Well I’ve been waiting to do an updated blog on SAV for a
few weeks now, but wanted the uncertainty to slip away before commenting. I
also wanted confirmation that Bergen has been cancelled and what it had been
replaced with. (Before going further I still have the 4p shares I brought a while
ago, but haven’t brought any since then, nor sold any.)
Today has finally provided that with a few updates from
Savannah. Savannah resources has swapped from a Bergen monthly facility to a
large share placement. From December onwards this will be much better, however
the price to get the placing away at 4.45p has caused a decent pullback from
the 6p highs (currently around 20% down from there).
It did become rather obvious this week that shares where
flooding the market and being offload, no doubt some of the placing shares
being pre-sold into the high.
I do have a feeling that the Private Investor market was
played to some degree to enable a spike to “get the placing away” more easily.
We will have more pain to come when we approach the 8th of December
and the meeting that will approve the second bunch of shares (15m).
However once this has been done from, mid December onwards,
the company should start to see a very strong revival in its share price upto
the 10-12p that the money, licenses and news justifies.
A placing was always going to happen with the cancellation
of Bergen, SAV is committed to spending over $2m in Oman over the next 24
months as a bare minimum, as well as this we have further exploration of
Mozambique, JORC and economic assessment and the administration and wage costs
to cover. We also have the initial block payment for new Block 4 in Oman. All
in All my thoughts before the placing was that SAV needs approx. $4-5m over the
next 24 months. Based on this, the current placing should see SAV through to
around June next year.
Mozambique.
We are approaching the 2nd week in December which
is when the results should be released for the final 3rd drill. This
includes the anticipated higher value strandlines.
www.icebergshares.blogspot.com/.../savannah-resources-sav-excellence.html
I have talked a lot about the strandlines etc in various posts,
blogs and tweets, including above so will not mention too much here. I still
believe firmly that the Heavy Minerals are part of a multi-billion resource
with outstanding world class potential.
Once the results are known a JORC possibly in the week before
Christmas is very possible, else David might deem it better timing to wait
until after the new year, personally I would prefer him to wait until the 7-8th
of Jan to maximise market potential.
After this time I am hoping that SAV discuss a final round of
drilling and economic scoping study for delivery March-April time. This would
open the door for a partial sale to a Big Player to take Mozambique forward and
fill the coffers with enough money to get Oman into the production stage.
Oman.
The latest acquisition in Oman, does take Savannah Resources
into the top league for Oman mining. For those that have followed SAV since
David took over and changed the name, the strategy has been widely discussed by
David. It’s to become a mid-sized 1bn+ MCAP value copper producer with an
interest in other metals. Mozambique arose due to a once in a lifetime
opportunity and was the catalyst that split SAV and ALO, with David wanting to
take advantage of the heavy mineral prospects to give a quick boost to a copper
producer.
SAV is now the majority owner of licenses in this part of
the most prolific Geological copper zone in the Oman. Zone 4 gives it several
more potential mining prospects and an old copper smelter. It also gives it
Silver, Zinc and Gold metals alongside the copper.
The plan has always been to have one, possible two, central
processing areas, with several satellite open pit mines to produce cheap, near
surface copper ore which can then be trucked to the processing sites. Due to
David’s pedigree most can see SAV having up to 10 or so open pit producing
mines by 2018 and maybe 2 or 3 by 2016. Money is readily available due to
project partners and the Oman contacts.
To sum up.
SAV is not your day dreaming commodity explorer, drilling
deep holes, moving from prospect to prospect looking for the next big drill
grades to pay big salaries from diluted raised monies from suffering investors.
It’s owned and run by managers and directors who have a
proven track record in delivery results and creating companies. It doesn’t blow
its on trumpet or talk up in anticipation of placings. It doesn’t pay it’s
directors even enough money to buy a pint down the local pub.
It will be, over the course of this decade, the fast growing
mining company on AIM, in my opinion. It needs to be fed cash (which the BOD is
trying to limit), but is essential in meeting the fast paced strategy. The
proving up and partial selling of Mozambique next year will mean the end of the
dilutions.
The placing shares will be fed into the market pretty quickly,
or kept for 6-12 months, both scenarios will occur.
The best thing about the current deal and today’s news though is the removal of uncertainty that has
now been lifted and the market can start to price in the excellence that
Savannah is both delivering and will deliver in the future.
It would have been worse if the Bergen deal were cancelled,
but no money raised, or if only 200-400k were raised. Thankfully yet again
David has shown that he is both flexible and intelligent in the way he runs SAV.
