TIDMSAV
RNS Number : 1165W
Savannah Resources PLC
15 April 2019
15 April 2019
Savannah Resources Plc
("Savannah" or the "Company")
Agreement to secure 100% control of the Mina do Barroso Lithium
Project in Portugal
HIGHLIGHTS:
-- Savannah intends to secure 100% control of its flagship
asset, the Mina do Barroso Lithium Project in Portugal (the
'Project'), Europe's most significant spodumene lithium deposit,
via an all share offer (the 'Transaction')
-- The remaining 25% interest is to be acquired from minority
shareholders (the 'Vendors') including Slipstream Resources
Investments Pty Ltd ('Slipstream'), the largest of the Vendors and
an existing shareholder in Savannah
-- 100% ownership by Savannah of Mina do Barroso will provide
greater exposure for Savannah shareholders to this significant
lithium project and valuable optionality as the Company progresses
the development and commercialisation of the Project
-- Consideration is to be satisfied through the issue of 163
million new ordinary shares in Savannah (the 'Consideration
Shares') at USD 0.073 (circa. 5.63p) per share valuing the
Transaction at circa US$11.9m and equating to 15.6% of the enlarged
issued share capital of the Company
-- The Transaction is subject to Savannah entering into a
legally binding Share Purchase Agreement ('SPA') with the Vendors
and will be subject to shareholders approving the requisite
resolutions to issue new ordinary shares at the Company's 2019
AGM
-- Resource investment specialist, Slipstream, will become a
16.0% shareholder in Savannah following the proposed issue of new
ordinary shares due to them, increasing from a 5.1%
shareholding
-- The Vendors have agreed to a 12-month lock-in arrangement on
the Consideration Shares and a further 9-month orderly market
restriction following completion of the Transaction
-- The Transaction demonstrates Slipstream's confidence in the
potential of the Project and Savannah's overall asset portfolio
Savannah Resources plc (AIM: SAV, FWB: SAV and SWB: SAV), the
resource development company with a portfolio of diversified
assets, is pleased to announce that it has entered into a term
sheet, (the 'Term Sheet') to acquire the minority 25% shareholding
in Savannah Lithium Lda, which owns the Mina do Barroso Lithium
Project in Portugal. The Transaction will take Savannah's ownership
of the Project to 100% ahead of the completion of the Feasibility
Study and a decision to mine.
In connection with the Transaction, Savannah has retained Hannam
& Partners (H&P Advisory Limited) as financial
advisors.
Commenting on the Transaction, Savannah's CEO David Archer,
said: "Since acquiring our initial 75% shareholding in Mina do
Barroso in 2017, we have rapidly progressed the Project including
delineating a 23.5Mt spodumene-bearing JORC compliant resource and
completing a positive Scoping Study. At the same time, legislators
and battery end users in the region have come to appreciate the
need for Europe to have domestic sources of battery raw materials
as the region seeks to reduce emissions from the transport sector
via the transition to Electric Vehicles ('EVs').
As a result, we see great economic and strategic value in the
Project and we are pleased to have the opportunity to increase our
stake to 100%. We believe this Transaction, which will give
Savannah complete control of the Project, provides welcome
simplification, clarity and valuable optionality as we seek to
progress our negotiations regarding lithium and co-product offtake
agreements along with the Project's proposed financing. The Company
remains focused on completing the Project's Definitive Feasibility
Study and Environmental Impact Assessment and permitting process,
which will allow a development decision to be made. I look forward
to updating shareholders on further developments in due
course."
Commenting on the Transaction, Geoffrey Stewart, CEO of
Slipstream, said: "Following completion of the Transaction, we will
be fully aligned with Savannah's shareholders. We strongly support
and endorse the Board's strategy and the management team's
sustained efforts to rapidly advance the development of the Mina do
Barroso Project. It has been a truly remarkable achievement that,
in under two years, Savannah has developed what was a promising
exploration project into what is likely to be Europe's first
significant producer of high-grade, low impurity spodumene
concentrate. We are excited and confident that the Project will
become both economically and strategically important in Europe's
rapidly developing EV industry."
