)rst phase of the study,
completed in Autumn 2022, Community Insights Group
were on the ground in the local area, listening to views
of local people on the Project and their expecta(cid:94)ons and
preferences for bene(cid:2)t sharing from the Project. The
resul(cid:94)ng 'Social Issues Scoping Report' was submi(cid:55)ed to
APA as part of Savannah's revised EIA submission and
Savannah has used these (cid:2)ndings to shape its current
and future communica(cid:94)on with stakeholders now that
the revised EIA has been resubmi(cid:55)ed and its details
made public.
Some of the new formats being tried as a result of the
study are a comprehensive series of fact sheets which
summarise the key topics in the EIA as well as a second
community informa(cid:94)on sheet which summarises the
Project and highlights the new features which have been
introduced to further reduce the Project’s impact
following feedback from stakeholders.
Financial Overview
Star(cid:94)ng 2022 with a cash balance of £13.0m put
Savannah in a strong posi(cid:94)on to begin its plans to
progress the Barroso Lithium Project De(cid:2)ni(cid:94)ve
Feasibility Study (’DFS’). The unexpected development
in the environmental licencing process caused by the
movement into the addi(cid:94)onal Ar(cid:94)cle 16 phase caused
Savannah to change its planned ac(cid:94)vi(cid:94)es somewhat.
However, con(cid:94)nuing prudent cost management has
resulted
in a year end cash balance of £7.2m.
Importantly, throughout the period, the Company
con(cid:94)nued to invest in its asset base in Portugal (£2.6m;
2021: £1.9m). Hence, our opening cash posi(cid:94)on for 2023
is more than su(cid:37)cient to see us through the Ar(cid:94)cle 16
process, and will carry us into the second phase of the
environmental licencing process and allow us to progress
the DFS, which would follow a posi(cid:94)ve decision from
APA on the EIA.
In terms of the broader (cid:2)nancial performance, Savannah
recorded a loss from con(cid:94)nuing opera(cid:94)ons of £2.7m
(2021: £3.5m) with a £0.8m exchange rate gain resul(cid:94)ng
from treasury management (2021:
loss £0.2m).
Administra(cid:94)on fees were rela(cid:94)vely (cid:3)at over the period
at £3.5m
(2021: £3.3m), however H2 2022
Administra(cid:94)on fees were £0.3m lower than in H1 2022,
resul(cid:94)ng from a reduc(cid:94)on in professional fees plus the
remunera(cid:94)on costs eliminated following the departure
of David Archer who stepped down as CEO in July.
Outlook
Our team has worked tremendously hard over recent
months to make the revisions to the Project’s design and
I thank them sincerely for all their e(cid:53)orts. We hope the
resul(cid:94)ng EIA will meet with approval from APA’s
Evalua(cid:94)on Commi(cid:55)ee and the wider stakeholder group
as well. We are currently undertaking a fresh
communica(cid:94)on campaign in the local communi(cid:94)es to
explain the changes we have made to the Project and to
explain the poten(cid:94)al bene(cid:2)ts it can bring to local society.
Assuming that Savannah receives a posi(cid:94)ve decision
from APA, we will look to move forward with the Project
in a responsible way, being sure to communicate its
plans to all stakeholders.
As we look towards the future, your board will con(cid:94)nue
to follow the same responsible approach it has adopted
up to now in the overall management and posi(cid:94)oning of
Savannah. As we all know, the con(cid:94)nua(cid:94)on of the
con(cid:3)ict in Ukraine and wider global geopoli(cid:94)cal tensions
are placing considerable strain on the global economy in
the near term through rising cost in(cid:3)a(cid:94)on and risks to
supply chains. While the underlying market drivers for
the development of the Barroso Lithium Project remain
posi(cid:94)ve, Savannah’s board will con(cid:94)nue to closely
monitor both internal and external risks to the business,
and make decisions with a clear focus on the long term
stability and growth of the business.
For 2023, subject to receipt of the EIA, the next steps in
the overall Project development process would include;
re(cid:59)commencing the (cid:2)eldwork required for the DFS and
advancing
second,
Environmental Compliance Report of the Execu(cid:94)on
Project (‘RECAPE’) phase of the environmental licencing
process, and progressing with the decarbonisa(cid:94)on study
ini(cid:94)a(cid:94)ng
Study,
the
the
4
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CHAIRMAN’S STATEMENT
and o(cid:21)ake discussions. We also plan to provide a new
Scoping Study on the Project based on the latest design
and updated lithium price forecasts. Pu(cid:24)ng an ini(cid:94)al
o(cid:21)ake agreement or strategic partnership in place
would then, along with the comple(cid:94)on of all outstanding
technical studies in 2024, allow Savannah to move into
project (cid:2)nancing and ini(cid:94)a(cid:94)ng construc(cid:94)on of the
Project in 2025. 2026 would bring the comple(cid:94)on of
construc(cid:94)on and the long awaited (cid:2)rst produc(cid:94)on of
spodumene concentrate from the Barroso Lithium
Project. With that agenda ahead, 2023 could be
Savannah’s most exci(cid:94)ng year to date. My thanks also
go to our shareholders for their own commitment to
being part of Savannah’s journey.
Ma(cid:3)hew King
Chairman
Date: 4 April 2023
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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CHIEF EXECUTIVE’S REPORT
It is an exci(cid:94)ng (cid:94)me to be wri(cid:94)ng my (cid:2)rst CEO report
because in a few short weeks we will reach a de(cid:2)ning
moment for our Company. By the end of May the
decision from the Portuguese environmental regulator
on the Barroso Lithium Project Environmental Impact
Assessment is due to be announced. If we receive a
posi(cid:94)ve decision at that point, the development of the
Project as a source of responsibly produced lithium raw
material in Europe, and for Europe, will move a
signi(cid:2)cant step closer.
revised EIA
Everyone at Savannah along with our consultants and
advisers has worked fantas(cid:94)cally hard to get the
Company to this point. Whether it has been working on
the
itself, producing
submission
communica(cid:94)on materials in support of the EIA, mee(cid:94)ng
with stakeholders and shareholders, maintaining
rela(cid:94)onships with poten(cid:94)al commercial partners, or
managing our spending and cash (cid:3)ow, everyone has
played their part. Many of the dedicated employees and
Directors are also shareholders, including myself.
If the award of an environmental licence was based on
e(cid:53)ort alone, I’m sure Savannah would receive one.
However, as part of taking a responsible approach I
should reiterate that we cannot provide a guarantee that
the regulator will give a posi(cid:94)ve decision. If we receive
a nega(cid:94)ve decision, we would be required to submit a
wholly new EIA for the Project. Equally, I am keen to
point out, par(cid:94)cularly to the popula(cid:94)on living near the
Project, what a posi(cid:94)ve decision would mean in respect
of Project construc(cid:94)on (cid:94)melines and other associated
work streams. I have outlined the ‘next steps’ in the
process below, so that everyone is clear about what lies
ahead and when to expect each step to take place.
Stakeholders can be assured that Savannah will match
the outstanding technical work that must be completed
before we reach a Final Investment Decision with
ongoing community and stakeholder engagement.
While much of the talk over the past year has been
about the EIA, it is important to highlight that from a
commercial perspec(cid:94)ve, the Project remains the same.
There has been no change to the overall JORC compliant
resources present on the Project across the C(cid:59)100
Mining Lease (23.5Mt at 1.02% Li2O) and Aldeia Mining
Lease Applica(cid:94)ons areas (3.5Mt at 1.3% Li2O). The Mine
Plan submi(cid:55)ed to APA is s(cid:94)ll based on the sequen(cid:94)al
mining of four spodumene lithium bearing orebodies on
the C(cid:59)100 Mining Lease and the assumed tonnage of
‘mineable material’ is also unchanged at 17.3Mt.
The central plant will u(cid:94)lise conven(cid:94)onal technology and
an environmentally sensi(cid:94)ve processing circuit to
produce spodumene concentrate and a quartz(cid:59)feldspar
by(cid:59)product. The annual mining rate and spodumene
concentrate annual produc(cid:94)on rate are retained at
around 1.5Mtpa and c.200ktpa, respec(cid:94)vely, or
approximately 15% larger than the Project perceived for
the 2018 Scoping Study.
Environmental Impact Assessment – Work done,
decision awaited
While the extension to the EIA review process was not
something we had planned for, I’m hopeful that the
addi(cid:94)onal (cid:94)me spent will ul(cid:94)mately prove to be a good
investment for all stakeholders in the Project and deliver
the full opportunity for all which this project can o(cid:53)er.
Most importantly, the Ar(cid:94)cle 16 process has allowed us
the direct engagement with APA and the other groups
on its Evalua(cid:94)on Commi(cid:55)ee which was very limited in
the previous parts of the EIA review process. I trust this
engagement in turn has resulted in us producing a
revised design which gives the decision makers the
addi(cid:94)onal reassurances and peace of mind they need to
make an informed decision on the Project. We believe
that the revised design addresses the feedback we have
received during our construc(cid:94)ve mee(cid:94)ngs with APA and
its Evalua(cid:94)on Commi(cid:55)ee while retaining many of the key
components and features of the original design, which
have always made it a Project which tries to balance the
produc(cid:94)on of a mineral cri(cid:94)cal to Europe’s e(cid:53)orts to
tackle climate change with being sympathe(cid:94)c to the
local environment and popula(cid:94)on.
Savannah has provided a series of updates in recent
(cid:94)mes on the revised design and I brie(cid:3)y summarise just
four of the key areas below.
Waste management: Dry stack tailings storage to be
maintained, waste rock used for back(cid:2)ll
The original design included an ‘Integrated Waste
Landform’ approach to onsite waste storage, which
would have seen the inert waste rock from the mine
workings stored together with the inert, dried, and
compacted tailings from the processing plant in a highly
stable ‘dry stack’ structure. This innova(cid:94)on meant that
there would be no tradi(cid:94)onal, upstream ‘wet’ tailings
dam. In the revised design, the same innova(cid:94)ve, stable
dry stack approach is maintained for the tailings,
however, waste rock and tailings will be stored
separately. Furthermore, despite the inert nature of the
6
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CHIEF EXECUTIVE’S REPORT
tailings, the storage facility will be lined with an
impermeable membrane, elimina(cid:94)ng the possibility of
any solu(cid:94)ons from the tailings percola(cid:94)ng into the
subsoil and entering groundwater. Furthermore, the
natural groundwater (cid:3)ow direc(cid:94)on from the tailings
storage facility (‘TSF’) is back towards the Pinheiro pit,
which would contain any (cid:3)uids moving away from the
TSF if the lining was compromised. This represents
another degree of environmental protec(cid:94)on which the
new design provides.
To meet with the addi(cid:94)onal requirements of APA,
signi(cid:2)cant quan(cid:94)(cid:94)es of waste rock will now be stored in
Waste Rock Facili(cid:94)es (‘WRFs’) and then used for back(cid:2)ll
purposes. Savannah has taken an extremely cau(cid:94)ous
approach to this aspect of the design and ensured that
in the unlikely event of any failure of the largest WRF
adjacent to the Grandao pit, it can be contained in the
valley immediately surrounding the structure and no
material will reach the Covas River. Under the new plan,
the smaller Pinheiro and NOA pits will be completely
back(cid:2)lled, while the larger Grandao and Reservatorio
pits will be back(cid:2)lled to above the local water table to
avoid the forma(cid:94)on of a waterbody at each pit. In
addi(cid:94)on, any watercourses impacted by the workings
will be remediated and reinstated. A proposed WRF to
the north of the Grandao deposit has now been moved
to avoid impact on marshland in that area. There is no
risk from acid mine drainage as test work shows that the
waste rock is inert and that any trace elements will not
be leached out. Sediment runo(cid:53) from the WRFs
repor(cid:94)ng to the Covas River is considered the main risk
associated but detailed designs have been drawn up to
ensure that this will not happen. The residual,
permanent WRFs will be landscaped into the natural
topography and revegetated with na(cid:94)ve species.
Water: Local supply and aqua(cid:60)c environment to be
una(cid:8)ected due to Project’s self(cid:1)su(cid:6)ciency & recycling
In our design we have carefully considered both the
Project’s own water requirements and its impact on the
area’s water ecosystem.
The Project will be its own water source with water
collected from within or beneath mine workings and
from the wider Project footprint. The water will then be
stored in dedicated facili(cid:94)es on the Project (see image
on sec(cid:94)on ‘Waste management: Dry stack tailings
storage to be maintained, waste rock used for back(cid:2)ll’)
which will also act as sediment control structures and
have been designed to withstand a once in a 100 year
storm event. This approach means there will be no
requirement to extract water from the Covas River. The
Project’s water system is made more e(cid:37)cient by the 85%
recycling level expected to be achieved in the processing
plant, which accounts for 80% of the Project’s overall
water requirement. With this level of recycling, which
includes using recycled water in the Project’s buildings
for drinking, means that once the system is (cid:2)lled (a
process which can begin during the construc(cid:94)on phase)
the annual requirement for ‘top up’ water will equate to
less than half of the Project’s total water requirement.
In terms of protec(cid:94)ng the local water ecosystem, the
Project’s water system will be a closed network, with
signi(cid:2)cant water treatment infrastructure and recycling
capacity installed. Process water will not be discharged
to the environment, and any water that does need to be
released will meet with the Portuguese Government’s
regula(cid:94)ons. Furthermore, due to the local geology and
poor (cid:3)ow rates in the area’s aquifers, the Project is not
expected to in(cid:3)uence groundwater abstrac(cid:94)on for
either public supply (the nearest extrac(cid:94)on point is
Simula(cid:32)on of the Grandao pit, tailings storage facility, processing plant and water storage facili(cid:32)es during the
opera(cid:32)ng phase (le(cid:5)) and following rehabilita(cid:32)on, landscaping, revegeta(cid:32)on and closure (right):
Source: Company
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
7
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CHIEF EXECUTIVE’S REPORT
1.3km upstream from the nearest pit) or agricultural use.
However, Savannah has commi(cid:55)ed to
install a
replacement water source of equal size if there is any
impact.
As highlighted above, Savannah has commi(cid:55)ed to
avoiding impact on watercourses wherever possible to
protect these important habitats and to preserve water
quality. Where loca(cid:94)on of workings or infrastructure
makes this avoidance
impossible, Savannah has
designed to minimise impact. For example, the new river
crossing that will be required to access the Reservatorio
and NOA deposits will feature a single span bridge to
avoid infrastructure in the river and to minimise
disturbance on the riverbank. Savannah will rehabilitate
watercourses on a progressive basis where they have
been impacted.
Road access: Avoiding local villages and towns,
improving access to the area
A detailed Tra(cid:37)c Study
in accordance with the
regula(cid:94)ons of the Municipal Master Plan (PDM de
Bo(cid:94)cas) and Infraestruturas de Portugal, S.A. (IP, SA) was
completed into access op(cid:94)ons for the planned Project
for both light and heavy vehicles and to access poten(cid:94)al
impacts. Based on this study and stakeholder
consulta(cid:94)on a transport plan was developed including
two new roads which will further limit the movement of
Project(cid:59)related tra(cid:37)c through
local communi(cid:94)es.
Savannah has commi(cid:55)ed to limi(cid:94)ng road transport to
weekdays only between 7am and 8pm and by accessing
the Project from the north of the concession with a new
purpose built 11.6km access road, which connects the
Project to the R311 highway, all communi(cid:94)es to the
north of the Project would be bypassed and no water
crossings would be required. Furthermore, a sec(cid:94)on of
this road will be available for use by the public. A second
proposed 17km bypass sec(cid:94)on connec(cid:94)ng to the A24
highway would also avoid tra(cid:37)c passing through Bo(cid:94)cas,
Granja and Sapiaos which will mean that no Project
tra(cid:37)c will pass through any villages or towns between
the Project and the A24 freeway.
Rehabilita(cid:60)on
The revised EIA sees Savannah reitera(cid:94)ng its previous
commitment to rehabilita(cid:94)on of the Project area. Our
objec(cid:94)ve at the end of the project is to leave the land
rehabilitated, safe, valued and with new opportuni(cid:94)es
for di(cid:53)erent uses by the popula(cid:94)on. Savannah commits
to ensuring future sustainable use, whether for tourism,
agriculture, or other purposes. Today, of the 271
hectares (2.71km2) which will be temporarily or
permanently impacted by the Project’s development is
95% forest or scrub vegeta(cid:94)on with just 14 hectares, or
5%, consis(cid:94)ng of agricultural land and pastures. Hence,
the opera(cid:94)on’s impact on local agricultural land is very
limited. Furthermore, one of the key advantages of the
Barroso Lithium Project is that mining will take place in
a sequen(cid:94)al fashion which will allow for con(cid:94)nual
rehabilita(cid:94)on from early in the Project’s life. Hence, the
Project will never have large, disturbed areas and only
essen(cid:94)al opera(cid:94)ng areas will be le(cid:29) open at the end of
the Project’s opera(cid:94)ng life for the (cid:2)nal phase of
rehabilita(cid:94)on. Soil removed from working areas will be
carefully stored, maintained and enhanced to allow its
use during the landscape recovery phase.
Focus will be placed on harmonising the Project area
back into the local landscape by contouring landforms
and back(cid:2)lling the pits, replan(cid:94)ng with na(cid:94)ve species of
plants and trees, some of which have been lost in forest
(cid:2)res. In turn, this will encourage local fauna to recolonise
previously impacted areas.
On closure, the processing plant, other suppor(cid:94)ng
facili(cid:94)es, semi(cid:59)mobile and (cid:2)xed equipment will all be
dismantled and removed from site. Structures used to
deviate exis(cid:94)ng water courses will also be removed, and
water courses reinstated as close to their original
orienta(cid:94)on as reasonably possible. O(cid:37)ce buildings and
other facili(cid:94)es could be retained for subsequent
alterna(cid:94)ve use by the local community or local
businesses.
Monitoring of key environmental performance
indicators, such as water quality, will be maintained over
the long term once rehabilita(cid:94)on is completed. The
Project area will be o(cid:53)ered to the respec(cid:94)ve Parish
Councils, making it available for use by the communi(cid:94)es
for agriculture, tourism, and community owned
businesses.
8
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CHIEF EXECUTIVE’S REPORT
Barroso Lithium Project: Proposed new road layout avoids Project(cid:3)related tra(cid:7)c passing through local villages:
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Stakeholder Engagement – As cri(cid:60)cal as the mineral
itself
The extra (cid:94)me added by the Ar(cid:94)cle 16 process, as well
as the management and responsibility changes that we
have made amongst our team in the past nine months,
has allowed us to refresh and strengthen our
rela(cid:94)onships with key contacts within local and na(cid:94)onal
government, associated agencies and the broader
stakeholder group. As a result, we are pleased with the
greater level of engagement we are achieving with key
contacts.
members going forward. We have also been proac(cid:94)ve in
our provision of informa(cid:94)on about the revised EIA for
the community. The community informa(cid:94)on sheet,
men(cid:94)oned by the Chairman, was delivered to every
residence in the Municipality, and the follow up fact
sheets on individual EIA topics hopefully press home the
key messages we are keen to make regarding the
responsible manner in which we have designed and plan
to operate the Project. We are looking forward to
feedback on these publica(cid:94)ons as the Social Impact
Assessment work con(cid:94)nues.
As the Chairman outlined, we have also been
undertaking more ‘hands on’ interac(cid:94)on with local
communi(cid:94)es under the banner of the Social Impact
Assessment via Community Insights Group (‘CIG’). As
part of this exercise, CIG will be training our own sta(cid:53) to
make for more e(cid:53)ec(cid:94)ve engagement with community
Although they do not represent examples of the posi(cid:94)ve
stakeholder engagement we are trying to generate, we
are also equally comfortable to provide an update on the
two legal cases which have been brought involving our
Project.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
9
CHIEF EXECUTIVE’S REPORT
lodged by the Management
In the civil claim
Commission of the Covas do Barroso Baldios (the
'Baldios Commission') against certain private landowners
in respect of some land packages at the Project which
they sold to Savannah (RNS 25 July 2022), Savannah and
the private owners submi(cid:55)ed their contesta(cid:94)on to the
lawsuit at the end of October 2022. The claimant had
un(cid:94)l 13 January 2023 to reply to our contesta(cid:94)on, which
it did not. On 24 January 2023, the Vila Real district court
provided an addi(cid:94)onal (cid:94)meline of 10 working days for
the Baldios Commission to reply, this (cid:94)me only applies
to the legal protocols (i.e., not the legal arguments in the
lawsuit). During that extension the Baldios Commission
requested the judge to provide a minimum of 30 days to
allow it to correct some documenta(cid:94)on and a response
is awaited from the judge. Assuming this request is
granted, and the Baldios Commission is permi(cid:55)ed to
amend its documenta(cid:94)on, we would then have to wait
for the Vila Real district court to set a date for a
preliminary hearing (expected mid(cid:59)2023).
In the case brought by the Parish of Covas do Barroso
(‘Parish Council’) against the Republic of Portugal and
the Ministry of Economy as defendants in which
Savannah's wholly owned subsidiary, Savannah Lithium
Unipessoal Lda, was joined as the counter(cid:59)interested
party (not a defendant), the Mirandela Fiscal and
Administra(cid:94)ve Court acqui(cid:55)ed the defendants and
Savannah’s subsidiary in February 2023 having ruled that
the defendants were not the legi(cid:94)mate par(cid:94)es in the
lawsuit. The case was subsequently ex(cid:94)nguished in
March 2023 a(cid:29)er the period available for the Parish
Council to appeal expired. The li(cid:94)ga(cid:94)on was seeking to
nullify certain administra(cid:94)ve ac(cid:94)ons taken by the
defendants in June 2016 including the addi(cid:94)on of
lithium to and the expansion in the area of the C(cid:59)100
Mining Lease.
The lawsuits have neither impacted the Barroso Lithium
Project’s ac(cid:94)vi(cid:94)es nor the current environmental impact
assessment process which is moving to a conclusion. The
C(cid:59)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. The advice from
Savannah’s lawyers was and remains that the both the
ex(cid:94)nguished and ongoing claim are without founda(cid:94)on.
Next steps – The Barroso Lithium Project through to
produc(cid:60)on
Ongoing licencing:
As we have (cid:3)agged in our recent releases, if we receive
a posi(cid:94)ve ‘DIA’ decision from APA at this stage, we
expect it will be condi(cid:94)onal upon us ful(cid:2)lling some
further speci(cid:2)c design requirements which will be set
out with the decision. This is a normal aspect of the
environmental licencing process, which Savannah has
planned for, and this will be managed through the
remainder of the licencing process.
The DIA award is the (cid:2)rst approval in a mul(cid:94)(cid:59)stage
environmental licencing process. Receipt of the DIA
would allow the approval process to move on to the
subsequent Environmental Compliance Report of the
Execu(cid:94)on Project (‘RECAPE’) and environmental licence
stages during which approval of the Project's detailed
(cid:2)nal designs are received ('DCAPE') and the Project’s
environmental (cid:94)tle is awarded. These stages are
expected to run in parallel. If Savannah receives a
posi(cid:94)ve DIA decision, we expect the RECAPE phase to
take approximately 9(cid:59)12 months, meaning the TUA
could be awarded in second half of 2024.
Once the DCAPE declara(cid:94)on 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 opera(cid:94)on. These
licences cover permissions for construc(cid:94)on and use of
services on site such as power and water. The condi(cid:94)ons
set by the DIA and the agreement of the Project’s (cid:2)nal
designs in the RECAPE phase will also provide important
input parameters for the DFS.
Updated Scoping Study:
The extended (cid:94)metable on EIA and the accompanying
De(cid:2)ni(cid:94)ve Feasibility Study has meant we have not been
able to publish an update to the 2018 Project Scoping
Study. If the DIA decision is posi(cid:94)ve, we will prepare and
publish a new Scoping Study in the second half of 2023
based on the revised EIA and Mine Plan. This study
won’t re(cid:3)ect all of the details which will come through
the RECAPE phase however, it will act as a useful prelude
to the De(cid:2)ni(cid:94)ve Feasibility Study for all stakeholders. As
many shareholders will know, cost in(cid:3)a(cid:94)on in the mining
sector over the last 12 months has been running at over
20%, and Savannah will need to re(cid:3)ect this in our
modelling, along with any addi(cid:94)onal costs (and savings)
that result from the latest Project design. Overall,
between in(cid:3)a(cid:94)on and the Project’s expansion and the
EIA revisions, we expect this to result in an increase in
capex from the c.US$125m (including con(cid:94)ngencies)
es(cid:94)mate in the Scoping Study nearly (cid:2)ve years ago.
However, no amount of cost in(cid:3)a(cid:94)on, however sizeable,
has matched the 1300% in(cid:3)a(cid:94)on seen in lithium prices
since the low of US$375/t in August(cid:59)October 2020. While
we will not run our models using today’s spot price of
US$4,750/t over the long term, we will be able to
incorporate a spodumene price deck which re(cid:3)ects
updated forecasts from banks, brokers and market
10
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CHIEF EXECUTIVE’S REPORT
commentators, which all far exceed the average US$685/t
we used in the 2018 Study. I am con(cid:2)dent, the new
Scoping Study level economics will remain highly posi(cid:94)ve.
De(cid:2)ni(cid:32)ve Feasibility Study:
In terms of (cid:94)ming, assuming a posi(cid:94)ve DIA decision is
received, work to complete the DFS will be undertaken in
parallel with the remainder of the environmental licensing
process. Alongside the (cid:2)nal Project designs which will come
through the RECAPE phase of the ongoing environmental
licencing process, a modest (cid:2)eldwork programme is also
required. This will include drilling for reserve and resource
delinea(cid:94)on and geotechnical purposes. This programme has
been planned and Savannah would look to ini(cid:94)ate it during
H2 2023, subject to the DIA decision. Savannah expects the
DFS to be completed no later than 12 months following the
restart of the required (cid:2)eldwork, so in H2 2024.
Importantly, the process (cid:3)owsheet for the concentrator
plant was (cid:2)nalised in Q1 2022. Based on industry standard
equipment and processing
techniques and an
environmentally friendly reagent regime, which complies
with all relevant regula(cid:94)ons and allows both mica and
spodumene (cid:3)ota(cid:94)on to operate at near neutral pH, the
plant will be capable of producing a high quality, spodumene
concentrate grading (cid:1)5.5% Li2O with low levels of impuri(cid:94)es.
Decarbonisa(cid:32)on Study:
We are excited and commi(cid:55)ed to decarbonising the Project
and achieving our goal of net zero carbon over the life of the
Project. The (cid:2)rst phase of the Decarbonisa(cid:94)on Study took
longer than we had expected, but we have been pleased by
its (cid:2)ndings, including the 54% reduc(cid:94)on in the calculated
Scope 2 emissions the Project before we ini(cid:94)ate any
changes. We have also been very pleased by the interest we
have generated with a number of OEMs (vehicle
manufacturers), which are developing new zero emissions
surface mining vehicles. As we announced in early 2023, we
the key
will be
inves(cid:94)ga(cid:94)ng some of
further
recommenda(cid:94)ons from the (cid:2)rst phase of the study in the
second phase, with the assistance of our consultants and
ABB. This will include our op(cid:94)ons around increasing the
renewable power supply to the Project and forging
commercial partnerships with one or more of the OEMs
which has expressed interest in working with Savannah. We
look forward to providing further updates on the study
during the year and incorpora(cid:94)ng its (cid:2)nal recommenda(cid:94)ons
into our DFS and subsequent opera(cid:94)ons.
Commercial discussions:
With our focus on the EIA in recent months, we have not
been looking to (cid:2)nalise o(cid:21)ake agreements during the
period. Equally, for most of the counterpar(cid:94)es we have
been in discussions with, the uncertainty regarding the EIA
has checked their own willingness to commit to a long term
commercial arrangement. Importantly though, the level of
underlying interest in Savannah’s future produc(cid:94)on of
spodumene concentrate has not waned, despite the EIA
process. We con(cid:94)nued to receive new commercial inquiries
throughout the year and that has also con(cid:94)nued into 2023.
This is clear evidence, along with the persistent high price
levels, that sourcing of lithium raw materials, par(cid:94)cularly
from low risk jurisdic(cid:94)ons remains a signi(cid:2)cant challenge
for downstream users.
EV sales have remained very strong with European EV sales
growing again to 2.7m units (+15%) as part of global sales
of 10.5m (+55%, source EV(cid:59)volumes.com). Hence, when
Savannah is in a posi(cid:94)on to proceed to (cid:2)nalise commercial
arrangements, which we expect to do next year, we will be
pushing hard to secure deals which meet our criteria
including working with a partner or partners commi(cid:55)ed to
using Savannah’s product within the European ba(cid:55)ery
value chain, willing to talk about pricing levels in line with
reported spot prices at the (cid:94)me, and prepared to
contribute signi(cid:2)cantly towards the CAPEX of our Project
as part of the o(cid:21)ake’s (cid:2)nancial arrangements.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
11
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Construc(cid:32)on & Produc(cid:32)on: 2025, 2026 and beyond:
If the above (cid:94)metable can be met, Savannah should be
in a posi(cid:94)on to make its (cid:2)nal investment decision on the
Project in late 2024 / early 2025 and move on with
securing the (cid:2)nance required to construct the Project.
Construc(cid:94)on could then begin in H2 2025, and is
expected
take approximately 15 months.
Commissioning of the plant, ramp up of produc(cid:94)on, and
delivery of Savannah’s (cid:2)rst product to a European
customer could then all take place in H2 2026.
to
Outlook
Ge(cid:24)ng Savannah to this point, where we are just a few
weeks away from receiving a DIA decision that we have
waited for since 2020, has been a huge e(cid:53)ort for
everyone in the Company. I would like to take this
opportunity to thank them for their hard work and
resolve. My thanks also go to our shareholders for their
pa(cid:94)ence and support, and to those stakeholders who
have been willing to engage with us over the past year.
Savannah hopes to bring bene(cid:2)ts to all as it looks to
make its contribu(cid:94)on to Europe’s e(cid:53)orts to tackle
climate change through the provision of responsibly
sourced, low carbon, European lithium.
Dale Ferguson
Chief Execu(cid:94)ve O(cid:37)cer
Date: 4 April 2023
12
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
ESG
This review of Savannah’s ESG ac(cid:94)vi(cid:94)es represents the
Company’s (cid:2)(cid:29)h year of repor(cid:94)ng on these themes in a
dedicated sec(cid:94)on of the Annual Report. We trust that the
dura(cid:94)on of this repor(cid:94)ng gives some indica(cid:94)on of the
Company’s long(cid:59)term commitment to these ma(cid:55)ers, a
commitment which is matched by the ever greater focus
placed on corporate ESG prac(cid:94)ces by shareholders and
other stakeholders alike. For some, a natural resource
like Savannah, does not (cid:2)t with their
company,
percep(cid:94)on of an ESG ‘type’ company, but for the energy
transi(cid:94)on away from fossil fuels to be successfully
achieved, the mining industry is going to be needed more
than ever before by society to provide the raw materials
it needs. Therefore, it is in the interests of society and the
mining sector alike that the necessary expansion of the
industry and mass produc(cid:94)on of cri(cid:94)cal raw materials is
conducted as a mature and respec(cid:10)ul partnership. From
a mining company’s perspec(cid:94)ve this means opera(cid:94)ng in
a highly responsible and transparent way with a (cid:2)rm
focus on safety, environmental management, stakeholder
engagement and bene(cid:2)t sharing.
Savannah recognises the importance of sound environmental, social and corporate governance:
Source: Adobe stock images
The next (cid:2)ve years are set to be a de(cid:2)ning period for
Savannah during which the Company hopes to achieve
its goal of becoming an established responsible, low
carbon, producer of lithium in Europe which shares the
social and economic bene(cid:2)ts of its developments with
stakeholders while also genera(cid:94)ng value
for
shareholders. To achieve that goal, the Company’s
commitment and delivery of good ESG prac(cid:94)ces will need
to equal its commitment to technical excellence on a
Project’s development and opera(cid:94)on.
Environmental and Social Management System
The work begun in 2021 on the Corporate Environmental
and Social Management System (‘ESMS’) has been
completed. The ESMS can now act as the ‘manual’ that
provides the framework for Savannah to systema(cid:94)cally
iden(cid:94)fy and manage its most poten(cid:94)ally signi(cid:2)cant ESG
risks. It also provides a roadmap for our opera(cid:94)ng
Portuguese subsidiary to develop its own project(cid:59)speci(cid:2)c
ESMS, aligned with the Corporate ESMS, and in
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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compliance with all applicable ESG(cid:59)related
regula(cid:94)ons and permits.
laws,
Applica(cid:60)on of other guidelines and protocols
The ESMS incorporates elements from the Interna(cid:94)onal
Finance Corpora(cid:94)on’s Performance Standards on
Environmental and Social Sustainability, the World Bank
Group’s Environmental Health & Safety, Mining and
General Guidelines, and re(cid:3)ects the applicable principles
and provisions of the Quoted Companies Alliance’s
Corporate Governance Code.
However, as many stakeholders will already be aware,
there is a growing number of other ESG(cid:59)related
guidelines, goals, and frameworks produced by a number
of highly relevant groups and agencies. As Savannah
moves forward and looks to ini(cid:94)ate and then mature a
comprehensive ESG strategy, part of the requirement will
be to select the most appropriate guidelines to apply and
subsequently report to. Savannah is currently in the
process of assessing a number of these repor(cid:94)ng
frameworks put forward by various groups.
