Savannah Resources Plc ($SAV)

Ladies and gentlemen, we warmly welcome you to the roundtable of the Savannah Resources Plc. I am pleased to welcome the CEO, Emanuel Proenca, who will guide you through the presentation in a moment, after which we will move on to a Q&A session via audio line and chat. And with that said, I'm handing over to you, Mr. Proenca.

Thank you very much, Mara. Hi, everyone. A pleasure to have you all here. I imagine this is a first for many of you in relation to Savannah. And so Asa and I will try to go through the basics of the project over the course of 15, 20 minutes and then be open for questions or for further engagement in the future through our e-mail, through our website, LinkedIn and so on or directly. So let me tell you a bit more about Savannah, the company and the project that it has as it is tremendously exciting for us, and we certainly believe that you would like it too. The purpose of the Barroso lithium project, that's our main project and single relevant assets today is to develop Europe's largest spodumene project. For those who don't know, spodumene is the basis of lithium. And lithium, as Asa will explain, is the new white gold as many have referred for the importance it has in relation to the batteries that are transforming a set of sectors as we enter this third decade of the 21st century. And so it is a very important resource, one that is not as abundant as people would would like and one that is significantly less abundance inside European territory. Savannah is a company that is listed on AIM on the London Stock Exchange. It has been listed there since its inception. It has been working this Barroso lithium project in Northern Portugal here, as you see here in the map, so right at the top end of northern of Portugal, to Western Europe. We've been working this project for almost 10 years now. For those who are familiar with the minerals industry and the mining industry, it is very frequent that projects take very long to develop and to prove their geology, prove their mineralogy and prove their value and worth. And it's only then after these many years that things really accelerate. And we are at the stage in which things have accelerated. We are preparing a definitive feasibility study, and we're preparing then to start construction of the project. The company today trades at about EUR 150 million, EUR 160 million, GBP 140 million equivalent. And its register includes already a set of important names that are very strong support to the project, a set of Portuguese family offices and industrial players. AMG Critical Materials that some of you may know, Dutch German company listed on the Amsterdam Stock Exchange, owner of another smaller mine in Brazil, owner also of a first refinery in lithium refinery in Germany and long-term holder [indiscernible] and many institutional investors amongst which you count some of the best European funds that are specialized either in mining or in battery raw materials, in batteries or are just generalists who understand the potential of the project. Also others who do understand that potential are some of those that already cover the story, Alantra, CaixaBI, Canaccord, Espngel, you should probably know 1 or 2 of these brokers and research houses. Back to the fundamentals of the project. Europe's largest spodumene lithium deposit, so Europe's largest source of lithium preparing to build at this stage. We're targeting DFS now in the summer, full funding closer to the end of the year and first production in 2028. And we already have strong support by a set of relevant entities to do this path. One of them is the German state through Allianz Trade, [indiscernible] Hermes and the KfW who have confirmed their interest in supporting the project with a loan guarantee of up to $270 million or more recently, now in January, the Portuguese state on the back of European support that confirms that it awarded a grant of EUR 110 million to Savannah for support to the deployment of the project, the more capital-intensive phase of the project. It's a European Commission strategic project. It has sufficient lithium mapped out now already for more than 20 million electric vehicle batteries. This is fully electric vehicles, not plug-in hybrids. But it also has plenty of additional potential that will be worked over the course of the next years. And it could, at some point, get us to over 50 million EV batteries equivalent. This is very significant. We would be talking about fully electrifying the full fleet of countries like Portugal, the Netherlands, Belgium and 1 or 2 other midsized countries in Europe by ourselves, 100%. So it is a very relevant source of the feedstock that is needed to accelerate the battery value chain, be it in Europe or elsewhere in the world to support a smooth and solid energy transition. Now Asa, do you want to tell us a bit more about why this is relevant and useful and why lithium is at the heart of this transition?

