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Savannah Resources PLC (LON:SAV), which is developing Europe’s first lithium mine, said it has been encouraged by the increased focus being placed on the environment by governments.
The company’s chairman, Matthew King, drew attention to an increasing number of governments prioritising “green” investment as a key part of economic recovery packages.
“We believe Savannah, through its ownership of Mina do Barroso … is ideally placed to play an important role in these initiatives as the foundation for a new European industry,” King said in the company’s results statement covering the first half of 2020.
The current year has seen some notable re-ratings of electric vehicle company valuations and the company has sought to exploit this improved sentiment by accelerating its own commercial discussions, increasing its engagement with the European Battery Alliance and EIT InnoEnergy, the group appointed by the European Commission for the industrialisation of the battery sector in Europe.
The company has also put greater effort into increasing government, public and community relations in Portugal, where the Mina do Barroso project is located. As a result, Savannah is recognised by key market participants as a vital upstream player in Europe’s lithium battery industry, King maintained.
To increase its focus on Mina do Barroso, the company agreed earlier this year to sell its copper projects in Oman to Australian firm Force Commodities Ltd but the company remains convinced of the prospects for its Mutamba mineral sands project in Mozambique.
With regards to the Oman divestment, the interim accounts reflect the write-down of the book value of the Oman assets in line with the appropriate accounting standards; however, the company noted that the potential for future income from the assets exists as a result of the sales agreement, which included 1% net smelter royalty payments.
The mining projects developer remains in the pre-revenue stage so it is loss-making; the half-year loss before tax was £5.47mln, versus a loss of £100,476 the year before, and includes the write-down in the value of the Oman assets mentioned above.
Excluding discontinued activities, the loss before tax narrowed to US$1.06mln from £1.88mln the previous year.
The group had a cash position of £ 1.7mln at the end of June and subsequently raised £ 2.34mln in the significantly oversubscribed placing executed in September.
“There remains much work to realise Mina do Barroso’s potential of becoming the first significant supplier of lithium raw material to Europe’s rapidly developing battery value chain; however, as I have outlined, our long-held convictions about the dynamics of this market have now been reinforced by notable shifts in sentiment by industry and politicians as well as the general public. Your board is focussed on ensuring that your company does indeed benefit from these trends,” King said.
“Additionally, the new strategy for Mutamba will help to clarify the future development path for that project which should then allow for its true value as one of the world ‘ s largest undeveloped mineral sands projects to be better appreciated by the market,” the company’s chairman added.
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