Portugal
Our environmental and social e(cid:53)orts during the year
were naturally heavily focused on Portugal and
par(cid:94)cularly dominated by the work in the second half of
the year engaging with APA and other key stakeholders
and undertaking the work of revising the EIA and
associated Mine Plan.
Environmental
All at Savannah were disappointed that the wait for the
DIA decision on the Barroso Lithium Project EIA was
extended
last July. However, a(cid:29)er the previous
24 months spent with great uncertainty during the ini(cid:94)al
review period, we were keen to take the opportuni(cid:94)es
which the Ar(cid:94)cle 16 phase o(cid:53)ered Savannah. This
included direct engagement with APA and the other
groups on its Evalua(cid:94)on Commi(cid:55)ee, and a clearly de(cid:2)ned
(cid:94)meline in law. As was reported during the second half
of 2022, our mee(cid:94)ngs with APA and the other groups
were cordial and very construc(cid:94)ve. Savannah’s team and
its consultants were given a clear understanding of what
aspects of the Project’s physical design and its associated
socio(cid:59)economic programmes needed to be addressed to
give the Project the best chance of receiving a posi(cid:94)ve
DIA decision from APA. The revised EIA, featuring an
updated site layout and mine plan which re(cid:3)ects the
feedback received, has now been submi(cid:55)ed and we
await the decision on or before 31 May 2023.
The Barroso Lithium Project has been speci(cid:2)cally
designed to minimise
impact on the natural
its
environment and local communi(cid:94)es wherever possible
and should, via the responsibly sourced lithium it will
produce, bring a signi(cid:2)cant net bene(cid:2)t with respect to
removal of CO2 and other emissions within the European
Union. The Project and all its processes have been
designed to meet or exceed the stringent regula(cid:94)ons that
exist in Portugal and the European Union.
One of the key advantages of the Barroso Lithium Project
is that mining will take place in a sequen(cid:94)al fashion which
will allow for con(cid:94)nual remedia(cid:94)on and rehabilita(cid:94)on of
the areas impacted from early in the Project’s life. Focus
will be placed on reharmonising the Project area with the
local landscape, replan(cid:94)ng with na(cid:94)ve species of plants
and trees to encourage local fauna, and protec(cid:94)ng and
re(cid:59)establishing local water courses. Another cri(cid:94)cal
feature is the innova(cid:94)ve ‘dry stacking’ technique that will
be used for the storage of tailings from the processing
plant. This will completely avoid the need for a tradi(cid:94)onal
‘wet tailings dam’ onsite.
Our objec(cid:94)ve at the end of the project is to leave the land
rehabilitated, safe, valued and with new opportuni(cid:94)es
for di(cid:53)erent uses by the popula(cid:94)on. Savannah commits
to ensuring future sustainable use, whether for tourism,
agriculture, or other purposes.
With regards to water, Savannah appreciates the cri(cid:94)cal
importance of both water availability and water quality
to the popula(cid:94)on and natural environment in the Barroso
region. Hence, the Project has been designed so that its
water usage does not impact other local users or the
natural environment. The Project is expected to be
self(cid:59)su(cid:37)cient for its water needs with the water required
collected on the site, primarily from within or below the
mine workings. The single largest consumer of water on
the Project will be the processing plant, and 85% of the
water used in the plant will be recycled and used again.
In addi(cid:94)on to not depriving other local users or the local
environment of water, nor will the Project pose a threat
to local water quality, thanks to its benign produc(cid:94)on
processes and innova(cid:94)ve water treatment and storage
process.
To provide peace of mind to local residents, we are also
planning to o(cid:53)er real(cid:59)(cid:94)me data on the Project’s
environmental performance to the public (air quality,
water quality, noise, ground vibra(cid:94)ons). This will be done
by making the relevant data, which we will collect from
14
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ESG
a series of sensors located across the Project area and
local surroundings, available via an app and our website.
In addi(cid:94)on, local communi(cid:94)es will be saved from
disturbance from Project(cid:59)related tra(cid:37)c thanks to a road
plan which avoids villages and towns and allows trucks
safe and e(cid:37)cient access onto the na(cid:94)onal highway
network.
strategy has been underway since March 2022. The
Project is signi(cid:2)cantly aided in its decarbonisa(cid:94)on goal
by the 60%+ renewable energy mix which already exists
in Portugal’s grid power. The commercialisa(cid:94)on of zero
or ultra(cid:59)low emission surface mining equipment over the
medium term is also likely to contribute signi(cid:2)cantly to
our plans.
As part of its commitment to the decarbonisa(cid:94)on of
Europe, in 2021 Savannah announced its inten(cid:94)on to
target net zero scope 1 and 2 emissions over the life of
the Project and is also seeking to signi(cid:2)cantly minimise
scope 3 emissions by exploring a number of innova(cid:94)ve
technology op(cid:94)ons. Work on this decarbonisa(cid:94)on
The following table summarises the key steps that
Savannah has taken and intends to take to minimise its
impact on the natural and urban environment
neighbouring the Barroso Lithium Project.
Summary of Environmental protec(cid:60)on measures and commitments made at the Barroso Lithium Project
Previous & Recent ac(cid:60)vi(cid:60)es/
Considera(cid:60)on commitments Future ac(cid:60)vi(cid:60)es/commitments
Air quality
management
Baseline monitoring of local air
quality completed
•
• Annual monitoring of local air
quality, during exploita(cid:94)on works
on the NOA pit
• Constant monitoring of local air quality
during opera(cid:94)ng phase and real(cid:59)(cid:94)me
repor(cid:94)ng of data to stakeholders
• Dust suppression through regular dowsing
of site roads from water trucks and use of
‘fog cannons’ at plant delivery point
• Future air quality to bene(cid:2)t from targeted
reduc(cid:94)ons to Scope 1 & 2 emissions to net
zero and addi(cid:94)onal reduc(cid:94)ons to Scope 3
emissions
• Comprehensive ac(cid:94)on plan prepared to
deal with any air pollu(cid:94)on incidents
Biodiversity
•
Baseline monitoring of local (cid:3)ora
and fauna completed
•
Survey of local land use completed
• Annual monitoring for the Iberian
• Rehabilita(cid:94)on
and
revegeta(cid:94)on
of
impacted areas on the Project and on
surrounding Savannah owned
lands
beginning during opera(cid:94)ng phase
Wolf completed
• Con(cid:94)nue monitoring of key land and
aqua(cid:94)c fauna in the area, including the
Iberian Wolf
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Considera(cid:60)on commitments Future ac(cid:60)vi(cid:60)es/commitments
Carbon abatement
•
• Decarbonisa(cid:94)on studies to be con(cid:94)nued.
Next steps to include:
o More detailed analysis of the op(cid:94)ons
available for 100% renewable energy
provision as part of the De(cid:2)ni(cid:94)ve
Feasibility Study on the Project; and
o
Studies with a number of mining
equipment OEMs to determine a site
speci(cid:2)c solu(cid:94)on for a transi(cid:94)on to
ba(cid:55)ery operated mining (cid:3)eet and
associated charging infrastructure
Execu(cid:94)on of study (cid:2)ndings to deliver on the
de(cid:2)ned emissions targets through (cid:2)nal
project design, ongoing op(cid:94)misa(cid:94)on during
produc(cid:94)on
ESG
3rd party Scope 1(cid:59)3 emissions
assessment completed in 2019.
Scope 1 & 2 emissions inventory
es(cid:94)mate revised and restated in
2022 (see below)
•
Commitment to move towards net
zero Scope 1&2 emissions during
opera(cid:94)ng phase
target
addi(cid:94)onal Scope 3 reduc(cid:94)ons
announced
and
• Decarbonisa(cid:94)on strategy ini(cid:94)ated
in March 2022 with study led by
the Portuguese environmental
consultant, ECOPROGRESSO. First
phase of study concluded:
•
o
o
o
the poten(cid:94)al
Con(cid:2)rma(cid:94)on
that Ba(cid:55)ery
Electric Mining Equipment will
provide the most e(cid:53)ec(cid:94)ve and
(cid:3)exible means to reduce Scope
1 emissions at the Project to
zero. Scope 1 emissions
represent 68% of the Scope 1
and 2 total
The es(cid:94)mate of Scope 2
baseline
emissions was
reduced by 54% from the
original 2019 forecast, based
for a
on
reduc(cid:94)on in the es(cid:94)mated
power requirement of the
Project's plant and a 41%
reduc(cid:94)on in the emissions
associated with Portugal's grid
power
A number of viable op(cid:94)ons are
to secure 100%
available
renewable energy supply to
the Project including regional
solar and wind genera(cid:94)on, on
market purchase, via direct
Power Purchase Agreements,
or a combina(cid:94)on of these. Use
of 100% renewable energy
would reduce the Project's
Scope 2 emissions to zero
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•
Previous & Recent ac(cid:60)vi(cid:60)es/
Considera(cid:60)on commitments Future ac(cid:60)vi(cid:60)es/commitments
Signed
a Memorandum of
Understanding (‘MoU') with ABB,
the global technology leader as the
(cid:2)rst of
the decarbonisa(cid:94)on
‘specialist’ appointments. Under
the MoU, ABB will:
Land rehabilita(cid:94)on
Noise & light
abatement
Transport
management
o
Apply its industrial automa(cid:94)on
and electri(cid:2)ca(cid:94)on exper(cid:94)se to
develop and co(cid:59)ordinate an
extensive suite of produc(cid:94)on
control and process solu(cid:94)ons for
the Project
o Work with ECOPROGRESSO
and its partners to provide
engineering support for the
Barroso
Project
Lithium
De(cid:2)ni(cid:94)ve Feasibility Study
• Ongoing rehabilita(cid:94)on of areas
impacted by previous explora(cid:94)on
ac(cid:94)vi(cid:94)es (drill pads and access
routes)
• Annual monitoring ongoing of the
small exploita(cid:94)on works on the
NOA deposit
•
Baseline noise studies completed
•
• Annual monitoring ongoing of the
small exploita(cid:94)on works on the
NOA deposit
Processing plant loca(cid:94)on selected
to reduce light and noise impact on
local communi(cid:94)es
Time limited, regulated blas(cid:94)ng
schedule included in Project plan
•
•
•
•
•
Con(cid:94)nue with rehabilita(cid:94)on of previous
explora(cid:94)on sites
comprehensive
Progressive
rehabilita(cid:94)on during and a(cid:29)er opera(cid:94)ng
phase using na(cid:94)ve species to revegetate
impacted areas
and
Execute Project design and plans at the
relevant (cid:94)me
Constant monitoring of noise emissions
during opera(cid:94)ng phase and real(cid:59)(cid:94)me
repor(cid:94)ng of data to stakeholders and the
environmental regulator
• Noise levels may be further reduced by the
introduc(cid:94)on of zero(cid:59)emission mining (cid:3)eet
and other equipment
•
•
•
•
Inclusion of new access roads in the
Project design to mi(cid:94)gate impact
on local communi(cid:94)es and minimise
use of local roads
Commitment to daily (cid:94)me limits on
truck movements during opera(cid:94)ng
phase
Execute access road plan
Evaluate use of low/zero emission road
trucks as part of decarbonisa(cid:94)on strategy
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Considera(cid:60)on commitments Future ac(cid:60)vi(cid:60)es/commitments
Visual impact
abatement
•
• Visual impact proac(cid:94)vely considered
in Project design (e.g., processing
plant loca(cid:94)on, road layout)
Large, vegetated earth berms
included
in Project design to
reduce the visual impact of the
opera(cid:94)on on local communi(cid:94)es
•
Waste
management
• Waste to be minimised through sale
of quartz and feldspar products
•
Processing plant waste (tailings) to
be dried and stacked to avoid risks
associated with wet storage in
tradi(cid:94)onal tailings dam
Water
management
•
•
•
•
•
• Waste rock to be stored
in
temporary storage facili(cid:94)es before
being used to (cid:2)ll closed pits as part
of rehabilita(cid:94)on programme
Beginning in the opera(cid:94)ng phase,
residual waste storage areas to be
contoured into exis(cid:94)ng topography
and progressively re(cid:59)vegetated
Con(cid:94)nued baseline monitoring of
including
local water courses,
surface and underground chemical
analysis
3rd party es(cid:94)mate of annual water
requirement for opera(cid:94)ng phase
completed
Project to be self(cid:59)su(cid:37)cient for
water usage through on(cid:59)site water
harves(cid:94)ng,
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
Vibra(cid:94)ons
management
• Monitoring of vibra(cid:94)on, during
blas(cid:94)ng works at the NOA pit
Re(cid:2)ne and (cid:2)nalise Project design through
licencing and DFS
the environmental
processes
•
Execute (cid:2)nal Project design
•
•
•
•
•
•
•
•
•
Re(cid:2)ne and (cid:2)nalise the Project design
through the environmental licencing and
DFS processes
Execute (cid:2)nal Project design
Comprehensive ac(cid:94)on plan prepared to
deal with any poten(cid:94)al pollu(cid:94)on incidents
Re(cid:2)ne and (cid:2)nalise Project design through
licencing and DFS
the environmental
processes
Execute (cid:2)nal Project design
Constant monitoring of local water quality
both upstream and downstream of the
process plant during and post opera(cid:94)ng
phase and real(cid:59)(cid:94)me repor(cid:94)ng of data to
stakeholder
Comprehensive ac(cid:94)on plan prepared to
deal with any poten(cid:94)al pollu(cid:94)on incidents
Constant monitoring of vibra(cid:94)ons during
opera(cid:94)ng phase and real(cid:59)(cid:94)me repor(cid:94)ng of
data to stakeholders
Comprehensive ac(cid:94)on plan prepared in
case the vibra(cid:94)ons results exceed what was
expected
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One of the other community consulta(cid:94)on ac(cid:94)ons which
is underway is dialogue with the local community groups
(Baldios) which acts as guardian of parcels of land on
behalf of the community, a por(cid:94)on of which may be
required for the Barroso Lithium Project. This dialogue is
designed to fairly compensate the local community
during the period construc(cid:94)on and opera(cid:94)on of
the mine.
Government & wider engagement
We met regularly with a range of ministers during the
year to keep them informed of developments on the
Project and progress with the Ar(cid:94)cle 16 process, and to
ensure that the economic opportunity available to
Portugal through our Project and the wider lithium
ba(cid:55)ery value chain is fully understood at the highest
level. We also met with European Commission Vice
President, Maroš Šef(cid:19)ovi(cid:19), who is responsible for
coordina(cid:94)ng the Commission’s work on the European
Ba(cid:55)ery Alliance, and representa(cid:94)ves of the US
Government, which is lobbying for cri(cid:94)cal raw material
produc(cid:94)on in Europe, as part of a wider, western,
response to the growing global compe(cid:94)(cid:94)on for these
resources.
Social
Local Community engagement
During the year Savannah made signi(cid:2)cant e(cid:53)orts to
maintain its interac(cid:94)on with the local communi(cid:94)es.
However, the ongoing wait for a DIA decision in the (cid:2)rst
half followed by Ar(cid:94)cle 16 process in the second half,
made it challenging for the Company to provide detailed
informa(cid:94)on on the Project’s future development or to
make (cid:2)rm commitments on Project(cid:59)related ma(cid:55)ers
which would involve the community. We did increase the
number of informa(cid:94)on centres in the area with shop
space taken in the centre of Bo(cid:94)cas town and we were
pleased to recruit new sta(cid:53) from the local popula(cid:94)on to
sta(cid:53) the centres and to represent Savannah in the
community. We con(cid:94)nued to give preference to local
suppliers of goods and services wherever possible, and
to provide support to local groups and events including
the local (cid:2)re service.
Pleasingly, a greater level of community engagement was
achieved on Savannah’s behalf by Community Insights
Group (CIG), the highly experienced social performance
consultancy, which has been commissioned to produce
a Social Impact Assessment (the 'Assessment' or the 'SIA')
in rela(cid:94)on to the Barroso Lithium Project. The SIA will
provide Savannah with a clear assessment of the range
of views that exists among stakeholders towards the
Project and the Company, as well as the expecta(cid:94)ons and
preferences that stakeholders have for bene(cid:2)t sharing
from the Project. The (cid:2)rst phase of the Assessment, saw
CIG representa(cid:94)ves spending (cid:94)me in the area during the
Autumn conduc(cid:94)ng interviews with local residents. The
outcome of this phase was a 'Social Issues Scoping
Report' which was submi(cid:55)ed to APA as part of
Savannah's revised EIA submission.
The (cid:2)ndings in this report demonstrated both local
residents’ concerns about the impact of the Project and
their apprecia(cid:94)on of the poten(cid:94)al for the Project to
generate jobs and to make the area more accessible.
Savannah has been using these (cid:2)ndings to shape its
current and future communica(cid:94)on with stakeholders
now that the revised EIA has been resubmi(cid:55)ed and its
details made public.
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Summary of social and government interac(cid:60)on and commitments made in rela(cid:60)on to the Barroso Lithium Project
Considera(cid:60)on Recent ac(cid:60)vi(cid:60)es Future ac(cid:60)vi(cid:60)es
Community
engagement
• Addi(cid:94)onal
Informa(cid:94)on
centre
Social
•
Impact
the
Comple(cid:94)on of
Assessment to support (cid:2)nalisa(cid:94)on of
Stakeholder
to
Engagement
complement future phases of the Project
Plan
•
•
Re(cid:2)ne and (cid:2)nalise the Bene(cid:2)t Sharing and
Good Neighbour Plans
Con(cid:94)nue with land acquisi(cid:94)on programme
•
•
•
•
•
Community
support
opened in Bo(cid:94)cas town
Impact
Ini(cid:94)al phase of Social
by
completed
Assessment
Group,
Insights
Community
incorpora(cid:94)ng
interviews with
community members and resul(cid:94)ng
in a 'Social Issues Scoping Report'
which accompanied Savannah’s
revised EIA submission to APA
Communica(cid:94)on also maintained
with local communi(cid:94)es through the
Informa(cid:94)on Centres and newsle(cid:55)ers
Land
programme
con(cid:94)nued
Produced a comprehensive series of
Informa(cid:94)on sheets for stakeholders
highligh(cid:94)ng the key design points
and
socio(cid:59)economic programs
within the revised EIA
acquisi(cid:94)on
Sponsorship of local cultural and
spor(cid:94)ng events & teams
•
•
•
• Dona(cid:94)ons
local (cid:2)re(cid:2)gh(cid:94)ng
to
service (forest (cid:2)re mi(cid:94)ga(cid:94)on)
Repairs made to local housing stock
Incorpora(cid:94)on of a founda(cid:94)on as part
of the Bene(cid:2)t Share Plan which will
invest
focused
programmes
community
in
Government
engagement
Engagement/Mee(cid:94)ngs held:
European Commission:
• Vice President Maroš Šef(cid:19)ovi(cid:19)
Portugal:
•
•
•
•
Portuguese Minister of Economy
and Mari(cid:94)me A(cid:53)airs
Portuguese Minister of Environment
and Energy Transi(cid:94)on
Portuguese
Infrastructure
Minister
for
Portuguese Secretary of State for
Energy
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Con(cid:94)nue with current (cid:2)nancial and
resource support for local events, teams
and groups; con(cid:94)nue with support for local
residents in need if posi(cid:94)ve DIA decision is
received
•
Re(cid:2)ne and (cid:2)nalise the Bene(cid:2)t Sharing and
Good Neighbour Plans
•
Con(cid:94)nue and increase engagement with
key na(cid:94)onal government ministers &
departments, and local administrators
• Maintain contact with Bri(cid:94)sh and US
Embassies in Portugal
• Maintain
European
contact with
Commission & relevant EU bodies (see
Membership sec(cid:94)on in Governance box
below)
ESG
Considera(cid:60)on Recent ac(cid:60)vi(cid:60)es Future ac(cid:60)vi(cid:60)es
Environmental regulator, APA
Ins(cid:94)tute for Nature Conserva(cid:94)on
and Forests
•
•
•
•
The Northern Portugal Regional
Coordina(cid:94)on and Development
Commission (CCDR(cid:59)N)
The Directorate(cid:59)General for Energy
and Geology (DGEG)
• Mayor of Bo(cid:94)cas
• Mayors of Dornelas parish, Covas do
Barroso parish, Ribeira de Pena
•
Portuguese Ambassador to UK
UK:
•
Bri(cid:94)sh Ambassador to Portugal
USA:
• US trade delega(cid:94)on at US Embassy,
Portugal
• O(cid:37)ce of Foreign Investment and
Na(cid:94)onal Security, U.S. Department
of Energy
Health & Safety
Local business
engagement
•
•
•
•
• Maintain priority focus on Health & Safety
and associated sta(cid:53) training
to priori(cid:94)se high
Con(cid:94)nued
standards of Health & Safety and
updated the related policies
Zero Health & Safety incidents or
loss (cid:94)me injuries reported in 2022
(2021: 0)
Became member of Mais Bo(cid:94)cas
(local Chamber of Commerce)
• Maintain and increase engagement with
local suppliers of goods and services
Preference given to local suppliers of
goods & services
• Maintain and increase engagement with
suppliers of goods and services across
Portugal
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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Considera(cid:60)on Recent ac(cid:60)vi(cid:60)es Future ac(cid:60)vi(cid:60)es
Other stakeholder
engagement
• A(cid:55)endance at relevant government
and trade events in Portugal and
elsewhere in the Europe
•
• Maintain presence at relevant government
and industry events in Portugal, UK and
across Europe
Public rela(cid:94)ons campaigns across mul(cid:94)ple
media channels in Portugal and beyond to
highlight importance of domes(cid:94)c ba(cid:55)ery
raw material supply
in Europe and
Savannah’s responsible approach to its own
lithium opera(cid:94)on
• Ac(cid:94)ve engagement with na(cid:94)onal
and interna(cid:94)onal press and media
resul(cid:94)ng in signi(cid:2)cant coverage of
Savannah and the Barroso Lithium
in Portugal and across
Project
Europe
Public consulta(cid:94)on phase of EIA
completed
2021)
including public ‘in(cid:59)person’ mee(cid:94)ngs
arranged by environmental regulator
(April(cid:59)July
•
• Met with the Food and Agriculture
Organisa(cid:94)on of the United Na(cid:94)ons
Sta(cid:53)
•
18 members of sta(cid:53) as at February
2023 with 60:40 male:female
demographic with 16%
from
minority ethnic groups; currently
34% of Project sta(cid:53) are from the
local community
Other ac(cid:94)vi(cid:94)es
•
Sponsorship of FST Lisboa, the
Lisbon University student electric
vehicle racing team
• Add to the exis(cid:94)ng team across the range
of disciplines required to develop the
Project
•
•
•
Project expected to generate over 300
construc(cid:94)on jobs during its development,
around 215 long term direct jobs during the
opera(cid:94)ng phase, and around 2,000 indirect
and induced jobs
Con(cid:94)nue to seek opportuni(cid:94)es to recruit
from the local popula(cid:94)on and within
Portugal
Evaluate other sponsorship and support
opportuni(cid:94)es with relevant groups
if
posi(cid:94)ve DIA decision is received
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
ESG
Governance
Considera(cid:60)on Recent ac(cid:60)vi(cid:60)es Future ac(cid:60)vi(cid:60)es
Board Composi(cid:94)on
• Annual evalua(cid:94)on of the Board’s
• Appointment of Directors to meet needs
iden(cid:94)(cid:2)ed by the Nomina(cid:94)on Commi(cid:55)ee
• Ongoing annual Board performance review
performance implemented
• Appointment of Mary Jo Jacobi,
Manohar Pundalik Shenoy and
Diogo Antonio da Silveira as Non(cid:59)
Execu(cid:94)ve Directors
in 2022.
Re(cid:94)rement from the board of
Maqbool Ali Sultan (non(cid:59)execu(cid:94)ve
director) and Murtadha Ahmed
Sultan (alternate director for Imad
Kamal Abdul Redha Sultan)
• Mary Jo Jacobi is a leader of the ESG
movement
and will oversee
Savannah's ESG program going
forward. She also has a wealth of
relevant industry and government
rela(cid:94)ons exper(cid:94)se
• Diogo Antonio
Silveira’s
appointment to the Board brings a
highly experienced business leader
with extensive experience
in
Portugal and Europe
da
Environmental &
Social Management
System
•
Finalised Corporate ESMS, aligned
with interna(cid:94)onally recognised ESG
standards
• Work ini(cid:94)ated on development of a
project(cid:59)level ESMS for the Barroso
Lithium Project
ESG Repor(cid:94)ng
•
Comple(cid:94)on of ESG ques(cid:94)onnaires
for ins(cid:94)tu(cid:94)onal investors and lithium
industry analysts
•
•
•
Finalise Barroso Lithium Project ESMS to
provide complementary framework for
environmental management and social
licence
engagement
commitments
alongside
Commence repor(cid:94)ng to speci(cid:2)c ESG
standards
Provision of relevant data into the Digbee
system for public disclosure
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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ESG
Considera(cid:60)on Recent ac(cid:60)vi(cid:60)es Future ac(cid:60)vi(cid:60)es
Membership of
industry Trade
bodies &
Associa(cid:94)ons
Lithium Industry:
• Maintain
•
•
current memberships and
evaluate membership of addi(cid:94)onal
ini(cid:94)a(cid:94)ves which would support our e(cid:53)orts
to follow industry best prac(cid:94)ces and
complement other ESG and corporate goals
Interna(cid:94)onal Lithium Associa(cid:94)on
Bri(cid:94)sh Standards Ins(cid:94)tute Technical
Commi(cid:55)ee on Lithium Industry
Standardisa(cid:94)on (UK is a par(cid:94)cipant
Interna(cid:94)onal
the
member of
Standards Organisa(cid:94)on’s Technical
Commi(cid:55)ee on Lithium Industry
Standardisa(cid:94)on)
European Union Associated ini(cid:94)a(cid:94)ves:
•
Investment
Pla(cid:10)orm
Business
managed by EIT InnoEnergy
European Ba(cid:55)ery Alliance
EIT RawMaterials
European Raw Materials Alliance
•
•
•
European Mining Industry:
•
European Associa(cid:94)on of Mining,
Metal Ores & Industrial Minerals
('Euromines’)
Portuguese ini(cid:94)a(cid:94)ves:
• Associa(cid:94)on for the Ba(cid:55)ery Cluster
(founding member)
• Mineral Resources Cluster
•
Business Council for Sustainable
Development
• Mais
of
(Chamber
Bo(cid:94)cas
Commerce in Bo(cid:94)cas area)
Forest Associa(cid:94)on of Trás(cid:59)os(cid:59)Montes
Forestry Associa(cid:94)on
Cotec Portugal
•
•
UK:
• Quoted Company Alliance
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
Considera(cid:60)on Recent ac(cid:60)vi(cid:60)es Future ac(cid:60)vi(cid:60)es
online
Policies and
Procedures
• Annual
•
Introduc(cid:94)on of policies to re(cid:3)ect the
Group’s growing maturity and transi(cid:94)on to
building and opera(cid:94)ng a mine
Introduce
the
requirements of poten(cid:94)al customers or
(cid:2)nanciers
policies
re(cid:3)ect
to
•
ESG
training
/
acknowledgement of Company’s
Code of Conduct and An(cid:94)(cid:59)Bribery
Code (Directors / Employees /
Company Consultants)
Implementa(cid:94)on of Social Media
Policy
Implementa(cid:94)on of Travel and
Expenses Policy
Transla(cid:94)on of key policies
Portuguese
into
Re(cid:2)nement of Group’s insurance
coverage in conjunc(cid:94)on with leading
global brokers, Marsh
• Nomad’s a(cid:55)endance at Board
Mee(cid:94)ng to keep the Directors
governance
abreast
developments
of
•
Enhancement of
protocols
IT
security
•
•
•
•
Risk Management
•
Review and update of Group’s Financial
Repor(cid:94)ng Procedure
• Annual Board Risk workshop
• Ongoing review of Risk Register
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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STRATEGIC REPORT
Sec(cid:90)on 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 repor(cid:90)ng requirements under the Act for the purposes of the Strategic Report,
together with guidance to other applicable sec(cid:90)ons of the 2022 Annual Report, which are incorporated by reference
into the Group‘s Strategic Report.
Principal Ac(cid:45)vi(cid:45)es, Fair Review of the Business and Future Developments
The following table provides summary reviews of the principal ac(cid:90)vi(cid:90)es of the Group in the year, (cid:4)nancial results
and poten(cid:90)al future developments. The comments below build on the commentary provided in the Chairman‘s
Statement and Chief Execu(cid:90)ve‘s Report:
Asset & loca(cid:45)on Ownership Ac(cid:45)vi(cid:45)es undertaken
The Barroso
Lithium project,
Portugal
100%
• Explora(cid:45)on and Evalua(cid:45)on: Beyond the small amount of mining
from the exis(cid:90)ng workings at the NOA deposit, which is undertaken
every year to meet the condi(cid:90)ons of the Mining Lease, (cid:4)eldwork
was kept to a very limited level during 2022 as a result of the
ongoing Environmental Impact Assessment (‘EIA‘) review process
(see below). Fieldwork which was undertaken included ongoing
baseline studies and monitoring, and speci(cid:4)c tasks required in
support of the work for the resubmission of the EIA under the
Ar(cid:90)cle 16 process.
A modest (cid:4)eldwork programme, including drilling for reserve and
resource delinea(cid:90)on and geotechnical purposes, is required for
comple(cid:90)on of the De(cid:4)ni(cid:90)ve Feasibility Study (‘DFS‘). This
programme has been planned and Savannah would look to ini(cid:90)ate
it during H2 2023 if a posi(cid:90)ve decision is received on the EIA from
the regulator.
• Environmental Licencing Process: For Savannah to achieve its goal
of becoming a responsible lithium raw material producer it must
secure a new Environmental Licence for its Barroso Lithium Project.
The major step in this Licencing process is the approval by Portugal‘s
environmental regulator (Agência Portuguesa do Ambiente, ‘APA‘,
the ‘Regulator‘) of an Environmental Impact Assessment for the
Project. An EIA evaluates a project‘s environmental and social
impact during its construc(cid:90)on, opera(cid:90)on, closure and post(cid:59)closure
phases. The outcome of the EIA is a project design and a set of
ac(cid:90)ons to be undertaken which minimises the environment and
social impact of the project throughout all its ac(cid:90)ve phases and over
the long term, post closure.
Having submi(cid:49)ed the Project‘s EIA in June 2020, Savannah spent
the (cid:4)rst half of 2022 con(cid:90)nuing to wait on a Declara(cid:90)on of
Environment Impact (‘DIA‘) decision from the Regulator following
comple(cid:90)on of the EIA‘s public consulta(cid:90)on phase in mid(cid:59)July 2021.
In early July 2022, before giving its (cid:4)nal DIA decision on the Project,
APA proposed that the EIA evalua(cid:90)on process for the Project should
con(cid:90)nue under Ar(cid:90)cle 16 of Decree(cid:59)Law No. 151(cid:59)B/2013, amended
and republished by the Decree(cid:59)law 152(cid:59)B/2017 of 11 December
(‘Ar(cid:90)cle 16‘), which regulates Environmental Impact Assessments
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STRATEGIC REPORT
Asset & loca(cid:45)on Ownership Ac(cid:45)vi(cid:45)es undertaken
in Portugal. Under Ar(cid:90)cle 16, Savannah had up to 180 business days
(deadline 17 March 2023) to redesign or revise certain physical
aspects of the Project‘s design and associated environment, ecology
and socio(cid:59)economic considera(cid:90)ons and resubmit them to APA for
considera(cid:90)on. Savannah agreed to the review process entering this
extra phase as it allowed the Company to meet with APA and
receive direct feedback from its Evalua(cid:90)on Commi(cid:49)ee on the ini(cid:90)al
EIA submission, an element which had been lacking in previous
parts of the review. Based on feedback received during a number
of produc(cid:90)ve mee(cid:90)ngs with APA and other member groups of its
Evalua(cid:90)on Commi(cid:49)ee, Savannah duly made revisions to the EIA and
resubmi(cid:49)ed its documents on 16 March 2023.
Under the legisla(cid:90)on, APA has a maximum of 50 business days to
review the resubmission and give its DIA decision. Based on the
date of resubmission, this gives APA un(cid:90)l 31 May 2023 to inform
Savannah on its decision and Savannah will have up to 10 days to
respond.
Subject to a posi(cid:90)ve DIA decision, the environmental licencing
process would then move onto the (cid:4)nal design phase
(Environmental Compliance Report of the Execu(cid:90)on Project,
‘RECAPE‘) and the Environmental License phase, which run in
parallel. If both phases are completed and the Project‘s detailed
(cid:4)nal designs are approved, the Barroso Lithium Project would
receive a posi(cid:90)ve ‘DCAPE‘ decision and its single environmental
(cid:90)tle (Título Único Ambiental‘).
• Other Licencing processes: Once the DCAPE declara(cid:90)on 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 opera(cid:90)on. These licences cover
permissions for construc(cid:90)on and use of services on site such as
power and water. Permits will also be required for the proposed
new road sec(cid:90)ons which are included in the revised Project design
to further limit tra(cid:27)c impact for among local communi(cid:90)es.
During the period Savannah remained engaged with key
stakeholders in these licencing process including local authority
leaders, ministers and Secretaries of State.
