Savannah Resources Plc / Index: AIM / Epic: SAV / Sector: Mining

30 September 2015

Savannah Resources Plc

Interim Results

Savannah Resources plc (AIM: SAV) ('Savannah' or 'the Company') announces its interim financial results for the six months ended 30 June 2015.   To view the press release with the illustrative maps please use the following link:

 http://www.rns-pdf.londonstockexchange.com/rns/6225A_-2015-9-29.pdf

HIGHLIGHTS:

OPERATIONS

·        Focussed on the development of multi-commodity portfolio: copper in Oman, with additional gold upside potential, and heavy mineral sands in Mozambique

·        Agreement signed with Rio Tinto for the combination of Rio's Mutamba and  Savannah's adjacent Jangamo project in a joint venture in this world-class heavy minerals sands province in Mozambique

·        Targeting early stage open-pit mining in Mozambique with an initial production rate of 600,000tpa of ilmenite and 40,000tpa of rutile plus zircon concentrate

·        Significant potential to expand on current Oman total Indicated and Inferred Mineral Resources of 1.7Mt @ 2.2% copper

·        Completed the first ever VTEM survey over Block 4, Oman,  which identified a number of high priority brown and greenfield targets for drill testing in Q4 2015

·        Trenching and rock chipping programme at Block 4 highlighted high grade oxide gold at surface over multiple areas including 72.2g/t gold

·        Completion of drill programmes at Sarami West (Block 5) and Ghayth (Block 4) prospects identified prospective targets for follow up drilling

·        Board re-alignment with the successful transformation of Company

FINANCIAL

·        Operating loss of £1.01m includes realised loss of £0.28m on the sale of Alecto shares and reflects the high tempo of exploration activities being conducted

·        Other comprehensive loss for the period attributable to the equity owners of Savannah Resources Plc loss of £0.62m attributable principally to losses of £0.8m relating to a write down of the value of the Company's investments primarily in Alecto Minerals Plc that adversely impacted net assets accordingly, and for which the Company divested 18.6% of its holding in the period

·        Augmented cash balances with a £0.55m cash share subscription

·        Investments in intangible and exploration project assets of £928,591 during the period

CHAIRMAN'S STATEMENT

This has been a period of significant progress for Savannah in building a diversified mining group focussed on heavy mineral sands ('HMS') in Mozambique and a high calibre portfolio of copper-gold projects in Oman. During the period we achieved notable successes in both countries as we look to positon Savannah as a leading junior exploration and development company on the AIM market with the corporate objective of building a solid portfolio of assets, which demonstrate early production potential and superior economics.

To this end, in June we were delighted to report a pivotal joint venture agreement with the mining major Rio Tinto ('Rio') to combine our Jangamo Heavy Minerals Sands Project with Rio's world class Mutamba Project, which has an Exploration Target of 7-12Bt with high grades up to 4.5% Heavy Mineral Sands ("HMS").  The objective of the joint venture is to develop a significant dry mining project in a world-class province in Mozambique with good access to the nearby ports of Inhambane and Maxixie.

Additionally, major advances in terms of exploration and discovery have been made at our 1,270km² copper-gold blocks 4, 5 and 6 in Oman*, where we are looking to build on our existing high grade copper Mineral Resource base to support high margin, low cost copper production for the Company by 2017. Additionally high grade gold mineralisation has been identified in the period on Block 4, offering the potential for gold production.

Mozambique

Prior to signing the joint venture agreement with Rio, Savannah had already defined a maiden Inferred Mineral Resource of 65Mt at 4.2% HMS over a number of zones within the eastern part of the Jangamo exploration licence. This was a significant development that validated our exploration concept and marked a major milestone in highlighting the value potential of Jangamo. Importantly, the Mineral Resource Estimate was defined from a modest initial round of resource drilling over a small area of the eastern part of the large Jangamo licence. The mineralisation remains open along strike.

