The owner of the Mina do Barroso lithium project in Portugal said in its half-year results statement that it had made significant progress in 2019 in developing the project and it now, following the recent fund-raising, has the financial capacity to finalise the definitive feasibility study (DFS) and the environmental impact assessment.
Chairman Matthew King told investors that the multiple external pressures currently being exerted on some of the world's major economies and global capital markets have meant that the first nine months of 2019 has been a challenging time for industrial commodity players, particularly for those like Savannah in the development phase.
Macro trends are beyond the company's control, and Savannah’s plan is to keep its head down, remain well capitalised and deliver on its stated goal of focusing on its exposure to the positive market dynamics forecast for lithium through the Mina do Barroso project.
Market dynamics for mineral sands are also currently positive, which bodes well for the company’s Mutamba project in Mozambique.
“Hence, our priorities remain to finance, construct and operate the Mina do Barroso lithium project, progress the pre-feasibility study on the Mutamba mineral sands project and complete our strategic review on our Oman copper projects,” King said.
King said the company is not overly fussed about the recent volatility in the lithium sector, which it regards as part of the normal ebb and flow of demand and supply over a short time-frame.
“We believe that the outlook for lithium prices remains positive in the medium and long term with demand driven by ever-tightening emissions legislation, the public's growing concern regarding climate change and the reducing cost of ownership of electric vehicles. The Mina do Barroso project gives Savannah great exposure to this burgeoning industry and we remain firmly focused on delivery of the DFS on the project in Q2 2020,” King said.
As would be expected of a company not yet earning revenue, Savannah made a loss in the first half of the year. The loss before tax was £1.98mln, versus a loss of £1.20mln the year before, reflecting the increased costs associated with the rapid pace of the company’s project developments.
Cash at the end of June stood at £3.1mln but this had increased to £6.6mln by mid-September following the recent placing of shares.
Shares in Savannah were trading at 1.93p in early deals, down from 2.0p overnight.