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Option to Acquire Mining Lease Application

RNS Announcement

RNS Number : 7819B

Savannah Resources PLC

25 September 2018

Savannah Resources Plc

Significant Resource Potential Identified in Area Near Mina do Barroso Lithium Project

Option to Acquire Mining Lease Application Executed

HIGHLIGHTS:

· Acquired an option for the potential purchase of the 2.94km² Aldeia Mining Lease application proximal to Savannah's flagship 20Mt Mina do Barroso Lithium Project ("the MdB Project") in Portugal

· Follows technical and legal due diligence completed by Savannah, which has highlighted excellent lithium prospectivity focusing on a large scale pegmatite in Block A where

o Rock chip sampling has returned a maximum result of 1.53% Li₂O

o Reconnaissance geological mapping and air photography interpretation suggest a pegmatite body of up to 300m long and 25m wide is present

o The geometry and characteristics of the body appears to be similar to the 16.4Mt Grandao deposit at Mina do Barroso - potential to develop into a significant resource amenable to open pit mining

· Savannah is confident the Lease application area provides further resource upside to enhance Mina do Barroso, and could help optimise the layout for any potential mine development

· All payments under the deal are structured to be staged with the majority of payments expected to be made from anticipated revenue generated from Mina do Barroso

Savannah Resources plc (AIM: SAV, FWB: AFM and SWB: SAV) ('Savannah' or the 'Company'), the AIM quoted resource development company, announces that, further to the Company's announcement of 18 July 2018, it has completed its technical and legal due diligence process with a private Portuguese company Aldeia & Irmão, S.A. ('Aldeia'), and executed an agreement to purchase a mining lease application ('Mining Lease Application') (once granted) which covers areas of land bordering the Company's Mina do Barroso Lithium Project ("the MdB Project") lease in northern Portugal (the 'Proposed Licence Area') (Figure 1). To view the press release with the illustrative maps and diagrams please use the following link: http://www.rns-pdf.londonstockexchange.com/rns/7819B_1-2018-9-24.pdf

Savannah's CEO, David Archer said: "Our technical due diligence has highlighted the lithium prospectivity of three blocks. The blocks are highly accretive to our Mina do Barroso Project, bringing the potential for further lithium resources and extra area for mine infrastructure. This new ground further strengthens an already highly attractive mine development project, which we believe has the potential to be Western Europe's largest, near term producer of spodumene lithium."

Figure 1. Location Map showing the position of the mining licence application relative to Savannah's Mina do Barroso Mining Lease

Savannah Technical Due Diligence Programme

The Aldeia Mining Lease Application for lithium, feldspar and quartz covers key areas of the lithium pegmatite bearing structural corridors identified by Savannah both adjacent to and within the vicinity of the Company's Mina do Barroso Mining Lease. A technical due diligence work programme was completed by Savannah to evaluate the potential of the Aldeia licence application including rock chip sampling and reconnaissance geological mapping on Block A (Figure 2).

This work has confirmed the excellent potential of the Aldeia licence to host spodumene bearing pegmatites similar to those already identified by Savannah in the Company's nearby Mina do Barroso mining lease.

The results from the programme were positive in outlining significant potential for the discovery of further spodumene mineralisation. A summary of the key results for Block A are provided below and in Table 1.

Block A

The largest and most extensive pegmatite on Block A, occurs where quarrying operations are taking place (Figure 2). The quarried pegmatite has many similarities with the Grandao deposit in Mina do Barroso, which has a Mineral Resource Estimate of 16.4Mt at 1.04% Li₂O for a total contained Li₂O of 171,400t. It is evident from the excavation that the pegmatite has a continuity that can be followed into the hillside and has a current surface dimension over 300m in strike with a maximum width of 25m in places (Figure 3). The pegmatite is seen to have a relatively shallow dip to the north of about 30 degrees, similar to Grandao, which indicates good potential to increase the buried extent of the pegmatite to both the northeast and similarly to the southwest.

Figure 2. Panorama Photo of the Pegmatite Quarry on Block A

Three rock chip samples were collected from the quarry, and all of them had values greater than 0.5% Li₂O with two them greater than 1.0% Li₂O. Spodumene mineralisation has been noted in hand specimen from the quarried rock, which is confirmed from the sampling making the quarry area a high priority target for drilling.

Figure 3. Block A area showing pegmatites and rockchip assay results

Table 1. Summary of the sample location and assay results

Sample ID	Location	East	North	RL	Comment	Li₂O%	Tin ppm
A010	Block A	603217	4606745	600	Large area of fresh pegmatite on fire cutting very close to lease boundary	1.02	75
A011	Block A	603038	4606640	575	Small pegmatite quarry which Aldeia are working. Visible spodumene, pegmatite 15-20m thick with shallow dip to west. Pegmatite extends to other side of water line to the west	0.65	246
A012	Block A	603038	4606640	575	As above	1.53	147

Commercial Rationale

The key commercial aspects and potential value the additional ground could provide include:

· Potential expansion of the current Mineral Resource base, which could provide the opportunity to extend the mine life of eleven years, as defined by the recent scoping study, and/or potentially increase annual processing rates.