• De(cid:3)ni(cid:45)ve Feasibility Study (‘DFS‘): The major advance made in
DFS(cid:59)related workstreams during the year was in metallurgical test
work which resulted in the process (cid:5)owsheet for the concentrator
plant being (cid:4)nalised in Q1 2022. The Environmental Licencing
process once (cid:4)nalised will provide more key inputs, as will the
outstanding (cid:4)eldwork programme. The DFS will include: JORC
resource and reserve es(cid:90)mates; (cid:4)nal designs and schedules for site
layout, mining, processing, storage of processed materials, and
infrastructure; capital and opera(cid:90)ng cost es(cid:90)ma(cid:90)ons; labour
studies; commodity market studies; and a project risk review.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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STRATEGIC REPORT
Asset & loca(cid:45)on Ownership Ac(cid:45)vi(cid:45)es undertaken
Assuming a posi(cid:90)ve DIA decision is received from APA, we expect
the DFS work to be re(cid:59)ini(cid:90)ated in H2 2023 and completed no later
than 12 months following the restart of the required (cid:4)eldwork.
• Decarbonisa(cid:45)on Study: In March 2022 Savannah announced the
ini(cid:90)a(cid:90)on of a Decarbonisa(cid:90)on Strategy to support its goal of
producing a net carbon zero lithium product from the Project.
By se(cid:21)ng this goal Savannah is helping to minimise the carbon
footprint associated with the European lithium ba(cid:49)ery value chain,
thus maximising the environment bene(cid:4)t these ba(cid:49)eries can bring.
ECOPROGRESSO, a subsidiary of the Portuguese engineering and
environmental consultancy, Quadrante Group, was commissioned
to lead on the mul(cid:90)ple phased study. Phase 1, which was focused
on upda(cid:90)ng the es(cid:90)mate of the Project‘s greenhouse gases (‘GHG‘)
emissions based on interna(cid:90)onal guidelines, and de(cid:4)ning targets
for overall GHG reduc(cid:90)on was completed during the year and the
results announced in January 2023. The study con(cid:4)rmed that:
o
o
o
Ba(cid:49)ery Electric Mining Equipment will provide the most
e(cid:42)ec(cid:90)ve and (cid:5)exible means to reduce Scope 1 emissions at
the Project to zero. Scope 1 emissions represent 68% of the
Scope 1 and 2 total.
The es(cid:90)mate of Scope 2 baseline emissions was reduced by
54% from the original 2019 forecast, based on the poten(cid:90)al
for a reduc(cid:90)on in the es(cid:90)mated power requirement of the
Project‘s plant and a 41% reduc(cid:90)on in the emissions associated
with Portugal‘s grid power.
A number of viable op(cid:90)ons are available to secure 100%
renewable energy supply to the Project including regional solar
and wind genera(cid:90)on, on market purchase, via direct Power
Purchase Agreements, or a combina(cid:90)on of these. Use of 100%
renewable energy would reduce the Project‘s Scope 2
emissions to zero.
Next steps in the study are to include:
o More detailed analysis of the op(cid:90)ons available for 100%
renewable energy provision as part of the De(cid:4)ni(cid:90)ve Feasibility
Study on the Project; and
o
Studies with a number of mining equipment OEMs to
determine a site speci(cid:4)c solu(cid:90)on for a transi(cid:90)on to ba(cid:49)ery
operated mining (cid:5)eet and associated charging infrastructure.
• Government Engagement: Savannah sta(cid:42) engaged extensively
with stakeholders among government and government(cid:59)related
en(cid:90)(cid:90)es at the na(cid:90)onal and local level during the year. The mid(cid:59)year
team changes and the move into the Ar(cid:90)cle 16 phase of the EIA
review, gave the Company the opportunity to re(cid:59)invigorate
previous discussions and exis(cid:90)ng rela(cid:90)onships with stakeholders.
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STRATEGIC REPORT
Asset & loca(cid:45)on Ownership Ac(cid:45)vi(cid:45)es undertaken
As a result, Savannah is now bene(cid:4)(cid:90)ng from good working
rela(cid:90)onships with key o(cid:27)cials in the relevant departments,
agencies and ministries.
• Community Engagement: Savannah engagement with its local
community stakeholders evolved on a number of fronts during the
year. As in previous years, Savannah con(cid:90)nued with its support of
local groups and events and its preferen(cid:90)al use of local suppliers
for goods and services. The Company also increased the number
of informa(cid:90)on centres in the local area and recruited new sta(cid:42)
from the local popula(cid:90)on to sta(cid:42) these centres and to represent
Savannah in the community.
In parallel with the Ar(cid:90)cle 16 work on the EIA and to support
planning for future stakeholder engagement, Community Insights
Group (CIG) were commissioned to produce a Social Impact
Assessment (SIA). During H2 2022, CIG‘s sta(cid:42) undertook an
extensive survey amongst the local community to build a detailed
pro(cid:4)le of local a(cid:21)tudes towards the Project, to be(cid:49)er understand
the rela(cid:90)onship that members of the local community expect to
have with the Project, and what ac(cid:90)ons they would like Savannah
to undertake. The SIA was submi(cid:49)ed alongside the revised EIA to
APA in March 2023.
• Commercial discussions: Commercial interest in the future
produc(cid:90)on of spodumene concentrate from the Project remained
strong during the year, as the outlook for future market (cid:90)ghtness
persisted and raw material prices rose. During the year Savannah
remained in discussions with several poten(cid:90)al customer groups,
and kept these par(cid:90)es informed about the move into the Ar(cid:90)cle 16
phase on the EIA, and the impact on the Project‘s (cid:90)meline.
Savannah preference remains to supply concentrate to
European(cid:59)based customers and with our revised expecta(cid:90)on of
(cid:4)rst produc(cid:90)on in 2026, our (cid:90)meline is s(cid:90)ll well aligned with the
development schedules of the two proposed merchant re(cid:4)neries
in Portugal and other merchant plants elsewhere in Europe.
Finalising o(cid:18)ake agreements will be dependent on the Project
receiving a posi(cid:90)ve DIA decision and being able to proceed
as scheduled.
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
Execu(cid:90)ve‘s Report.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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STRATEGIC REPORT
Principal Risks and Uncertain(cid:45)es
The Board has iden(cid:90)(cid:4)ed various risk factors which taken individually or together may have a materially adverse
e(cid:42)ect 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 sec(cid:90)ons below, the Group understands and takes
proac(cid:90)ve steps in order to mi(cid:90)gate or eliminate those risks, and an intersec(cid:90)on of these is demonstrated in the
environmental licencing evalua(cid:90)on process, the failure to do so could result in the Project‘s approval being delayed
or withheld. Speci(cid:4)cally, in July 2021, following an extended review period, including a public consulta(cid:90)on, the
Portuguese environmental regulator, APA, proposed that the environmental licencing evalua(cid:90)on process for the
Project should con(cid:90)nue under ‘Ar(cid:90)cle 16‘ which provided Savannah a legally binding (cid:90)meframe to redesign or revise
certain physical aspects of the Project‘s design and associated environment, ecology and socio(cid:59)economic
considera(cid:90)ons and resubmit them to APA for considera(cid:90)on. Savannah agreed to the review process entering this
extra phase as it allowed the Company to meet with APA and receive direct feedback from its Evalua(cid:90)on Commi(cid:49)ee
on the ini(cid:90)al submission, an element which had been lacking in previous parts of the review. Based on feedback
received during a number of produc(cid:90)ve mee(cid:90)ngs with APA and other member groups of its Evalua(cid:90)on Commi(cid:49)ee,
Savannah duly made revisions to the Environmental Report and Mining Plan and resubmi(cid:49)ed those documents on
16 March 2023. Under the legisla(cid:90)on, APA has a maximum of 50 business days to review the resubmission and give
its Environmental Impact Statement (‘DIA‘) decision by 31 May 2023.
Natural Resource Project Development & Construc(cid:23)on Risk
There can be no guarantee that mineral explora(cid:90)on and evalua(cid:90)on programmes will result in the delinea(cid:90)on of a
commercially viable project. However, to reduce this risk, the Group focused its ac(cid:90)vity primarily on brown(cid:4)eld
loca(cid:90)ons, previously delineated resources or established explora(cid:90)on targets. Notably, the Barroso Lithium Project
in Portugal (‘BLP‘) which already has a granted Mining Lease following explora(cid:90)on work conducted by previous
owners.
When a commercially viable project is delineated, the Group will then be exposed to construc(cid:90)on and project
delivery risk factors. These risk factors will include: project (cid:4)nancing (see Future Funding Requirements sec(cid:90)on
below); licence and permi(cid:21)ng (see Licence and Title Risk sec(cid:90)on below); key person (see A(cid:49)rac(cid:90)on and Reten(cid:90)on
of Key People sec(cid:90)on below); and contractor and contract ful(cid:4)lment/cost overrun. Risks rela(cid:90)ng to the main project
contractors will be mi(cid:90)gated by comprehensive tendering and due diligence processes being performed to iden(cid:90)fy
competent and (cid:4)nancially robust service providers. Contract ful(cid:4)lment and cost management will be mi(cid:90)gated by
structuring contracts to include adequate penalty and incen(cid:90)ve clauses.
A(cid:4)rac(cid:23)on and Reten(cid:23)on of Key People
The success of the Group is dependent on the exper(cid:90)se and experience of the Directors and Senior Management
and the loss of one or more could have a material adverse e(cid:42)ect on the Group. The Board, supported by the
Remunera(cid:90)on Commi(cid:49)ee and professional advisers, has adopted a remunera(cid:90)on framework aimed at rewarding
performance, encouraging reten(cid:90)on of key sta(cid:42), and aligning their interests with those of shareholders, including
via its (share op(cid:90)ons based) Long(cid:59)Term Incen(cid:90)ve Plan.
Future Funding Requirements
The Group has an ongoing requirement to fund its explora(cid:90)on and mine development ac(cid:90)vi(cid:90)es and will need to obtain
addi(cid:90)onal (cid:4)nance to execute its plans. Poten(cid:90)al sources of (cid:4)nance include the established debt and equity capital markets
(which themselves may be impacted by global and regional shocks, or macro(cid:59)economic, poli(cid:90)cal or environmental trends),
o(cid:18)ake or other industrial partners which could provide prepayment and working capital facili(cid:90)es in exchange for long
term supply contracts, commodity based royalty and stream (cid:4)nance groups which can also provide up(cid:59)front payments
in exchange for exposure to future revenue or produc(cid:90)on streams, major suppliers, and grants or other facili(cid:90)es from
government or other centralised bodies (e.g., EU which is focusing par(cid:90)cularly on the clean energy revolu(cid:90)on which the
BLP helps to underpin). Finance could also be raised through the sale of a stake in the Project. Senior Management and
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the Board closely monitor the cash(cid:5)ows of the Group. Cash(cid:5)ow projec(cid:90)ons are presented regularly to the Board for
review and this assists in ensuring that expenditure is focused on areas of greatest development poten(cid:90)al. Overheads
and administra(cid:90)on costs are carefully managed. The mining industry has witnessed in(cid:5)a(cid:90)on running at high levels, but
posi(cid:90)ve recent, current, and future outlooks for lithium prices have seen much greater improvements than in(cid:5)a(cid:90)on.
Country Risk
A greater or lesser degree of sovereign and poli(cid:90)cal risk exists in all countries. At the repor(cid:90)ng date, the Group
carried out a combina(cid:90)on of explora(cid:90)on and mine development work in Portugal. Being a member of the EU,
Portugal operates within the framework of the EU, and in January 2022 it elected a majority government for the
(cid:4)rst (cid:90)me since 2005, and it is a pro(cid:59)lithium industry government. Country risk is further mi(cid:90)gated by ensuring the
Group priori(cid:90)ses local in(cid:59)country employment and maintains working rela(cid:90)onships at all levels with government,
administra(cid:90)ve bodies, local communi(cid:90)es, and other stakeholders. The Board ac(cid:90)vely monitors relevant poli(cid:90)cal
and regulatory developments and the appointment as a Non(cid:59)Execu(cid:90)ve Director in 2022 of Diogo da Silveira, a highly
experienced senior Portuguese business leader, has strengthened the Company‘s network within Portugal.
Licence and Title Risk
The gran(cid:90)ng, maintaining and renewal of the appropriate licence or licence equivalent is essen(cid:90)al to the Group‘s
explora(cid:90)on, mineral development, and mining ac(cid:90)vi(cid:90)es, and is usually at the discre(cid:90)on of the relevant government
authority. The Group seeks to ensure that its ac(cid:90)vi(cid:90)es are always in compliance with the relevant licencing and
associated standards, laws and regula(cid:90)ons and will a(cid:49)empt to respond in a (cid:90)mely manner to any changes in licence
regula(cid:90)ons. 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 explora(cid:90)on licences
into mining licences, may have a (cid:4)nancial impact on the Group through addi(cid:90)onal costs or extensions to work
programmes. The mining licence rela(cid:90)ng to the BLP has been the subject of legal due diligence in order to establish
validity of legal (cid:90)tle. It is in good standing and regular communica(cid:90)on is maintained with the relevant government
authority (Direção(cid:59)Geral de Energia e Geologia (DGEG)). Such ac(cid:90)ons mi(cid:90)gate the risks posed by challenges from
an(cid:90)(cid:59)mine groups in respect of licence and (cid:90)tle risk, as do the ac(cid:90)ons taken in respect of Social Licence Risk.
Social Licence Risk
In parallel with obtaining the necessary licences and permits to operate from na(cid:90)onal 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 signi(cid:4)cant 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 rela(cid:90)onships with its
neighbouring communi(cid:90)es and wider stakeholder groups and looks to mi(cid:90)gate ‘social licence‘ risk through its proac(cid:90)ve,
community engagement programmes, and through its wider group policies, including those rela(cid:90)ng to environmental
standards, corporate governance, code of conduct, and repor(cid:90)ng and communica(cid:90)on and in H2 2022 commissioned
a Social Impact Assessment. See ESG sec(cid:90)on for more details. The use of ‘lawfare‘ is a common tool used by par(cid:90)es
seeking to disrupt project developments, and details of a pending legal case rela(cid:90)ng to the Project is reported in the
Chief Execu(cid:90)ve‘s Report.
The Group‘s innova(cid:90)ve Bene(cid:4)t Sharing Plan (‘BSP‘) and Good Neighbour Plan (‘GNP‘) were part of the overall EIA
submission. Both plans will be (cid:4)nalised a(cid:26)er extensive analysis by the Group and with input from key local stakeholders
to address a number of area speci(cid:4)c social, economic, and environmental themes. Via the BSP and GNP, Savannah is
demonstra(cid:90)ng its desire to become a valued member of the local community through the commitments it is making
to operate the BLP in a responsible and sustainable way and to share with stakeholders the many bene(cid:4)ts the Project
can bring.
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Commodity Price Risk
The Group‘s commodity focus is lithium and the price movement in this commodity can be vola(cid:90)le. This vola(cid:90)lity
can be caused by numerous factors beyond the Group‘s control. A sustained period of signi(cid:4)cant price vola(cid:90)lity
has the poten(cid:90)al to adversely a(cid:42)ect the Group opera(cid:90)ons.
Assuming all previously highlighted development and construc(cid:90)on related risks have been mi(cid:90)gated and produc(cid:90)on
is established at the BLP, speci(cid:4)c commodity price risk can be more ac(cid:90)vely managed. This could be achieved in
the case of the BLP, where spodumene lithium and its co(cid:59)products are not currently exchange traded commodi(cid:90)es,
by entering into o(cid:42)(cid:59)take agreements as part of the Project (cid:4)nancing.
Global and Regional External Shocks
Opera(cid:90)ng in an increasingly globally mobile economy and popula(cid:90)on, the Group may be a(cid:42)ected by global or
regional shocks such as pandemics, energy crisis, in(cid:5)a(cid:90)on, or military con(cid:5)icts. The worldwide COVID(cid:59)19 pandemic
impacted the Group‘s day to day opera(cid:90)ons (e.g., ability to perform (cid:4)eld(cid:59)work) to undertake a variety of ac(cid:90)vi(cid:90)es,
although, the rapid approval and distribu(cid:90)on of mul(cid:90)ple vaccine programs provides an improved back(cid:59)drop for
future ac(cid:90)vity. Global or regional shocks poten(cid:90)ally impact the worldwide economy and the Group‘s (cid:4)nancial
outlook (e.g., in the event of a global depression impac(cid:90)ng demand for commodi(cid:90)es, albeit, lithium‘s unique place
in the EV revolu(cid:90)on provides a basis for its demand growth to remain strong), thus the Group maintains a minimum
cash balance to mi(cid:90)gate any such adverse impacts. However, ac(cid:90)ons by the EU and governments show that funds
designed to generate economic recovery will be targeted at projects which are deemed to have a posi(cid:90)ve impact
on climate goals, such as the BLP. Furthermore, the global response to recent external shocks has led na(cid:90)onal
governments, the EU, and global industrial business to focus on energy security and regionalisa(cid:90)on of supply chains,
thus increasing the importance to Europe of the BLP.
Analysis of the Development and Performance of the Business
This informa(cid:90)on is contained in the Chairman‘s Statement, and the Chief Execu(cid:90)ve‘s Report.
Analysis of the Posi(cid:45)on of the Business
This informa(cid:90)on is contained in the Chairman‘s Statement, and the Chief Execu(cid:90)ve‘s Report.
Key Financial Performance Indicators and Milestones
Our key performance indicators (‘KPIs‘) help the Board and execu(cid:90)ve Management assess performance against our
strategic priori(cid:90)es and business plans.
Analysis Using Key Financial Performance Indicators and Milestones
KPIs Descrip(cid:45)on Performance
Cash balance (for
explora(cid:90)on,
development and
going concern
purposes)
Cash balance available to
con(cid:90)nue with the ac(cid:90)vity
of the Group.
At the repor(cid:90)ng date the Group‘s cash balance was £7.2m
(2021: £13.0m). The major source of cash funding during the
year was the 2021 year(cid:59)end balance resul(cid:90)ng from an
oversubscribed £10.3m equity placing and subscrip(cid:90)on in
April 2021 and the US$9.5m termina(cid:90)on compensa(cid:90)on from
Rio Tinto on cancella(cid:90)on of the unconsolidated Mutamba joint
venture in December 2021. The Directors believe that the
Group‘s project por(cid:8)olio is a(cid:49)rac(cid:90)ve and are con(cid:4)dent that
funding will con(cid:90)nue to be secured and that it is appropriate
to prepare the Financial Statements on a going concern basis.
The Company currently has a number of op(cid:90)ons in respect of
future (cid:4)nancing and has engaged with poten(cid:90)al (cid:4)nanciers,
strategic partners, and o(cid:18)akers (equity investment and / or
prepayments).
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KPIs Descrip(cid:45)on Performance
Subscrip(cid:90)on and
placing of shares
To
its
con(cid:90)nue with
opera(cid:90)ng ac(cid:90)vi(cid:90)es as an
ac(cid:90)ve and growing mineral
development group, the
Group has raised funds
from the market.
Given its opening cash balance of £13.0m at the start of the
year, the Company did not deem it necessary to raise any
funds via the issuance of ordinary shares in an equity
fundraise during 2022.
Share price
Investment in
Explora(cid:90)on &
Evalua(cid:90)on Assets
(‘E&E Assets‘) and
Property, Plant and
Equipment (‘PPE‘)
the
Group
The price re(cid:5)ects the value
of
as
determined by the free
its ordinary
trading of
shares on public stock
exchanges such as the AIM.
From an opening at 4.35p Savannah‘s share price began the
year strongly. Backed by rising lithium prices, the share price
reached 5.60p during trading on 18 January and set the
year‘s high in the process before easing back to below 5p.
The price would go on to brie(cid:5)y break back through the 5p
level again in early February before falling to below 4p for
the (cid:4)rst (cid:90)me in the year on 24 February, despite some
posi(cid:90)ve news on the (cid:4)nalisa(cid:90)on of the BLP‘s process
(cid:5)owsheet. From that point the price recovered well during
early Spring as lithium prices con(cid:90)nued to rise, reaching or
breaking the 5p level for 8 consecu(cid:90)ve days during early to
mid(cid:59)April. The price was then maintained above the 4.10p
level un(cid:90)l mid(cid:59)June. However, from that point the price
slipped below 4p, reaching 3.33p as investor anxiety grew
about
the
the expected EIA decision. Following
announcement of the move into the Ar(cid:90)cle 16 process on
the EIA and the stepping down of David Archer as CEO on
6 July, the price fell to the year‘s low of 2.10p on 7 July with
nearly 62m shares traded across the two days (vs. the
average daily volume around 1.6m). Pleasingly, backed by
Director buying, the share price made a robust recovery
from the low, reaching 3.85p during trading on 10 August.
With the remainder of the year dominated by work on the
revised EIA ahead of its Q1 2023 submission, meaning other
goals for the year were depriori(cid:90)sed, the share price eased
back below the 3p level in late August and remained range
bound between 2.22p and 2.95p for the remainder of the
year. Shares closed the year at 2.30p, a 47% decline over the
12 month period.
investment
As an ac(cid:90)ve and expanding
mine development group,
the
in E&E
Assets and PPE Assets can
the volume of
show
ac(cid:90)vity which is adding
value.
During 2022 the Company con(cid:90)nued its investment in
explora(cid:90)on ac(cid:90)vity, but with (cid:4)eld work s(cid:90)ll rela(cid:90)vely limited
the increase in E&E Assets was a 6% lower year(cid:59)on(cid:59)year at
£1.7m (2021: £1.8m). As in 2021, there was no signi(cid:4)cant
equipment purchasing required during the year, but with
£0.8m commi(cid:49)ed to land acquisi(cid:90)on at the Barroso Lithium
Project, PPE investment increased to £0.9m (2021: £0.6m).
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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Analysis Using Other Key Performance Indicators and Milestones
KPIs Descrip(cid:45)on Performance
Project pipeline
Mining Lease
Applica(cid:90)ons
As
an
ac(cid:90)ve mine
group,
development
Management is up to date
in the
on the changes
market and
looking for
to
new opportuni(cid:90)es
increase the poten(cid:90)al of
the Company.
In recent years there has been (and con(cid:90)nues to be) an
increase in the importance of the lithium(cid:59)ion ba(cid:49)ery markets,
impac(cid:90)ng on global lithium demand with projec(cid:90)ons
showing signi(cid:4)cant increases in demand. In 2016 the Group
started its investment in lithium projects with the acquisi(cid:90)on
of explora(cid:90)on licences in Finland (subsequently relinquished).
Following the acquisi(cid:90)on of the Barroso lithium Project in the
north of Portugal in 2017 (100% ownership achieved in 2019),
the Group has the poten(cid:90)al to become the (cid:4)rst signi(cid:4)cant
lithium spodumene producer in Europe. While the short term
focus of the Company has been on revising and resubmi(cid:21)ng
the EIA for the Barroso Lithium Project, one of Savannah‘s
longer term goals is to further develop its lithium business in
the Iberian Peninsula. To this end, it ac(cid:90)vely assesses
poten(cid:90)al lithium explora(cid:90)on targets in the area, and expects
to par(cid:90)cipate in the much(cid:59)awaited lithium explora(cid:90)on tender
process in Portugal when it is launched by the Government.
As a mineral development
company, the grant of
a
mining
leases
to
precursor
commencement
of
produc(cid:90)on is a signi(cid:4)cant
milestone.
as
Portugal:
A 30(cid:59)year Mining Lease (the C(cid:59)100 Lease) was granted on
the Project in 2006. To be allowed to execute its plan of
developing a spodumene mine and concentrator opera(cid:90)on
of the Lease, Savannah is required to obtain a new
Environmental Licence for the Project and associated
licences covering areas such as construc(cid:90)on and use of
services on site (power, water, etc).
In June 2020, the Group submi(cid:49)ed 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. That
submission was made public in April 2021 and underwent
a public consulta(cid:90)on between April and July of that year.
Before giving its (cid:4)nal decision on the EIA, the Regulator
recommended in July 2022 that the review process enter an
addi(cid:90)onal phase of evalua(cid:90)on under Ar(cid:90)cle 16 of the
relevant EIA legisla(cid:90)on during which Savannah could meet
with the Regulator‘s Evalua(cid:90)on Commi(cid:49)ee, receive
feedback on its original design and be given 180 working
days to revised and resubmit its EIA. Savannah agreed to
this proposal and resubmi(cid:49)ed its EIA on 16 March 2023.
Under the legisla(cid:90)on, the Regulator is required to publish
its decision on the revised EIA by 31 May 2023.
Mozambique:
A(cid:26)er the conclusion of the Mutamba transac(cid:90)on with
Rio Tinto in December 2021, Savannah is in the process of
dives(cid:90)ng its residual interest in Mozambique which includes
Mining Concession 9735C.
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STRATEGIC REPORT
KPIs Descrip(cid:45)on Performance
Mineral resources
As a mineral development
company the repor(cid:90)ng of
sa(cid:90)sfactory
mineral
resource es(cid:90)mates is a key
indicator of the poten(cid:90)al
of the Group and
its
projects.
Portugal:
There was no update to the 2019 JORC resource es(cid:90)mates
in 2022. Hence the JORC resource es(cid:90)mates
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
addi(cid:90)on to the JORC Mineral Resource es(cid:90)mate, the
Explora(cid:90)on Target1 also remained unchanged from 2019
at 11.0(cid:59)19.0Mt at 1.0%(cid:59)1.2% Li2O.
• Co(cid:59)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 es(cid:90)mate
on Mining Concession 9735C during the year. Hence the
JORC resource es(cid:90)mate remained at:
• Inferred Resource of 65 million tonnes @ 4.2% Heavy
Minerals (‘HM‘). Ilmenite represents 60% of the total
HM contained.
Economic Studies
Sa(cid:90)sfactory comple(cid:90)on of
economic studies is a key
indicator of the viability of
the
mine
Group‘s
development projects.
The Barroso Lithium Project, Portugal:
The major advance made in DFS(cid:59)related workstreams during
the year was in metallurgical test work which resulted in the
process (cid:5)owsheet for the concentrator plant being (cid:4)nalised
in Q1 2022. The Environmental Licencing process once
(cid:4)nalised will provide more key
inputs, as will the
outstanding (cid:4)eldwork programme. Assuming a posi(cid:90)ve DIA
decision is received from APA, Savannah expects the DFS
work to be re(cid:59)ini(cid:90)ated in H2 2023 and completed no later
than 12 months following the restart of the required
(cid:4)eldwork and it will prepare and publish a new Scoping
Study in the second half of 2023 based on the revised EIA
and Mine Plan.
1 Cau(cid:90)onary Statement: The poten(cid:90)al quan(cid:90)ty and grade of the Addi(cid:90)onal Resource Targets is conceptual in nature, there has been insu(cid:27)cient prospec(cid:90)ng work to es(cid:90)mate
a mineral resource and it is uncertain if further prospec(cid:90)ng will result in de(cid:4)ning a mineral resource.
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Sec(cid:45)on 172(1) Statement
The following disclosure describes how the directors have had regard to the ma(cid:49)ers set out in sec(cid:90)on 172(1)(a)
to (f) and forms the Directors‘ Statement required under sec(cid:90)on 414CZA of the Companies Act 2006.
Informa(cid:90)on is presented below on a number of ‘principal decisions‘ which the Board made during the course of
2022. Principal decisions are not de(cid:4)ned in legisla(cid:90)on, but are considered material by the Board from the
perspec(cid:90)ve 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
associa(cid:45)ons
A list of the relevant industry trade
bodies and associa(cid:90)ons of which
is pleased to be a
Savannah
in the
member can be found
Governance table
in the ESG
sec(cid:90)on and on the Company‘s
website.
For Savannah:
•
and
Trade associa(cid:90)on can o(cid:42)er
industry speci(cid:4)c networking,
training
educa(cid:90)on,
technical advice, and support in
interac(cid:90)ons with governments,
government
departments,
agencies, regulators, the media,
and other stakeholders
During the year members of the
Savannah team regularly a(cid:49)ended
mee(cid:90)ngs, and
interacted with
relevant trade associa(cid:90)ons. The
Company also joined the following
trade associa(cid:90)ons during the year:
Mining and raw materials:
•
Raw Materials
European
Alliance
European
of
Mining, Metal Ores & Industrial
Minerals (‘Euromines‘)
Associa(cid:90)on
•
For trade associa(cid:90)ons:
Savannah
Interac(cid:90)ng with
•
trade associa(cid:90)on
o(cid:42)ers a
another source of
industry
exper(cid:90)se; an opportunity to
extend its network and reach,
and an addi(cid:90)onal source of
income and sponsorship
Shareholders/Investors
A table of signi(cid:4)cant shareholders
can be found on the Report of the
Directors sec(cid:90)on and on the
Company‘s website.
Key metrics are:
•
•
•
Cash
Investment in Explora(cid:90)on &
Evalua(cid:90)on Assets
Share price
issued
The Company has not
addi(cid:90)onal investment instruments
beyond shares and share(cid:59)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
execu(cid:90)on of the Company‘s
business plan
The key means of engagement with
shareholders include:
• AGM (held in person in 2022)
•
Investor roadshows (held both
in person and online in 2022)
• Mee(cid:90)ngs in rela(cid:90)on to key
news/ques(cid:90)ons (largely held
online in 2022)
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
Social media including Twi(cid:49)er
and LinkedIn
• A(cid:49)ending
industry(cid:59)related
conferences and events
• Video interviews and corporate
videos via the newly designed
corporate website in English
and Portuguese
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
The key means of engagement with
sta(cid:42) include:
•
•
Regular internal calls, mee(cid:90)ngs
and visits to Project sites by
members of the Board and
execu(cid:90)ve team
Remunera(cid:90)on
framework
including Long Term Incen(cid:90)ve
Plan (Share op(cid:90)ons) and Short
Terms Incen(cid:90)ve Plan (Annual
Bonus)
the Group‘s
Full details of
community(cid:59)related ac(cid:90)vi(cid:90)es across
its businesses can be found in the
ESG sec(cid:90)on.
Workforce
The average number of monthly
sta(cid:42) employed by the Company
during 2022 was 17 (2021: 46) see
Note 3 for further details.
The Company‘s day to day running
and long(cid:59)term development relies
on the recruitment, reten(cid:90)on and
incen(cid:90)visa(cid:90)on of
and
provision of a
safe working
environment.
sta(cid:42),
Community
Savannah will be o(cid:26)en working
alongside communi(cid:90)es at
its
project sites. For example, it works
alongside a number of small
communi(cid:90)es at the Barroso Lithium
Project. The Company aims to act
with integrity, transparency and
its dealings with
honesty
communi(cid:90)es and wishes for its host
communi(cid:90)es to bene(cid:4)t from its
projects.
in
For Savannah:
•
•
•
•
To ensure that Health & Safety
standards and other regula(cid:90)ons
rela(cid:90)ng to Savannah‘s interac(cid:90)on
with the general public and
public services are being met
To ensure
it secures and
maintains social acceptance of its
business ac(cid:90)vi(cid:90)es among the
communi(cid:90)es it works alongside
through e(cid:42)ec(cid:90)ve community
engagement programmes
its
To ensure that indirect bene(cid:4)ts
are
from
opera(cid:90)ons
maximised among the
local
community
To receive feedback/ advice/
assistance on the above topics
For Communi(cid:90)es:
•
To receive relevant informa(cid:90)on
about site(cid:59)speci(cid:4)c Health &
Safety ma(cid:49)ers and other
guidance rela(cid:90)ng to Savannah‘s
interac(cid:90)on with the general
public
• Opportunity to receive up to
date informa(cid:90)on on Savannah‘s
and
business
programmes
to
communi(cid:90)es
ac(cid:90)vi(cid:90)es
relevant
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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How did the Board and/or
Stakeholder Group Importance of engagement management engage
•
•
•
To register for and to take part in
relevant community programmes
To provide feedback on relevant
topics
To learn about job opportuni(cid:90)es
at a Savannah Project or to
receive training/coaching
For Savannah:
•
•
To maintain good working
rela(cid:90)onships and credit terms
with suppliers to ensure the
(cid:90)mely and cost(cid:59)e(cid:42)ec(cid:90)ve delivery
of services and supplies
To aid planning for future supply
requirements and to iden(cid:90)fy
suitable suppliers
For Suppliers:
•
•
•
To maintain
a working
rela(cid:90)onship with its customer
and provide product informa(cid:90)on
To help with planning
for
changing levels of demand from
a client
To
future business
opportuni(cid:90)es with an exis(cid:90)ng
client
iden(cid:90)fy
For Savannah:
•
•
build
To
and
iden(cid:90)fy
rela(cid:90)onships with
future
customers to ensure our projects
become
commercial
businesses
viable
To access capital for project
development either directly from
from other
customers, or
investors which
the
customer
establishment of
rela(cid:90)onships as a key de(cid:59)risking
factor in an investment decision
view
Suppliers
Savannah requires a wide range of
services to maintain its business
ac(cid:90)vi(cid:90)es and uses a wide range of
domes(cid:90)c and overseas suppliers to
meet its needs. When Savannah
moves into the development and
produc(cid:90)on phase at an opera(cid:90)on,
supplier numbers are expected to
rise signi(cid:4)cantly in(cid:59)line with the scale
up of the project concerned.
