Yesterday, Savannah Resources (Savannah) informed that it raised £339,060 (before expenses) through the issue of 16,953,000 new ordinary shares. The shares were issued to Al Marjan Limited (new investor), at a price of 2.0p per ordinary share. The placing would be complete in two tranches. The company plans to issue 8,946,405 shares in the first tranche, and expects them to be admitted on trading on or around 22nd October 2015. Post the admission of these shares, Savannah’s total issued share capital will total to 265,730,331 ordinary shares.
Beaufort Securities view on Savannah Resources: To meet its long term goals, Savannah completed the second round of fund raising in October. The aforementioned issue of shares along with the one issued on 7th October takes the total cash raised to £564,060 before expenses. The company plans to use the funds to target early production in Oman and undertake mineral sands initiative in Mozambique. Recently, Savannah commenced with drilling in the Block 4 region, which is prospective for both gold and copper. The company has also identified a new high grade copper mineralization at the Aarja prospect and additional grades of up to 13.9g/t gold at the Salahi 1 prospect. Additionally, the company had found many potential targets, located close to the previously producing copper mines, with production of more than 190,000 tonnes of copper. In view of the findings in the Block 4, we believe the commencement of drilling would probably enhance the company’s resource base and improve its long-term prospects. We are also encouraged with the potential growth tied-up with the recently signed JV agreement with Rio Tinto. Under the agreement, Savannah will be the operator and can earn up to 51% of the combined Mutamba-Jangamo heavy mineral sands project. Therefore, in view of the continuous developments in Savannah’s major projects, we maintain a Speculative Buy rating on the stock.
Beaufort Securities acts as corporate broker to Savannah Resources plc
