Savannah Resources Share Discussion Threads

[ged5] 21/6/2019 15:30

And me.

Martin Steinbild

[edgein] 21/6/2019 14:50

Ged,

I think it'll come down to simple economics in the end and timing. It'll be much cheaper to ship high grade lith concentrate or lith hydroxide from Portugal than Africa, South America or Australia. Its a weak market out there at the moment and there's lots of miners that should be trading much higher. Whether it re-rates on the DFS, funding, development or even production it imo will happen at one of those stages. Portugal is going to be the cheapest source for the basic ingredient for those large car manufacturers. There is still the possibility that one of them will make an offer for the asset, a long shot, but certainly not impossible. I'm going to sit this one out no matter how long it takes.

Regards,
Ed.

[ged5] 21/6/2019 11:52

Thanks IB. So we can expect one from Finncap.

Correct Ed.

Shares Trading At Big Discount To Our Valuation

Says it all really. There's no doubt about the quality of the assets so it leads me to believe that the market has reservations about the management being able to deliver. Whether just unlucky with the regimes they have to work with or political games being played there seems to be some doubt.

Once one of these mining licences are granted I feel sure this will take off.

[edgein] 21/6/2019 11:10

Also an important point to note is that the SS NPV was based on a much much smaller tonnage, around 15-16Mt from memory. The DFS will include assays right up to recently.

Regards,
Ed.

[inbrackets] 21/6/2019 11:06

It ?as from WH

[ged5] 21/6/2019 10:49

Thanks. So we can expect one from Whitman Howard.

[rickyhatton] 21/6/2019 10:45

I believe it is from FinnCap Ged.

[ged5] 21/6/2019 10:17

Thanks for posting Ricky. Which brokers note is it?

[rickyhatton] 21/6/2019 09:16

From another poster.

"Savannah, via an issue of new shares to the vendors, is acquiring the outstanding 25% minority stake in its advanced Mina do Barroso (MdB) spodumene hard rock lithium project in Portugal. The deal, struck at 5.63 p/share, values 25% of MdB at £9.1m.

MdB’s Bankable Feasibility Study (BFS) Completed By Year End

In a July 2018 Scoping Study, a post-tax NPV of £184m, was estimated at an 8% discount rate. Since then, the company has started a BFS to be completed by year end. By drilling they have increased resources and have upgraded from inferred into indicated and measured. Analytical testing has shown that already low levels of iron are smaller than originally expected and metallurgical and marketing work has shown much greater potential for by-product revenues. However, in line with all lithium markets, the price of spodumene concentrates have fallen from the US$900/t highs seen in July 2018, hence, the conservative $685/t assumed then, is around the current price and the financial numbers in the BFS may be pulled in opposite directions.

Shares Trading At Big Discount To Our Valuation

If 25% of MdB is worth £9.1m, so 100% of MdB is £36.3m or 3.5p/share, or 70% of the current share price. 75% of the £184m project NPV is £138m, which is 13.2p or 2.6 times the current share price.

Savannah retains ownership of 20% of a Heavy Mineral Sands project in Mozambique and varying majority holdings in two Omani copper projects. In spite of little recent visible signs of progress on either, we maintain our respective £25m and £5m valuations. There is dilution with the share issues, but this is offset by the move to 100% ownership of MdB. Hence, our Savannah valuation increases to £170m from £140m, but our per share valuation slips to 16.2p from 17p.

Europe’s Most Significant Spodumene Project

This MdB deal is very good and gives Savannah 100% ownership of Europe’s most significant spodumene hard rock lithium project at a cheap price. It simplifies the company’s structure and reduces project funding uncertainties."

[rickyhatton] 20/6/2019 13:25

My guess would be that the £3m future milestone commitments had to be wiped (by the $300k payment) in order to have a clean sheet as a precursor to progress an Oman asset sale that is now very much in the offing. With imminent license granting the outstanding step to asset sale. But who knows.