· Expanding the site footprint will potentially improve infrastructure options and reduce mining and infrastructure costs

Key Commercial Terms

The Due Diligence Agreement provided the Company with a 70-day exclusive due diligence period, announced on 18 July 2018, whereby Savannah conducted technical, financial, and legal due diligence into the Proposed Aldeia Licence Area.

The Company has received satisfactory results from the due diligence, and therefore triggers the commencement of an exclusive option governed by a certain Pledge and Purchase Agreement to acquire the Proposed Licence Area following the grant of a mining lease from relevant government/competent authorities (the 'Option').

The Option would, if not exercised earlier, endure until no later than 25 June 2019 whereby the Company would be required to commit to the purchase of the Proposed Licence Area once granted by the relevant Portuguese government bodies ('Commitment to Purchase'). The total purchase price of the option is €358,000, of which €58,000 is due upon execution of the Pledge and Purchase Agreement and the balance payment of €300,000 payable in 4 equal instalments supported by a corresponding bank guarantee.

Upon Savannah providing a Commitment to Purchase in the future, the parties shall have a maximum of five years (which cannot exceed 25 September 2024) to submit, and to have approved, a mining lease application for the Proposed Licence Area. Upon approval of the mining lease, Aldeia shall thereafter apply to register the lease in a subsidiary of Savannah.

The total purchase price for the acquisition of the Proposed Licence Area (once granted) is €3.25m, which would be paid €55k upon execution and the balance in 71 monthly instalments following the transfer of the mining lease to Savannah's subsidiary. These payments are expected to be made whilst the Mina do Barroso project is in production with the newly acquired area potentially being mined shortly thereafter.

Regulatory Information

This Announcement contains inside information for the purposes of Article 7 of the Regulation (EU) 596/2014.

Competent Persons

The information in this announcement that relates to exploration results is based upon information compiled by Mr Dale Ferguson, Technical Director of Savannah Resources Limited. Mr Ferguson is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC Code). Mr Ferguson consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears.

**ENDS**

For further information please visit www.savannahresources.com or contact:

David Archer	Savannah Resources plc	Tel: +44 20 7117 2489
David Hignell / Dugald J. Carlean (Nominated Adviser)	Northland Capital Partners Ltd	Tel: +44 20 3861 6625
Christopher Raggett / Camille Gochez (Broker)	finnCap Ltd	Tel: +44 20 7220 0500
Grant Barker (Equity Adviser)	Whitman Howard	Tel: +44 020 7659 1225
Charlotte Page / Lottie Wadham (Financial PR)	St Brides Partners Ltd	Tel: +44 20 7236 1177

About Savannah

Savannah is a diversified resources group (AIM: SAV) with a portfolio of energy metals projects - lithium in Portugal and copper in Oman - together with the world-class Mutamba Heavy Mineral Sands Project in Mozambique, which is being developed in a consortium with the global major Rio Tinto. The Board is committed to serving the interests of its shareholders and to delivering outcomes that will improve the lives of our staff and the communities we work with.

The Company is listed and regulated on AIM and the Company's ordinary shares are also available on the Quotation Board of the Frankfurt Stock Exchange (FWB) under the symbol FWB: AFM, and the Börse Stuttgart (SWB) under the ticker "SAV".

APPENDIX 1 - JORC 2012 Table 1

Section 1 Sampling Techniques and Data

(Criteria in this section apply to all succeeding sections.)