Customers
As a pre(cid:59)produc(cid:90)on business,
Savannah is yet to start genera(cid:90)ng
revenue from sales of product to
customers. However, the Company
expects to supply products to a
number of industrial customers over
(cid:90)me, beginning with customers
buying its lithium and co(cid:59)product
concentrate products
from the
Barroso Lithium Project.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
The Company‘s engagement with
service
current and poten(cid:90)al
suppliers has been widespread
during the year. For example,
considerable (cid:90)me has been spent
working with exis(cid:90)ng suppliers of
goods and services to the Barroso
Lithium Project, and iden(cid:90)fying and
evalua(cid:90)ng other groups which may
provide key contract services during
the construc(cid:90)on and/or produc(cid:90)on
opera(cid:90)on.
phases
Addi(cid:90)onally, the Company
is a
member of the local chamber of
commerce in Portugal and where
possible the use of local service
providers will be priori(cid:90)sed.
the
of
Management maintained its e(cid:42)orts
to build rela(cid:90)onships with mul(cid:90)ple
poten(cid:90)al customers for its lithium
and co(cid:59)product concentrates from
the Barroso Lithium Project as
discussed
the Chairman‘s
in
Statement and CEO‘s Report.
STRATEGIC REPORT
How did the Board and/or
Stakeholder Group Importance of engagement management engage
For Customers:
•
•
To build a working rela(cid:90)onship
with a well(cid:59)managed, long term
raw material supplier
To secure a long(cid:59)term supply of
product from a responsible
producer in markets where the
outlook is for increasing global
compe(cid:90)(cid:90)on for supply, such as
lithium
For Savannah:
•
and
iden(cid:90)fy
build
To
rela(cid:90)onships with future lenders
to ensure su(cid:27)cient (cid:4)nance can
be secured to support project
development
Lenders
Savannah currently has no corporate
bonds or project (cid:4)nance loans but
may seek to secure project (cid:4)nance as
part of the (cid:4)nancing mix for the
development of its projects, such as
the Barroso Lithium Project.
For Lenders:
•
To secure a future
lending
agreement with a responsible
raw material producer opera(cid:90)ng
in the ba(cid:49)ery metals sector
the
Regulators/Government
Depending on
jurisdic(cid:90)on,
mul(cid:90)ple departments and agencies
of na(cid:90)onal, regional and/or local
government can be involved in the
licencing and monitoring of mining
ac(cid:90)vi(cid:90)es.
For Savannah:
•
departments
To build strong and suppor(cid:90)ve,
working rela(cid:90)onships with all
of
relevant
government and to ensure that
the Company receives and
complies with the required
licences and authori(cid:90)es
to
operate its projects
For governments:
•
•
To ensure that the Company is
mee(cid:90)ng its responsibili(cid:90)es as per
its licences
To understand the needs of
Savannah as an opera(cid:90)ng en(cid:90)ty
with
relevant
legisla(cid:90)on
respect
to
Management maintained a dialogue
with poten(cid:90)al project lenders in
rela(cid:90)on to the Barroso Lithium
Project during the year. Discussions
with these groups are expected to
become more detailed once the DFS
is completed as that study will be a
key part of a
lending bank‘s
evalua(cid:90)on of the Project.
The Company‘s ESMS incorporates
elements from the Interna(cid:90)onal
Finance Corpora(cid:90)on‘s Performance
Standards on Environmental and
Social Sustainability, the World Bank
Group‘s Environmental Health &
Safety, Mining
and General
Guidelines.
the
As outlined
in the Chairman‘s
Statement and CEO‘s Report,
Management has had
regular
relevant
interac(cid:90)on with
departments and personnel in the
various levels of government in both
countries where it had opera(cid:90)ons
during the period. Savannah views
the establishment of ac(cid:90)ve, two(cid:59)way,
rela(cid:90)onships with
government
stakeholders as cri(cid:90)cal to the
its
successful development of
projects and in its decision(cid:59)making
regarding the Company‘s long(cid:59)term
commitment to any jurisdic(cid:90)on.
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How did the Board and/or
Stakeholder Group Importance of engagement management engage
priority
In parallel with all our project
for
a
stakeholders,
Savannah‘s management
to
is
minimise
Company‘s
the
environmental impact, and work
undertaken across all its project sites
to date has been completed in
accordance with
relevant
environmental regula(cid:90)ons.
the
Having collected baseline data and
engaged with relevant groups since
2018,
in June 2020, Savannah
submi(cid:49)ed 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.
That submission was made public in
April 2021 and underwent a public
consulta(cid:90)on between April and July
of that year. Before giving its (cid:4)nal
decision on the EIA, the Regulator
recommended in July 2022 that the
review process enter an addi(cid:90)onal
phase of evalua(cid:90)on under Ar(cid:90)cle 16
of the relevant EIA legisla(cid:90)on during
which Savannah could meet with the
Regulator‘s Evalua(cid:90)on Commi(cid:49)ee,
receive feedback on its original
design, and be given 180 working
days to revise and resubmit its EIA.
Savannah agreed to this proposal
and resubmi(cid:49)ed its EIA on 16 March
2023. Under the legisla(cid:90)on, the
Regulator is required to publish its
decision on the revised EIA by
31 May 2023.
Environment
Savannah is commi(cid:49)ed to minimising
the environmental impact of its
opera(cid:90)ons
design,
monitoring,
and
remedia(cid:90)on.
through
mi(cid:90)ga(cid:90)on
For Savannah:
•
Savannah places great emphasis
on minimising the environmental
impact of its opera(cid:90)ons and also
realises the importance placed
environmental
on
management by all project
including
stakeholders
governments,
communi(cid:90)es,
customers, investors and lenders.
good
40
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
STRATEGIC REPORT
Principal decisions
Savannah de(cid:4)nes 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 reputa(cid:90)on for high standards of business conduct and the need to
act fairly between the members of the Group:
Principal Decision 1: Entering into ‘Ar(cid:45)cle 16‘ EIA evalua(cid:45)on process
In July 2022, the Company‘s subsidiary, which operates the BLP, entered into the Ar(cid:90)cle 16 of Decree(cid:59)Law
No. 151(cid:59)B/2013 (‘Ar(cid:90)cle 16‘), which regulates Environmental Impact Assessments in Portugal. Under Ar(cid:90)cle 16, the
Group had up to six months to work collabora(cid:90)vely with APA (Portugal‘s environmental regulator) to further op(cid:90)mise
certain physical aspects of the BLP‘s design and associated environment, ecology and socio(cid:59)economic considera(cid:90)ons
and resubmit them for considera(cid:90)on. A(cid:26)er submission of revised EIA under Ar(cid:90)cle 16 and acknowledgment of
acceptance of the op(cid:90)misa(cid:90)on measures (submi(cid:49)ed on 16 March 2023), Ar(cid:90)cle 16 allows APA a period of up to 50
working days to carry out its assessment and issue any DIA decision.
In making the decision the Board considered:
•
Shareholders and Workforce: Considering the extended (cid:90)melines experienced in the EIA licencing process,
entering into the Ar(cid:90)cle 16 process provided certainty on the (cid:90)melines rela(cid:90)ng to a DIA decision. Hence, subject
to a posi(cid:90)ve decision, the Group would s(cid:90)ll be on track to be able to supply concentrate to Europe‘s (cid:4)rst
genera(cid:90)on of lithium conversion plants as they come online in the mid(cid:59)2020s.
• Government / Regulators: APA had invited the Company‘s subsidiary to enter into the Ar(cid:90)cle 16 process.
•
•
Environment: Ar(cid:90)cle 16 provided the opportunity to work in conjunc(cid:90)on with APA and incorporate addi(cid:90)onal
perspec(cid:90)ves into the Project‘s design, further reducing impacts on the environment.
Community: Ar(cid:90)cle 16 provided the opportunity for a public consulta(cid:90)on exercise to provide addi(cid:90)onal
perspec(cid:90)ves to incorporate into the Project‘s design, further reducing impacts on the local community in
par(cid:90)cular.
Principal Decision 2: Independent Non(cid:5)Execu(cid:45)ve Board appointments
The Board was strengthened by the appointments in 2022 (April and November respec(cid:90)vely) of Mary Jo Jacobi and
Diogo da Silveira as independent Non(cid:59)Execu(cid:90)ve Directors. Ms Jacobi is a leader of the ESG movement and has a
wealth of relevant industry and government experience. Mr Silveira is a highly experienced business leader with
extensive experience in Portugal and Europe.
In making the decisions the Board considered:
•
Shareholders and Workforce: Increasing the diversity and independence of the members of the Board, whilst
also adding the experience of globally and locally recognised heavyweight business leaders. This experience
includes opera(cid:90)ng major Portuguese companies, and employee engagement responsibility for a global mining
sector operator.
• Government / Regulators, Customers and Suppliers:
Ms Jacobi has a wealth of relevant industry and government rela(cid:90)ons exper(cid:90)se, having amongst other
experiences working in the UK as a member of the UK Advisory Commi(cid:49)ee on Business Appointments, and in
the US as Assistant United States Secretary of Commerce, and Special Assistant to US President Ronald Reagan.
Mr Silveira has signi(cid:4)cant business experience, par(cid:90)cularly within Portugal, including as the CEO of Portuguese
forestry operator, Navigator, and current Chair of Floene Energias, the leading Gas DSO in Portugal. As a result,
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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he has a comprehensive network among Portugal‘s leading players in mul(cid:90)ple industries as well as amongst
poli(cid:90)cians, key decision makers, and opinion formers. Addi(cid:90)onally, he was a management member of several
Portuguese industrial associa(cid:90)ons such as CIP, APS, Celpa, Cotec and BCSD as well as of European, Brussels
based, CEPI and Worldwide, Geneva based, WBCSD.
•
Community and Environment: Ms Jacobi is a leader of the ESG movement and will oversee Savannah‘s ESG
program. Mr Silveira has extensive experience of Environment and Community ma(cid:49)ers from his role as CEO of
a forestry operator.
Principal Decision 3: Appointment of Dale Ferguson as interim CEO
In July 2022, David Archer stepped down as CEO a(cid:26)er almost nine years and he was succeeded on an interim basis
by Dale Ferguson, the Company‘s Technical Director, whilst the Company progresses the search for a new full
(cid:90)me CEO.
In making the decision the Board considered:
•
Shareholders and Workforce: Mr Ferguson brings a wealth of technical exper(cid:90)se and a strong, global track
record of bringing mines into produc(cid:90)on. He has been involved with the Project since the beginning and an
integral member of the Board for nine years, providing a familiar and respected face to the sta(cid:42). He also has
strong (cid:4)nancial interest in the Company, both directly and via his holding in the Company‘s second largest
shareholder, Slipstream Resources Investments, amoun(cid:90)ng to 2.94% of the Company‘s issued share capital.
• Government / Regulators, Environment and Community: Mr Ferguson‘s wealth of technical exper(cid:90)se and a
strong, global track record of bringing mines into produc(cid:90)on has included naviga(cid:90)ng both regulatory licencing
processes and winning the social licence to operate. His familiarity with the technical aspects of the Project
facilitates refreshed and e(cid:42)ec(cid:90)ve interac(cid:90)on with APA.
Principal Decision 4: Decarbonisa(cid:45)on strategy ini(cid:45)ated (cid:1)
In March 2022, the Group entered into an agreement with ECOPROGRESSO (cid:59) Quadrante Group (cid:59) a Portuguese
Consultant in Environment, Sustainability, Climate Change and Resources Management, to lead on the crea(cid:90)on of
a decarbonisa(cid:90)on strategy for Project. This appointment follows on from the Group‘s commitment in November
2021 to move towards net zero Scope 1 and 2 emissions for the Project whilst also targe(cid:90)ng the reduc(cid:90)on of its
Scope 3 emissions.
In making the decision the Board considered:
•
Shareholders: The roadmap to Net Zero established by Savannah further emphasises the strong ESG creden(cid:90)als
of Savannah, and in addi(cid:90)on to its own Net Zero plans, Savannah es(cid:90)mates 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 ac(cid:90)ve in electric vehicle ba(cid:49)eries. The groups developing greener technologies, which Savannah could
adopt, are doing so using innova(cid:90)ons that are designed to be both environmentally friendly and cost
compe(cid:90)(cid:90)ve, so this, combined with the prospects of increasing (cid:4)nancial burdens (taxes and du(cid:90)es) rela(cid:90)ng to
CO2 equivalent emissions, provide an opportunity for reduced opera(cid:90)onal costs compared to tradi(cid:90)onal mining
opera(cid:90)ons.
• All stakeholders: At the (cid:90)me of the appointment, for the Project‘s Environmental Impact Assessment study,
Ecoprogresso es(cid:90)mated that, when opera(cid:90)ng, 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(cid:59)3. By reducing the Project‘s Scope 1 and 2 emissions to zero, Savannah would reduce
the Project‘s overall emissions during its opera(cid:90)ng phase by over 60%. (see ‘Carbon abatement‘ in the ESG
sec(cid:90)on for further details).
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STRATEGIC REPORT
•
Customers and Lenders: Poten(cid:90)al customers have the opportunity to purchase a product with a preferen(cid:90)al
carbon footprint and poten(cid:90)al lenders have the opportunity to invest in a highly ESG conscious project.
Principal Decision 5: Savannah refreshes brand and launches new website
In April 2022, the Company announced its rebrand and the launch of its new website.
In making the decision the Board considered:
•
•
Shareholders, Workforce and Customers: The rebranding was in response to the evolu(cid:90)on of the business in
the last two years to a singular focus as a European lithium ‘pure play‘ helping to enable Europe‘s energy
transi(cid:90)on. It also highlights the Company‘s ESG creden(cid:90)als.
Community and All: Easier access to informa(cid:90)on for all stakeholders, and in par(cid:90)cular for Community members
thanks to Portuguese language func(cid:90)onality being added.
Approval of the Board
This Strategic Report contains certain forward(cid:59)looking statements that are subject to the usual risk factors and
uncertain(cid:90)es associated with mineral development businesses. While the Directors believe the expecta(cid:90)on re(cid:5)ected
herein to be reasonable in view of the informa(cid:90)on available up to the (cid:90)me of the Board‘s approval of this Strategic
Report, the actual outcome may be materially di(cid:42)erent owing to factors either beyond the Group‘s control or
otherwise within the Group‘s control but, for example, resul(cid:90)ng from a change of strategy. Accordingly, no reliance
may be placed on the forward(cid:59)looking statements.
On behalf of the Board:
Dale Ferguson
Chief Execu(cid:90)ve O(cid:27)cer
Date: 4 April 2023
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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(cid:57)100 Mining Lease2 (5.42km2) and an adjacent, three block,
Mining Lease Applica(cid:84)on area (2.94km2). Through Savannah’s successful explora(cid:84)on programme, the Barroso Lithium
Project (the ‘Project’) has been de(cid:4)ned as the most signi(cid:4)cant 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
produc(cid:84)on globally, and Savannah believes that the Barroso Lithium Project can become an important source of this
‘conven(cid:84)onal’ lithium mineral for Europe’s burgeoning domes(cid:84)c lithium ba(cid:30)ery industry.
Savannah Resources has operated the Project since May 2017 when an ini(cid:84)al 75% stake was acquired (with all the
milestones rela(cid:84)ng to purchase completed by October 2018). Savannah became the sole owner of the project in June
2019 following the acquisi(cid:84)on of the residual 25% stake from the project’s minority shareholders in an all(cid:57)share
transac(cid:84)on. June 2019 also saw the Group exercise the op(cid:84)on it had taken in September 2018 to acquire the adjacent
three block Mining Lease Applica(cid:84)on area from the Portuguese company Aldeia & Irmão, S.A. (‘Aldeia’) following a period
of technical and legal due diligence. This increased the tenement por(cid:11)olio footprint by over 50% to its current size.
Plan of the Barroso Lithium Project showing the loca(cid:16)on of the major orebodies:
Source: Company
Western Europe’s most signi(cid:4)cant spodumene lithium resource
To date Savannah’s extensive explora(cid:84)on programme, which includes over 31,000m of drilling, has iden(cid:84)(cid:4)ed 8 deposits
bearing spodumene lithium mineralisa(cid:84)on on the project. From being a ‘pre(cid:57)resource’ project when acquired, JORC
compliant Mineral Resources have now been es(cid:84)mated on (cid:4)ve of these deposits (4 on the C(cid:57)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), represen(cid:84)ng the most signi(cid:4)cant spodumene lithium resource in Western Europe.
2 The exis(cid:84)ng 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.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
BARROSO LITHIUM PROJECT OVERVIEW
Many of the lithium deposits on the project remain open to possible extensions through further explora(cid:84)on and an
Explora(cid:84)on Target3 ranging from 11(cid:57)19Mt at 1.0(cid:57)1.2% Li2O has been es(cid:84)mated on three of the deposits as of May 2019.
The project currently has a combined resource and explora(cid:84)on target3 of 38(cid:57)48Mt at 1.0 to 1.2% Li2O hence, Savannah
believes signi(cid:4)cant explora(cid:84)on upside remains with the poten(cid:84)al to signi(cid:4)cantly extend the Project’s opera(cid:84)onal life.
The Barroso Lithium Project’s Lithium JORC Mineral Resource Es(cid:84)mate & Explora(cid:84)on Target3:
JORC Mineral Resource Es(cid:32)mate (May 2019, 0.5% Li2O cut(cid:29)o(cid:10))
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(cid:29)total 17.7 1.04 0.7 181,800
Reservatorio
Measured – – – –
Indicated – – – –
Inferred 3.2 1.0 1.4 32,000
Sub(cid:29)total 3.2 1.0 1.4 32,000
Pinheiro
Measured – – – –
Indicated – – – –
Inferred 2.0 1.0 0.7 20,000
Sub(cid:29)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(cid:29)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(cid:29)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
3 Cau(cid:84)onary Statement: The poten(cid:84)al quan(cid:84)ty and grade of the Addi(cid:84)onal Resource Targets is conceptual in nature, there has been insu(cid:21)cient prospec(cid:84)ng work to
es(cid:84)mate a mineral resource and it is uncertain if further prospec(cid:84)ng will result in de(cid:4)ning a mineral resource.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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Explora(cid:32)on Target4 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(cid:57)1.2
1.0(cid:57)1.2
2.0
4.0
1.0(cid:57)1.3
11.0
19.0
1.0(cid:29)1.2
Not just a lithium project
In addi(cid:84)on to the produc(cid:84)on of signi(cid:4)cant volumes of spodumene lithium concentrate, the Barroso Lithium Project
also has the poten(cid:84)al to produce signi(cid:4)cant volumes of feldspar and quartz which is in demand from the large
ceramics and glass industries in Portugal and Spain. Sales of these ‘co(cid:57)products’ would have the dual bene(cid:4)ts of
reducing the amount of processed material which the Project must store on(cid:57)site and provide addi(cid:84)onal revenue
which could signi(cid:4)cantly improve the net produc(cid:84)on costs of the lithium concentrate.
During 2019 the Group es(cid:84)mated its (cid:4)rst co(cid:57)product resource on the project, based only on pegma(cid:84)te material
located inside the proposed Grandao pit (i.e., wholly within the exis(cid:84)ng lithium mineral resource model). Hence,
this resource is expected to increase further once similar es(cid:84)mates are performed on the NOA, Reservatorio,
Pinheiro and Aldeia deposits. Savannah also completed marke(cid:84)ng and test work studies during 2019 to con(cid:4)rm
the co(cid:57)products’ suitability for various applica(cid:84)ons within the ceramic and glass industries.
The Barroso Lithium Project’s Co(cid:57)product JORC Mineral Resource Es(cid:84)mate:
JORC Mineral Resource Es(cid:32)mate (September 2019, no lithium cut(cid:29)o(cid:10) 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(cid:29)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,
con(cid:4)rmed that all three materials were suitable for commercial use. Speci(cid:4)cally, the test work showed that both
the separate quartz and feldspar products could be used in a variety of applica(cid:84)ons in both industries such as
hotel(cid:57)ware quality ceramics and container glass while the mixed bulk tail product could be used in ceramic
applica(cid:84)ons, such as vitri(cid:4)ca(cid:84)on and bone china. Encouragingly, the marke(cid:84)ng study con(cid:4)rmed that prices for all
the products could be poten(cid:84)ally higher (in the range of US$40(cid:57)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,
produc(cid:84)on of the bulk material would also poten(cid:84)ally eliminate approximately US$15m from the es(cid:84)mated
processing plant capex that would otherwise be required to produce separate quartz and feldspar co(cid:57)products.
4(cid:16) Cau(cid:84)onary Statement: The poten(cid:84)al quan(cid:84)ty and grade of the Addi(cid:84)onal Resource Targets is conceptual in nature, there has been insu(cid:21)cient prospec(cid:84)ng work to
es(cid:84)mate a mineral resource and it is uncertain if further prospec(cid:84)ng will result in de(cid:4)ning a mineral resource.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
BARROSO LITHIUM PROJECT OVERVIEW
Posi(cid:32)ve Scoping Study completed in 2018
Based on the rapid delinea(cid:84)on of an ini(cid:84)al JORC (2012) Mineral Resource es(cid:84)mate and Explora(cid:84)on Target5 during
late 2017 and early 2018, Savannah commissioned a Scoping Study on the project. This was completed in June 2018
and reported very posi(cid:84)ve project economics based on a 1.3Mtpa opera(cid:84)on producing an average of 175ktpa of
spodumene concentrate and associated co(cid:57)products over an 11(cid:57)year life. The Project design also featured an
innova(cid:84)ve ‘dry stack’ tailings facili(cid:84)es, meaning that a ‘wet tailings dam’ was completely avoided.
The Barroso Lithium Project 2018 Scoping Study Key Facts:
Opera(cid:32)ng Parameters and assump(cid:32)ons
Mineable resource (June 2018)
14.4Mt at 1.07% Li2O. All open pit. Life of mine strip ra(cid:84)o
(waste: ore): 5.2: 1, years 1(cid:57)4: 1.6:1
Ini(cid:84)al life of mine
11 years at 1.3Mtpa throughput rate
Processing route & recovery rate
Crush(cid:57)grind(cid:57)Dense Media Separa(cid:84)on(cid:57)(cid:6)ota(cid:84)on (80%
recovery)
Concentrate produc(cid:84)on & spec
175ktpa (minimum), 6% spodumene
Concentrate produc(cid:84)on as LCE/Lithium
Hydroxide Equivalent (net of assumed
processing losses in a chemical conversion plant)
~22ktpa; ~25.5ktpa. Su(cid:21)cient for ~0.5M 60kWh
car ba(cid:30)ery packs per annum
Co(cid:57)products
Ini(cid:84)al capex
Feldspar (~276ktpa), quartz (~173ktpa) for use in the
ceramics and other industries
US$109m (Addi(cid:84)onal con(cid:84)ngency of US$24.9m, included in
(cid:4)nancial model)
Sustaining capital & closure costs
US$17.2m
LoM C1 Cash Opera(cid:84)ng cost (US$/t conc)
Financial & economic outcomes
Pricing assump(cid:84)ons (Average life of mine)
US$271/t (US$210/t average in Years 1(cid:57)4). Costs include all
mining, processing, transport, shipping/freight, corporate,
admin, marke(cid:84)ng & royalty costs and are net of co(cid:57)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(cid:57)product revenue)
EBITDA (LoM, Avg pa)
Pre(cid:57)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(cid:57)tax US$356m; Post(cid:57)tax US$241m
Pre(cid:57)tax 63.2%; Post(cid:57)tax 48.6%
Pre(cid:57)tax 1.7 years; Post(cid:57)tax 2.1 years
Source: June 2018 Scoping Study and subsequent company press releases
5(cid:16) Cau(cid:84)onary Statement: The poten(cid:84)al quan(cid:84)ty and grade of the Addi(cid:84)onal Resource Targets is conceptual in nature, there has been insu(cid:21)cient prospec(cid:84)ng work to
es(cid:84)mate a mineral resource and it is uncertain if further prospec(cid:84)ng will result in de(cid:4)ning a mineral resource.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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Progressing the Project: Environmental Licencing, Economic Studies, and Decarbonisa(cid:32)on
As a result of the posi(cid:84)ve Scoping study, Savannah took the decision to progress the Project towards a Final
Investment Decision point. While the Project has an exis(cid:84)ng Mining Lease, Savannah’s plan to produce spodumene
concentrate and mine on a larger scale than previously envisaged, means it is necessary for the Project to receive
a new Environmental Licence and have a new Mine Plan approved by the Portuguese authori(cid:84)es. Savannah must
also jus(cid:84)fy its poten(cid:84)al capital investment in the Project with a robust business case. Hence, to progress on both
these fronts, Savannah commissioned an Environmental Impact Assessment (‘EIA’) study, the (cid:4)rst stage in the
Environmental Licencing process, and a De(cid:4)ni(cid:84)ve Feasibility study (DFS) on the project in the second half of 2018.
Environmental Licencing
For the Environmental Licencing process, Savannah (cid:4)rst submi(cid:30)ed its Environmental Impact Assessment and Mine
Plan to Agência Portuguesa do Ambiente (‘APA’), the Portuguese environmental regulator, in June 2020. The EIA
study iden(cid:84)(cid:4)es all the poten(cid:84)al environmental and social impacts the Project may have and details how Savannah
would monitor and minimise these throughout all phases of the Project’s life, including a(cid:18)er its closure.
Following submission, Savannah’s EIA was made public in April 2021 and underwent a public consulta(cid:84)on between
April and July of that year. APA then con(cid:84)nued with its review and considera(cid:84)on of feedback from the public
consulta(cid:84)on un(cid:84)l July 2022 when the Regulator recommended that the review process enter an addi(cid:84)onal phase
of evalua(cid:84)on under Ar(cid:84)cle 16 of the relevant EIA legisla(cid:84)on. In contrast to the ini(cid:84)al period of the EIA review, Under
Ar(cid:84)cle 16 the applicant can meet with the Regulator’s Evalua(cid:84)on Commi(cid:30)ee and receive feedback on its original
design. Ar(cid:84)cle 16 also has a closely de(cid:4)ned schedule with the applicant given 180 working days to revise and
resubmit its EIA based on the feedback received. Savannah agreed to this proposal, and a(cid:18)er a series of produc(cid:84)ve
mee(cid:84)ngs with members of APA’s Evalua(cid:84)on Commi(cid:30)ee and a period of revising the Project’s EIA, resubmi(cid:30)ed its
EIA and associated Mine Plan in March 2023. Under the legisla(cid:84)on, the Regulator has 50 working days to review
and publish its ‘Environmental Impact Declara(cid:84)on’ (‘DIA’) decision on the revised EIA. In the case of the Barroso
Lithium Project this should result in a decision being received in late May 2023.
The DIA award is the (cid:4)rst approval in a mul(cid:84)(cid:57)stage environmental licencing process. Receipt of the DIA would allow
the approval process to move on to the subsequent Environmental Compliance Report of the Execu(cid:84)on Project '
(‘RECAPE’) and Environmental Licence stages during which approval of the Project's detailed (cid:4)nal designs are
received ('DCAPE') and the Project’s environmental (cid:84)tle is awarded. These stages are expected to run in parallel.
Once the DCAPE declara(cid:84)on has been made and the environmental licence received, Savannah will then be able
to apply for the remainder of the licences required for the Project’s development and opera(cid:84)on. These licences
cover permissions for construc(cid:84)on and use of services on site such as power and water. The condi(cid:84)ons set by the
DIA and the agreement of the Project’s (cid:4)nal designs in the RECAPE phase will also provide important input
parameters for the DFS.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
BARROSO LITHIUM PROJECT OVERVIEW
Key elements of the Barroso Lithium Project during the opera(cid:15)ng phase as proposed in the 2023 revised EIA:
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Source: Company
De(cid:5)ni(cid:8)ve Feasibility Study and Updated Scoping Study
The DFS is a comprehensive technical and economic study of the proposed Project and will include among other
elements; an updated JORC resource for the Project as well as its maiden reserve es(cid:43)mate; (cid:7)nal designs for site
layout and associated infrastructure; schedules for mining, processing, storage of processed materials; commodity
market studies; and capital and opera(cid:43)ng cost es(cid:43)ma(cid:43)ons and a cash(cid:8)ow model. As a result of the c.90% increase
in overall resources de(cid:7)ned since the 2018 scoping study, the DFS is considering the possibility of increasing the
annual throughput rate to 1.5Mtpa resul(cid:43)ng in an average annual output of c.200ktpa lithium concentrate.
Assuming a posi(cid:43)ve DIA decision is received, work to complete the DFS will be undertaken in parallel with the
remainder of the Environmental Licensing process. Alongside the (cid:7)nal Project designs which will come through the
ongoing Environmental Licencing process, a modest (cid:7)eldwork programme is also required. This will include drilling
for reserve and resource delinea(cid:43)on and geotechnical purposes. This programme has been planned and Savannah
would look to ini(cid:43)ate it during H2 2023, subject to the DIA decision. Savannah expects the DFS to be completed no
later than 12 months following the restart of the required (cid:7)eldwork.
Importantly, the process (cid:8)owsheet for the concentrator plant was (cid:7)nalised in Q1 2022. Based on industry standard
equipment and processing techniques and an environmentally friendly reagent regime, which complies with all
relevant regula(cid:43)ons and allows both mica and spodumene (cid:8)ota(cid:43)on to operate at near neutral pH, the plant will
be capable of producing a high quality, spodumene concentrate grading (cid:1)5.5% Li2O with low levels of impuri(cid:43)es.
Assuming a posi(cid:43)ve DIA decision is received from APA, the Company will prepare and publish a new Scoping Study
in the second half of 2023 based on the revised EIA and Mine Plan, and is con(cid:7)dent that the new Scoping Study
level economics will remain highly posi(cid:43)ve.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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BARROSO LITHIUM PROJECT OVERVIEW
Simpli(cid:3)ed Process Flowsheet Block Flow Diagram
Source: Company
Decarbonisa(cid:32)on Study
In March 2022 Savannah announced the ini(cid:84)a(cid:84)on of a Decarbonisa(cid:84)on Strategy to support its goal of producing a
net carbon zero lithium product from the Project. By se(cid:14)ng this goal Savannah is helping to minimise the carbon
footprint associated with the European lithium ba(cid:30)ery value chain, thus maximising the environmental bene(cid:4)t
these ba(cid:30)eries can bring. ECOPROGRESSO, a subsidiary of the Portuguese engineering and environmental
consultancy, Quadrante Group, was commissioned to lead on the mul(cid:84)ple phased study. Phase 1, which was focused
on upda(cid:84)ng the es(cid:84)mate of the Project's greenhouse gases ('GHG') emissions based on interna(cid:84)onal guidelines,
and de(cid:4)ning targets for overall GHG reduc(cid:84)on was completed during 2022 and the results announced in February
2023. Key (cid:4)ndings of the (cid:4)rst phase study included; con(cid:4)rma(cid:84)on that ba(cid:30)ery electric mining equipment provides
the most e(cid:17)ec(cid:84)ve and (cid:6)exible means to reduce Scope 1 emissions, which account for 68% of the combined Scope
1 & 2 total and; the Scope 2 emissions es(cid:84)mate being reduced by 54% from the 2019 es(cid:84)mate based on a lower
power consump(cid:84)on at the Project’s processing plant and a 41% reduc(cid:84)on in the emissions associated with grid
power due to the increase in contribu(cid:84)on from renewable sources in the intervening period. The recommenda(cid:84)ons
for ongoing studies to further reduce the Project’s CO2 footprint include assessing the op(cid:84)ons for securing a 100%
renewable energy supply for the Project, and working with mining equipment OEMs to determine a site speci(cid:4)c
solu(cid:84)on for a transi(cid:84)on to a ba(cid:30)ery operated mining (cid:6)eet and associated charging infrastructure.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
BARROSO LITHIUM PROJECT OVERVIEW
Developing and commercialising the project
Assuming the Project’s environmental licencing is progressing as hoped, a (cid:4)nal investment decision on the project’s
development will be taken by the Company once the DFS has been completed in H2 2024. 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 construc(cid:84)on. The Company expects to obtain the capital it needs from mul(cid:84)ple
sources including from new strategic partners inves(cid:84)ng directly in the project or Savannah’s equity, (cid:4)nance linked
to o(cid:10)ake agreements for the project’s lithium concentrate, the debt capital markets in the form of a project (cid:4)nance
loan, government and/or EU grants or loans, and from the equity capital markets. If the necessary (cid:4)nance can be
sourced in a (cid:84)mely manner once a (cid:4)nal investment decision has been made, construc(cid:84)on could begin in 2025 and
be followed by commissioning and (cid:4)rst produc(cid:84)on at the Project in 2026. If this schedule can be met, Savannah
will be well placed to supply spodumene concentrate into the new merchant lithium chemicals plants being
proposed in Europe, including two in Portugal, which are also to be targe(cid:84)ng (cid:4)rst produc(cid:84)on around this (cid:84)me.
Drillcore from the Grandao orebody:
Source: Company
The Barroso Lithium Project – a (cid:4)rst for Portugal in the new lithium ba(cid:3)ery industry
Portugal is already established as Europe’s ‘largest’ lithium producer with approximately 900t produced in 2021.