There was no necessity or compulsion to make anybof of these payments that were linked to subsequent production and investment decisions, so "volunteering" these reduced "payments" at a much earlier date suggests something formal looks imminent

Another less likely explanation is that tidying this up at a reduced cost level helps progress the finance arrangement discussions for Portugal with prospective lenders.

[edgein] 20/6/2019 10:12

Ged,

What I gathered from it was the $3m payment (50% cash/50% equity) has now been reduced to $300k ($100k cash). That money saved can be used to advance MdB also less shares need to be issued ($1.3m less). Why the other party was prepared to take less can only be speculated on. My guess is and its only my opinion, is that its not going anywhere fast in Oman so were willing to take the reduced payment. So I commented on the fact that this money could now be used on better place like MdB. That could fund more exploration drilling for sure or keep the cash pool healthy until we get the bank funding in place.

Regards,
Ed.

[ged5] 20/6/2019 09:56

Hi IB, feeling refreshed after the holiday in Rome. What a beautiful city.
We may not have to wait too long before those moving parts converge.
A billion shares now so we need the expected news to be announced soon to justify the market capitalization. Hope all is well with you.

10p could be sooner FQR. I've seen mkt caps of nearly £200M in other companies with far less proved assets, so you never know!

Couldn't agree more Ed although I've not quite worked out the full significance of the Oman part of the announcement.

[edgein] 20/6/2019 09:27

Good to see this expected acquisition complete. I'm sure the European banks would prefer to see SAV being the masters of their own fate with 100% of the project now tied up. At least the focus and money is now going towards the most advanced asset rather than towards Oman. Being the starting point in the European lith supply chain shows the importance of MdB to Europe, they're gonna need the lith hydroxide to supply those large battery factories. Time soon for the ECB or large car manufacturers et al to step up and show us the money.

Regards,
Ed.

[fqr714bhp] 20/6/2019 08:33

There is your RNS this morning.

Well timed, bought some more yesterday at 5.05p

Looking better by the week here.

Roll on end of 2019 with any luck this will be 10p

[inbrackets] 19/6/2019 10:24

Hi Ged, hope all well. With all the moving parts, it doesn't sound as if all will slot into place immediately but there is no doubt that we shall be centre ground of Li raw material supply in Europe. RT would seem to have given up on Serbia for the time being, and it looks to me that EMH and BCN smell the chance of EU funding to plug gaps that would otherwise to too cavernous to bridge.Glad see that SAV are looking to put their hands up at the coming auctions and let's hope they are there at the hammer for the nearby lot. Portugal gov need to detail their plans a little more and I hope this comes as they launch their auction in the next week or so as this would be timely.Meanwhile, summer well in expectation. Even an elephant would have given birth by now.

[ged5] 18/6/2019 08:19

We should have an RNS later today to confirm the purchase of the other 25% of Mina do Barroso and the issue of 163M shares.

Those who attend may find time to have a chat about latest developments. Unfortunately busy today.

[ged5] 14/6/2019 09:53

Thanks for posting that link, Deacon.

I thought the most relevant part to SAV was the following extract:-

We have identified with the Member States that there are 10 potential mining projects for lithium that, if developed, could allow the EU to move from 1 to 30% of the world production by 2030.

In the case of battery raw materials, we can see commercially viable projects not securing financing even when fast track permitting process, high sustainability standards and the public acceptance are all secured (e.g. lithium projects in in Portugal and Finland).

We therefore need our European Investment Bank to become more fully engaged in raw material projects in exploration, mining and refining – and linking it up with the circular economy (with secondary raw materials), where our competitive advantage lies.

Things are moving: the European Bank for Reconstruction and Development (EBRD) is preparing a EUR 60 million Exploration Investment Facility. Similarly, the World Bank has launched a Climate- Smart Mining Facility.

Yet another mention of possible available funding.

However in the article tweeted by SAV:-

Galamba also confirmed an auction for lithium exploration in Portugal will launch at some point this month.

"Our goal was to significantly strengthen the environmental component," he said. "The most important component of all is that the granting of future concessions is conditional on the construction of a lithium refinery in Portugal, or linking up with a refinery."