Benefits of the Transaction for Savannah and its shareholders
include:
-- Providing Savannah with 100% control over Mina do Barroso,
Savannah's flagship asset and Europe's most significant spodumene
lithium deposit at 23.5Mt
-- Significant simplification of Savannah's group structure and Project decision making process
-- Reduction in Project funding uncertainty related to the
presence of significant Project level minority shareholders
-- Expected cost savings and efficiency gains from the reduced
complexity related to JV management and reporting
-- The lock-up and orderly market arrangements provide
protection for the Company's existing shareholders during the
funding phase of the Project
Terms of the Transaction
Pursuant to the Term Sheet, total consideration of circa
US$11.9m for the Vendors combined 25% shareholding in the Project
will be settled by the issue of 163 million new ordinary shares of
1p in the Company at 0.073 USD (circa. 5.63p) per share equating to
15.6% in the enlarged issued share capital of the Company. The
Consideration Shares will rank pari passu with the Company's
existing Ordinary shares. Slipstream, an existing 5.1% shareholder
in Savannah, and the largest of the Vendors, will see its holding
in the Company increase to 16.0%, making it Savannah's second
largest shareholder. The Vendors have agreed to a 12-month lock-in
arrangement on their Consideration Shares and a further 9-month
orderly market restriction where any sale of the Consideration
Shares by a vendor would be through a Savannah nominated
broker.
The Transaction is subject to entering into a legally binding
SPA between Savannah and the Vendors. In addition, Savannah does
not currently have the authority to issue the Consideration Shares
so the Transaction will be subject to the Company's shareholders
approving resolutions to increase the Directors' authority to issue
and allot the Consideration Shares and to disapply statutory
pre-emption rights at the Company's forthcoming 2019 AGM. A further
announcement regarding the AGM will be made in due course.
Regulatory Information
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) 596/2014.
Mr Dale Ferguson
Mr Dale Ferguson, the Company's Technical Director, is also a
Director of and minority shareholder in Slipstream Resources
Investments Pty Ltd (one of the Vendors). As such, Dale Ferguson
has been excluded from any of Savannah's commercial negotiations
with the Vendors and is precluded from voting on any Board matters
relating to the Term Sheet and the SPA between Savannah and the
Vendors.
**ENDS**
For further information please visit www.savannahresources.com
or contact:
David Archer Savannah Resources Tel: +44 20 7117 2489
plc
David Hignell / Charlie SP Angel Corporate Tel: +44 20 3470 0470
Bouverat (Nominated Adviser) Finance LLP Partners
Ltd
Christopher Raggett (Broker) finnCap Ltd Tel: +44 20 7220 0500
Grant Barker (Equity Adviser) Whitman Howard Tel: +44 020 7659
1225
Ingo Hofmaier/Andrew Chubb Hannam & Partners Tel: +44 0207 907
(Financial Advisor) 8500
Melissa Hancock/ Cosima St Brides Partners
Akerman (Financial PR) Ltd Tel: +44 20 7236 1177
About Savannah
Savannah is a diversified resources group (AIM: SAV) with a
portfolio of energy metals projects - lithium in Portugal and
copper in Oman - together with the world-class Mutamba Heavy
Mineral Sands Project in Mozambique, which is being developed in a
consortium with the global major Rio Tinto. The Board is committed
to serving the interests of its shareholders and to delivering
outcomes that will improve the lives of the communities we work
with and our staff.
The Company is listed and regulated on AIM and the Company's
ordinary shares are also available on the Quotation Board of the
Frankfurt Stock Exchange (FWB) under the symbol FWB: SAV, and the
Börse Stuttgart (SWB) under the ticker "SAV".
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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