Ryan Mee, CEO of Fulcrum Metals, reviews FY23 and progress on the Gold Tailings Hub in Canada. Watch the video here.
To avoid there being offers which cannot be implemented and so as to avoid the creation of a false market in the shares of the target company and, where relevant, the offeror, General Principle 5 of the City Code provides that an offeror must announce a bid only after ensuring that he/she can fulfil in full any cash consideration that is offered, and after taking all reasonable measures to secure the implementation of any other type of consideration.
In a number of instances, the City Code requires the making of an announcement and the public identification of particular offerors before the parties would otherwise wish. An announcement is required by Rule 2.2 of the City Code when, inter alia:
following an approach to the board of the target company, the target company is the subject of rumour and speculation or there is an untoward movement in its share price. This will be considered in light of all the relevant facts, for example the percentage movements of the target company’s share price. A movement of approximately 10 per cent. or a rise of five per cent. in the course of a single day may be regarded as untoward for the purposes of Rule 2.2;
after a potential offeror first actively considers an offer but before an approach has been made to the board of the target company, the target company is the subject of rumour and speculation or there is an untoward movement in its share price and there are reasonable grounds for concluding that it is the potential offeror’s actions (whether through inadequate security or otherwise) which have led to the situation;
negotiations or discussions relating to a possible offer are about to be extended to include more than a very restricted number of people (outside those who need to know within the parties concerned and their immediate advisers). An offeror wishing to approach a wider group, for example, in order to arrange financing for the offer (whether equity or debt), where a consortium to make an offer is being organised or where irrevocable commitments are being sought, should consult the Panel; or
during an offer period, rumour or speculation specifically identifies a potential offeror which has not previously been identified in any announcement. In those circumstances, the Panel will normally require an announcement to be made by the target company or the potential offeror (as appropriate) identifying that potential offeror.
Pity me. I’ve been with this stock since AME days. I’ve travelled from Mali, to Mozambique, to Onan, to Finland, to Portugal. I’ve seen DA come and go, to be replaced by DF. I’ve been to AGMs. I’ve been to Annabel’s. I’ve watched Mina da Barosa rise like a Phoenix, only to be crushed by bureaucratic delay and further submissions. I’ve walked up the mountain to 31 May and the DIA decision, hoping them to see the sunlit uplands … only to hurtle downwards into the valleys of despair. Through it all I’ve amassed over 4 million shares and dreamt of £1, 50p, 33p, 20p exits. Do I believe in SAV? Yes I do! With head and heart. Do I support the management? Yes I do! With head and heart. Do I think we can realise multiple-baggers -10, 20, 30 fold? Yes I do! With head and heart. And if Aethel want to offer 20 or 30p then that would be the very least that would tempt me. Better if it prompts a bidding war.
BUY target of 22.6p (currently 4.8p): Savannah Resources released a new Scoping Study. The updated study is a more robust project economics estimate based on a conservative set of assumptions while continuing to offer outstanding investment returns. On a conservate side, the study includes a significant provision for environmental impact mitigation initiatives (>$100m), development and LOM sustaining capex (ex closure/rehabilitation) revised by >120% on cost inflation as well as design changes and +15% capacity expansion (1.5mtpa, up from 1.3mtpa), C1 costs (incl mining, processing and G&A) up ~45%, metallurgical recoveries used 73% vs 80% previously and royalties of 4% vs 3% before. All that is more than offset by stronger lithium price outlook compared to the previous study with current assumptions using ~$2,500/con, significantly below current $4,000/con. The study confirms the highly undervalued status of Savannah as one of the best lithium plays in the market.
This marks a very significant milestone in the development of the Project and brings us closer to our goal of commencing production in 2026. It is noteworthy that this is the first favorable DIA decision regarding a lithium raw material project in Portugal. With this positive development, Savannah is now able to proceed with the environmental licensing process for the Project, which is scheduled to be completed next year. In order to meet the requirements outlined in the positive DIA decision, Savannah will promptly initiate the necessary work to finalize the Project's design. In light of this decision, Savannah is to publish an updated Scoping Study in the first half of 2023. This study will incorporate the new Project design and provide valuable insights into the economic aspects. By comparing the current long-term price forecasts for lithium, which are more than double the average price assumed in the 2018 study (US$685/t), with the economics of the new design, the study will help to clarify the financial viability of the Project. It is worth noting that the spot prices for spodumene lithium concentrate currently stand at around US$3,500/t.
