TIDMSAV
RNS Number : 1175D
Savannah Resources PLC
19 June 2023
19 June 2023
Savannah Resources Plc
(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the
'Company')
AGM Statement
Savannah hosts its Annual General Meeting ('AGM') today at 09:00
BST at Druces LLP, Salisbury House, London Wall, London, EC2M 5PS
(Exchange Meeting Room). Ahead of the AGM, the Company is providing
the Chairman's Statement below.
Chairman's AGM Statement
When we published our Annual Report two months ago, we had just
submitted our revised Environmental Report and Mine Plan to the
Portuguese Regulator ('APA') and its review and the public
consultation process on our proposals were underway. The subsequent
endorsement of the Project (the 'DIA') by the Portuguese Government
body at the end of May was a major milestone for Savannah. This
approval should be regarded as a significant achievement by the
Company towards its objective of becoming a major European supplier
of lithium spodumene for industries across Europe and a significant
player in the developing European EV supply chain. We will now
ensure that the conditions set as part of the DIA are met through
the final design of the Project. We have been hugely pleased by the
DIA approval, and are proud to be the first lithium project to
receive approval in Portugal. I hope it has brought similar
satisfaction and excitement for all our shareholders.
In statements to the Lusa news agency, on 31 May 2023, the
President of the Portuguese Environment Agency, Nuno Lacasta,
declared that "what was allowed to happen and what was ensured was
that this mining operation ends up being the mining operation with
the highest international environmental standards: it will be a
gold standard, that is very, very important".
Nuno Lacasta also stressed that "from an energy point of view,
the mine is important for Portugal," as well as "from the point of
view of the industrial sector. There are not many reserves in the
world. Portugal has a good reserve and it was important to ensure
the highest levels of environmental requirements and that is what
was ensured,"
My sincere thanks go to the broader Savannah team, and all our
expert consultants, for their hard work over the preceding nine
months which allowed the Company to achieve this goal. It was their
responses through the innovative design ideas, proposed following
the feedback received from the regulator and other stakeholders
through the Article 16 process, which produced the revised Project
design and operational plan that took the Company through this key
milestone. In my opinion, the new design clearly demonstrates
Savannah's commitment to developing the Project so that its
environmental impact is minimised and the significant
socio-economic benefits it can generate are shared with
stakeholders, particularly at the local level. From this new,
strengthened position, Savannah and Portugal now have the platform
from which a significant contribution to Europe's lithium-ion
battery value chain and energy transition can be made.
I would like to give special thanks to Dale Ferguson who has led
this effort while making enormous personal sacrifices to ensure a
successful outcome to the DIA approval process.
My thanks also go to Diogo da Silveira, joining us today for his
first AGM as a Non-Executive Director, who has played such an
active and valuable role in our engagement with the Portuguese
Government and media in recent months.
The subsequent release of a new Scoping Study on the Project on
12 June built on the achievement by capturing the revised,
approved, Mine Plan and presenting this alongside new, highly
attractive, economics. Shareholders and stakeholders will find all
the key facts and figures on the Project in the Scoping Study RNS,
but I highlight a few figures here which I think underline not only
the Project's attractive investment case, but also the scale of the
commitment that Savannah is making to minimise the impact of the
Project, as well as the socio-economic benefits it can bring.
Looking at our commitments to Portugal and the local community
first, based on the revenues and cash flows estimated in the
Scoping Study, Savannah will be generating over US$900m in
corporation tax and royalties for Portugal (Income tax on staff
costs from the hundreds of jobs the Project will create will add
millions more to this contribution too). The Study also includes
over US$40m of capital expenditure committed to infrastructure,
such as the new bypass road, which are not only important for the
Project, but also serve the local communities by reducing the
Project's impact, and in the case of the road, providing a new,
high capacity, access route into the area. The Scoping Study inputs
also include the EUR0.5m/year which we have committed to providing
to a new foundation, focused on funding community initiatives as
well as the approximate US$100m in closure costs, which represent
Savannah's significant commitment to the comprehensive
rehabilitation of the Project area. It is very pleasing to me that
Savannah can make these contributions and commitments to our
Portuguese stakeholders. Furthermore, it is a testament to the
economic robustness of the Project that whilst incorporating these
significant financial commitments, it can still generate strong
financial outcomes for shareholders, such as post-tax free cash
flow of US$1.7 billion, net present value ('NPV' at an 8% discount
rate) of US$953m, an internal rate of return of 77%, and has a
payback period of just 1.3 years. Furthermore, all of this is based
on an average spodumene concentrate price of US$1,464/t (5.5% Li(2)
O grade) over the life of the Project versus the current spot price
of US$3,500/t (6% Li(2) O grade).