Officials have said various international groups have expressed interest in exploring for lithium in Portugal, which is the world's sixth-largest producer and Europe's biggest.



I thought the auction for lithium exploration was going to be in May. Surely not another government dragging its feet! No wonder the share price is at this ridiculously low level.

[paleje] 14/6/2019 08:32

Good article Deacon.

Elon Musk Was singing the same song about under investment in battery minerals yesterday:-



Elon Musk said that Tesla “might get into the mining business” to increase its access to lithium, which is used in rechargeable electric car batteries.

The billionaire chief executive told shareholders on Tuesday that the company would do “whatever we have to” to grow at the fastest rate possible, but that there was no point adding new models without enough batteries: “That is complexity but without gain.”

Tesla, founded in 2003 and one of America’s most valuable carmakers, specialises in electric cars with self-driving features. Growing demand has led to a boom in lithium mining. Western Australia has gone from having one mine to seven, making the country the world’s biggest exporter of the silvery white metal. Tesla’s huge Nevada factory was designed to increase the global supply of electric cars and so reduce costs, but a lack of investment in lithium has convinced Musk of an upcoming global shortage.

[the deacon] 12/6/2019 15:38

Speech by Vice-President Šef?ovi? at the European Investment Bank (EIB) Board of Directors' meetingLuxembourg, 12 June 2019Dear President Hoyer, dear Vice-President McDowell,Dear Board members, dear working group participants,It is a pleasure to be able to address you today.This, as I understand, is a first-of-a-kind meeting and I very much welcome this initiative.I take this as a recognition that our partnership in the field of batteries - and, more generally, the Energy Union - is bearing fruit.The time is indeed ripe to discuss what lessons can be drawn to ensure sustainable industrial value creation in Europe, by supporting the shift to a climate-neutral - and circular - economy.Europe is facing unprecedented challenges that require a renewed alignment of our policies - that of the Commission, the Member States and the European Investment Bank.These challenges are not new, but time is accelerating:Climate change – to achieve a net-zero greenhouse gas economy by 2050, public and private investors will need to invest massively into innovation. The scale - and speed - of investment needed mean "business as usual" is no longer an option (we need a multilevel and joined-up approach with the private actors).Global competitiveness – we are living in turbulent times. Our post-war multilateral system is at risk; there are threats of trade wars and an ever-competitive China looking to challenge Europe in our areas of leadership, such as the automotive sector. We need to prioritise sectors that are strategic for Europe and their value chains.Last but not least, access to critical raw materials – Europe has mainly relied on the market to resolve the access problem. However, we are witnessing China is using its abundant financial resources to capture third market sourcing: It is thereby locking users into new dependencies, and from there aggressively moving up in the value chain.So, resource security - in our case "vulnerability" - is becoming a rising political, economic, industrial / technological and environmental issue. We therefore need to be more pro-active in defending European interests here, and on the global stage.We are thus witnessing changes impacted by new geopolitics, technological shifts and sustainability requirements that call for strategic approach to industrial policy. We in the Commission will propose an industrial blueprint to the leaders by the autumn.In this context, the European Battery Alliance (EBA) has been considered as the perfect testbed for our new industrial approach. And the co-operation with the Bank has been an essential pre-requisite for its success.The EBA was set up a year a half ago, and made operational at lightning-speed as a collaborative platform with and for the EU industry.It has acted as a real catalyst ; our industry has taken an indisputable lead, it has announced massive investment throughout the value chain (Innoenergy estimates 100 billion euros), and agreed on ambitious industrial targets :to reap the benefits of an annual market of 250 bn euros a year by 2025 (according to Innoenergy),to capture a great part of the 400 GWh forecast demand in Europe by 2025,to ramp up production and build 15-25 gigafactories (lithium-ion cells manufacturing) on our territory, so as to catch up with - and even supersede - our Asian competitors.To support the industry, we have deployed a comprehensive framework (you can refer to COM Strategic Action Plan) - with:robust policies (climate, energy, mobility targets and packages),enhanced support for research and development (Horizon 2020),a project to identify skills needed by the sector,mobilise all available EU funding and financing,and developing a regulatory framework to establish high-level