However, all of the country’s current lithium produc(cid:84)on is used in the domes(cid:84)c ceramics and glassware industries,
and not in lithium ba(cid:30)ery produc(cid:84)on. Signi(cid:4)cant lithium mineralisa(cid:84)on 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 na(cid:84)onal manufacturing industry to service the growing lithium ba(cid:30)ery market in Europe.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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As part of this strategy, the Portuguese Government has earmarked six areas prospec(cid:84)ve for lithium mineralisa(cid:84)on
which will be made available for explora(cid:84)on via a public tender process in due course. This follows the publica(cid:84)on
of strategic environmental assessments on an ini(cid:84)al nine areas and a public consulta(cid:84)on round which was
completed in December 2021. As the most advanced lithium development company in the country, Savannah plans
to par(cid:84)cipate in the tender process when it is ini(cid:84)ated.
In parallel with its plans to develop its lithium mining industry the government published new legisla(cid:84)on rela(cid:84)ng
to mineral deposits in 2021, Decree(cid:57)Law 30/2021 from 7th May, which sets more demanding standards of
environmental sustainability, the sharing of economic bene(cid:4)ts with the popula(cid:84)ons and gives more powers to
municipality(cid:57)level administrators in regard to mineral project development. This new Regulatory Decree is designed
to ensure that the explora(cid:84)on and development of mineral deposits complies with the principles of ‘green mining’.
Given its own focus on low impact project design and maximising the bene(cid:4)ts which can (cid:6)ow from mineral project
development to stakeholders, Savannah welcomes this new legisla(cid:84)on. The Company is already commi(cid:30)ed to
developing the Barroso Lithium Project in a responsible way and by applying the best interna(cid:84)onal prac(cid:84)ces that
minimise the impact associated with the opera(cid:84)on so that the maximum overall environmental bene(cid:4)t is gained
from the lithium once it is incorporated into a ba(cid:30)ery. It also means that Savannah is dedicated to ensuring the
best outcomes for the project’s stakeholders in terms of social, demographic and economic bene(cid:4)ts.
While larger scale lithium mining alone would represent a new industry for Portugal, the government has stated
that it wants to develop a domes(cid:84)c lithium industry that goes beyond mining and features downstream stages such
as lithium chemical produc(cid:84)on. Hence, the Barroso Lithium Project must be seen as part of the (cid:4)rst phase in the
development of a much larger na(cid:84)onal concern as demonstrated recently by the large lithium chemical produc(cid:84)on
plant proposals announced by two partnerships in December 2021. As a result of these objec(cid:84)ves, the Barroso
Lithium Project has received strong support at na(cid:84)onal government level. If lithium produc(cid:84)on is achieved at the
Barroso Lithium Project, Portugal would be placed at the centre of the new European lithium ba(cid:30)ery supply chain
which the European Commission is so keen to establish as part of its e(cid:17)orts to combat climate change while
maintaining the region’s large automo(cid:84)ve industry. The transport sector is the second largest generator of emissions
(CO2 equivalent) in the EU behind energy supply, and the transi(cid:84)on to mass adop(cid:84)on 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.
52
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
REPORT OF THE DIRECTORS
Going Concern
This informa(cid:76)on is contained in the Strategic Report in
the Key Financial Performance Indicators and Milestones
sec(cid:76)on and in Note 1.
Streamlined Energy & Carbon Repor(cid:45)ng (‘SECR’)
The Group does not meet the SECR requirements and
therefore is not required to perform this repor(cid:76)ng.
Statement as to Disclosure of Informa(cid:45)on to Auditors
So far as the Directors are aware, there is no relevant
audit informa(cid:76)on (as de(cid:9)ned by Sec(cid:76)on 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 informa(cid:76)on and to
establish that the Group’s auditors are aware of that
informa(cid:76)on.
Auditors
The auditors, BDO LLP, will be proposed
for
re(cid:25)appointment at the forthcoming Annual General
Mee(cid:76)ng.
The Directors present their report with the Financial
Statements of the Company and the Group for the year
ended 31 December 2022.
Dividends
The Directors do not recommend the payment of
a dividend (2021: £nil).
Events Since the Repor(cid:45)ng Date
This informa(cid:76)on is contained in Note 25 to the Financial
Statements.
Directors
The Directors who have held o(cid:12)ce during the period
from 1 January 2022 to the date of this report (unless
otherwise stated) are as follows:
David Stuart Archer (stepped down on 6 July 2022)
Dale John Ferguson
Mary Jo Jacobi (appointed on 7 April 2022)
Ma(cid:49)hew James Wya(cid:49) King
James Gerald Leahy
Manohar Pundalik Shenoy (appointed on 7 April 2022,
previously Alternate Director)
Diogo da Silveira (appointed on 10 November 2022)
Imad Kamal Abdul Redha Sultan
Maqbool Ali Sultan (re(cid:76)red from the Board on
7 April 2022)
Murtadha Ahmed Sultan (Alternate Director, re(cid:76)red
from the Board on 7 April 2022)
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 O(cid:12)cers’ insurance
policy.
Financial Instruments Risk
This informa(cid:76)on is contained in Note 18 to the Financial
Statements.
Future Development
This
Statement and the Chief Execu(cid:76)ve’s Report.
is contained
informa(cid:76)on
in the Chairman’s
Key Stakeholder Groups and Principal Decisions
Details of how the Directors have had regard to the need
to foster Savannah’s business rela(cid:76)onships with
suppliers and others, and the principal decisions taken
by the Company during the year, can be found in the
Strategic report in Sec(cid:76)on 172 (1) Statement.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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REPORT OF THE DIRECTORS
The Directors’ bene(cid:9)cial interests (including the bene(cid:9)cial interests of their immediate family) in the ordinary shares
of the Company are as follows:
Dale John Ferguson
Mary Jo Jacobi
Ma(cid:49)hew James Wya(cid:49) King
James Gerald Leahy
Manohar Pundalik Shenoy
Diogo da Silveira
Imad Kamal Abdul Redha Sultan2
No. of shares held at
31 December 2022
No. of shares held at
31 December 2021
50,649,5101
–
2,916,528
1,365,889
5,809,524
–
–
49,581,6041
–
2,916,528
1,150,000
5,809,524
–
–
1 46,161,656 shares (2021: 45,993,750 shares) held indirectly through Slipstream Resources Interna(cid:76)onal Pty Ltd.
2 The Director indicated is a representa(cid:76)ve of Al Marjan Ltd which held 268,262,589 shares at the repor(cid:76)ng date (2021: 268,262,589 shares).
Details of Directors’ remunera(cid:76)on are disclosed in the Remunera(cid:76)on Report.
Details of Directors’ interests in Share Op(cid:76)ons and Investor Warrants are disclosed in the Remunera(cid:76)on Report.
Substan(cid:45)al Shareholding
At the date of this report the Company has been no(cid:76)(cid:9)ed 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:
Name of Shareholder
Al Marjan Ltd (Director2)
Slipstream Resources Interna(cid:76)onal Pty Ltd
Dale John Ferguson (Director/CEO)3
No. of shares
268,262,589
147,717,300
50,649,510
%
15.88%
8.75%
3.00%
1 Except those exempts under DTR 5.1.5 regula(cid:76)on.
2 One Director is representa(cid:76)ve of Al Marjan.
3 This is including a 2.73% included in the holding reported for Slipstream Resources Interna(cid:76)onal Pty Ltd.
On behalf of the Board:
Dale Ferguson
Chief Execu(cid:76)ve O(cid:12)cer
Date: 4 April 2023
54
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
REMUNERATION REPORT
The Remunera(cid:76)on Commi(cid:49)ee comprises of James Leahy (Chairman), Manohar Shenoy and Diogo da Silveira.
Mary Jo Jacobi also served as a member of the Remunera(cid:76)on Commi(cid:49)ee and relinquished her role and was replaced
by Diogo da Silveira in November 2022.
The main purpose of the Remunera(cid:76)on Commi(cid:49)ee is to:
•
•
(to the extent prac(cid:76)cable) be independent non(cid:25)execu(cid:76)ve directors in determining and reviewing the
remunera(cid:76)on of execu(cid:76)ves on behalf of the ‘Board’; and
ensuring that remunera(cid:76)on policies and packages a(cid:49)ract and retain, mo(cid:76)vate quality directors whilst not
exceeding market rates.
Procedures for developing policy and (cid:6)xing remunera(cid:45)on
The Remunera(cid:76)on Commi(cid:49)ee (cid:9)xes execu(cid:76)ve remunera(cid:76)on and ensures that no Director is involved in deciding
his or her own remunera(cid:76)on. The Remunera(cid:76)on Commi(cid:49)ee is authorised to obtain outside professional advice
and exper(cid:76)se. The Remunera(cid:76)on Commi(cid:49)ee is authorised by the Board to inves(cid:76)gate any ma(cid:49)er within its Terms
of Reference, and it is authorised to seek any informa(cid:76)on that it requires from any employee.
Details of the remunera(cid:45)on policy
The fees to be paid to the Directors and senior management are set by the Remunera(cid:76)on Commi(cid:49)ee.
Directors’ service agreements
Service agreements for Directors and senior management are terminable by either party on no(cid:76)ce periods up to a
maximum of 6 months.
Directors’ remunera(cid:45)on
The following remunera(cid:76)on informa(cid:76)on comprises Directors’ fees and bene(cid:9)ts in kind that were paid to Directors
during the year:
Directors’ Directors’
emoluments 2022 emoluments 2021
Salary Bonus Pension Non(cid:8) Total Salary Bonus Pension Non(cid:25)
cash cash
share share
op(cid:45)ons op(cid:76)ons
£ £ £ £ £ £ £ £ £
Execu(cid:45)ve Directors
Dale Ferguson 241,142 16,2741 – 41,413 298,829 149,837 82,5561 – 35,071
David Archer2 174,268 – 16,525 53,217 244,010 310,000 124,0001 43,400 51,783
Non(cid:8)Execu(cid:45)ve Directors
Ma(cid:49)hew King 65,000 – – – 65,000 65,000 – – –
Mary Jo Jacobi 29,282 – – – 29,282 – – – –
James Leahy 40,000 – – – 40,000 40,000 – – –
Manohar Shenoy – – – – – – – – –
Diogo da Silveira 6,941 – – – 6,941 – – – –
Maqbool Sultan3 – – – – – – – – –
Imad Sultan – – – – – – – – –
Murtadha Sultan3 – – – – – – – – –
556,633 16,274 16,525 94,630 684,062 564,837 206,556 43,400 86,854
Total
£
267,464
529,183
65,000
–
40,000
–
–
–
–
–
901,647
1 Bonuses unpaid as at 31 December 2022 and 31 December 2021
2 Stepped down as Director (and employee) on 6 July 2022
3 Termina(cid:76)on of appointment as Director on 7 April 2022
The Board recognises that Directors’ remunera(cid:76)on is of a legi(cid:76)mate concern to the Company’s shareholders and is
commi(cid:49)ed to following the current best business prac(cid:76)ces. The Company operates within a compe(cid:76)(cid:76)ve
environment and its performance depends on the individual contribu(cid:76)ons of the Directors.
The Board’s policy is to provide execu(cid:76)ve remunera(cid:76)on packages designed to a(cid:49)ract, mo(cid:76)vate and retain directors
of the calibre necessary to maintain the Company’s posi(cid:76)on and to reward the Directors (and senior management)
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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REMUNERATION REPORT
for enhancing shareholder value and return. The
Company aims
levels of
remunera(cid:76)on to do this, but to avoid paying more than
necessary; the remunera(cid:76)on will also re(cid:10)ect the
Directors’ du(cid:76)es and responsibili(cid:76)es.
to provide su(cid:12)cient
David Archer stepped down from his role as CEO in July
2022 and the Board approved the appointment of Dale
Ferguson as the Interim CEO combined with his Technical
Director role. The Company sought advice from
Company’s Remunera(cid:76)on Adviser, Alvarez and Marsal
for the salary benchmarking for the Interim CEO role.
Following which the Remunera(cid:76)on Commi(cid:49)ee and
Board approved and implemented the Remunera(cid:76)on
Adviser’s
temporary
recommenda(cid:76)on, being a
adjustment of Dale Ferguson’s salary in considera(cid:76)on of
(an addi(cid:76)onal payment of
the expanded role
AUD 23,766.66 per month e(cid:16)ec(cid:76)ve July 2022).
In the calendar year, the Board appointed two
Non(cid:25)Execu(cid:76)ve Directors, with Mary Jo Jacobi joining the
Company in April 2022 and Diogo da Silveira in
November 2022. Diogo da Silveira was appointed and
owing to him being in Portugal he was/is expected to be
engaged in regular stakeholder engagement within
Portugal, the Board approved an annual fee of £50,000
(which is £10,000 higher than the remunera(cid:76)on of the
Board’s standard NEDs).
Following the Company’s announcement on the
Environmental Impact Assessment evalua(cid:76)on process
update and further work required on the Environmental
Impact Assessment with Portugal’s environmental
regulator, Agência Portuguesa do Ambiente, the Board
cancelled the 2022 KPI performance bonus for Mr Dale
Ferguson which was replaced by a 10% bonus award
versus gross salary (applied to the Technical Director
annual fee only – i.e., it did not apply to the temporary
increase). Furthermore, following the cancella(cid:76)on of the
2022 KPI performance bonus and in recogni(cid:76)on of the
senior management’s valuable contribu(cid:76)ons, including
assuming increased responsibili(cid:76)es following David
Archer stepping down as CEO, the Company awarded a
10% bonus to recognise this.
The Execu(cid:76)ve Directors were awarded a 5% pay rise to
re(cid:10)ect the in(cid:10)a(cid:76)onary environment, and this was the
(cid:9)rst such adjustment since 2020.
Remunera(cid:45)on Policy and Long(cid:8)Term Incen(cid:45)ve Plan
In 2019, the Remunera(cid:76)on Commi(cid:49)ee undertook a
review of remunera(cid:76)on packages and developed a new
remunera(cid:76)on policy aimed at rewarding performance,
encouraging reten(cid:76)on of key sta(cid:16) and aligning their
interests with those of shareholders. This resulted in a
long(cid:25)term incen(cid:76)ve plan (‘LTIP’) intended to support this
policy being implemented in March 2019 which is
designed to
incen(cid:76)vise the Company’s execu(cid:76)ve
Management Team and other key employees. Along
with the implementa(cid:76)on of the LTIP, the Remunera(cid:76)on
Commi(cid:49)ee established an overall remunera(cid:76)on policy
which included benchmarking exercises, feedback from
ins(cid:76)tu(cid:76)onal shareholders and engaging interna(cid:76)onally
recognised consul(cid:76)ng (cid:9)rm Alvarez and Marsal. This
resulted in a remunera(cid:76)on policy for the execu(cid:76)ve
Directors which combines short term incen(cid:76)ves (‘STI’ –
cash bonus which is assessed against key business
objec(cid:76)ves) and long(cid:25)term incen(cid:76)ves (‘LTI’ – under the
Company’s LTIP). The STI is based upon maximum
poten(cid:76)al bonus of 150% / 100% of base salary for the
CEO / Technical Director respec(cid:76)vely and is assessed
against key business objec(cid:76)ves.
The LTIP was established to encourage long(cid:25)term value
crea(cid:76)on for Savannah’s shareholders and to align the
interests of the par(cid:76)cipants with shareholders. Awards
under the LTIP take the form of op(cid:76)ons over the
Company’s ordinary shares of 1 pence each, (the
‘Op(cid:76)ons’). The Board believes that the implementa(cid:76)on
of the LTIP will incen(cid:76)vise the par(cid:76)cipants and will also
help Savannah to a(cid:49)ract 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 Remunera(cid:76)on Commi(cid:49)ee
adopted a policy whereby up to 5% of the Company’s
issued share capital should be made available via the
LTIP to the Execu(cid:76)ve Management Team only, with the
balance being available to other employees. These
percentages are reviewed annually by the Company’s
Remunera(cid:76)on Commi(cid:49)ee and did not change between
2021 and 2022. The LTIP also includes malus and
clawback clauses.
The LTIP is a share op(cid:76)on scheme of the kind commonly
listed companies. The Remunera(cid:76)on
adopted by
Commi(cid:49)ee took advice and recommenda(cid:76)ons from
leading remunera(cid:76)on consultancy, Alvarez and Marsal.
David Archer (former CEO) stepped down from the
Company in July 2022 and all 20,000,000 Op(cid:76)ons issued
to him lapsed on him leaving the Company.
No share op(cid:76)ons were issued in 2022 under the LTIP.
56
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
REMUNERATION REPORT
The Directors’ interests in the Share Op(cid:76)ons of the Company are as follows:
Dale Ferguson1
Dale Ferguson2
Dale Ferguson2
David Archer2, 3
David Archer2, 3
Op(cid:45)ons at
1 Jan 2022
3,000,000
3,625,000
3,625,000
10,000,000
10,000,000
Quan(cid:45)ty
granted Exercised
during
the year
during
the year
Op(cid:45)ons/
Lapsed Warrants
during
the year
2022
at 31 Dec Exercise
price
Date of
the grant
First
date of
exercise
Final
date of
exercise
–
–
–
–
–
–
–
–
–
–
–
– (10,000,000)
– (10,000,000)
3,000,000
3,625,000
3,625,000
–
–
10.0p
4.7p
6.2p
4.7p
6.2p
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
1 Granted under the 2019 LTIP
2 Granted under the 2021 LTIP
3 Stepped down as Director (and employee) on 6 July 2022
Op(cid:76)ons /
Warrants
at 1 Jan
2021
Quan(cid:76)ty
granted
during
the year
Exercised
during
the year
Op(cid:76)ons/
Lapsed Warrants
during
the year
2021
at 31 Dec Exercise
price
Dale Ferguson
David Archer3
Dale Ferguson1
David Archer2, 3
David Archer2, 3
Dale Ferguson2
Dale Ferguson2
2,000,000
7,000,000
3,000,000
–
–
–
– 10,000,000
– 10,000,000
– 3,625,000
– 3,625,000
–
– (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
1 Granted under the 2019 LTIP
2 Granted under the 2021 LTIP
3 Stepped down as Director (and employee) on 6 July 2022
No share op(cid:76)ons were granted to the Non(cid:25)Execu(cid:76)ve Directors.
On behalf of the Board:
James Leahy
Chairman of the Remunera(cid:76)on Commi(cid:49)ee
4 April 2023
Date of
the grant
01/03/17
01/03/17
11/03/19
30/06/21
30/06/21
30/06/21
30/06/21
First
date of
exercise
Final
date of
exercise
01/03/17 28/02/21
01/03/17 28/02/21
11/03/22 11/03/24
30/06/24 30/06/29
30/06/24 30/06/29
30/06/24 30/06/29
30/06/24 30/06/29
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 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 rela(cid:76)on to the
principles of the QCA Corporate Governance Code is
provided
at
h(cid:49)p://www.savannahresources.com/investor(cid:25)
rela(cid:76)ons/corporate(cid:25)governance/.
Company
website
the
on
The Code is described as a prac(cid:76)cal, outcome orientated
approach to corporate governance that is tailored for
small and mid(cid:25)size companies. It is a valuable reference
for growing companies wishing to follow good
governance prac(cid:76)ce. The Company has adopted the
Code because it allows it to take a (cid:10)exible 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.
independent non(cid:25)execu(cid:76)ve Director
Following the appointment to the Board of James Leahy
as an
in
November 2018, the Company’s Chairman relinquished
his roles as Chairman of the Remunera(cid:76)on Commi(cid:49)ee
and Chairman of the Audit and Risk Commi(cid:49)ee, and
subsequently le(cid:6) both Commi(cid:49)ees, thus strengthening
the independence of those Commi(cid:49)ees from the Board
itself.
In February 2021, the Company established a
Nomina(cid:76)ons Commi(cid:49)ee, prior to that the Board itself
was responsible for the ma(cid:49)ers falling under the
responsibility of this Commi(cid:49)ee, and on an annual basis
had reviewed the need for a Nomina(cid:76)ons Commi(cid:49)ee.
The ra(cid:76)onale for the crea(cid:76)on of the Commi(cid:49)ee is to
re(cid:10)ect the Company’s growing maturity and its planned
transi(cid:76)on from explorer / developer into mine operator.
The Board of Directors
The Board comprises of one execu(cid:76)ve Director, and six
non(cid:25)execu(cid:76)ve Directors. Ordinarily, the Board formally
meets approximately every quarter, and convenes for
business updates in between those formal mee(cid:76)ngs.
The Board is responsible for se(cid:11)ng and monitoring
group strategy, reviewing budgets and (cid:9)nancial
performance, ensuring adequate funding, examining
major por(cid:5)olio management ma(cid:49)ers, formula(cid:76)ng policy
on key issues and repor(cid:76)ng to the shareholders.
The Board was strengthened by the appointment in
2022 of Mary Jo Jacobi and Diogo da Silveira as
independent non(cid:25)execu(cid:76)ve directors. Mary Jo Jacobi is
a leader of the ESG movement and will oversee the
Company’s ESG program, and has a wealth of relevant
industry and government experience. Diogo da Silveira
is a highly experienced business leader with extensive
experience in Portugal and Europe.
Internal Financial Control
The Board is responsible for establishing and maintaining
the Group’s system of internal (cid:9)nancial controls. Internal
(cid:9)nancial control systems are designed to meet the
par(cid:76)cular 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 con(cid:76)nue to review
the e(cid:16)ec(cid:76)veness of the procedures presently in place to
ensure that they are appropriate to the nature and scale
of the opera(cid:76)ons of the Group.
The Audit and Risk Commi(cid:23)ee
The Audit and Risk Commi(cid:49)ee comprises of three Non(cid:25)
Execu(cid:76)ve Directors – Manohar Shenoy (who chairs the
Commi(cid:49)ee), Mary Jo Jacobi and Diogo da Silveira.
The Commi(cid:49)ee’s key responsibili(cid:76)es with respect to
audit are for ensuring that the (cid:9)nancial performance of
the Group is properly reported on and monitored, and
for mee(cid:76)ng the auditors and reviewing the reports from
the auditors rela(cid:76)ng to accounts and internal controls.
It also reviews the Group’s annual and interim Financial
Statements before submission to the Board for approval.
including monitoring
The Commi(cid:49)ee’s key responsibili(cid:76)es with respect to risk
are suppor(cid:76)ng the Board in its assessment of enterprise
risk and the determina(cid:76)on of risk appe(cid:76)te as part of the
overall se(cid:11)ng of strategy for the Group. It also assists
its oversight of the Group’s risk
the Board
in
management framework
its
e(cid:16)ec(cid:76)veness. The Group operates a Risk Register, with
the inten(cid:76)on of allowing risks to be iden(cid:76)(cid:9)ed, tracked
and addressed in order to mi(cid:76)gate any poten(cid:76)al damage
to the Group or its businesses. The Commi(cid:49)ee facilitates
the management of the Risk Register, in conjunc(cid:76)on
with the Board, senior managers and appropriate
professional advisers. The Commi(cid:49)ee also reviews any
items reported under the Company’s Code of Conduct
and whistleblowing procedure.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CORPORATE GOVERNANCE STATEMENT
Nomina(cid:45)ons Commi(cid:23)ee
The Nomina(cid:76)ons Commi(cid:49)ee, established in February
2021, comprises three non(cid:25)execu(cid:76)ve Directors –
Ma(cid:49)hew King (who chairs the Commi(cid:49)ee), Mary Jo
Jacobi and Imad Sultan. It is responsible for reviewing
the structure, size, and composi(cid:76)on of the Board of
Directors, giving considera(cid:76)on to succession planning for
Directors and senior execu(cid:76)ves, and iden(cid:76)fying and
nomina(cid:76)ng candidates for the approval of the Board as
required. It is also responsible for monitoring the
performance of the Board of Directors.
The Nomina(cid:76)on Commi(cid:49)ee played an instrumental role
in the changes to the Board Composi(cid:76)on in 2022, which
saw the Board strengthened by the addi(cid:76)on of Mary Jo
Jacobi who has extensive ESG experience and Diogo da
Silveira who is a Portuguese business heavyweight.
An(cid:45)(cid:8)Bribery and Corrup(cid:45)on
It is the Group’s policy to conduct business in an honest
way, and without the use of corrupt prac(cid:76)ces or acts of
bribery to obtain an unfair advantage in line with the
UK Bribery Act 2010. The Group takes a zero(cid:25)tolerance
approach to bribery and corrup(cid:76)on and is commi(cid:49)ed to
ac(cid:76)ng professionally, fairly and with integrity in all its
business dealings and rela(cid:76)onships wherever it operates
and implemen(cid:76)ng and enforcing e(cid:16)ec(cid:76)ve systems to
counter bribery.
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 con(cid:76)nue to be monitored
for appropriateness and e(cid:16)ec(cid:76)veness.
In 2022 Internal Audit reviews were completed for UK
and Portugal opera(cid:76)ng en(cid:76)(cid:76)es, and the results of the
tests demonstrated that controls were adequate to the
nature and scale of the opera(cid:76)ons of the en(cid:76)(cid:76)es, and
no material instances of noncompliance were noted.
The Remunera(cid:45)on Commi(cid:23)ee
The Remunera(cid:76)on Commi(cid:49)ee comprises of three
Non(cid:25)Execu(cid:76)ve Directors – James Leahy (who chairs the
Commi(cid:49)ee), Manohar Shenoy, and Diogo da Silveira. It is
responsible for reviewing the performance of the
execu(cid:76)ve Directors and for se(cid:11)ng the scale and
structure of their remunera(cid:76)on, paying due regard to
the interests of shareholders as a whole and the
performance of the Group. The remunera(cid:76)on of the
Chairman and any non(cid:25)execu(cid:76)ve Director is determined
by the Board as a whole, based on a review of the
current prac(cid:76)ces in other companies.
In 2022 the Remunera(cid:76)on Commi(cid:49)ee, supported by the
Company’s Remunera(cid:76)on Adviser, Alvarez and Marsal,
led the review for the fee se(cid:11)ng for Dale Ferguson’s
temporary increase for the Interim CEO role.
AIM Rule Compliance Commi(cid:23)ee
The AIM Rule Compliance Commi(cid:49)ee comprises one
non(cid:25)execu(cid:76)ve and one execu(cid:76)ve Director – Ma(cid:49)hew
King (who chairs the Commi(cid:49)ee) and Dale Ferguson, the
CEO. It is responsible for ensuring that resources and
procedures are in place to ensure the Company is at all
(cid:76)mes in compliance with the AIM Rules for Companies
and the Market Abuse Regula(cid:76)ons. The Commi(cid:49)ee is
responsible for the Company’s Corporate Governance
Code management. The Commi(cid:49)ee is also responsible
for ensuring that the execu(cid:76)ve Directors and
Management are communica(cid:76)ng e(cid:16)ec(cid:76)vely with the
Company’s Nominated Adviser.
Furthermore, the Commi(cid:49)ee
for
monitoring the Company’s compliance with the Market
Abuse Regula(cid:76)ons.
is responsible
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Website Publica(cid:45)on
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 legisla(cid:76)on in the United Kingdom
governing the prepara(cid:76)on and dissemina(cid:76)on of
Financial Statements, which may vary from legisla(cid:76)on in
other jurisdic(cid:76)ons. 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’ Responsibili(cid:45)es
The Directors are responsible for preparing the Strategic
Report, the Report of the Directors and the Financial
Statements in accordance with applicable law and
regula(cid:76)ons.
Company law requires the Directors to prepare Financial
Statements for each (cid:9)nancial year. Under that law the
Directors are required to prepare the Group and
Company Financial Statements in accordance with UK
adopted interna(cid:76)onal accoun(cid:76)ng standards. Under
Company law the Directors must not approve the
Financial Statements unless they are sa(cid:76)s(cid:9)ed that they
give a true and fair view of the state of a(cid:16)airs of the
Group and Company and of the pro(cid:9)t or loss of the
Group for that period.
In preparing these Financial Statements, the Directors
are required to:
•
select suitable accoun(cid:76)ng policies and then apply
them consistently;
• make judgements and accoun(cid:76)ng es(cid:76)mates that are
reasonable and prudent;
•
•
in
state whether they have been prepared
accordance with UK adopted
interna(cid:76)onal
accoun(cid:76)ng 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 con(cid:76)nue in business.
The Directors are responsible for keeping adequate
accoun(cid:76)ng records that are su(cid:12)cient to show and
explain the Company’s transac(cid:76)ons and disclose with
reasonable accuracy at any (cid:76)me the (cid:9)nancial posi(cid:76)on 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 preven(cid:76)on and detec(cid:76)on
of fraud and other irregulari(cid:76)es.
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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Opinion on the (cid:6)nancial statements
In our opinion:
•
•
•
•
the (cid:9)nancial statements give a true and fair view of the state of the Group’s and of the Parent Company’s a(cid:16)airs
as at 31 December 2022 and of the Group’s loss for the year then ended;
the Group (cid:9)nancial statements have been properly prepared in accordance with UK adopted interna(cid:76)onal
accoun(cid:76)ng standards;
the Parent Company (cid:9)nancial statements have been properly prepared in accordance with UK adopted interna(cid:76)onal
accoun(cid:76)ng standards and as applied in accordance with the provisions of the Companies Act 2006; and
the (cid:9)nancial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the (cid:9)nancial statements of Savannah Resources Plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 December 2022 which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Statements of Financial Posi(cid:76)on, the Consolidated and Company
Statements of Changes in Equity, the Consolidated and Company Statements of Cash Flows and notes to the (cid:9)nancial
statements, including a summary of signi(cid:9)cant accoun(cid:76)ng policies. The (cid:9)nancial repor(cid:76)ng framework that has been
applied in their prepara(cid:76)on is applicable law and UK adopted interna(cid:76)onal accoun(cid:76)ng standards and, as regards
the Parent Company (cid:9)nancial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with Interna(cid:76)onal Standards on Audi(cid:76)ng (UK) (ISAs (UK)) and applicable
law. Our responsibili(cid:76)es under those standards are further described in the Auditor’s responsibili(cid:76)es for the audit
of the (cid:9)nancial statements sec(cid:76)on of our report. We believe that the audit evidence we have obtained is su(cid:12)cient
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 (cid:9)nancial statements in the UK, including the FRC’s Ethical Standard as applied to
listed en(cid:76)(cid:76)es, and we have ful(cid:9)lled our other ethical responsibili(cid:76)es in accordance with these requirements.
Material uncertainty related to going concern
We draw a(cid:49)en(cid:76)on to note 1 to the (cid:9)nancial statements concerning the Group’s and the Parent Company’s ability
to con(cid:76)nue as a going concern. As stated in note 1 depending on the outcome of the Environmental Impact
Declara(cid:76)on (DIA), the group may be required to raise addi(cid:76)onal (cid:9)nance in the forecast period to fund the De(cid:9)ni(cid:76)ve
Feasibility Study (DFS) and the Environmental Compliance Report of the Execu(cid:76)on Project (RECAPE). Due to the
lack of any binding agreements to raise addi(cid:76)onal funds, there can be no certainty that the addi(cid:76)onal funding
required by the Group and the Parent Company will be secured within the necessary (cid:76)mescale. As stated in note 1
these events or condi(cid:76)ons, along with the other ma(cid:49)ers set out in note 1 indicate that a material uncertainty exists
that may cast signi(cid:9)cant doubt on the Group and Parent Company’s ability to con(cid:76)nue as a going concern. Our
opinion is not modi(cid:9)ed in respect of this ma(cid:49)er.
For the reasons set out above and based on our risk assessment, going concern was determined to be a key audit ma(cid:49)er.
In audi(cid:76)ng the (cid:9)nancial statements, we have concluded that the Directors’ use of the going concern basis of
accoun(cid:76)ng in the prepara(cid:76)on of the (cid:9)nancial statements is appropriate. Our evalua(cid:76)on of the Directors’ assessment
of the Group and the Parent Company’s ability to con(cid:76)nue to adopt the going concern basis of accoun(cid:76)ng and in
response to the key audit ma(cid:49)er included:
• Assessing the reasonableness of Directors’ forecast expenditure for a period of at least twelve months from the
date of approval of the (cid:9)nancial statements by reference to Directors’ budgeted ac(cid:76)vity and actual expenditure
in 2022.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
• Agreeing the current cash resources to suppor(cid:76)ng documenta(cid:76)on.
•
•
•
Considering the impact on the cash(cid:10)ow forecasts should the DIA be granted or not granted and con(cid:9)rming whether
liquidity is maintained under such scenarios.
Considering the mi(cid:76)ga(cid:76)ng ac(cid:76)ons available to management such as deferring uncommi(cid:49)ed capital expenditure
on the Barroso Lithium Project and con(cid:9)rming whether these are reasonable and within management’s control.
Reviewing the adequacy and consistency of the disclosures within the (cid:9)nancial statements in respect of going
concern with the Directors assessment including the key judgements made by the Directors.
Our responsibili(cid:76)es and the responsibili(cid:76)es of the Directors with respect to going concern are described in the
relevant sec(cid:76)ons of this report.
Overview
Coverage
94% (2021: 100%) of Group pro(cid:4)t before tax
100% (2021: 100%) of Group total assets
Key audit ma(cid:23)ers
2022 2021
Materiality
Carrying value of the Explora(cid:76)on
and Evalua(cid:76)on assets (cid:2) (cid:2)
Going concern (cid:2) x
Group (cid:4)nancial statements as a whole
£390,000 (2021: £430,000) based on 1.5% (2021: 1.5%)
of total assets
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 (cid:9)nancial 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 opera(cid:76)ng loca(cid:76)on being the 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 signi(cid:9)cant components of the Group.