Think about it. The last mine approved in Portugal took place last century - was it 1982 or 1992? Either way, ask yourself what experience there is in the APA or (for that matter) the Portuguese government when it comes to the complexities of building a modern, environmentally rigorous mine. I’d say zip. So along comes David Archer and Dale Ferguson, two Aussies who have worked together for years and have had vast experience of the regulatory procedures demanded by a mining country like Australia. Between them both, and working together, they’ve successfully brought online more than five mines over the years. Their EIA application to Portugal was no doubt best in class … and yet did APA have the institutional knowledge or experience to handle it? Of course not! And their opaque bureaucratic processes didn’t help. Finally APA has seen sense and asked SAV to engage with them: Dale will be best placed to address their concerns now, finally, SAV has been invited in via this Article 6 process. I reckon most of APA’s questions/concerns will be easily addressed by Dale and sooner than we think. This is a win-sun for APA and Portugal as well as SAV and will see Portugal get up the learning curve so as to be able properly to assess and approve mines, in readiness for Portugal to become a lithium mining powerhouse. And SAV will be in the vanguard. Expect share price to rocket. That’s my prediction… and I’m backing it with a 6m shareholding! Pin your ears back, boys and girls!
Am I mistaken, but is not this £9.5m a payment in respect of the termination of the consortium agreement? There still remains to be divested (so more cash to come in) SAVs Moz assets, namely the two concessions that SAV owned. Presumably these will be sold to Rio? If I’m right, then there’s more cashola to come in, kerchief?
• Rio Tinto has paid US$9.5m cash (the “Cash Termination Compensation”) primarily to Savannah’s wholly owned UK subsidiary in respect of the termination of the Consortium Agreement and the transfer of the in-country Savannah team to Rio Tinto (the “Transaction”).
• Cash Termination Compensation of US$9.5m cash, equating to 0.42 pence per share in Savannah
• Rio Tinto will take full responsibility for the Mutamba project (Mining Concessions 9228C and 9229C, and Mining Concession application 9230C (“Mutamba”)) with the intention to progress its
development
• Savannah and Rio Tinto intend to transfer Savannah’s in-country team to Rio Tinto
• Savannah will immediately commence the process of divesting its residual interests in
Mozambique (primarily Matilda Minerals Lda and Mining Concession 9735C)
We need to get real about our company - and not least management in getting the story out. Because I just can’t deal with this languishing share price. You might have thought with all the noise surrounding COP26 that SAV would have received a large and loud shout-out: it has the largest, near-ready-to-go, highest quality spodumene lithium deposit in Europe in a good accessible country and with plenty of potential upstream support (Galp, Northvolt, leading car manufacturers in Germany and Spain) plus seemingly governmental (Portugal) and EU support; it has an experienced tram with management having proven track record; it’s stated mineral deposit belies an even greater potential estimate once we really get started, and it’s in the box seat for more licenses (surely?); it submitted best in class environmental and planning documentation; and it offers the critical piece I the puzzle that the EU is crying out to have unriddled as regards securing battery supply for the new electric age to come. It is fully funded and seems to steward its resources wisely, … and then there’s the second string to the bow in Moz with the partnership with Rio no less! We must be only days away from the hoped for green light with the EIA and, holding thumbs, we should be mining within 12 months. What is not to like? Why is our sp not *now* at 10p in readiness for a four or five fold leap once the gun is fired? When?
All of us who are long term holders of SAV must surely be feeling it at these prices, and few can doubt the devastating effect the last placement has had. Nonetheless, I remain convinced that the company and its management are progressing things well, and that patience will be rewarded. It is clear that the focus is on lithium in Portugal: the EIS is due to be submitted in coming weeks; methinks that will answer many who might be concerned that local agitation poses a risk since everything we know about SAV bespeaks responsibility and the real cowboys in Portugal environmentally speaking are much further north. Similarly at a governmental level, though Socialists there is surprising support for the development of an indigenous lithium industry in Portugal and the EU has made clear the centrality of this too: again, methinks there is reason for confidence as Portugal, and SAVs tenement, represent the best resource in Europe to support that value chain. I have little doubt the BOD have heard loud and clear that shareholders will stomach no more dilution; but finance need not be equity and there is enough solidity to the company to suppose further funds can be raised without needing a placement - even supposing this is necessary (which I doubt) for the meeting of the stated deliverables. One expects the picture to be far more positive in a few months ... and all the while there is Moz, which has great potential, and Oman which is under strategic review (but us far lower priority). All of which is to say that I remain bullish and am still fully backing SAV.
I think it was in 2010 when a friend told me to sink some money in African Mining & Exploration. I did. I sunk $10k buying at 12p a share ... and pretty much watched it sink. Within weeks, AME was at 1p, and I gave up on it. Until, that is, David Archer took over AME and resurrected it as SAV. We left Mali, went to Mozambique, added Oman, looked at Finland, added Portugal ... and all with David showing consummate professionalism, savvy judgement (pun intended), shrewdness, wisdom and humility (for a time David was doing this without pay and having backed it with his own funds). And now - finally - lift off. I have observed him and management over the past 8 years, and have liked (very much) what I saw ... which is why by the beginning of this year I had (to my surprise) accumulated more than 7 million shares in my ISA, averaging at around 4.6p. I have greatly enjoyed the posts on this board ... and, finally, have decided to make my first post to celebrate "lift off". I hope and expect SAV to enjoy a promising future ... the lift in the SP this week is just the beginning. I have no intention of selling anywhere south of 100p. GLA.