Criteria	JORC Code explanation	Commentary
Sampling techniques	· Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.	· Random rockchip samples were completed over areas of potential geological interest. Samples were collected using a geological hammer
	· Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.	· A series of representative small fist sized rock chips were collected over a 2m radius, from a central point on a rock outcrop of interest · A location of the sample was carried using hand held GPS with an accuracy to within 5m, and the z direction was determined by satellite derived elevation data and is accurate to less than a metre. The point surveyed was the centre point of the sampled
	· Aspects of the determination of mineralisation that are Material to the Public Report. · In cases where 'industry standard' work has been done this would be relatively simple (e.g. 'reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay'). In other cases more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information.	· Approximately 2-3kg of representative material was collected from each sample point
Drilling techniques	· Drill type (e.g. core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).	· N/A
Drill sample recovery	· Method of recording and assessing core and chip sample recoveries and results assessed.	· N/A
	· Measures taken to maximise sample recovery and ensure representative nature of the samples.	· N/A
	· Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.	· N/A
Logging	· Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies. · Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography. · The total length and percentage of the relevant intersections logged.	· Rockchip samples were identified by rock type and the lithium minerals which could be visually identified in the samples
Sub-sampling techniques and sample preparation	· If core, whether cut or sawn and whether quarter, half or all core taken. · If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.	· A bulk sample was taken of representative material
	· For all sample types, the nature, quality and appropriateness of the sample preparation technique.	· For recent rockchip sampling at least 2kg of representative rock material from a 2m radius around the sample point was collected
	· Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.	· 1 in 25 samples were duplicated in the field
	· Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.	· Every effort was made to ensure that the samples were representative and not bias in anyway
	· Whether sample sizes are appropriate to the grain size of the material being sampled.	· A minimum sample size of 2kg was collected for recent rock chip sampling
Quality of assay data and laboratory tests	· The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.	· Laboratory and procedures for historical sampling unknown · Fine crushing of rock chip and drill samples to 90% nominal -2mm · Split sample using a rotary splitter · Pulverize entire sample up to 85% passing 75 microns. · 48 element 4 acid digest with ICP-AES/ICP-MS finish · REE's may not be totally soluble in this method.
	· For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.	· Not used.
	· Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.	· Standards and duplicates we used and were off acceptable levels of accuracy
Verification of sampling and assaying	· The verification of significant intersections by either independent or alternative company personnel.	· N/A
	· The use of twinned holes.	· N/A
	· Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.	· Most assays are Li2O occasionally they are Li assays and the conversion used was Li2O = Li x 2.153
	· Discuss any adjustment to assay data.	· No adjustments are made to the assay data for the purposes of public reporting.
Location of data points	· Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation. · Specification of the grid system used. · Quality and adequacy of topographic control.	· The coordinate of each rockchip was taken at the time of collecting using a handheld GPS with an accuracy of 5m. · The grid system used is the UTM datum WGS 84 Zone 29N. · Topographic accuracy was +/- 5m
Data spacing and distribution	· Data spacing for reporting of Exploration Results. · Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied. · Whether sample compositing has been applied.	· Samples were collected on irregular spacing based on rock outcrop and geological targets · Further sampling and drilling is required to accurately establish the grade continuity · No sample compositing was conducted
Orientation of data in relation to geological structure	· Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type. · If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.	· Unknown due to limited data · Unknown due to limited data
Sample security	· The measures taken to ensure sample security.	· Samples were delivered to a courier and chain of custody is managed by Savannah.
Audits or reviews	· The results of any audits or reviews of sampling techniques and data.	· Internal company auditing

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

Criteria	JORC Code explanation	Commentary
Mineral tenement and land tenure status	· Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings. · The security of the tenure held at the time of reporting along with any known impediments to obtaining a license to operate in the area.	· Mining concession application in the District of Boticas County in Portugal known as Canedo-Covas MNPC03512, including Blocks A, B and C
Exploration done by other parties	· Acknowledgment and appraisal of exploration by other parties.	· No known lithium exploration has occurred in the license area in the past
Geology	· Deposit type, geological setting and style of mineralisation.	· The lithium mineralization is predominantly in the form of Spodumene-bearing pegmatites which are hosted in meta-pelitic and mica schists, and occasionally carbonate schists of upper Ordovician to lower Devonian age. The pegmatites are unzoned and vary in thickness from 10m-50m. Lithium is present in most aplite compositions.
Drill hole Information	· A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: o easting and northing of the drill hole collar o elevation or RL (Reduced Level - elevation above sea level in metres) of the drill hole collar o dip and azimuth of the hole o down hole length and interception depth o hole length. · If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.	· See table in main release
Data aggregation methods	· In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated. · Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. · The assumptions used for any reporting of metal equivalent values should be clearly stated.	· N/A
Relationship between mineralisation widths and intercept lengths	· These relationships are particularly important in the reporting of Exploration Results. · If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. · If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. 'down hole length, true width not known').	· N/A
Diagrams	· Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.	· Relevant diagrams and maps have been included in the main body of the release.
Balanced reporting	· Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.	· All results have been reported.
Other substantive exploration data	· Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples - size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.	· The interpretation of the results is consistent with the observations and information obtained from historical data collected.
Further work	· The nature and scale of planned further work (e.g. tests for lateral extensions or depth extensions or large-scale step-out drilling). · Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.	· Rock chip sampling, channel sampling and RC drilling. Once planning has been completed the detail will be provided

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

END

MSCUSSKRWOAKUAR

RNS metadata

Title: Option to Acquire Mining Lease Application
Time: 08:00:13
Date: 25 Sept 2018
Category: Miscellaneous
ID: 7819B