JOHANNESBURG (miningweekly.com) – The implementation of prudent cash preservation measures by Aim-listed Savannah Resources last year, coupled with the securitisation of the company's Mali exploration portfolio, cash placements of some £3-million and a $5.5-million financing agreement with New York-based Bergen Global Opportunity Fund, have left the Africa-focused explorer in a “strong” financial position for the year ended December 31, 2013.

Commenting on the multicommodity company’s performance over the 12 months, chairperson Mike Johnson said in a results statement on Friday that the decision to recapitalise the company in March last year, in response to challenges facing the junior exploration sector, had enabled it to advance the exploration of its current portfolio and investigate potential new projects.

“The agreement with Bergen provides robust protections for existing shareholders based on stringent preventive restrictions around short-selling and trading volumes, and was carefully crafted with Bergen to provide flexibility in various market scenarios,” he said.

“In line with the prudent management concepts, the company has built a solid base of assets, with over £4-million in cash and equity securities at the reporting date. At May 6, the company's cash balance was £2.14-million and it held equity securities in Aim-listed Alecto Minerals worth £1.72-million.”

PORTFOLIO OVERHAUL

As part of the company's “portfolio transformation”, it sold the Mali-based Caracal gold mine to Alecto for £1.25-million worth of shares in the miner.

In March, the remainder of the company's exploration portfolio in Mali was sold to Alecto for a further £250 000 worth of shares in the company.

Following a cash investment of £500 000 in Alecto and the sale of the gold projects to the company, Savannah now owned an effective 20.9% strategic shareholding in the miner, providing Savannah with exposure to the highly prospective Kossanto gold project, in the prolific Kenieba inlier, in Mali, as well as to the Wayu Boda and Aysid Meketel gold and base metal projects, in Ethiopia.

Alecto had a joint venture with gold miner Centamin to develop Wayu Boda and Aysid  Meketel, which would see Centamin committing up to $14-million in exploration funding to earn up to 70% of each project.

Meanwhile, in October, the company acquired an 80% interest in the Jangamo heavy mineral sands project, in Mozambique, which borders Rio Tinto's Mutamba deposit – one of two major deposits that collectively had an exploration target of seven-billion tonnes and 12-billion tonnes at 3% to 4.5% total heavy minerals.

A scout drilling programme, which started within one month of the acquisition, had confirmed that the style of mineralisation at Jangamo was similar to that reported by Rio Tinto.

“With a strengthened regional exploration team in place, a highly prospective resource and defined development plan in place, Jangamo is at a very exciting stage of evaluation,” said Savannah CEO David Archer.

Further expanding its diversified portfolio, Savannah announced in April that it had entered into an agreement with Toronto-listed Gentor Resources to acquire a 65% interest in Block 5 and an up to 70% interest in Block 6 of an Oman-based copper project.

The acquisition was expected to be completed later this month.

“This project, located in the Semail Ophiolite, the world's largest and best preserved thrust sheet of oceanic crust and upper mantle, provides Savannah with an excellent opportunity to potentially evolve into a midtier copper producer in a relatively short timeframe. 

“Modern exploration has identified many small- to medium-sized high-grade copper deposits within the belt which as yet have not been brought into production. Together with our Omani partners, Savannah will look for ways to aggregate and explore as many of these opportunities as possible, with a view to providing the critical mass for constructing a central operating plant to realise the value of the deposits,” Johnson noted.

OUTLOOK

Reflecting on the 12 months under review and expounding on the company’s strategy going forward, Archer said Savannah would intensify its focus on the delineation of a potential maiden resource at Jangamo and begin a scoping study in the second half of the year to underscore the potential of the project.

It would also look to complete the acquisition of the two copper blocks, in Oman, thereafter planning to start an exploration programme.

“The company will continue to follow Alecto's development with interest and also maintains an active growth strategy aimed at expanding the company's geographic and commodity reach.

“We will also consider any asset that [Alecto] believes represents a compelling investment opportunity and complements its existing portfolio,” Johnson added.