Yes, sure. Thank you, Emanuel, and good morning, everyone. Yes, I mean, obviously, what's happening currently in the Middle East with the Iran conflict has sort of shown a fresh light on the role that lithium can play as this critical material. We've seen now for some time. Obviously, we have the -- this was highlighted by the conflict in Ukraine as well that we have, particularly in Europe, an issue here with supply chains with hydrocarbon-based energy supply chains, which we are rather at the mercy of. And we've got to reorientate those towards a more autonomous system as well as a cleaner system, and lithium has a massive role to play in that. So as we all know, it's already happening, we need to move away from those hydrocarbon-based energy supplies. We need to introduce more renewable. We need to shorten those supply chains. We need to remove internal combustion engines from the roads in our cars and other vehicles. And we've got to introduce this massive electrification. And the great news is this is happening, and it's accelerating and lithium is one of these critical raw materials, which is going to be crucial in this role. Already in Europe, we saw last year the sale of over 4 million electric vehicles on the roads, for example, we've seen massive growth in battery storage as well. So the demand is there. The economic drivers are there. the societal drivers are there. And lithium is absolutely crucial to that. And you can see there at the bottom right-hand side, the sort of scale up in demand that we're expecting here in Europe as well as globally. So it's going to be a very competitive marketplace for lithium going forward. If we just look at the lithium market in a little bit more detail, what we've got here on the left is a supply and demand chart, demand in the bars and supply in the gray line here. And it doesn't really matter whose numbers you look at, who's forecasting is everyone is sort of saying the same thing that supply going forward over the remainder of this decade and into the 2030s is going to be extremely challenged to keep up with that demand principally coming from batteries for all of their uses, whether it's in transport or whether it's in stationary storage. We're due to come online, as Emanuel has said, in 2028. And at that point, the market is really getting seriously quite tight. The expectation is for higher prices. We've seen how quickly prices can move in this market. It is a very small market. Things can happen very quickly. We've seen a 300% rise in prices just in the last 9 months because demand has been strong and supply has been slightly curtailed because we had -- previous to this, we had a period of lower prices, which was not incentivizing new supply. But going forward, as I say, EV sales are strong. Battery storage system demand is extremely strong, certainly outperforming most forecasts there. We've obviously got the massive rise of data centers and other potential uses of batteries and battery storage. So there's great news on the demand side. Supply is always the challenge, as Emanuel says, getting new mines up and running is a challenging business. But Europe knows it needs to do this itself so that it can be autonomous in providing these raw materials into these critical supply chains. Other areas have geopolitical risk, which, unfortunately, Europe doesn't suffer from. So overall, the situation from a perspective of a company like Savannah's coming online, as I say, in the late 2020s with a responsibly managed clean product is very favorable. Looking at our project in detail. So this is up in the Barroso Hills of Northern Portugal, as Emanuel has explained. We have 2 mining licenses, the area in red and these blocks in orange are mining license, existing mining licenses. That's very important because it means that mining is the priority land use in those areas. All of these colored dots that you can see are where we've done some drilling to identify the lithium mineralization in the ground. We've done about 50,000 meters of drilling over the time we've been working on the project. And that's established, as Emanuel said, Europe's largest spodumene lithium resource at 39 million tonnes. In 2023, after we've had a project design approved by Portugal's Environment Agency, we produced a scoping study. That was based on an average price then of about $1,500 per tonne of spodumene. At the moment, we're trading at about $2,400 a tonne, so significantly more. And that was based on a resource of about 20 million tonnes, producing about 190,000 tonnes of this spodumene concentrate a year. Now that contains enough lithium in it for about 0.5 million vehicle battery packs each year. So that gives you a sense of the scale. It's a very competitive project based on costs. We're in the second quartile of the global cost curve because there are a lot of advantages of operating in Western Europe. We enjoy good infrastructure. We've got labor readily available. And this is a very sort of cash-generative project, assuming that prices are going to remain at current levels or certainly at the price that we had at the time of the study. Breaking even at $600 a tonne is a very competitive and enviable situation. We don't expect spodumene prices to be back there anytime soon. But that means that it's a very robust project. And the idea is to confirm all of these figures in the definitive feasibility study, which is coming up over the summer. And just to sort of drill in a little bit. So the plan is to build a processing plant on site. This is on the eastern side of the project. And it's a very simple conventional project. We'll be mining open pit because the mineralization occurs from surface. So we'll be drilling, we'll be blasting, we'll be excavating, putting that ore in trucks and bringing it to the central processing plant where it will be processed in a very conventional way to produce the concentrate. That concentrate will then be trucked to the north up a new road to join to the existing road infrastructure of Northern Portugal, which means we can get down to ports in less than 2 hours on the Atlantic Coast. The waste will be stored on site and then can be used for rehab. But it's a very conventional, confined, restrained, responsible design using off-the-shelf technology, which is very well established in the lithium mining industry. Emanuel, I think I'll hand back to you here to talk about our team.