The remaining components of the Group were considered non(cid:25)signi(cid:9)cant and the (cid:9)nancial informa(cid:76)on of these
components were principally subject to analy(cid:76)cal review procedures by the Group engagement team, together
with addi(cid:76)onal detailed tes(cid:76)ng over UK components subject to a statutory audit where applicable.
The Group engagement team performed the audit of the Parent Company and the Portuguese component,
Savannah Lithium Unipessoal Lda, was audited by a BDO network member (cid:9)rm 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 su(cid:12)cient appropriate audit evidence has been obtained as a basis for our opinion on the
Group (cid:9)nancial statements as a whole. Our involvement with component auditors included the following:
• Detailed Group repor(cid:76)ng instruc(cid:76)ons were sent to the component auditor, which included the signi(cid:9)cant areas
to be covered by the audit (including areas that were considered to be key audit ma(cid:49)ers as detailed below),
and set out the informa(cid:76)on required to be reported to the Group audit team.
62
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
•
•
•
The Group audit team was ac(cid:76)vely involved in the direc(cid:76)on of the audit performed by the component auditor for
the Group repor(cid:76)ng purposes along with the considera(cid:76)on of (cid:9)ndings and determina(cid:76)on of conclusions drawn.
The Group audit team reviewed the component auditor’s work papers remotely, including review of group
repor(cid:76)ng documents and engaged with the component auditor regularly during their (cid:9)eldwork and comple(cid:76)on
phases.
The Group audit team performed procedures in respect of the signi(cid:9)cant risk areas that represented Key Audit
Ma(cid:49)ers in addi(cid:76)on to the procedures performed by the component auditor.
Key audit ma(cid:1)ers
Key audit ma(cid:49)ers are those ma(cid:49)ers that, in our professional judgement, were of most signi(cid:9)cance in our audit of
the (cid:9)nancial statements of the current period and include the most signi(cid:9)cant assessed risks of material
misstatement (whether or not due to fraud) that we iden(cid:76)(cid:9)ed, including those which had the greatest e(cid:16)ect on:
the overall audit strategy, the alloca(cid:76)on of resources in the audit, and direc(cid:76)ng the e(cid:16)orts of the engagement team.
In addi(cid:76)on to the ma(cid:49)er described in the Material uncertainty related to going concern sec(cid:76)on of our report, we
have determined the ma(cid:49)er described below to be the key audit ma(cid:49)er to be communicated in our report. These
ma(cid:49)ers were addressed in the context of our audit of the (cid:9)nancial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on these ma(cid:49)ers.
Key audit ma(cid:23)er
Carrying value of the Explora(cid:45)on and Evalua(cid:45)on Assets (notes 1 and 8)
The Group holds one explora(cid:76)on and evalua(cid:76)on asset being the Barroso Lithium Project in Portugal. Accoun(cid:76)ng
standards require Management to carry out an assessment at least annually for any indicators of impairment.
This requires signi(cid:9)cant management judgement, which is explained in the sec(cid:76)on on key judgements rela(cid:76)ng to the
Carrying value of Explora(cid:76)on and Evalua(cid:76)on Assets in note 1 to the (cid:9)nancial statements. Therefore we considered this
to be a key audit ma(cid:49)er.
How the scope of our audit addressed the key audit ma(cid:23)er
We reviewed and assessed whether Management’s assessment was performed in accordance with the requirements
of IFRS 6. We challenged Management’s assessment of the indicators of impairment of the Barroso Lithium Project in
Portugal, by performing the following procedures:
• We agreed management’s assessment to third party suppor(cid:76)ng documenta(cid:76)on where applicable, including:
o
o
o
Scoping studies,
Explora(cid:76)on and mining licence permits,
The revised Environmental Impact Assessment submi(cid:49)ed by the Group to Portugal’s environmental regulator.
• We reviewed the Group’s Mina do Barroso mining licence which expires in 2036 and has a 20 years’ extension
available. We checked compliance with licence terms through inspec(cid:76)ng suppor(cid:76)ng documents.
• We reviewed Management’s plans and budgets to establish whether the Group is commi(cid:49)ed to the development
of the project and that substan(cid:76)ve expenditure on further explora(cid:76)on and evalua(cid:76)on of mineral resources in the
area is budgeted and planned. We checked consistency of these with the Going concern forecasts.
• We considered whether the asset would be commercially viable with reference to the future lithium prices as per
forecasts by Consensus Economics.
• We reviewed RNS announcements, minutes from the mee(cid:76)ngs of Directors and news ar(cid:76)cles to check whether
there were any other poten(cid:76)al impairment indicators.
Key observa(cid:45)ons:
We consider the judgements made in the impairment indicators assessment of Explora(cid:76)on and Evalua(cid:76)on Assets
prepared by Management to be reasonable.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Our applica(cid:45)on of materiality
We apply the concept of materiality both in planning and performing our audit, and in evalua(cid:76)ng the e(cid:16)ect of
misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could
in(cid:10)uence the economic decisions of reasonable users that are taken on the basis of the (cid:9)nancial 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 tes(cid:76)ng needed. Importantly,
misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the
nature of iden(cid:76)(cid:9)ed misstatements, and the par(cid:76)cular circumstances of their occurrence, when evalua(cid:76)ng their
e(cid:16)ect on the (cid:9)nancial statements as a whole.
Based on our professional judgement, we determined materiality for the (cid:9)nancial statements as a whole and
performance materiality as follows:
Group (cid:6)nancial statements Parent company (cid:6)nancial statements
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Materiality 390 430 310 340
Basis for determining
materiality
Ra(cid:45)onale for the
benchmark applied
1.5% of total assets
79% of Group materiality
We considered total assets to be the
most signi(cid:9)cant determinant of the
Group’s (cid:9)nancial performance for
users of the (cid:9)nancial statements as
the Group con(cid:76)nues to bring its
mining assets through to produc(cid:76)on.
Capped at a percentage of Group
materiality taking into account our
assessment of component
aggrega(cid:76)on risk.
Performance materiality
293
322
233
255
Basis for determining
performance materiality
75% of materiality considering the nature of ac(cid:76)vi(cid:76)es and expected total value
of known and likely misstatements, based on past experience.
Component materiality
Materiality for the Parent Company is set out above. Materiality for the second signi(cid:9)cant component, Savannah
Lithium Unipessoal Lda, was based on a percentage of 69% (2021: 69%) of Group materiality and amounted to
£270,000 (2021: £300,000). We further applied performance materiality levels of 75% (2021: 75%) of the
component materiality to our tes(cid:76)ng to ensure that the risk of errors exceeding component materiality was
appropriately mi(cid:76)gated.
Repor(cid:27)ng threshold
We agreed with the Audit Commi(cid:49)ee that we would report to them all individual audit di(cid:16)erences in excess of
£7,800 (2021: £8,600). We also agreed to report di(cid:16)erences below this threshold that, in our view, warranted
repor(cid:76)ng on qualita(cid:76)ve grounds.
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Other informa(cid:45)on
The directors are responsible for the other informa(cid:76)on. The other informa(cid:76)on comprises the informa(cid:76)on included
in the annual report and (cid:9)nancial statements other than the (cid:9)nancial statements and our auditor’s report thereon.
Our opinion on the (cid:9)nancial statements does not cover the other informa(cid:76)on 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 informa(cid:76)on and, in doing so, consider whether the other informa(cid:76)on is materially inconsistent with
the (cid:9)nancial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially
misstated. If we iden(cid:76)fy such material inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the (cid:9)nancial statements themselves. If, based on
the work we have performed, we conclude that there is a material misstatement of this other informa(cid:76)on, we are
required to report that fact.
We have nothing to report in this regard.
Other Companies Act 2006 repor(cid:45)ng
Based on the responsibili(cid:76)es 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 ma(cid:49)ers as described below.
Strategic report and Directors’ report
In our opinion, based on the work undertaken in the course of the audit:
•
•
the informa(cid:76)on given in the Strategic report and the Directors’ report for the (cid:9)nancial year for which the (cid:9)nancial
statements are prepared is consistent with the (cid:9)nancial statements; and
the Strategic report and the Directors’ report 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 iden(cid:76)(cid:9)ed material misstatements in the Strategic report or the Directors’ report.
Ma(cid:23)ers on which we are required to report by excep(cid:45)on
We have nothing to report in respect of the following ma(cid:49)ers in rela(cid:76)on to which the Companies Act 2006 requires us
to report to you if, in our opinion:
•
•
•
adequate accoun(cid:76)ng 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 (cid:9)nancial statements are not in agreement with the accoun(cid:76)ng records and returns; or
certain disclosures of Directors’ remunera(cid:76)on speci(cid:9)ed by law are not made; or
• we have not received all the informa(cid:76)on and explana(cid:76)ons we require for our audit.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
Responsibili(cid:45)es of Directors
As explained more fully in the Statement of Directors’
responsibili(cid:76)es, the Directors are responsible for the
prepara(cid:76)on of the (cid:9)nancial statements and for being
sa(cid:76)s(cid:9)ed that they give a true and fair view, and for such
internal control as the Directors determine is necessary
to enable the prepara(cid:76)on of (cid:9)nancial statements that
are free from material misstatement, whether due to
fraud or error.
In preparing the (cid:9)nancial statements, the Directors are
responsible for assessing the Group’s and the Parent
Company’s ability to con(cid:76)nue as a going concern,
disclosing, as applicable, ma(cid:49)ers related to going
concern and using the going concern basis of accoun(cid:76)ng
unless the Directors either intend to liquidate the Group
or the Parent Company or to cease opera(cid:76)ons, or have
no realis(cid:76)c alterna(cid:76)ve but to do so.
Auditor’s responsibili(cid:45)es for the audit of the (cid:6)nancial
statements
Our objec(cid:76)ves are to obtain reasonable assurance about
whether the (cid:9)nancial 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 in(cid:10)uence the
economic decisions of users taken on the basis of these
(cid:9)nancial statements.
including
fraud, are
Extent to which the audit was capable of detec(cid:27)ng
irregulari(cid:27)es, including fraud
Irregulari(cid:76)es,
instances of
non(cid:25)compliance with laws and regula(cid:76)ons. We design
procedures in line with our responsibili(cid:76)es, outlined
above, to detect material misstatements in respect of
irregulari(cid:76)es, including fraud. The extent to which our
procedures are capable of detec(cid:76)ng irregulari(cid:76)es,
including fraud is detailed below:
Non(cid:12)compliance with laws and regula(cid:27)ons
Based on:
• Our understanding of the Group and Parent
Company and the industry in which they operate;
• Discussion with management and those charged
with governance; and
• Obtaining and understanding of the Group’s and
Parent Company’s policies and procedures regarding
compliance with laws and regula(cid:76)ons,
we considered the signi(cid:9)cant laws and regula(cid:76)ons to be
the applicable accoun(cid:76)ng framework, the Companies
legisla(cid:76)on,
Act 2006, Corporate
Employment Taxes, Health and Safety and the Bribery
Act 2010.
tax and VAT
Our procedures in respect of the above included:
•
•
•
•
•
Review of minutes of mee(cid:76)ng of those charged with
governance for any instances of non(cid:25)compliance
with laws and regula(cid:76)ons;
Review of correspondence with regulatory and tax
authori(cid:76)es for any instances of non(cid:25)compliance with
laws and regula(cid:76)ons;
Review of (cid:9)nancial statement disclosures and
agreeing to suppor(cid:76)ng documenta(cid:76)on;
Involvement of tax specialists in the audit to assist
with assessing the Group’s and Parent Company’s
compliance with applicable tax legisla(cid:76)on;
Review of legal expenditure accounts to understand
the nature of expenditure incurred; and
• Direc(cid:76)ng the component auditor’s work to ensure
an assessment is performed on the extent of the
component’s compliance with the relevant local and
regulatory framework.
Fraud
We assessed the suscep(cid:76)bility of the (cid:9)nancial
statements to material misstatement, including fraud.
Our risk assessment procedures included:
•
Enquiry with management and those charged with
governance regarding any known or suspected
instances of fraud;
• Obtaining an understanding of the Group’s and
Parent Company’s policies and procedures
rela(cid:76)ng to:
o
o
Detec(cid:76)ng and responding to the risks of fraud;
and
Internal controls established to mi(cid:76)gate risks
related to fraud.
66
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
REPORT OF THE INDEPENDENT AUDITORS
to the members of Savannah Resources Plc
in the (cid:9)nancial statements, the less likely we are to
become aware of it.
A further descrip(cid:76)on of our responsibili(cid:76)es is available
on the Financial Repor(cid:76)ng Council’s website at:
www.frc.org.uk/auditorsresponsibili(cid:76)es. This descrip(cid:76)on
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 ma(cid:49)ers we are required to
state to them in an auditor’s report and for no other
purpose. To the fullest extent permi(cid:49)ed 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, UK
Date: 4 April 2023
BDO LLP is a limited liability partnership registered in
England and Wales (with registered number OC305127).
•
Review of minutes of mee(cid:76)ng of those charged with
governance for any known or suspected instances of
fraud;
• Discussion amongst the engagement team as to how
and where fraud might occur in the (cid:9)nancial
statements; and
•
Performing analy(cid:76)cal procedures to iden(cid:76)fy any
unusual or unexpected rela(cid:76)onships that may
indicate risks of material misstatement due to fraud.
Based on our risk assessment, we considered the areas
most suscep(cid:76)ble to fraud to be management override
of controls and areas of judgement due to level of
subjec(cid:76)vity involved with them.
Our procedures in respect of the above included:
•
•
Tes(cid:76)ng a sample of journal entries throughout the
year, which met a de(cid:9)ned risk criteria, by agreeing
to suppor(cid:76)ng documenta(cid:76)on;
Reviewing the Group’s year end adjus(cid:76)ng entries,
consolida(cid:76)on entries and inves(cid:76)ga(cid:76)ng any that
appear unusual as to nature or amount by agreeing
to suppor(cid:76)ng documenta(cid:76)on; and
• Assessing
signi(cid:9)cant
by
management for bias (refer to Carrying value of the
Explora(cid:76)on and Evalua(cid:76)on Assets key audit ma(cid:49)er).
es(cid:76)mates made
We also communicated relevant iden(cid:76)(cid:9)ed laws and
regula(cid:76)ons and poten(cid:76)al fraud risks to all engagement
team members including component engagement teams
who were all deemed to have appropriate competence
and capabili(cid:76)es and remained alert to any indica(cid:76)ons of
fraud or non(cid:25)compliance with laws and regula(cid:76)ons
throughout the audit. For component engagement
teams, we also reviewed the result of their work
performed in this regard.
Our audit procedures were designed to respond to risks
of material misstatement in the (cid:9)nancial statements,
recognising that the risk of not detec(cid:76)ng a material
misstatement due to fraud is higher than the risk of not
detec(cid:76)ng one resul(cid:76)ng from error, as fraud may involve
deliberate concealment by, for example, forgery,
misrepresenta(cid:76)ons or through collusion. There are
inherent limita(cid:76)ons in the audit procedures performed
and the further removed non(cid:25)compliance with laws and
regula(cid:76)ons is from the events and transac(cid:76)ons re(cid:10)ected
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2022
CONTINUING OPERATIONS
Revenue
Other Income
Administra(cid:38)ve Expenses
Foreign Exchange Gain/(Loss)
OPERATING LOSS
Finance Income
Finance Costs
LOSS FROM CONTINUING OPERATIONS BEFORE TAX
Tax expense
LOSS FROM CONTINUING OPERATIONS AFTER TAX
(LOSS)/GAIN ON DISCONTINUED OPERATIONS NET OF TAX
LOSS AFTER TAX ATTRIBUTABLE
TO EQUITY OWNERS OF THE PARENT
OTHER COMPREHENSIVE INCOME
Items that will not be reclassi(cid:7)ed to pro(cid:7)t or loss:
Net change in Fair Value Through Other Comprehensive Income of
Equity Investments
Items that will or may be reclassi(cid:7)ed to pro(cid:7)t or loss:
Exchange Gains arising on transla(cid:38)on of foreign opera(cid:38)ons
OTHER COMPREHENSIVE INCOME FOR THE YEAR
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
ATTRIBUTABLE TO EQUITY OWNERS OF THE PARENT
Loss per share a(cid:1)ributable to equity owners of the parent
expressed in pence per share:
Basic and diluted
From Opera(cid:38)ons
From Con(cid:38)nued Opera(cid:38)ons
From Discon(cid:38)nued Opera(cid:38)ons
Notes
2022
£
2021
£
–
–
(3,531,894)
814,468
(2,717,426)
34,695
(265)
(2,682,996)
–
(2,682,996)
(176,396)
–
–
(3,305,649)
(213,088)
(3,518,737)
671
(139)
(3,518,205)
–
(3,518,205)
2,371
(2,859,392)
(3,515,834)
4
24
(19,598)
82,006
665,656
646,058
154,815
236,821
(2,213,334)
(3,279,013)
7
7
7
(0.17)
(0.16)
(0.01)
(0.22)
(0.22)
0.00
The Notes form part of these Financial Statements
68
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
ASSETS
NON(cid:9)CURRENT ASSETS
Intangible Assets
Right(cid:10)of(cid:10)Use Assets
Property, Plant and Equipment
Other Receivables
Other Non(cid:10)Current Assets
TOTAL NON(cid:9)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
Share Based Payment Reserve
FVTOCI Reserve
Retained Earnings
Notes
2022
£
2021
£
8
21
9
13
15
11
13
15
14
16
23
16,459,599
17,627
1,583,944
454,651
77,667
14,137,817
5,390
676,536
–
69,542
18,593,488
14,889,285
11,977
560,060
1,036
7,202,334
31,575
962,058
19,300
13,002,084
7,775,407
14,015,017
26,368,895
28,904,302
16,889,598
41,693,178
6,683,000
626,930
403,749
(41,035)
(40,999,879)
16,889,598
41,693,178
6,683,000
(38,726)
305,095
(21,437)
(38,284,665)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
25,255,541
27,226,043
LIABILITIES
NON(cid:9)CURRENT LIABILITIES
Lease Liabili(cid:38)es
TOTAL NON(cid:9)CURRENT LIABILITIES
CURRENT LIABILITIES
Lease Liabili(cid:38)es
Trade and Other Payables
Other Current Liabili(cid:38)es
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
21
21
17
12,263
12,263
5,364
1,085,778
9,949
1,101,091
1,113,354
–
–
1,132
1,677,127
–
1,678,259
1,678,259
26,368,895
28,904,302
The Financial Statements were approved and authorised for issue by the Board of Directors on 4 April 2023 and
were signed on its behalf by:
Dale Ferguson
Chief Execu(cid:38)ve O(cid:3)cer
Company number: 07307107
The Notes form part of these Financial Statements
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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COMPANY STATEMENT OF FINANCIAL POSITION
as at 31 December 2022
ASSETS
NON(cid:9)CURRENT ASSETS
Investments in Subsidiaries
Other Receivables
Other Non(cid:10)Current Assets
TOTAL NON(cid:9)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
Share Based Payment Reserve
FVTOCI Reserve
Retained Earnings
TOTAL EQUITY
LIABILITIES
CURRENT LIABILITIES
Trade and Other Payables
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Notes
2022
£
2021
£
10
13
15
11
13
14
16
23
17
333,740
31,877,211
6,776
333,831
26,184,402
6,776
32,217,727
26,525,009
11,977
238,189
6,241,356
31,575
207,129
11,085,944
6,491,522
11,324,648
38,709,249
37,849,657
16,889,598
41,693,178
6,683,000
403,749
(41,035)
(27,442,644)
16,889,598
41,693,178
6,683,000
305,095
(21,437)
(28,707,640)
38,185,846
36,841,794
523,403
523,403
1,007,863
1,007,863
38,709,249
37,849,657
The Company total comprehensive income for the (cid:11)nancial year was £1,101,220 (2021: loss £7,851,723) (Note 6).
The Financial Statements were approved and authorised for issue by the Board of Directors on 4 April 2023 and
were signed on its behalf by:
Dale Ferguson
Chief Execu(cid:38)ve O(cid:3)cer
Company number: 07307107
The Notes form part of these Financial Statements
70
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Share
Foreign Based
Share Share Merger Currency Warrant Payment FVTOCI Retained Total
Capital Premium Reserve Reserve Reserve Reserve Reserve Earnings Equity
£ £ £ £ £ £ £ £ £
At 1 January 2021 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) 2,579,688 7,218,294 – – – – – – 9,797,982
Share based payment
charges – – – – – 200,800 – – 200,800
Lapse of op(cid:38)ons – – – – – (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
Loss for the year – – – – – – – (2,859,392) (2,859,392)
Other Comprehensive
Income – – – 665,656 – – (19,598) – 646,058
Total Comprehensive
Income for the year – – – 665,656 – – (19,598) (2,859,392) (2,213,334)
Share based payment
charges – – – – – 242,832 – – 242,832
Lapse of op(cid:32)ons – – – – – (144,178) – 144,178 –
At 31 December 2022 16,889,598 41,693,178 6,683,000 626,930 – 403,749 (41,035) (40,999,879) 25,255,541
The following describes the nature and purpose of each reserve within owners' equity:
Reserve
Share Capital
Share Premium
Merger Reserve
Foreign Currency Reserve
Warrant Reserve
Share Based Payment Reserve
FVTOCI Reserve
Retained Earnings
Descrip(cid:32)on 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 considera(cid:38)on paid in an
acquisi(cid:38)on arrangement, when the issuing company takes its interest in another company from below 90% to
90% or above equity holding.
Gains/losses arising on retransla(cid:38)ng the net assets of group opera(cid:38)ons into Pound Sterling.
Fair value of the warrants issued.
Represents the accumulated balance of share based payment charges recognised in respect of asset acquired
and share op(cid:38)ons granted by Savannah Resources Plc, less transfers to retained losses in respect of op(cid:38)ons
exercised, lapsed and forfeited.
Cumula(cid:38)ve changes in fair value of equity investments classi(cid:11)ed at fair value through other comprehensive income
(FVTOCI).
Cumula(cid:38)ve net gains and losses recognised in the Consolidated Statement of Comprehensive Income and other
transac(cid:38)ons recognised directly in Retained Earnings.
The Notes form part of these Financial Statements
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
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COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2022
Share
Based
Share Share Merger Warrant Payment FVTOCI Retained Total
Capital Premium Reserve Reserve Reserve Reserve Earnings Equity
£ £ £ £ £ £ £ £
At 1 January 2021 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) 2,579,688 7,218,294 – – – – – 9,797,982
Share based payment
charges – – – – 200,800 – – 200,800
Lapse of op(cid:38)ons – – – – (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
Pro(cid:7)t for the year – – – – – – 1,120,818 1,120,818
Other Comprehensive
Income – – – – – (19,598) – (19,598)
Total Comprehensive
Income for the year – – – – – (19,598) 1,120,818 1,101,220
Share based payment
charges – – – – 242,832 – – 242,832
Lapse of op(cid:32)ons – – – – (144,178) – 144,178 –
At 31 December 2022 16,889,598 41,693,178 6,683,000 – 403,749 (41,035) (27,442,644) 38,185,846
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
Descrip(cid:32)on 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 considera(cid:38)on paid in an
acquisi(cid:38)on 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 op(cid:38)ons granted by Savannah Resources Plc, less transfers to retained losses in respect of op(cid:38)ons
exercised, lapsed and forfeited.
Cumula(cid:38)ve changes in fair value of equity investments classi(cid:11)ed at fair value through other comprehensive income
(FVTOCI).
Cumula(cid:38)ve net gains and losses recognised in the Consolidated Statement of Comprehensive Income and other
transac(cid:38)ons recognised directly in Retained Earnings.
The Notes form part of these Financial Statements
72
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
Cash (cid:2)ows used in opera(cid:32)ng ac(cid:32)vi(cid:32)es
Loss for the year
Deprecia(cid:38)on and amor(cid:38)sa(cid:38)on charges
Impairment of Other Assets
Share based payment charge
Finance Income
Finance Costs
Foreign Exchange (Gains)/Losses
Gain on relinquishment of the rights and obliga(cid:38)ons of
discon(cid:38)nued opera(cid:38)ons
Cash (cid:2)ow used in opera(cid:32)ng ac(cid:32)vi(cid:32)es before changes
in working capital
Increase in Trade and Other receivables
(Decrease)/Increase in Trade and Other Payables
Net cash used in opera(cid:38)ng ac(cid:38)vi(cid:38)es
Cash (cid:2)ow used in inves(cid:32)ng ac(cid:32)vi(cid:32)es
Purchase of Intangible Explora(cid:38)on Assets
Purchase of Right(cid:10)of(cid:10)Use Assets
Purchase of Tangible Fixed Assets
Proceeds from sale of Investments
Interest received
Proceeds from relinquishment of the rights and obliga(cid:38)ons of
discon(cid:38)nued opera(cid:38)ons
Net cash (used in)/from inves(cid:38)ng ac(cid:38)vi(cid:38)es
Cash (cid:2)ow from (cid:7)nancing ac(cid:32)vi(cid:32)es
Proceeds from issues of ordinary shares (net of expenses)
Proceeds from exercise of share op(cid:38)ons
Principal paid on Lease Liabili(cid:38)es
Interest paid on Lease Liabili(cid:38)es
Net cash (used in)/from (cid:11)nancing ac(cid:38)vi(cid:38)es
(Decrease)/Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at beginning of year
Exchange gains/(losses) on Cash and Cash Equivalents
Cash and Cash Equivalents at end of year
Notes
9, 21
4, 23
4
8
9
11
24
16
16
21
21
14
14
2022
£
2021
£
(2,859,392)
23,456
–
242,832
(34,695)
265
(858,679)
(3,515,834)
35,369
5,948
200,800
(671)
139
213,088
–
(627,078)
(3,486,213)
(78,217)
(538,972)
(3,688,239)
(267,267)
451,801
(4,103,402)
(3,503,705)
(1,771,821)
–
(852,127)
–
28,438
(1,603,208)
(798)
(633,090)
654,347
671
89,981
6,506,852
(2,505,529)
4,924,774
–
–
(5,022)
(265)
(5,287)
9,797,982
–
(11,607)
(139)
9,786,236
(6,614,218)
13,002,084
814,468
11,207,305
2,000,209
(205,430)
7,202,334
13,002,084
The Notes form part of these Financial Statements
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
73
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COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2022
Cash (cid:2)ows used in opera(cid:32)ng ac(cid:32)vi(cid:32)es
Gain/(loss) for the year
Impairment Investment in Subsidiaries
Impairment of Financial Assets
Impairment of Other Assets
Share based payment reserve charge
Dividends Income
Finance Income
Foreign Exchange (Gains)/Losses
Loss on relinquishment of the rights and obliga(cid:38)ons of
discon(cid:38)nued opera(cid:38)ons
Cash (cid:2)ow used in opera(cid:32)ng ac(cid:32)vi(cid:32)es before changes in working capital
Decrease/(Increase) in Trade and Other Receivables
(Decrease)/Increase in Trade and Other Payables
Net cash used in opera(cid:38)ng ac(cid:38)vi(cid:38)es
Cash (cid:2)ow used in inves(cid:32)ng ac(cid:32)vi(cid:32)es
Loans to subsidiaries
Proceeds from repayment of loans to subsidiaries
Proceeds from sale of Investments
Proceeds from dividends from subsidiaries
Interest received
Net cash (used in)/from inves(cid:38)ng ac(cid:38)vi(cid:38)es
Cash (cid:2)ow from (cid:7)nancing ac(cid:32)vi(cid:32)es
Proceeds from issues of ordinary shares (net of expenses)
Net cash from (cid:11)nancing ac(cid:38)vi(cid:38)es
(Decrease)/Increase in Cash and Cash Equivalents
Cash and Cash Equivalents at beginning of year
Exchange gains/(losses) on Cash and Cash Equivalents
Cash and Cash Equivalents at end of year
Notes
10
4, 23
4
11
4
16
14
14
2022
£
2021
£
1,120,818
17,821
102,988
–
242,832
(811,572)
(34,695)
(2,274,357)
(7,933,729)
–
39,215
5,948
200,800
–
(671)
1,756,702
–
4,439,229
(1,636,165)
168,209
(488,024)
(1,492,506)
(181,160)
34,184
(1,955,980)
(1,639,482)
(5,204,762)
799,772
–
811,572
28,438
(4,784,700)
6,014,021
654,347
–
671
(3,564,980)
1,884,339
–
–
(5,520,960)
11,085,944
676,372
9,797,982
9,797,982
10,042,839
1,237,876
(194,771)
6,241,356
11,085,944
The Notes form part of these Financial Statements
74
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. ACCOUNTING POLICIES
Basis of Prepara(cid:27)on
These Consolidated Financial Statements and the Company Financial Statements have been prepared in
accordance with UK adopted interna(cid:72)onal accoun(cid:72)ng standards. The Consolidated Financial Statements and
the Company Financial Statements have been prepared under the historical cost conven(cid:72)on with the excep(cid:72)on
of FVTOCI investments.
Presenta(cid:27)onal and Func(cid:27)onal Currency
The func(cid:72)onal currency of the Company is Pound Sterling. Each en(cid:72)ty in the Group determines its own
func(cid:72)onal currency and items included in the Financial Statements of each en(cid:72)ty are measured using that
func(cid:72)onal currency. The presenta(cid:72)onal currency of the Group is Pound Sterling.
Going Concern
In common with many mineral explora(cid:72)on companies, the Company has in the past raised equity to fund its
explora(cid:72)on ac(cid:72)vi(cid:72)es and to date has not earned any revenues from its explora(cid:72)on projects.
The Directors have prepared cash (cid:10)ow forecasts for the period to September 2024. This indicates that if the
Barroso Lithium Project’s Environmental Impact Statement (‘DIA’) is granted, addi(cid:72)onal funding will be required
in late 2023 in order to fund the work on the DFS and Environmental Compliance Report of the Execu(cid:72)on Project
(‘RECAPE’). The Directors believe that following the gran(cid:72)ng of the DIA the Group’s Barroso Lithium Project
would be a(cid:13)rac(cid:72)ve to investors and are con(cid:12)dent that funding for the DFS and RECAPE would be obtained
through op(cid:72)ons which may include equity, strategic partnership or o(cid:3)ake, in what are currently buoyant market
condi(cid:72)ons in the lithium market.
In the event that the DIA is not granted, a review of op(cid:72)ons would be undertaken to determine the most
appropriate course of ac(cid:72)on. In this circumstance, the Group and Company has su(cid:4)cient funding to cover its
corporate overhead for at least 12 months from the date of approval of the Financial Statements.
While the Company has been successful at raising equity (cid:12)nance in the past, and while the Directors are
con(cid:12)dent of raising addi(cid:72)onal funding should it be required, their ability to do this is not completely within
their control and the lack of a binding agreement means there can be no certainty that the addi(cid:72)onal funding
required by the Group and the Company will be secured within the necessary (cid:72)mescale. These condi(cid:72)ons
indicate the existence of a material uncertainty which may cast signi(cid:12)cant doubt about the Group and the
Company’s ability to con(cid:72)nue as a Going Concern, and its ability to realise its assets and discharge its liabili(cid:72)es
in the normal course of business. The Financial Statements do not include any adjustments that would result
if the Group and Company were unable to con(cid:72)nue as a going concern.
Basis of Consolida(cid:27)on
Where the company has control over an investee, it is classi(cid:12)ed 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 a(cid:22)ect 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 domes(cid:72)c 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 e(cid:22)ects 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 en(cid:72)ty. Intercompany transac(cid:72)ons and balances between group companies are therefore
eliminated in full.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 75
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. ACCOUNTING POLICIES con(cid:72)nued
Equity Investments
Equity Investments, excluding subsidiaries, are classi(cid:12)ed 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 reclassi(cid:12)ed directly to Retained Earnings
and is not reclassi(cid:12)ed to the Statement of Comprehensive Income.
All equity investments, excluding subsidiaries, held are quoted and traded in an ac(cid:72)ve market. The change in
market value represents the fair value of shares held at the repor(cid:72)ng date less the cost or fair value at the start
of the (cid:12)nancial year.
An impairment is recognised for equity investments where there is a signi(cid:12)cant and sustained decrease in the
market value of the investment.
Investments in Subsidiaries and Associates
Investments in subsidiaries, associates and jointly controlled en(cid:72)(cid:72)es are accounted for at cost within the
individual accounts of the parent company. These investments are classi(cid:12)ed as Non(cid:31)Current Assets on the
Statement of Financial Posi(cid:72)on of the parent company.
Foreign Currencies
Transac(cid:72)ons in foreign currencies are ini(cid:72)ally recorded in the func(cid:72)onal currency by applying spot exchange rate
ruling at the date of transac(cid:72)on. Monetary assets and liabili(cid:72)es denominated in foreign currencies are
retranslated at the func(cid:72)onal currency rate of exchange ruling at the repor(cid:72)ng date. Exchange di(cid:22)erences arising
on the retransla(cid:72)on of unse(cid:13)led monetary assets and liabili(cid:72)es are recognised immediately in pro(cid:12)t or loss.
The income statements of individual group companies with func(cid:72)onal 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
approxima(cid:72)on of the spot rates throughout the year, and the Statement of Financial Posi(cid:72)on translated at the
rate of exchange ruling on the repor(cid:72)ng date. Exchange di(cid:22)erences which arise from retransla(cid:72)on of the
opening net assets and results of such subsidiary undertakings are taken to equity (‘Foreign Currency Reserve’).