performance and sustainability criteria for placing batteries on our market - together with provisional standards (with the EU standardisation bodies).By sustainable battery production I mean: extraction with the highest environmental and ethical standards, production with the lowest carbon footprint possible, bidirectional electricity flow (vehicle to grid), battery re-use and recyclability of materials.Equally importantly has been the partnership with Member States and regions.When it comes to IPCEI (Important project of common European interest), I have worked very closely with France and Germany. Both are leading the way with transnational innovative projects. The recent announcement by both countries of their willingness to support a joint EUR 5-6 billion project to develop battery cells manufacturing is a strong signal of national commitment to the Alliance objectives.This is only the start, as you are most probably aware. This commitment is being shared by other Member States with participation from Poland, Belgium, Sweden, Finland, Italy and others.More projects are coming. With European OEMs now on board.It looks very likely that this will lead to notifications of some Important Projects of Common European Interest (IPCEIs) in the forthcoming weeks.We have also set up a smart specialisation partnership with 26 regions (from around 10 countries, still expanding), to develop joint projects in sustainable battery production and recycling. Important grants are being utilised (through ERDF).In the EU Battery Alliance, the cooperation with your Bank has been exemplary. And I must really thank Vice President McDowell for driving this agenda.We want to continue. It is crucial that the Union's budgetary instruments and the Bank's lending activities both pull in the same direction.In this context, I welcome our cooperation in the framework of the European Fund for Strategic Investments (EFSI).The recent progress of the InnovFin - Energy Demonstration Programme (EDP) is very good. This instrument has definitely served as a breeding ground for innovative energy projects, including battery pilot lines.As you know, InnovFin EDP has played a particularly important role in the Alliance, by financing the first Northvolt lithium-ion battery demonstration plant in Sweden.Northvolt is a first-mover. This first support has allowed it to move towards their goal of building the first battery cell gigafactory in Europe.For Northvolt production stage, 350 million euros of additional financing from the European Investment Bank via EFSI (guarantees) has recently been secured by your Board.This is a remarkable achievement – for which I commend you - and the outcome of excellent EIB-Commission teamwork.I can testify that this has served as "stamp of approval" to crowd in private investment into the project.And this approval is also starting to act as spill-over on other segments of the value chain (several sustainable lithium projects are now being developed thanks to Northvolt secured financing).I would also like to mention the establishment of the Breakthrough Energy Ventures Europe (BEV-E) Fund under InnovFin.For this new vehicle, the European Commission and the European Investment Bank have worked together – against the clock - to accelerate the cutting edge (i.e. high-risk) innovation in clean energy technologies here, in Europe.Finally, our partners, through EIT InnoEnergy, again with the support of the European Investment Bank and the Commission, have designed a Business investment platform for Batteries.The aim of this Platform is to accelerate financial transactions ("deal flows") between industrial projects and investors (public, private).The Platform will support projects of different sizes and needs (grants, loans, blended finance etc.) depending on their maturity and nature: innovative products, demonstration, industrial deployment, Important Projects of Common European Interest, etc. It should be launched on 25 June.But the work is far from complete. We still have a major gap in the battery value chain: I would like to address the critical issue of access to raw materials.Without undertaking its own exploration, the EU will have no mining projects. This, in turn, means no refineries and, without refining capacity, the EU will continue to be in great part dependent on foreign supplies of high quality materials.In a nutshell: we cannot sit idle while China is taking control of all the supply.Our companies have the world most innovative processes and apply the highest environmental and social standards – they can make a real difference on the ground in resource-rich countries.But they also need more de-risking from public investors.Concerning battery raw materials, current EU mining production represents a very small portion of global levels: 14% for nickel, 8% for cobalt, 1% for natural graphite and lithium.And refining is completely missing in Europe for the latter – which means that even if we were to ramp up production for batteries – as planned – for 2023/25 and invest in extractionactivities, we would still need to ship lithium to China and back for refining !Unless we develop our own capacity.We