Let me reinforce the point that you referred Asa in relation to the whole project because I -- given that we're speaking to a Central European, mostly German audience, I would guess that you will have seen other or heard of other projects. In lithium, it is very important to be either in the spodumene or in the brine space. And brine is Latin America, spodumene is Australia. If you are in one of those, you are in a tested technology in a tested set of environments at scale that has proven to be able to deliver 45% to 50% of overall global volumes at this stage. The volumes that serve the lithium markets today come from 1 of the 2 options. and we are very fortunate to be in one of those. So we are not in lepidolite. We are not in Jaderite, in involdite in other petalites. We are not a DLE project. So it is high quality. It is easy to process. It is well tested. It is very economically efficient and the ramp-up is solid and easy to do. Of course, the optimization, the 1% to 3% optimization is the matter of years of work, but the base of profitability of a project like this is deliverable at scale, and that is very important. Now given that we have these few minutes to go, I'll go through these slides, but I have already seen a few questions pop in. Please do continue to pop them in, and we'll answer all of them afterwards. Just a side note to tell you that the team is now close to 40 staff, mostly in Portugal and on site, but it's a mixture of people that are very seasoned in mining and very seasoned in lithium. And it includes a set of experts either from the Australian or the U.K. markets that have come to support. On the community side of things, a few years ago, we have issues. The company was way more international, way less local, and that took a toll. Today, we are part of the local community that we love and that we like to be part of, that we like to engage with and with whom we do plenty of interesting things. Only in the last couple of months -- 2 months to be more precise, we signed more than 5 MOUs. I think we're into the seventh now. with key local entities to do specific things that tie the project incentives to the local community incentives and that are based on the trust that we have already built and that will make the project even more interesting for the region than alone. On the time line, again, a set of key milestones to be delivered over the coming months, starting with the DFS now in the summer. So I will not leave for holidays without the DFS done. And obviously, the goal would be to get into construction at the start of next year, which means a project finance closer to the end of this year, a set of partnerships that will support that project finance, both on the debt and on the offtake sites are to be expected and then construction for 1.5 years, and we are into production in '28. Back to you, Asa, on how this usually translates into valuation.

Sure. Thank you. Yes. So we're on a journey, as you would expect here, and it's a well-trodden path. The chart here is looking at lithium company valuation as market cap as a proportion of underlying project value as defined by various brokers. And as you can see here, Savannah on the left-hand side, we've completed the scoping study we talked about in 2023, and we're going to complete a feasibility study later this year. As you can see, as you move along this development journey through the feasibility study stage and into production, the market rewards you with a greater proportion of your underlying project value. So between ourselves and the group that have completed their feasibility studies, there's roughly a doubling in valuation at the moment, which is potentially there. And then moving into production, as you might expect, you're getting companies who are seeing nearly their full project valuation or even in certain cases, a little bit more than their project valuation in their market caps. And that's where Savannah is aiming to go. So there's significant opportunity for value creation, first of all, during the remainder of this year and then into next year as we move into construction and then eventually into production in 2028. And of course, the whole group can see further valuation uplift from increasing pricing or improving investor sentiment towards the whole sector as we're seeing at the moment in the light of what's happening in Iran and what light that's throwing on sort of, as I say, the hydrocarbon supply chain and the need for sort of mass electrification on a global basis. So yes, there's a big opportunity for Savannah to add value, both in the near term and in the medium term. Emanuel, back to you.