On disposal of such en(cid:72)(cid:72)es, the deferred cumula(cid:72)ve amount recognised in equity rela(cid:72)ng to that par(cid:72)cular
opera(cid:72)on is transferred to the Consolidated Statement of Comprehensive Income as part of the pro(cid:12)t or loss
on disposal.
Intangible Assets
Explora(cid:34)on and Evalua(cid:34)on Assets
Once an explora(cid:72)on / mining licence or an op(cid:72)on to acquire an explora(cid:72)on / mining licence has been obtained,
all costs associated with mineral property development and investments are capitalised on a project(cid:31)by(cid:31)project
basis pending determina(cid:72)on of the feasibility of the project. Costs incurred include appropriate technical and
administra(cid:72)ve expenses, but not general overheads. 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 wri(cid:13)en o(cid:22).
Unevaluated mineral proper(cid:72)es are assessed annually at repor(cid:72)ng 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 iden(cid:72)(cid:12)able cash (cid:10)ows (cash genera(cid:72)ng units) as disclosed in Note 8.
If commercial reserves are developed, the related deferred development and explora(cid:72)on costs are then
reclassi(cid:12)ed as development and produc(cid:72)on assets within Property, Plant and Equipment, and subsequently
amor(cid:72)sed over the es(cid:72)mated life of the commercial ore reserves on a unit of produc(cid:72)on basis.
76
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. ACCOUNTING POLICIES con(cid:72)nued
Acquisi(cid:34)ons of Mineral Explora(cid:34)on Licences
Acquisi(cid:72)ons of Mineral Explora(cid:72)on Licences through acquisi(cid:72)on of non(cid:31)opera(cid:72)onal corporate structures that
do not represent a business, and therefore do not meet the de(cid:12)ni(cid:72)on of a business combina(cid:72)on, are accounted
for as the acquisi(cid:72)on of an asset. Related future cash considera(cid:72)on is con(cid:72)ngent and is not recognised as an
asset or liability.
Property, Plant and Equipment
Tangible Non(cid:31)Current Assets used in explora(cid:72)on and evalua(cid:72)on and land are classi(cid:12)ed within Tangible
Non(cid:31)Current Assets as Property, Plant and Equipment and are ini(cid:72)ally recognised at cost. To the extent that
such tangible assets are consumed in explora(cid:72)on and evalua(cid:72)on the amount re(cid:10)ec(cid:72)ng that consump(cid:72)on is
recorded as part of the cost of the intangible asset.
Deprecia(cid:72)on is provided on all items of Property, Plant and Equipment, except land, in order to write o(cid:22) the
cost less es(cid:72)mated residual value of each asset over its es(cid:72)mated useful life.
Plant & Machinery 4 – 10 years
O(cid:4)ce Equipment 1 – 4 years
Motor Vehicles 4 years
Financial Instruments
Financial Assets and Financial Liabili(cid:72)es are recognised in the Group’s Statement of Financial Posi(cid:72)on 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 objec(cid:72)ve is to hold these assets in order to
collect contractual cash (cid:10)ows and the contractual cash (cid:10)ows are solely payments of principal and interest. They
are ini(cid:72)ally recognised at fair value plus transac(cid:72)on costs that are directly a(cid:13)ributable to their acquisi(cid:72)on or
issue and are subsequently carried at amor(cid:72)sed cost using the e(cid:22)ec(cid:72)ve interest rate method, less provision
for impairment.
Under IFRS 9, impairment provisions are recognised based on a forward(cid:31)looking expected credit loss model.
The methodology used to determine the amount of the provision is based on whether there has been a
signi(cid:12)cant increase in credit risk since ini(cid:72)al recogni(cid:72)on of the Financial Asset. For those where the credit risk
has not increased signi(cid:12)cantly since ini(cid:72)al recogni(cid:72)on of the Financial Asset, twelve month expected credit
losses along with gross interest income are recognised. For those for which credit risk has increased signi(cid:12)cantly,
life(cid:72)me expected credit losses along with the gross interest income are recognised. For those that are
determined to be credit impaired, life(cid:72)me 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 (cid:10)ows from the asset
expires or it transfers the Financial Asset and substan(cid:72)ally all the risks and rewards of ownership of the asset
to another en(cid:72)ty.
There is no signi(cid:12)cant di(cid:22)erence 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 classi(cid:12)ed as Non(cid:31)Current Assets. Bank Deposits are measured at cost, less any impairment.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 77
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. ACCOUNTING POLICIES con(cid:72)nued
Guarantees
Guarantees represents deposits held as security required by the local mining / environmental authori(cid:72)es in
rela(cid:72)on to explora(cid:72)on / mining licences and applica(cid:72)ons thereof. They are not expected to be converted into
cash within less than a year and therefore are classi(cid:12)ed as Other Non(cid:31)Current Assets and considered restricted
assets. Guarantees are measured at cost, less any impairment.
Financial Liabili(cid:27)es
Other Liabili(cid:34)es
Other Liabili(cid:72)es consist of trade and other payables, which are ini(cid:72)ally recognised at fair value and subsequently
carried at amor(cid:72)sed cost, using the e(cid:22)ec(cid:72)ve interest method.
Financial Liabili(cid:72)es are derecognised when they are ex(cid:72)nguished, that is when the obliga(cid:72)on is discharged,
cancelled or has expired. When a Financial Liability is derecognised, the cumula(cid:72)ve gain or loss in equity (if
any) is transferred to the Consolidated Statement of Comprehensive Income.
There is no signi(cid:12)cant di(cid:22)erence between the carrying value and fair value of Other Liabili(cid:72)es.
Taxa(cid:27)on
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 substan(cid:72)vely enacted by the repor(cid:72)ng date.
Deferred Tax is recognised in respect of all temporary di(cid:22)erences that have originated but not reversed at the
repor(cid:72)ng date. A Deferred Tax Asset is recognised to the extent that it is probable that future taxable pro(cid:12)ts
will be available against which (cid:72)ming di(cid:22)erences can be u(cid:72)lised.
Leases
All leases are accounted for by recognising a Right(cid:31)of(cid:31)Use Asset and a Lease Liability except for:
•
•
Leases of low value assets; and
Leases with a dura(cid:72)on of 12 months or less.
Lease Liabili(cid:72)es 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 ini(cid:72)al recogni(cid:72)on, 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 op(cid:72)on granted in favour of the Group if it is reasonably certain to exercise
that op(cid:72)on; and
any penal(cid:72)es payable for termina(cid:72)ng the lease, if the term of the lease has been es(cid:72)mated on the basis
of termina(cid:72)on op(cid:72)on being exercised.
Right of Use Assets are ini(cid:72)ally measured at the amount of the Lease Liability, reduced for any lease incen(cid:72)ves
received, and increased for:
•
•
•
lease payments made at or before commencement of the lease;
ini(cid:72)al 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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SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. ACCOUNTING POLICIES con(cid:72)nued
Subsequent to ini(cid:72)al measurement Lease Liabili(cid:72)es increase as a result of interest charged at a constant rate
on the balance outstanding and are reduced for lease payments made. Right(cid:31)of(cid:31)Use Assets are amor(cid:72)sed on a
straight(cid:31)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(cid:31)term exemp(cid:72)on are charged to the income statement on a
straight(cid:31)line basis over the term of the relevant lease.
Share(cid:9)Based Payments
Where equity se(cid:13)led share op(cid:72)ons are awarded to Directors and employees, the fair value of the op(cid:72)ons at
the date of grant is charged to the Consolidated Statement of Comprehensive Income over the ves(cid:72)ng period.
Non(cid:31)market ves(cid:72)ng condi(cid:72)ons are taken into account by adjus(cid:72)ng the number of equity instruments expected
to vest at each repor(cid:72)ng date so that, ul(cid:72)mately, the cumula(cid:72)ve amount recognised over the ves(cid:72)ng period is
based on the number of op(cid:72)ons that eventually vest. Market ves(cid:72)ng condi(cid:72)ons are factored into the fair value
of the op(cid:72)ons granted. As long as all other ves(cid:72)ng condi(cid:72)ons are sa(cid:72)s(cid:12)ed, a charge is made irrespec(cid:72)ve of
whether the market ves(cid:72)ng condi(cid:72)ons are sa(cid:72)s(cid:12)ed. The cumula(cid:72)ve expense is not adjusted for failure to
achieve a market ves(cid:72)ng condi(cid:72)on.
Where the terms and condi(cid:72)ons of op(cid:72)ons are modi(cid:12)ed before they vest, the change in the fair value of the
op(cid:72)ons, measured immediately before and a(cid:6)er the modi(cid:12)ca(cid:72)on, is also charged to the Consolidated Statement
of Comprehensive Income over the remaining ves(cid:72)ng 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 Posi(cid:72)on in accordance with the Group’s relevant accoun(cid:72)ng 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 op(cid:72)on pricing model. The probability of non(cid:31)ves(cid:72)ng condi(cid:72)ons being sa(cid:72)s(cid:12)ed
are included in the fair value recognised at the measurement date.
On lapse of the share op(cid:72)ons and warrants the cumula(cid:72)ve fair value registered in the Share Based Payment
Reserve and Warrant Reserve respec(cid:72)vely is transferred to Retained Earnings.
Non(cid:9)Current Assets Held for Sale and Discon(cid:27)nued Opera(cid:27)ons
Non(cid:1)Current Assets Held for Sale
Non(cid:31)Current Assets and disposal groups are classi(cid:12)ed as held for sale if their carrying amount will be recovered
principally through a sale transac(cid:72)on rather than through con(cid:72)nuing use. This condi(cid:72)on is regarded as met
only when the asset (or disposal group) is available for immediate sale in its present condi(cid:72)on 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 commi(cid:13)ed to the sale, which should be expected to qualify for recogni(cid:72)on as a
completed sale within one year from the date of classi(cid:12)ca(cid:72)on.
When the Group is commi(cid:13)ed to a sale plan involving loss of control of a subsidiary, all the assets and liabili(cid:72)es
of that subsidiary are classi(cid:12)ed as held for sale when the criteria described above are met, regardless of whether
the Group will retain a non(cid:31)controlling interest in its former subsidiary a(cid:6)er the sale.
Non(cid:31)Current Assets (and disposal groups) classi(cid:12)ed as held for sale are measured at the lower of their carrying
amount and fair value less costs to sell.
Discon(cid:34)nued Opera(cid:34)ons
The results of opera(cid:72)ons disposed during the year are included in the Consolidated Statement of
Comprehensive Income up to the date of disposal.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 79
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. ACCOUNTING POLICIES con(cid:72)nued
A discon(cid:72)nued opera(cid:72)on 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 classi(cid:12)ed as held for sale.
Discon(cid:72)nued opera(cid:72)ons are presented in the Consolidated Statement of Comprehensive Income as a single
line which comprises the Post(cid:31)Tax Pro(cid:12)t or Loss of the discon(cid:72)nued opera(cid:72)on along with the Post(cid:31)Tax Gain or
Loss recognised on the re(cid:31)measurement to fair value less costs to sell or on disposal of the assets or disposal
groups cons(cid:72)tu(cid:72)ng discon(cid:72)nued opera(cid:72)ons.
Con(cid:27)ngent Considera(cid:27)on
The Group measures Con(cid:72)ngent Considera(cid:72)on at the date of disposal at fair value and recognises the relevant
Financial Asset. The Group measures the Con(cid:72)ngent Considera(cid:72)on at fair value at each repor(cid:72)ng date and
changes in fair value are recognised in pro(cid:12)t and loss.
Key Accoun(cid:27)ng Es(cid:27)mates and Judgements
The prepara(cid:72)on of (cid:12)nancial informa(cid:72)on in conformity with IFRS requires the use of es(cid:72)mates and assump(cid:72)ons
that a(cid:22)ect the reported amounts of assets and liabili(cid:72)es at the date of (cid:12)nancial informa(cid:72)on and the reported
amounts of expenses during the repor(cid:72)ng periods. Although these es(cid:72)mates are based on Management’s best
knowledge of the amounts, event or ac(cid:72)ons, actual results ul(cid:72)mately may di(cid:22)er from those es(cid:72)mates.
The key judgements are set out below:
(a) Going concern
In determining the Group’s ability to con(cid:72)nue as a going concern the Directors consider a number of factors
including cash(cid:10)ow forecasts prepared by Management. The detail of these factors are set out in Note 1
Going Concern heading.
(b) Explora(cid:34)on and evalua(cid:34)on costs
The Group has to apply judgement in determining whether explora(cid:72)on and evalua(cid:72)on expenditure should
be capitalised within Intangible Assets as explora(cid:72)on and evalua(cid:72)on costs or expensed. The Group has a
policy of capitalising all costs which relate directly to explora(cid:72)on and evalua(cid:72)on costs (as set out above).
The total value of explora(cid:72)on and evalua(cid:72)on costs capitalised as at each of the repor(cid:72)ng dates is set out
in Note 8. When the Group has applied for explora(cid:72)on and mining licences and these have not been granted
at the repor(cid:72)ng date the Management apply judgement in determining if this should be considered as an
impairment indicator. Management takes into account historic informa(cid:72)on about the (cid:72)ming of gran(cid:72)ng
licences by the relevant ministers and governments, and the informa(cid:72)on provided by the Group’s local
teams based on communica(cid:72)ons with these bodies.
(c) Carrying value of Explora(cid:34)on and Evalua(cid:34)on Assets
The Group assesses at each repor(cid:72)ng period whether there is any indica(cid:72)on that these assets may be
impaired. If such indica(cid:72)on exists, the Group es(cid:72)mates the recoverable amount of the asset. In the early
stages of explora(cid:72)on an indica(cid:72)on 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 signi(cid:12)cant increase in the credit risk of the loans since ini(cid:72)al recogni(cid:72)on to determine the
stage of these loans to conclude if need to be calculated the 12(cid:31)months expected credit losses or the
life(cid:72)me expected credit losses. To calculate the expected credit losses Management apply judgement to
de(cid:12)ne several scenarios and their likelihood with the expected cash (cid:10)ows associated to the recovery of
the loans, which are compared with the present value of the loans to calculate the expected credit losses.
80
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
1. ACCOUNTING POLICIES con(cid:72)nued
(e) Fair Value Considera(cid:34)on of Disposed Opera(cid:34)ons
The Management applied judgement in the calcula(cid:72)on of the fair value of the con(cid:72)ngent considera(cid:72)on
received on disposal of the Omani Opera(cid:72)ons in 2020. The Management de(cid:12)ned several scenarios and
their likelihoods with the expected cash (cid:10)ows associated to the recovery of the third(cid:31)party loan and
amounts receivable from the royalty rights. This evalua(cid:72)on is reviewed in a yearly basis. There has not
been changes during 2022 a(cid:22)ec(cid:72)ng the conclusion from prior year and the fair value is s(cid:72)ll nil.
Accoun(cid:27)ng Developments During 2022
The accoun(cid:72)ng policies adopted are consistent with those of the previous (cid:12)nancial year. New standards and
amendments to IFRS e(cid:22)ec(cid:72)ve as of 1 January 2022 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.
Accoun(cid:27)ng Developments Not Yet E(cid:11)ec(cid:27)ve
There are a number of standards and interpreta(cid:72)ons which have been issued by the Interna(cid:72)onal Accoun(cid:72)ng
Standards Board that are e(cid:22)ec(cid:72)ve in future accoun(cid:72)ng periods that the Group has decided not to adopt early.
The Group is currently assessing the impact of these new accoun(cid:72)ng standards and amendments and does not
expect a material impact on the Group Financial Statements.
2. SEGMENTAL REPORTING
The Group complies with IFRS 8 Opera(cid:72)ng Segments, which requires opera(cid:72)ng segments to be iden(cid:72)(cid:12)ed on
the basis of internal reports about components of the Group that are regularly reviewed by the chief opera(cid:72)ng
decision maker, which the Company considers to be the Board of Directors. In the opinion of the Directors, the
opera(cid:72)ons of the Group comprise of explora(cid:72)on and development in Portugal, headquarter and corporate
costs, the Company’s third party investments and the discon(cid:72)nued opera(cid:72)on in Mozambique.
Based on the Group’s current stage of development there are no external revenues associated to the segments
detailed below. For explora(cid:72)on and development in Portugal and the discon(cid:72)nued opera(cid:72)on in Mozambique
the segments are calculated by the summa(cid:72)on of the balances in the legal en(cid:72)(cid:72)es which are readily iden(cid:72)(cid:12)able
to each of the segmental ac(cid:72)vi(cid:72)es. In the case of the Investments, this is calculated by analysis of the speci(cid:12)c
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.
Discon(cid:27)nued
Opera(cid:27)on
Mozambique Portugal HQ and
Mineral Sands Lithium corporate Investments Elimina(cid:27)on
£ £ £ £ £
2022
Revenue1 – 1,908,6372 971,582 – (2,880,219)
–
Finance Costs – (265) – – –
(265)
34,695
Interest Income – – 34,695 – –
Share based payments – – 242,832 – –
242,832
Gain/(Loss) for the year (176,396) (1,661,876) (1,021,120) – – (2,859,392)
Total Assets 607,124 18,575,420 7,174,374 11,977 – 26,368,895
Total Non(cid:31)Current Assets 456,490 18,130,222 6,776 – – 18,593,488
Addi(cid:72)ons to Non(cid:31)Current Assets 454,651 2,667,514 – – –
3,122,165
Total Current Assets 150,635 445,197 7,167,598 11,977 –
7,775,407
Total Liabili(cid:72)es (111,567) (326,564) (675,223) – – (1,113,354)
Total
£
1 Revenues included the intercompany recharges within the Group which are eliminated.
2 Included in the Portugal Lithium segment is £1,908,637 (2021: £1,654,567) rela(cid:72)ng to intercompany recharges within this segment and therefore
eliminated in Elimina(cid:72)on column.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 81
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
2. SEGMENTAL REPORTING con(cid:72)nued
Discon(cid:72)nued
Opera(cid:72)on
Mozambique
Mineral Portugal HQ and
Sands Lithium corporate Investments Elimina(cid:72)on
£ £ £ £ £
Total
£
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 – –
(200,800)
Share based payments – – (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(cid:31)Current Assets 1,483 14,881,026 6,776 – – 14,889,285
Addi(cid:72)ons to Non(cid:31)Current Assets – 1,891,109 – – –
1,891,109
Total Current Assets 674,874 606,660 12,701,908 31,575 – 14,015,017
(1,678,259)
Total Liabili(cid:72)es (130,940) (299,648) (1,247,671) – –
1 Revenues included the intercompany recharges within the Group which are eliminated.
2 Included in the Portugal Lithium segment is £1,908,637 (2021: £1,654,567) rela(cid:72)ng to intercompany recharges within this segment and therefore
eliminated in Elimina(cid:72)on column.
3. EMPLOYEES AND DIRECTORS
The average monthly number of employees (including Directors that receive remunera(cid:72)on) during the year
was as follows:
Opera(cid:72)onal
Non(cid:31)opera(cid:72)onal
Group
Company
2022
No
4
13
17
2021
No
28
18
46
2022
No
1
6
7
2021
No
1
7
8
The reduc(cid:72)on in the number of employees from 2021 to 2022 relates mainly to the transfer of employees to
Rio Tinto as part of the termina(cid:72)on of the Consor(cid:72)um Agreement in December 2021 (Note 24).
Sta(cid:11) Costs (excluding Directors)
Salaries
Bonus
Social security and other employee expenses
Pension
Share based payment expense (Note 23)
Group
Company
2022
£
990,123
80,6631
136,784
54,372
124,804
2021
£
1,248,268
245,5491
179,784
58,056
93,195
1,386,746
1,824,852
2022
£
494,875
49,3051
69,235
54,372
124,804
792,591
2021
£
484,426
112,1961
74,545
58,056
93,195
822,418
1 Bonuses unpaid as at 31 December 2022 and 31 December 2021
The Group numbers in the above table includes £165,311 (2021: £245,799) which was capitalised as an
explora(cid:72)on and evalua(cid:72)on asset.
82
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
3. EMPLOYEES AND DIRECTORS con(cid:72)nued
Directors’ Remunera(cid:27)on
Salaries
Bonus
Social security and taxes
Pension
Share based payment expense
2022
£
556,633
16,2741
38,717
16,525
94,629
722,778
2021
£
564,837
206,5561
70,484
43,400
86,854
972,131
1 Bonuses unpaid as at 31 December 2022 and 31 December 2021
The numbers in the above table include £144,462 (2021: £181,854) of Directors’ Remunera(cid:72)on which was
capitalised as an Intangible Asset in rela(cid:72)on to the provision of speci(cid:12)c technical services.
The Directors’ remunera(cid:72)on is paid by the Company. Details of the Director’s remunera(cid:72)ons are disclosed in
the Remunera(cid:72)on Report.
The Directors are considered to be the key management of the Group.
No share op(cid:72)ons were exercised during the (cid:12)nancial year ended 31 December 2022 or 31 December 2021.
The highest paid director received remunera(cid:72)on of £257,716 and non(cid:31)cash payments of £41,413.
4. LOSS BEFORE INCOME TAX
The Group loss before income tax is stated a(cid:6)er charging:
Deprecia(cid:72)on and amor(cid:72)sa(cid:72)on
Auditors’ remunera(cid:72)on:
– Statutory audit of the Group Financial Statements
– Non(cid:31)audit services – tax services
– Non(cid:31)audit services – liquida(cid:72)on and research services
Fees payable to associated (cid:12)rms of the auditor for audit of subsidiaries
Fees payable to associated (cid:12)rms of the auditor for non(cid:31)audit services of
subsidiaries – tax services
Fees payable to associated (cid:12)rms of the auditor for non(cid:31)audit services of
subsidiaries – research services
Professional fees
Foreign Exchange (Gain)/Loss
Short term lease payments (Note 21)
Share based payments (Note 23)
2022
£
2021
£
23,456
35,369
76,115
26,314
15,643
20,312
65,178
24,348
–
19,473
8,409
9,021
5,455
1,085,326
(814,468)
76,505
242,832
5,503
1,044,713
213,088
11,593
200,800
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 83
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
4. LOSS BEFORE INCOME TAX con(cid:72)nued
The Company pro(cid:12)t/(loss) before income tax is stated a(cid:6)er charging:
Auditors’ remunera(cid:72)on:
– Statutory audit of the Group Financial Statements
– Non(cid:31)audit services – tax services
– Non(cid:31)audit services – liquida(cid:72)on and research services
Foreign Exchange (Gain)/Loss
Short term lease payments
Share based payments
Dividends from subsidiaries
2022
£
2021
£
76,115
26,314
15,643
(2,274,357)
59,000
242,832
(811,572)
65,178
24,348
–
1,756,702
–
200,800
–
5.
INCOME TAX
Analysis of the Tax Charge
No liability to UK corpora(cid:72)on tax arose on ordinary ac(cid:72)vi(cid:72)es for the year ended 31 December 2022
(2021: £25,7171).
1 In the previous year the compara(cid:72)ve (cid:12)gure was stated as nil and following submission of de(cid:12)ni(cid:72)ve tax computa(cid:72)ons in 2022 for the year ended
31 December 2021 this has been updated.
Factors A(cid:11)ec(cid:27)ng the Tax Charge
The reasons for the di(cid:22)erence between the actual tax charge for the year and the standard rate of corpora(cid:72)on
tax in the United Kingdom applied to the result for the year are as follows:
2022
£
2021
£
Loss on ordinary ac(cid:72)vi(cid:72)es before tax
(2,859,392)
(3,515,834)
Loss on ordinary ac(cid:72)vi(cid:72)es mul(cid:72)plied by the standard rate
of corpora(cid:72)on tax in the UK of 19% (2021: 19%)
E(cid:22)ects of:
Expenses not deduc(cid:72)ble for tax purposes
Di(cid:22)erent tax rates applied in overseas jurisdic(cid:72)ons
Tax losses carried forward
Corpora(cid:72)on tax related to prior year
Total Income Tax
(543,284)
(668,009)
164,020
(39,277)
392,824
25,717
–
1,280,750
173,218
(785,959)
–
–
Deferred Tax
The Group has carried forward losses amoun(cid:72)ng to £14,559,034 as at 31 December 2022 (2021: £13,040,6602).
As the (cid:72)ming and extent of taxable pro(cid:12)ts are uncertain, the Deferred Tax Asset arising on these losses has not
been recognised in the Financial Statements.
2 In the previous year the compara(cid:72)ve (cid:12)gure was stated as £12,111,229 and following submission of de(cid:12)ni(cid:72)ve tax computa(cid:72)ons for the year
ended 31 December 2021 has been updated.
84
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
5.
INCOME TAX con(cid:72)nued
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 2017(cid:31)2019 tax
years and for a 12 year period for losses related to the 2020(cid:31)2022 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 un(cid:27)l
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2032
2033
2034
No expiry date
Total
2022
£
2021
£
–
73,602
333,945
252,905
1,655,049
–
–
–
22,733
140,923
469,772
948,040
1,118,598
1,556,120
1,666,189
6,321,159
388,564
148,404
298,979
226,425
1,481,760
–
–
–
21,562
133,665
445,575
899,209
1,060,981
1,475,909
–
6,459,628
14,559,035
13,040,661
6. LOSS OF PARENT COMPANY
As permi(cid:13)ed by Sec(cid:72)on 408 of the Companies Act 2006, the pro(cid:12)t and loss account of the parent company is
not presented as part of these Financial Statements. The parent company’s Total Comprehensive Income for
the (cid:12)nancial year was £1,101,220 (2021: loss £7,851,723).
7. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings a(cid:13)ributable 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 dilu(cid:72)ve poten(cid:72)al ordinary shares.
In accordance with IAS 33 as the Group is repor(cid:72)ng a loss for both this and the preceding year the Share Op(cid:72)ons
and Investor Warrant are not considered dilu(cid:72)ve because the exercise of these would have the e(cid:22)ect of reducing
the loss per share.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 85
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
7. EARNINGS PER SHARE con(cid:72)nued
Reconcilia(cid:72)ons are set out below:
Basic Loss Per Share
Losses a(cid:13)ributable to ordinary shareholders:
Total loss for the year
Total loss for the year from con(cid:72)nuing opera(cid:72)ons
Total gain/ (loss) for the year from discon(cid:72)nued opera(cid:72)ons
Weighted average number of shares
Loss per share – total loss for the year
Loss per share – total loss for the year from con(cid:72)nuing opera(cid:72)ons
Gain/(Loss) per share – total loss for the year from discon(cid:72)nued opera(cid:72)ons
8.
INTANGIBLE ASSETS
Cost
At 1 January 2021
Addi(cid:72)ons
Disposal assets on relinquishment of rights and obliga(cid:72)ons
Foreign exchange movements
At 31 December 2021
Addi(cid:72)ons
Foreign exchange movements
At 31 December 2022
Amor(cid:27)sa(cid:27)on and impairment
At 1 January 2021
At 31 December 2021
At 31 December 2022
Net Book Value
At 1 January 2021
At 31 December 2021
At 31 December 2022
2022
£
2021
£
(2,859,392)
(2,682,996)
(176,396)
(3,515,834)
(3,518,205)
2,371
1,688,959,820 1,609,019,120
(0.00219)
(0.00219)
0.00000
(0.00169)
(0.00159)
(0.00010)
Explora(cid:27)on and
Evalua(cid:27)on
£
17,246,222
1,817,570
(4,702,323)
(223,652)
14,137,817
1,731,323
590,459
16,459,599
–
–
–
17,246,222
14,137,817
16,459,599
In December 2021 a Deed of Termina(cid:72)on was signed with Rio Tinto in rela(cid:72)on to the Consor(cid:72)um Agreement
signed in October 2016. Under this Deed of Termina(cid:72)on, the rights and obliga(cid:72)ons provided to Savannah Group
on Rio Tinto’s licences under the Consor(cid:72)um Agreement were relinquished, and agreed that no explora(cid:72)on or
development ac(cid:72)vi(cid:72)es should be undertaken by any Savannah Group en(cid:72)ty. Therefore, all Explora(cid:72)on and
Evalua(cid:72)on Assets related to the Mozambique licences were registered as disposed.
The Explora(cid:72)on and Evalua(cid:72)on Assets referred to in the table above comprise expenditure in rela(cid:72)on to
explora(cid:72)on licences in Portugal. The Directors consider that for the purposes of assessing impairment, the
above explora(cid:72)on and evalua(cid:72)on expenditure is allocated to the Portugal Lithium licences area, represen(cid:72)ng
the Group’s Cash Genera(cid:72)ng Units (‘CGUs’).
The Directors have reviewed the carrying value of the CGU and have not iden(cid:72)(cid:12)ed any indicators of impairment
for the assets allocated to the licences in Portugal, and therefore there is no impairment charge in 2022 or 2021
for Portugal opera(cid:72)ons.
86
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
9. PROPERTY, PLANT AND EQUIPMENT
Motor
Vehicles
£
Cost
At 1 January 2021 58,226
Addi(cid:72)ons –
Disposal assets on relinquishment
of rights and obliga(cid:72)ons –
Foreign exchange movements (3,825)
At 31 December 2021 54,401
Addi(cid:72)ons –
Foreign exchange movements 2,954
At 31 December 2022 57,355
Deprecia(cid:27)on
At 1 January 2021 35,868
Charge for year 11,959
Disposal assets on relinquishment
of rights and obliga(cid:72)ons –
Foreign exchange movements (1,494)
At 31 December 2021 46,333
Charge for year 8,192
Foreign exchange movements 2,830
At 31 December 2022 57355
Net Book Value
At 1 January 2021 22,358
At 31 December 2021 8,068
At 31 December 2022 –
O(cid:7)ce
Equipment
£
Plant and
Machinery
£
Land
£
Total
£
32,414
22,126
991,887
–
56,337
610,964
1,138,864
633,090
(16,784)
(8)
(1,182,880)
190,993
–
(18,121)
649,180
843,032
67,604
(1,199,664)
169,039
741,329
852,127
72,923
1,559,816
1,666,379
–
–
–
–
–
–
–
–
165,336
126,454
(242,657)
15,660
64,793
13,636
4,006
82,435
–
–
–
–
99,189
107,136
(224,012)
17,687
–
–
–
–
892,698
–
56,337
649,180
973,528
676,536
–
1,559,816
1,583,944
37,748
9,095
2,365
49,208
30,279
7,359
(18,645)
(533)
18,460
5,444
1,176
25,080
2,135
19,288
24,128
As consequence of the signature of the Deed of Termina(cid:72)on with Rio Tinto in rela(cid:72)on to the Consor(cid:72)um
Agreement signed in October 2016 all property, plant and equipment related to the Mozambique licences were
registered as disposed.
The addi(cid:72)ons in land re(cid:10)ect the land acquisi(cid:72)on program that Savannah has in place in Portugal to acquire the
land required for the future development of the Barroso Lithium project.
The above Property, Plant and Equipment is allocated to the Portugal Lithium opera(cid:72)ons, represen(cid:72)ng the
Group’s CGUs.
Management has evaluated the existence of impairment indicators of the Property, Plant and Equipment
allocated to the licences area together with the impairment review performed for the Explora(cid:72)on and Evalua(cid:72)on
Assets, and it has concluded that there are no indicators of impairment, and therefore there is no impairment
charge in 2022 or 2021 for Portugal opera(cid:72)ons.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 87
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
10. INVESTMENT IN SUBSIDIARIES
Company
Non(cid:31)Current
At 1 January 2021
Addi(cid:72)ons
Impairment charge
Disposal on relinquishment of rights and obliga(cid:72)ons
At 31 December 2021
Addi(cid:72)ons
Impairment charge
At 31 December 2022
Investment in
subsidiaries
£
621,582
–
(30)
(287,721)
333,831
17,730
(17,821)
333,740
The disposal on relinquishment of rights and obliga(cid:72)ons re(cid:10)ects the write(cid:31)o(cid:22) of assets associated to the historical
acquisi(cid:72)on of the Mozambique project a(cid:6)er the signing of the Deed of Termina(cid:72)on with Rio Tinto.
During 2022 the Company impaired its investment in Savannah Lithium BV a(cid:6)er the commencement of the
liquida(cid:72)on process of this en(cid:72)ty, which is expected to be completed in 2023.
