Savannah Resources SAV – Lifting the veil of uncertainty.

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 8^th 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 2^nd week in December which is when the results should be released for the final 3^rd 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 7-8^th 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.