Thank you, Asa. Let me pause before I finalize and go through the questions and maybe that will be easier. So Sven, you asked how we generally see our position relative to competitors. And I think that part of the presentation has dwelled into that. But you refer 3 companies, and I would like to position versus the 3 specifically. So -- in relation to Rock Tech, for example, a German company, Rock Tech would mostly be a client of us. They have the refinery, we have the mine. And Europe certainly needs to have refineries. It will not have solid refineries unless it has feedstock. And we have engaged at length with all the companies in Europe. And so Rock Tech is certainly one of them. I have very good appreciation for what the CEO and the team are doing, and we keep track of each other, but they would be clients on the refining side. They do have an exploration project in Canada, but it's very far from production yet, and it is significantly smaller than our project. So I see them as clients. AMG, the same. AMG has an operating finishing, hydroxide finishing refinery in Germany. They are part of our shareholders, as referred. And they are also an offtaker already. So the first deal that we struck -- the commercial deal that we struck 2 years ago was with AMG Critical Materials for the supply of about 1/4 of our production into their own system, which was good back then. It was the most advanced refiner in Europe with the vast lithium resource working together. And over the course of these years, we have kept working well together, and I firmly believe that one of the pillars of the European battery value chain is being built together. Now our project is bigger than that. So 1/4 of the production with them is already a starting point. We have the ability to feed other companies. [indiscernible] in Finland is getting into production right now. Rock Tech will eventually get there. We have been working with South Koreans, Americans, Chinese, Australians and a few others. So there are plenty of interesting opportunities on where we can place our product. The last name that you refer is Zinvault, and I do not compare to involt. Zinvault has a resource that is a zinvolight. That's a different mineral. The grades are much lower than the spodumene grades and grades in particular. And the resource has its own challenges, its own obstacles. And I can tell you that at this stage in the world, there are plenty of spodumene projects that operate even in the most harsh competitive environment. Ours will be one of those. But in [indiscernible] is not something that has gone to scale yet and it's something that is particular of that specific region of the world. The other question from Patrick is, do we already have supply agreements with battery manufacturers or OEMs. And I think I have partially answered, but to provide a bit more color, in the discussions that we are having right now with potential partners, you see a mix of companies. You see amongst the biggest refiners in the world, some cathode material producers, some battery producers, some OEMs. I cannot disclose names yet, but I can tell you that it is normal for a project like ours, and it was very conscious of us to keep offtake available for this stage of maturity. So now that we are at DFS, we can do harsher due diligences with offtakers and potential partners. Now that we are at DFS or close to DFS, we can also tell clients that we will have our production ready for them at year and month and day why with specifications [indiscernible]. And so the discussion becomes much more interesting than it was 2 years ago and much more complete. And hence, the reason why these supply agreements have stayed as a idle front until now. Over the course of this year, we will certainly strike at least another deal on top of the deal that we have struck already with AMG Critical Materials. And again, I cannot share names at this stage, but you would see some of the most exciting companies in this space in the world in the list of options with whom we are engaging. So I'm particularly excited with what can come out over the coming months. These were the 2, 3 questions that we have in the Board. Let me know if you have any others, but if you don't, I will also maybe get you through the next 2 slides and into the final conclusion. So we believe that it is a good moment to look at a project like Savannah. There are no other projects like this in Europe. Europe would need a few more and ideally would have a few more. We hope that we'll be able to not only deliver this one, but potentially grow it in the future. So there is very positive momentum both in relation to market sentiment and in relation to how the register at Savannah has progressed the fact that AMG, key Portuguese investors and sector specialists have come in, in the last 12 to 18 months does signal that growing strength. The Portuguese government and EU support is also something very important. And lithium since June is up by more than 300% on the spodumene side. And so certainly, we are in a very good position or in an increasingly better position as we speak. And Savannah is kind of a hidden project in the globe because it is listed on AIM and not listed on an ASX listing or on a listing that is closer to some of you that usually invest in Central European markets such as the DAX or Euronext or others. There is a clear value opportunity today. And the next 2, 3 years are the years in which you do major derisking milestones. And with that, usually valuation goes up. Third, there is no other strong EU competitor, but this is not something that we say out of pride. I would prefer that Europe has a few more options, but it certainly means that we could benefit from some tailwinds. More important for us is that we have a project that is competitive at a global scale. So I don't want to be in a project that depends on EU support and on particular legislation that would benefit us. I think that those elements of legislation will come with time, but I want to make sure that this project is successful, is bound for success at a global scale, and that's exactly what we have. As Asa referred, it is a project that can deliver products very competitively. So if for any circumstance, we would need to ship our product from Portugal to China and back to Europe, for example, we would still be adding a lot of value to both our shareholders, the local community and other stakeholders. DFS is now funded. Post-DFS work streams are already ongoing. We bought the second concession Alda in December, and that means that Europe's largest project becomes even larger with plenty of interesting synergies, and there is still plenty of room to grow the resource. And last but not least, if you would want to find out more about Savannah, you have a few references there. Do join our mailing list or follow us and do visit us in Portugal. It is very pleasant here now. And over the coming weeks and months, it will be the best time to visit the country. The country side close to us is very pleasant. Food is amazing, and you will already be able to see a few interesting things on site. Did we cover...