The Company had the following subsidiary undertakings, either directly or indirectly, at 31 December 2022, which
have been included in the Consolidated Financial Statements:
Subsidiary Registered o(cid:7)ce 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%
Ma(cid:72)lda Minerals Limitada3 Mozambique6 Mining & explora(cid:72)on Ordinary 100%
Panda Recursos Limitada2 Mozambique7 Mining & explora(cid:72)on Ordinary 99.99%
African Mining & Explora(cid:72)on Limited1 United Kingdom5 Dormant Ordinary 100%
Savannah Resources Portugal B.V.1 Netherlands8 Holding Company Ordinary 100%
AME Portugal Pty Ltd2, 12 Australia9 Holding Company Ordinary 100%
Slipstream PORT Pty Ltd2, 12 Australia9 Holding Company Ordinary 100%
Savannah Lithium Unipessoal Limitada2, 4 Portugal10 Mining & explora(cid:72)on Ordinary 100%
Savannah Resources Lithium B.V.1, 12 Netherlands8 Holding Company Ordinary 100%
Savana Ma(cid:72)nal – Mining,
Unipessoal Limitada2 Portugal11 Mining & explora(cid:72)on Ordinary 100%
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 5 de Outubro, nº 26, Bo(cid:72)cas, Portugal, 5460(cid:31)304
11 Rua Jose Eigenmann, No 90, parish of Nogueira, municipality of Braga, Portugal, 4715(cid:31)199
12 Liquida(cid:72)on process started in 2022 and expected to be completed in 2023
88
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
11. EQUITY INSTRUMENTS AT FVTOCI
Group
At 1 January 2021
Reclassi(cid:12)ca(cid:72)on to Other current Assets
Disposals
Change in market value of investment
At 31 December 2021
Change in market value of investment
At 31 December 2022
Company
At 1 January 2021
Disposals
Change in market value of investment
At 31 December 2021
Change in market value of investment
At 31 December 2022
Shares in
Equity
Investments at
FVTOCI
£
606,245
(2,109)
(654,347)
81,786
31,575
(19,598)
11,977
Shares in
Equity
Investments at
FVTOCI
£
604,136
(654,347)
81,786
31,575
(19,598)
11,977
Equity Investments are designated as Fair Value Through Other Comprehensive Income (FVTOCI).
During 2021 the Company sold all the shares it held in Cri(cid:72)cal Resources (formerly Force Commodi(cid:72)es Limited).
The fair value of the shares held by the Company is the quoted value at the repor(cid:72)ng date. The fair value
hierarchy in 2022 and 2021 for these shares is Level 1 as the valua(cid:72)on is based wholly on quoted prices.
12. JOINT ARRANGEMENTS
In December 2021 Savannah through its subsidiary AME East Africa Limited (‘AME’) signed a Deed of Termina(cid:72)on
with Rio Tinto Mining and Explora(cid:72)on Limited (Rio Tinto) to terminate the unincorporated Consor(cid:72)um
Agreement signed between these en(cid:72)(cid:72)es in 2016.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 89
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
13. TRADE AND OTHER RECEIVABLES
Non(cid:31)Current:
Other Receivables
Amounts due from Subsidiaries
Total Non(cid:31)Current Trade and Other Receivables
Current:
VAT Recoverable
Other Receivables
Total Current Trade and Other Receivables
2022
£
454,651
–
454,651
155,205
404,855
560,060
Group
2021
£
Company
2022
£
2021
£
–
–
–
–
31,877,211
–
26,184,402
31,877,211
26,184,402
66,867
895,191
962,058
6,707
231,482
238,189
12,744
194,385
207,129
The carrying value of Trade and Other Receivables classi(cid:12)ed at amor(cid:72)sed 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 par(cid:72)es. 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 su(cid:4)cient future pro(cid:12)ts to se(cid:13)le the amounts owing and accordingly, these
amounts have been par(cid:72)ally 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 considera(cid:72)on of various risks a(cid:22)ec(cid:72)ng 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 explora(cid:72)on stage. Management
has concluded that the success of the projects is the most important factor that will drive credit losses. This
will be a(cid:22)ected 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 explora(cid:72)on and mining
licences. Several scenarios and their likelihood have been considered to calculate the expected cash (cid:10)ows for
the loans associated to each project and the expected credit losses as at the repor(cid:72)ng date. In the current
period the Company es(cid:72)mates that an expected credit loss calculated of £0.02m (2021: £4.0m) arises on the
receivables from the subsidiaries, increasing the expected credit loss balance to £5.1m.
The Group has a receivable from Gentor Resources Limited, a subsidiary of Cri(cid:72)cal Resources, which represents
con(cid:72)ngent considera(cid:72)on from the disposal of the Oman opera(cid:72)ons in 2020 and has been valued at £nil as at
31 December 2022 and 31 December 2021.
The expected credit loss on other third par(cid:72)es’ receivables is £nil as at 31 December 2022 (2021: £nil).
90
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
13. TRADE AND OTHER RECEIVABLES con(cid:72)nued
Movements in the impairment allowance for the year ended 31 December 2022 is as follows:
Company
At 1 January 2021
Impairment charge
Foreign exchange movements
At 31 December 2021
Impairment charge
Foreign exchange movements
At 31 December 2022
Impairment
from Subsidiaries
£
595,155
4,047,901
(61,915)
4,581,141
16,125
467,550
5,064,816
Of the impairment charge for 2021 (cid:12)nancial year £4,008,685 was related to the exit of the Mozambique Mineral
Sands project, with the amounts due from Ma(cid:72)lda Minerals fully impaired as at 31 December 2022 and
31 December 2021.
The breakdown of the Amounts due from Subsidiaries as at 31 December 2022 is as follows:
Company
Amounts due from Subsidiaries:
Outstanding amount
Impairment
14. CASH AND CASH EQUIVALENTS
2022
£
2021
£
36,942,027
(5,064,816)
30,765,543
(4,581,141)
31,877,211
26,184,402
Group
2022
£
2021
£
Company
2022
£
2021
£
Cash at Bank and in Hand
7,202,334
13,002,084
6,241,356
11,085,944
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 91
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
15. OTHER CURRENT AND NON(cid:17)CURRENT ASSETS
Non(cid:40)Current:
Guarantees
Other
Total Other Non(cid:40)Current Assets
Current:
Other
Total Other Current Assets
Group
Company
2022
£
64,611
13,056
77,667
1,036
1,036
2021
£
61,284
8,258
69,542
19,300
19,300
2022
£
–
6,776
6,776
–
–
2021
£
–
6,776
6,776
–
–
The Non(cid:40)Current Assets (cid:40) Guarantees are deposits required by the local mining / environmental authori(cid:81)es in
rela(cid:81)on to explora(cid:81)on / mining licences and applica(cid:81)ons thereof.
16. SHARE CAPITAL
Allo(cid:2)ed, issued and fully paid
At beginning of year
Issued during year:
Share placements
2022
2021
£0.01
ordinary
shares
number
1,688,959,820
£0.01
ordinary
shares
number
16,889,598 1,430,991,035
£
£
14,309,910
–
–
257,968,7851
2,579,688
At end of year
1,688,959,820
16,889,598 1,688,959,820
16,889,598
1 In respect of the Share placements in 2021 the net proceeds were £9,797,982 of which £7,218,294 has been recorded in Share Premium. The
gross proceeds were £10,320,901 and the costs of the Share placements £522,919.
The par value of the Company’s shares is £0.01.
17. TRADE AND OTHER PAYABLES
Group
Company
Current:
Trade Payables
Other Payables
Accruals
Amounts due to Subsidiaries
2022
£
618,805
56,745
410,228
–
2021
£
866,053
79,236
731,838
–
Total Current Trade and Other Payables
1,085,778
1,677,127
2022
£
329,005
28,651
156,961
8,786
523,403
2021
£
501,283
46,260
460,320
–
1,007,863
In 2022 and 2021 accruals represent mainly professional fees in the Group for which invoices have not been
received at the repor(cid:81)ng date and to a lesser extent in 2022, sta(cid:23) bonuses.
Part of Trade and other payables amounts relate to work performed in the projects which balances are
capitalised and therefore these are included in Inves(cid:81)ng not Opera(cid:81)ng cash (cid:13)ows.
92
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
18. FINANCIAL INSTRUMENTS
Financial Instruments (cid:17) Risk Management
In common with all other businesses, the Group is exposed to risks that arise from its use of (cid:7)nancial
instruments. This note describes the Group's objec(cid:81)ves, policies and processes for managing those risks and
the methods used to measure them. Further quan(cid:81)ta(cid:81)ve informa(cid:81)on in respect of these risks is presented
throughout these Financial Statements.
There have been no substan(cid:81)ve changes in the Group's exposure to (cid:7)nancial instrument risks, its objec(cid:81)ves,
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 (cid:7)nancial instruments used by the Group, from which (cid:7)nancial instrument risk arises, are as follows:
•
•
•
•
•
Intercompany Loan Receivables
Non(cid:40)Current Other Receivables
Current Trade and Other Receivables
Cash and Cash Equivalents
Investments
• Other Non(cid:40)Current Assets – Guarantees
• Other Current Assets
•
•
Trade and Other Payables
Leases Liabili(cid:81)es
Trade and other payables fall due for payment within 3 months from the repor(cid:81)ng date.
Liquidity Risk
At the repor(cid:81)ng date the Group’s cash balance was £7.2m (2021: £13m). This, in conjunc(cid:81)on with the raising
of future cash through di(cid:23)erent op(cid:81)ons, which the Directors believe can be secured, will allow the Group to
con(cid:81)nue working on its development / explora(cid:81)on ac(cid:81)vi(cid:81)es and to meet its (cid:7)nancial commitments for at least
12 months. In common with many non(cid:40)revenue genera(cid:81)ng companies, the Company rou(cid:81)nely raises funds for
its development ac(cid:81)vi(cid:81)es. The Group’s policy con(cid:81)nues 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 opera(cid:81)ons to foreign exchange risk which mainly arises because the Group
has overseas opera(cid:81)ons located in Portugal whose func(cid:81)onal currency is Euro.
Foreign exchange risk also arises when individual group en(cid:81)(cid:81)es enter into transac(cid:81)ons denominated in a currency
other than their func(cid:81)onal currency. The Group’s policy is, where possible, to allow group en(cid:81)(cid:81)es to se(cid:29)le
liabili(cid:81)es denominated in their func(cid:81)onal currency (Euro, MZN or Pound Sterling) with the cash remi(cid:29)ed to their
own opera(cid:81)ons in that currency where prac(cid:81)cal. Where group en(cid:81)(cid:81)es have liabili(cid:81)es denominated in a currency
other than their func(cid:81)onal currency (and have insu(cid:13)cient reserves of that currency to se(cid:29)le them) cash already
denominated in that currency will, where possible, be transferred from elsewhere within the Group.
In addi(cid:81)on, the Group is exposed through the cash held in foreign currencies. To mi(cid:81)gate this risk the Group’s
policy is to review the cash (cid:13)ow forecast iden(cid:81)fying the currencies that will be required to se(cid:29)le liabili(cid:81)es in
future and hold the cash balances in the required currencies. From (cid:81)me to (cid:81)me when there is insu(cid:13)cient
precision about the currencies that will be required for future expenditure the Group spreads its cash balances
across globally recognised reserve currencies to mi(cid:81)gate against adverse changes in exchanges rates, and the
Company monitors this regularly.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
93
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
18. FINANCIAL INSTRUMENTS con(cid:81)nued
Market Risk
The Group holds equity investments in companies traded on ac(cid:81)ve markets (Note 11). The Directors believe
that the exposure to market price risk from this ac(cid:81)vity is acceptable in the Group's circumstances.
The e(cid:23)ect of a 10% increase in the value of the equity investments held at the repor(cid:81)ng date would, all other
variables held constant, have resulted in an increase in other comprehensive income and net assets of £1,198
(2021: increase in other comprehensive income and net assets of £3,157). 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 par(cid:81)es.
The subsidiaries are explora(cid:81)on and development companies with no current revenue and therefore, whilst
the receivables are due on demand, they are not expected to be paid un(cid:81)l there is a successful outcome on a
development project resul(cid:81)ng in revenue being generated by a subsidiary. The third(cid:40)party receivables are due
within 30 days of issuing the invoices; in the case of the con(cid:81)ngent considera(cid:81)on from the disposal of the Oman
opera(cid:81)ons this is due when its related mining project generate posi(cid:81)ve cash (cid:13)ow, the project is in the
explora(cid:81)on phase. 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 (cid:7)nancial
ins(cid:81)tu(cid:81)ons. Only reputable banks and (cid:7)nancial ins(cid:81)tu(cid:81)ons which are rated by recognised ra(cid:81)ng 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 remi(cid:29)ed to other group en(cid:81)(cid:81)es on a monthly basis to se(cid:29)le
liabili(cid:81)es as they fall due, to avoid credit risk associated to foreign jurisdic(cid:81)ons banks. The Group policy is also
to operate at least with two banks in each country when possible.
Financial instruments by category (Group)
Financial Assets
Fair Value
Through Other
Amor(cid:42)sed Comprehensive
Cost Income Total
£ £ £
As at 31 December 2022
Investments – 11,977 11,977
Non(cid:40)Current Other Receivables 454,651 – 454,651
Other Non(cid:40)Current Assets 77,667 – 77,667
Current Trade and Other Receivables 191,143 – 191,143
Other Current Assets 1,036 – 1,036
Cash and Cash Equivalents 7,202,334 – 7,202,334
Total Financial Assets 7,926,831 11,977 7,938,808
As at 31 December 2021
Investments – 31,575 31,575
Other Non(cid:40)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
See review of the fair value hierarchy of fair value through other comprehensive income assets in Note 11.
94
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
18. FINANCIAL INSTRUMENTS con(cid:81)nued
Financial Liabili(cid:42)es
Financial
Liabili(cid:42)es at
Amor(cid:42)sed Cost Total
£ £
As at 31 December 2022
Long(cid:40)term Lease Liabili(cid:81)es 12,263 12,263
Trade and Other Payables 1,085,778 1,085,778
Short(cid:40)term Lease Liabili(cid:81)es 5,364 5,364
Total Financial Liabili(cid:81)es 1,103,405 1,103,405
As at 31 December 2021
Trade and Other Payables 1,677,127 1,677,127
Lease Liabili(cid:81)es 1,132 1,132
Total Financial Liabili(cid:81)es 1,678,259 1,678,259
The Group's net exposure to foreign exchange at the repor(cid:81)ng date was as follows:
Func(cid:42)onal Currency of En(cid:42)ty
GBP MZN EUR Total GBP MZN EUR Total
2022 2022 2022 2022 2021 2021 2021 2021
£ £ £ £ £ £ £ £
Foreign currency (cid:8)nancial assets
USD 847,872 6,089 354 854,315 7,466,462 69,649 317 7,536,428
EUR 4,132,466 – – 4,132,466 3,958,196 – – 3,958,196
AUD 581,376 – 4,388 585,764 307,035 – 4,184 311,219
OMR 8,558 – – 8,558 8,558 – – 8,558
Total 5,570,272 6,089 4,742 5,581,103 11,740,251 69,649 4,501 11,814,401
Func(cid:42)onal Currency of En(cid:42)ty
GBP Total GBP Total
2022 2022 2021 2021
£ £ £ £
Foreign currency (cid:8)nancial liabili(cid:42)es
USD 132,841 132,841 71,383 71,383
AUD 68,061 68,061 225,086 225,086
EUR 104,010 104,010 103,604 103,604
OMR 6,900 6,900 6,900 6,900
Total 311,812 311,812 406,973 406,973
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
95
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
18. FINANCIAL INSTRUMENTS con(cid:81)nued
The e(cid:23)ect of changes in foreign currencies exchange rates against GBP at the repor(cid:81)ng 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 2022 £ £ £
Movement exchange rates
against GBP +10% (cid:17)10% +10% (cid:17)10% +10%
Pre(cid:40)tax loss for the year (44,407) 36,333 (459,163) 375,679 (63,754)
Net assets 44,407 (36,333) 459,136 (375,679) 63,754
(cid:17)10%
52,162
(52,162)
USD EUR AUD
As at 31 December 2021 £ £ £
Movement exchange rates
against GBP +10% (cid:40)10% +10% (cid:40)10% +10%
Pre(cid:40)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
(cid:40)10%
25,422
(25,422)
Financial instruments by category (Company)
Financial Assets
Fair Value
Through Other
Amor(cid:42)sed Comprehensive
Cost Income Total
£ £ £
As at 31 December 2022
Other Receivables 31,877,211 – 31,877,211
Other Non(cid:40)Current Assets 6,776 – 6,776
Investments – 11,977 11,977
Trade and Other Receivables 27,215 – 27,215
Cash and Cash Equivalents 6,241,356 – 6,241,356
Total Financial Assets 38,152,558 11,977 38,164,535
As at 31 December 2021
Other Receivables 26,184,402 – 26,184,402
Other Non(cid:40)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
See review of the fair value hierarchy of fair value through other comprehensive income assets in Note 11.
96
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
18. FINANCIAL INSTRUMENTS con(cid:81)nued
Financial liabili(cid:42)es
Financial
Liabili(cid:42)es at
Amor(cid:42)sed Cost Total
£ £
As at 31 December 2022
Trade and Other Payables 523,403 523,403
Total Financial Liabili(cid:81)es 523,403 523,403
As at 31 December 2021
Trade and Other Payables 1,007,863 1,007,863
Total Financial Liabili(cid:81)es 1,007,863 1,007,863
The Company’s net exposure to foreign exchange risk at the repor(cid:81)ng date was as follows:
Func(cid:42)onal Currency of En(cid:42)ty
GBP Total GBP Total
2022 2022 2021 2021
£ £ £ £
Foreign currency (cid:8)nancial assets
USD 215,473 215,473 6,876,165 6,876,165
EUR 35,369,797 35,369,797 29,552,010 29,552,010
AUD 509,978 509,978 224,044 224,044
OMR 8,558 8,558 8,558 8,558
Total 36,103,806 36,103,806 36,660,777 36,660,777
Func(cid:42)onal Currency of En(cid:42)ty
GBP Total GBP Total
2022 2022 2021 2021
£ £ £ £
Foreign currency (cid:8)nancial liabili(cid:42)es
USD 8,174 8,174 – –
AUD 43,178 43,178 94,825 94,825
EUR 15,696 15,696 11,134 11,134
OMR 6,900 6,900 6,900 6,900
Total 73,948 73,948 112,859 112,859
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
97
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
18. FINANCIAL INSTRUMENTS con(cid:81)nued
Capital Disclosures
The Group’s objec(cid:81)ves when maintaining capital are:
•
•
to safeguard the en(cid:81)ty’s ability to con(cid:81)nue as a going concern, so that it can con(cid:81)nue to provide returns
for shareholders and bene(cid:7)ts for other stakeholders; and
to maintain an op(cid:81)mal 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 (cid:7)nancial
structures such as grants, debt (project (cid:7)nance), royal(cid:81)es, streaming, mezzanine (cid:7)nance, or combina(cid:81)ons thereof.
19. GROUP CONTINGENT LIABILITIES
Details of con(cid:81)ngent liabili(cid:81)es where the probability of future payments is not considered remote are set out
below, as well as details of con(cid:81)ngent liabili(cid:81)es, 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 ma(cid:29)ers,
as at the repor(cid:81)ng date it is not probable that a future sacri(cid:7)ce of economic bene(cid:7)ts will be required and the
amount is not capable of reliable measurement.
Considera(cid:42)on payable in rela(cid:42)on to the acquisi(cid:42)on of the Aldeia Mining Lease Applica(cid:42)on for lithium,
feldspar and quartz (Portugal lithium project)
In June 2019 the Company exercised its op(cid:81)on to acquire a Mining Lease Applica(cid:81)on for lithium, feldspar and
quartz from private Portuguese company, Aldeia & Irmão, S.A.. The total purchase price for the acquisi(cid:81)on is
EUR €3,250,000 (~GBP £2,880,000), which will only become due once the Mining Lease Applica(cid:81)on has been
granted and the Mining Rights transferred to an en(cid:81)ty within the Group, at which point the agreed payment
schedule will consist of an ini(cid:81)al EUR €55,000 (~GBP £50,000) payment with the balance due in 71 equal
monthly instalments. Upon delivery of the request for transfer of the Mining Rights to an en(cid:81)ty within the
Group, the Group shall provide with a bank guarantee of EUR €3,195,000 (~GBP £2,830,000) that will be reduced
in accordance with the 71 monthly instalments. As at 31 December 2022 the mining lease has not been granted.
20. RELATED PARTY DISCLOSURES
Details of Directors’ remunera(cid:81)on are disclosed in the Remunera(cid:81)on Report and in Note 3. During the year
£237,903 (2021: £214,413) was payable to Blue Bone Consul(cid:81)ng Pty Ltd (a company controlled by Dale
Ferguson) for consultancy fees of which £41,554 (including bonus) (2021: £93,303 (including bonus)) remained
unpaid. The amounts payable to Blue Bone Consul(cid:81)ng Pty Ltd have been included in the Directors’ remunera(cid:81)on
in the Remunera(cid:81)on Report and in Note 3.
During the year Dale Ferguson acquired in the market 900,000 shares indirectly through its investment in
Slipstream Resources Investments Pty, Ltd for a considera(cid:81)on of £18,900. During the year James Leahy acquired
in the market 215,889 shares for a considera(cid:81)on of £5,018. During 2021 Ma(cid:29)hew King acquired 312,500 shares
as part of the April 2021 fundraise for a considera(cid:81)on of £12,500.
98
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
21. LEASES
Right(cid:17)of(cid:17)Use Assets
Vehicles
£
Cost
At 1 January 2021 68,583
Addi(cid:81)ons 798
Foreign exchange movements (4,524)
At 31 December 2021 64,857
Addi(cid:81)ons 21,322
Foreign exchange movements 4,341
At 31 December 2022 90,520
Deprecia(cid:42)on
At 1 January 2021 46,874
Charge for year 16,051
Foreign exchange movements (3,458)
At 31 December 2021 59,467
Charge for year 9,820
Foreign exchange movements 3,606
At 31 December 2022 72,893
Net Book Value
At 1 January 2021 21,709
At 31 December 2021 5,390
At 31 December 2022 17,627
Lease Liabili(cid:42)es
Vehicles
£
At 1 January 2021 12,738
Addi(cid:81)ons –
Lease payments (11,108)
Foreign exchange movements (498)
At 31 December 2021 1,132
Addi(cid:81)ons 20,663
Lease payments (4,837)
Foreign exchange movements 669
At 31 December 2022 17,627
Current Liabili(cid:81)es
Non(cid:40)Current Liabili(cid:81)es
Total lease liabili(cid:42)es
2022
£
5,364
12,263
17,627
2021
£
1,132
–
1,132
The Right(cid:40)of(cid:40)Use Assets and related Lease Liabili(cid:81)es are for the lease of motor vehicles. Total 2022 cash (cid:13)ow
ou(cid:11)low amount is £5,287 (2021: £11,746).
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
99
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
21. LEASES con(cid:81)nued
Other Leases
The Group has registered £76,505 (2021: £11,593) in the Statement of Comprehensive Income related to
short(cid:40)term leases. Short(cid:40)term leases meet the requirements to not be accounted for by recognising a Right(cid:40)of(cid:40)
Use Asset and a Lease Liability, having a dura(cid:81)on of 12 months or less and without reasonable certainty about
their renewal.
At 31 December 2022 the Other Lease commitments for the next 12 months is £33,969 (2021: £12,385).
These leases are for business premises in Portugal and the UK.
22. GROUP COMMITMENTS
As a condi(cid:81)on of being granted with mining licence 9735C in Mozambique the Group, through Ma(cid:81)lda Minerals
Lda, signed a bank guarantee of MZN 60,143,680 (GBP £778,892) to be assigned to the Ministério Dos Recursos
Minerais e Energia (Ministry of Natural Resources and Energy). The guarantee is valid un(cid:81)l the 28 November
2023 and Ma(cid:81)lda Minerals Lda is obligated to maintain funds for the same amount as the guarantee in a bank
account. This bank account deposit was impaired in 2021 a(cid:12)er the signing of the Deed of termina(cid:81)on with Rio
Tinto (Note 24). At 31 December 2022 this bank account deposit is fully impaired.
23. SHARE OPTIONS AND INVESTOR WARRANTS
Share Op(cid:81)ons and Investor Warrants to subscribe for Ordinary Shares in the Company are granted to certain
employees, Directors and investors. Some of the op(cid:81)ons issued vest immediately and others over a ves(cid:81)ng
period and may include performance condi(cid:81)ons. Op(cid:81)ons are forfeited if the employee leaves the Group before
the op(cid:81)ons vest.
2022 2021
Weighted Weighted
average Weighted average Weighted
remaining
exercise remaining exercise
life
Number price life Number price
Share Op(cid:42)ons
Opening Balance 67,600,000 6.0p 6.71 20,150,000 8.5p
Granted – – – 58,650,000 5.5p
Lapsed (23,525,620) 5.6p – (11,200,000) 7.5p
1.41
7.43
–
Closing Balance 44,074,380 6.3p 5.44 67,600,000 6.0p
6.71
Investor Warrants
Opening Balance – – – 343,432 11.3p
Lapsed – – – (343,432) 11.3p
Closing Balance – – – – –
0.62
–
–
100 SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
23. SHARE OPTIONS AND INVESTOR WARRANTS con(cid:81)nued
Share schemes outstanding as at 31 December 2022 are as follows:
Outstanding Exercisable Outstanding Exercisable
31 December 31 December 31 December 31 December Exercise
2022 2022 2021 2021 Price
Share Op(cid:42)ons
January 2018 – – 1,000,000 1,000,000 8.0p
March 2019 7,950,000 7,950,000 7,950,000 – 10.0p
June 2021 750,000 750,000 750,000 750,000 4.7p
June 2021 750,000 750,000 750,000 750,000 6.2p
June 2021 13,887,190 – 24,485,000 – 4.7p
June 2021 13,887,190 – 24,485,000 – 6.2p
October 2021 250,000 250,000 250,000 250,000 4.7p
October 2021 250,000 250,000 250,000 250,000 6.3p
October 2021 3,175,000 – 3,840,000 – 4.7p
October 2021 3,175,000 – 3,840,000 – 6.3p
44,074,380 9,950,000 67,600,000 3,000,000
Expiry
Date
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
All of the Share Op(cid:81)ons granted a(cid:29)ract a share based payment charge.
The fair value of the Share Op(cid:81)ons and Investor Warrants at the date of grant have been measured using the
Black(cid:40)Scholes pricing model that takes into account factors such as the op(cid:81)on life, share price vola(cid:81)lity and the
risk free rate. Vola(cid:81)lity was calculated with reference to the Company’s historical share price vola(cid:81)lity up to
the grant date to re(cid:13)ect a term approximate to the expected life of the op(cid:81)on.
The range of inputs of the Share Op(cid:81)ons granted during 2021 were as follows:
Share Op(cid:42)ons June 2021 June 2021 June 2021
Stock price 3.9p 3.9p 3.9p
Fair value of op(cid:81)on 1.7p 1.4p 1.2p
Exercise Price 4.7p 6.2p 4.7p
Expected vola(cid:81)lity 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 Op(cid:42)ons October 2021 October 2021 October 2021 October 2021
4.0p
Stock price 4.0p 4.0p 4.0p
0.9p
Fair value of op(cid:81)on 1.7p 1.4p 1.2p
6.3p
Exercise Price 4.7p 6.3p 4.7p
59%
Expected vola(cid:81)lity 55% 55% 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%
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 101
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
23. SHARE OPTIONS AND INVESTOR WARRANTS con(cid:81)nued
This fair value is the cost that is charged to the Statement of Comprehensive Income and is spread over the
expected ves(cid:81)ng period which, for non(cid:40)market ves(cid:81)ng condi(cid:81)ons (as noted above), is revised at each period
end.
Share Op(cid:42)ons granted
During the 2021 (cid:7)nancial year 56,650,000 Share Op(cid:81)ons were issued to employees to assist with the
recruitment, reward and reten(cid:81)on of key employees. These Share Op(cid:81)ons vest upon the employee mee(cid:81)ng
service and/or performance condi(cid:81)ons. No Share Op(cid:81)ons were granted during 2022 to employees.
Addi(cid:81)onally, during the 2021 (cid:7)nancial year 2,000,000 Share Op(cid:81)ons were issued to Group advisors, which vest
immediately. No Share Op(cid:81)ons were granted during 2022 to Group advisors.
The detail of the LTIP Share Op(cid:81)ons granted to the Directors is disclosed in the Remunera(cid:81)on Report.
Investor Warrants issued
No Investor Warrants were issued in 2022 or 2021.
24. DISCONTINUED OPERATIONS
In October 2016 Savannah, AME and Rio Tinto entered into a Consor(cid:81)um Agreement (‘CA’), whereby both
Savannah Group and Rio Tinto combined their respec(cid:81)ve projects in Mozambique to form an unincorporated
consor(cid:81)um. On the 1 December 2021 Savannah signed a Deed of Termina(cid:81)on rela(cid:81)ng to the CA.
Under the Deed of Termina(cid:81)on the following was agreed:
•
•
•
the relinquishment of the rights and obliga(cid:81)ons provided under the CA, including that AME EA would not
have an interest in Mutamba Rio and Rio Tinto would not have an interest in Ma(cid:81)lda Minerals Lda’s Mining
Concession 9735C;
the transfer of Savannah’s in country team to Rio Tinto; and
termina(cid:81)on compensa(cid:81)on amoun(cid:81)ng to $9.5m cash.
The post(cid:40)tax gain on relinquishment of the rights and obliga(cid:81)ons of Discon(cid:81)nued Opera(cid:81)ons at 31 December
2021 was determined as follows:
£
Termina(cid:42)on Compensa(cid:42)on 6,996,875
Net assets relinquished
Intangible Assets (4,702,323)
Tangible Assets (957,007)
Other Non(cid:40)Current Assets (710,467)
(6,369,797)
Pre(cid:17)tax gain on relinquishment of the rights and obliga(cid:42)ons
of discon(cid:42)nued opera(cid:42)on 627,078
Related tax –
Gain on relinquishment of the rights and obliga(cid:42)ons of discon(cid:42)nued opera(cid:42)ons 627,078
102 SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2022
24. DISCONTINUED OPERATIONS con(cid:81)nued
The detail of the result of discon(cid:81)nued opera(cid:81)ons is as follows:
Expenses other than (cid:7)nance costs
Gain on relinquishment of the rights and obliga(cid:81)ons
of discon(cid:81)nued opera(cid:81)ons a(cid:12)er tax
(Loss) / Pro(cid:8)t on discon(cid:42)nued opera(cid:42)ons for the year
Earnings per share from discon(cid:42)nued opera(cid:42)ons
Basic and diluted loss per share
2022
£
2021
£
(176,396)
(624,707)
–
(176,396)
627,078
2,371
(0.00010)
0.00000
The statement of cash (cid:13)ows includes the following amounts rela(cid:81)ng to discon(cid:81)nued opera(cid:81)ons:
Net cash used in opera(cid:81)ng ac(cid:81)vi(cid:81)es
Net cash from inves(cid:81)ng ac(cid:81)vi(cid:81)es
Net cash from/(used in) (cid:7)nancing ac(cid:81)vi(cid:81)es
Net cash used in discon(cid:42)nued opera(cid:42)ons
2022
£
2021
£
(274,769)
91,807
112,265
(70,697)
(438,441)
6,105,942
(5,674,201)
(6,700)
Savannah is in the process of dives(cid:81)ng its residual interest in Mozambique which includes Mining Concession
9735C and (cid:7)nalising administra(cid:81)ve work related to the termina(cid:81)on of the Consor(cid:81)um Agreement as required
by the Mozambique laws. The costs incurred during 2022 are related to these ac(cid:81)vi(cid:81)es.
The legal transfer of Ma(cid:81)lda’s employees and some supplier contracts to Rio Tinto was completed in April 2022,
and a gross payment was received amoun(cid:81)ng to US$115,329 (~£91,807), which was part of the Termina(cid:81)on
compensa(cid:81)on amoun(cid:81)ng to US$9.5m.
25. EVENTS SINCE THE REPORTING DATE
As part of the Ar(cid:81)cle 16 phase, on 16 March 2023 the Group submi(cid:29)ed the revised Environmental Report and
Mine Plan for the Barroso Lithium Project to Portugal's environmental regulator, Agência Portuguesa do
Ambiente (‘APA’). Submission ini(cid:81)ates the 50(cid:40)business day assessment period available to APA. The deadline
for the no(cid:81)ce of APA’s Environmental Impact Statement (DIA) is therefore 31 May 2023.
SAVANNAH RESOURCES Plc – ANNUAL REPORT AND FINANCIAL STATEMENTS 2022 103
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COMPANY INFORMATION
DIRECTORS:
SECRETARIES:
Ma(cid:11)hew James Wya(cid:11) King
Dale John Ferguson
Mary Jo Jacobi
James Gerald Leahy
Manohar Pundalik Shenoy
Diogo da Silveira
Imad Kamal Abdul Redha Sultan
Chairman
Execu(cid:24)ve Director
Non(cid:29)Execu(cid:24)ve Director
Non(cid:29)Execu(cid:24)ve Director
Non(cid:29)Execu(cid:24)ve Director
Non(cid:29)Execu(cid:24)ve Director
Non(cid:29)Execu(cid:24)ve 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 ADVISER:
JOINT BROKERS:
SOLICITORS:
REGISTRARS:
BDO LLP
Chartered Accountants & Statutory Auditors
55 Baker Street
London W1U 7EU
NatWest Bank Plc
St James' & Piccadilly Branch
PO Box 2DG, 208 Piccadilly
London W1A 2DG
SP Angel Corporate Finance LLP
Prince Frederick House
35(cid:29)39 Maddox Street
London W1S 2PP
SP Angel Corporate Finance LLP
Prince Frederick House
35(cid:29)39 Maddox Street
London W1S 2PP
Druces LLP
Salisbury House
London Wall
London EC2M 5PS
Share Registrars Limited
3 The Millennium Centre, Crosby Way
Farnham
Surrey GU9 7XX
RBC Capital Markets
100 Bishopsgate
London EC2N 4AA
WEBSITE:
www.savannahresources.com
Perivan.com
265729