The recent progress we have made is excellent, but there is much
more to do. Pleasingly our cash balance of GBP5.1m at the end of
May allows us to progress key work streams expeditiously.
Preparations for the final phase of the environmental licencing
process and for the completion of the Project's Definitive
Feasibility Study ('DFS') are already underway. We expect to
complete both these tasks in the second half of next year.
Another major task is to further increase our engagement with
all stakeholders so they are kept well informed of how the Project
will now progress, and how they can work with us and our engagement
team to help shape the Project's social role in the region. Through
further collaboration everyone can benefit from the long-term
socio-economic opportunities the Project will create. The Social
Impact Assessment being conducted by Community Insights Group will
also be progressed.
We have also remained in regular contact with potential offtake
and strategic partners and we look forward to focusing on the
creation of frameworks for commercial agreements which could
provide significant assistance with meeting the capital
requirements for the Project's construction. Again, we will look to
complete this exercise in 2024, so that we are in a position
towards the end of next year or in early 2025 to make a Final
Investment Decision on the Project. Assuming that decision is
positive, we will mobilise to construct the Project during 2025
before entering production in mid-2026.
Our other major task, starting right now, is to close the market
valuation gap that exists between Savannah and some of its lithium
peers. The US$953m NPV of the Project equates to 44p/share, or
approximately ten times our current share price. Our Project has
been significantly derisked by the favourable DIA decision and
other lithium stocks which have also completed a Scoping Study on
their respective projects trade on an average multiple to their net
asset value of around 0.3x. Savannah currently trades at just 0.1x,
so we will be marketing extensively over the coming months to
highlight this investment opportunity to market participants.
Furthermore, as we move through later milestones, such as the DFS,
we expect a re-rating in our multiple to the 'post DFS' peer group,
currently trading on an average of 0.5x, and the lithium producers
average of 0.8x net asset value. From the position we are now in
with the Project and given the commercial interest we are receiving
around future offtake and partnership, I firmly believe Savannah
can unlock these materially higher valuations over the medium
term.
As all shareholders will appreciate the next 12 months are going
to be a busy and defining period for the Company. We are all
looking forward to it greatly, and we are actively looking to build
out the Savannah team to meet our future challenges. I trust our
shareholders are equally excited about Savannah's future and I take
this opportunity to thank you all for the previous and ongoing
support you provide as we work to deliver the value that we believe
is inherent in our Company.
Regulatory Information
This Announcement contains inside information for the purposes
of the UK version of the market abuse regulation (EU No. 596/2014)
as it forms part of United Kingdom domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").
Savannah - Enabling Europe's energy transition.
**S**
Follow @SavannahRes on Twitter
Follow Savannah Resources on LinkedIn
For further information please visit www.savannahresources.com
or contact:
Savannah Resources PLC Tel: +44 20 7117 2489
Dale Ferguson, CEO
SP Angel Corporate Finance LLP (Nominated Advisor Tel: +44 20 3470 0470
& Joint Broker)
David Hignell/ Charlie Bouverat (Corporate Finance)
Grant Barker/Abigail Wayne (Sales & Broking)
RBC Capital Markets (Joint Broker) Tel: +44 20 7653 4000
Farid Dadashev/ Jamil Miah
Tel: +44 20 3757 4980
Camarco (Financial PR)
Gordon Poole/ Emily Hall / Fergus Young
LPM (Portugal Media Relations) Tel: +351 218 508 110
Herminio Santos/ Jorge Coelho
About Savannah
Savannah Resources is a mineral resource development company and
sole owner of the Barroso Lithium Project in northern Portugal.
Savannah is focused on the responsible development and operation
of the Barroso Lithium Project so that its impact on the
environment is minimised and the socio-economic benefits that it
can bring to all its stakeholders are maximised. Through the
Barroso Lithium Project, Savannah can help Portugal to play an
important role in providing a long-term, locally sourced, lithium
raw material supply for Europe's rapidly developing lithium battery
value chain. Production is targeted to begin in 2026, producing
enough lithium for 0.5m vehicle battery packs per year.
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".
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END
AGMSFDEFAEDSEFM
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