Thank you so much, Emanuel. We actually do receive one other question. He's asking, could you clarify on how the Portuguese government loan you received earlier this year fits into the overall project financing and what other developments are currently taking place in the battery value chain in Portugal and Spain?

Very good questions. It's 2 very good questions. For the first one, let me try to make it as simple as possible, and I can elaborate afterwards offline. It's EUR 110 million out of which about EUR 80 million come as we build. So as I do construction and invest into construction, part of that money is refunded on a 3 or 6 months rolling set of periods. And so the money will come and help finance the main step of capital deployment that we will have. On top of that grant that obviously helps us. we will be building a project finance that we're working on and expect to have concluded closer to the end of the year. Receptiveness of commercial banks and other potential lenders has been quite good to date. And so I hope that things continue to unfold positively over the course of the next months. And then we either do other instruments such as prepayments on offtakes or we add an additional equity portion to the table. I would say that probably the answer will be between both. We already have a register that strongly supports the project. So I know that some -- that most of them are planning to support in a subsequent raise should it exist before the end of the year. But we have also seen interesting receptiveness by others who are willing to join the project. So I would hope that you guys also are excited about it. This is one. The second question was around Iberia and around what we see in Iberia. Lithium has been a topic of discussion for many years in Portugal because of our project, but also because of others. And in Spain, you also see a lot of developments closer to the mid-stage of the value chain. So to give you a few examples on top of our mine, there are a few other smaller -- significantly smaller mines in development, one Lagoa just by us, another one [indiscernible] north of us by about 80 to 100 kilometers. They are smaller, but I think that at some point, they will be very important and interesting additions to our ecosystem. And so we're happy to have them there. On the refining side, AMG Critical Materials has said that it is planning to look into building a refinery with -- in Iberia at some point, certainly after we enter into production. We already have a plan for another refinery in Southern Portugal with Northvolt and Gulf that one did not go through. And at this stage, we also have lithium, a family-owned chemicals group that is preparing to build a hydroxide finishing facility like AMG's in Central Portugal. So a set of developments on refining. And then on the cathode materials space, you have Hunan, the Chinese [indiscernible], you have Topsoy, the Danish in Southern Portugal. And on the battery side, you have from PowerCo in Northern Spain to the global leader, CATL in Southern Spain to the global #4 CALB building a big project in Western Portugal. So a lot of movement there on top of the vehicle side of things. In Iberia, 1 of every 5 European cars, European produced cars is produced between Portugal and Spain. So the vehicle industry is a very big industry and one that certainly will want to develop and to transform into electric vehicles. We have started seeing that with the Volkswagen plant in Portugal, the Stellantis plant in Portugal, the Iveco plant in Portugal and some other plants in Spain. There are new developments that can lead to additional plants. So there is a lot of potential movements. But for all of those to be as successful as possible, they will need to have a source of lithium as close as possible to them, and that's us.

Well, in the meantime, we have not received any further questions. I would say we, therefore, come to the end of today's roundtable. Thank you for your interest in Savannah Resources Plc. If you have any further questions at a later time, please feel free to contact Investor Relations. A big thank you also to you, Mr. Proenca and Mr. Bridle for your presentation and your time. I wish you all a successful day, and I'm handing over to you, Mr. Proenca, once more for your closing remarks.

Thank you for the invitation. It has been a pleasure to tell you a bit more about the project that excites us a lot. And again, this is just the starting point. So very happy to engage further, be it directly with your contacts after this presentation or elsewhere, we will certainly be a bit more active in Central Europe over the coming years. Thank you.

Thank you.