have identified with the Member States that there are 10 potential mining projects for lithium that, if developed, could allow the EU to move from 1 to 30% of the world production by 2030.In the case of battery raw materials, we can see commercially viable projects not securing financing even when fast track permitting process, high sustainability standards and the public acceptance are all secured (e.g. lithium projects in in Portugal and Finland).The US, Canada, Australia are investing massively in this segment of the value chain. And China is acquiring companies single-handedly around the globe.We therefore need our European Investment Bank to become more fully engaged in raw material projects in exploration, mining and refining – and linking it up with the circular economy (with secondary raw materials), where our competitive advantage lies.Things are moving: the European Bank for Reconstruction and Development (EBRD) is preparing a EUR 60 million Exploration Investment Facility. Similarly, the World Bank has launched a Climate- Smart Mining Facility.The idea is to develop a portfolio of projects, which, by their nature, are risky – and have longer return on investment (mining project can take up to 10-15 years from planning to production).There are three remaining challenges that I would flag for discussion:Completing the value chainI would like the European Investment Bank, as the Bank of the EU and a leading world finance organisation, to look constructively at ways it can engage in this upstream segment of the value chain.This might be worth discussing with our services and other international organisations.We must look together at "how" to pay attention to both our carbon and material footprint.Identifying other key strategic areas / value chains for this joined-up approachOur joint work is strategic and proving instrumental in accelerating the take-off of these innovative European sustainable, innovative and competitive projects.I understand that more battery and energy storage projects are currently in the pipeline and I very much hope to see them materialise in the near future.I would not want to give the impression that batteries – however important they will be – are the silver bullet in the clean energy transition. For areas where electrification will remain difficult and/or costly, hydrogen is for instance, also a strategic supply chain. I hope to take this political work into the next Commission.Other key areas / technologies (beyond energy storage) should benefit from this collaborative approach: cleantech, the circular economy, 5G, IoT, supercomputing, 3D (metal) printing, to name but a few.Focusing on scaling up support for high-risk projects within the next MFFWe are looking forward to continuing our work with the EIB as our strategic partner to roll out our investment programme through: InvestEU and other instruments such as the Innovation Fund and the European Innovation Council.It is of utmost importance that we not only cover a strategic range of sectors but also the entire innovation cycle, from research and development to demonstration operations, the transfer and scale-up of innovation results to the market.We have started with pilot projects; with Northvolt financing we are showing that we can – and should – scale up project finance. To incentivise, leverage and de-risk private investment at the right scale and speed.As we move up to the commercialisation stage, we need to develop further our risk-sharing instruments. Investment platforms could help in that regard – we should make them as lean and agile as possible.To sum up, the European Battery Alliance has been at the forefront of our new industrial policy : by linking up EU's climate ambition with our joined-up investment and innovation agenda.At the core of it lies our two institutions' strategic partnership.I am keen to hear your views as to how to take it from here.Thank you.

[fqr714bhp] 12/6/2019 13:07

Who is the person who keeps dumping shares??????

LOL!!!

[greatfull dead] 12/6/2019 08:37

Busraker,

Excellent summary of your thoughts.

This IMO could get SAV nearer re % of funding for construction of lithium hydroxide plant from the EU.



ATB,
GD

[busraker1] 11/6/2019 19:07

Thanks - Yes, Northvolt is significant. There's lots of pretty pictures in the latest presentation from Infinity Lithium that shows the development in Europe of the whole supply chain - www.infinitylithium.com/presentations

[inbrackets] 11/6/2019 18:50

Interesting piece Busraker and thanks for putting your thoughts down for many to agree and learn from.Just seen a message to say that NOrthvolt have apparently managed to get its E1.5bn financing package in place with backing from VW and Siemens. Could be significant .

[busraker1] 11/6/2019 17:32

Thanks Deacon. Hope it goes well. There's lots of apparently 'bottoming' share price patterns across lithium companies globally.

[the deacon] 11/6/2019 16:57

That's a great post Busraker1, and I certainly agree. Thanks for sharing your thoughts. I've been picking up some of the bombed out majors over the past week or so. Particularly ABL, which is slowly regaining some traction. GL