In June 2015 we were delighted to announce a joint venture with Rio to combine the companies' minerals sands projects, which both contain thick zones of ilmenite dominant heavy mineral sands from surface. The combined project has the potential for the definition of a large orebody able to sustain a significant mining operation for over 20 years.

Under the terms of the agreement Savannah will operate the joint venture and can earn up to 51% of the combined Mutamba-Jangamo Project as it moves towards production through scoping, pre-feasibility and feasibility studies. Rio will be providing all its existing camp, facilities and associated equipment, which will help accelerate activity, and, significantly, will enter into an offtake sales agreement for 100% of the production from any mine that may be developed.

Initially, we are focussed on targeting early stage open-pit mining, with an initial production rate of 600,000tpa of ilmenite and 40,000tpa of rutile plus zircon ("non-mag") concentrate, either as final products or a bulk heavy mineral concentrate ('HMC') containing 400-500,000tpa of ilmenite dominant HMC.

In terms of exploration, at Mutamba, Rio has completed over 80,000 metres of drilling producing over 35,000 samples from approximately 4,000 reverse circulation ('RC'), sonic and auger drill holes to define heavy mineral-bearing sand units that vary in thickness from 15 to 70 metres. Eight large, separate mineralised bodies have been identified within the three Rio areas and have been the subject of Order of Magnitude Studies.

The joint venture is conditional upon approval from the Ministry of Mineral Resources and Energy of the Republic of Mozambique, and evaluation work will commence over the new combined licence areas once approval is obtained. The phase 1 work programme will include an initial reconnaissance exploration programme, which will be completed to detect zones of high grade HMS. Follow-up scout Reverse Circulation ("RC") drilling focusing on coherent zones of high grade HMS will then be conducted based on the results of this. In conjunction with the drilling, interpretation and analysis, we will look to deliver a Scoping Study on the viability of a high grade, low capital intensity HMS operation. We currently anticipate that delivery of the Scoping Study will take approximately six months from commencement and importantly for Savannah, on completion of the Scoping Study, our participating interest will increase to 20%.

Our phase 2 exploration and evaluation work programme will look to support the completion of a pre-feasibility study on the Mutamba-Jangamo Project, including further scout RC drilling, resource definition RC drilling, mineralogy and metallurgy testing, preliminary process flow sheet and plant design, and the initiation of baseline environmental, community, infrastructure, product and market studies. Following delivery of the pre-feasibility study, our participating interest in the joint venture will increase to 35%.

Thereafter we envisage undertaking a third phase exploration and evaluation work programme to support completion of a feasibility study on the Mutamba-Jangamo Project, including infill and extension resource drilling to increase the categorisation of the resource to JORC 2012-compliant Measured and Indicated for conversion to an Ore Reserve; mineralogy and metallurgy tests on composite drill hole samples and multiple bulk excavation samples; mine design and scheduling; including definitive process flow sheet and fully costed process plant and ancillary infrastructure; and definitive environmental, community, infrastructure, product and market studies. This would mark the final stage under the terms of the joint venture agreement and on delivery of the feasibility study our participating interest would increase to 51%.

Following delivery of the feasibility study Savannah and Rio will assess timings regarding the commencement of an initial mine construction and will be entitled to maintain their respective participating interests in the joint venture by contributing to funding pro-rata to such interests, or be diluted.

We anticipate receiving the required Government approval for the new venture shortly and from there will commence our first phase exploration programme as we look to advance Mutamba-Jangamo, with the ultimate goal of early production.

Figure 1: Map of Mozambique Mineral Sands Projects - please see the PDF link

Oman

Last year your Company made the transformational move into mineral rich Oman by securing interests in three highly prospective copper blocks (*Block 4 earning up to 65%, Block 5 65% interest, Block 6 40% interest and earning up to 65%) spanning some 1,270 km² in the northeast of the country. Importantly, these assets have total Indicated and Inferred Mineral Resources totalling 1.7Mt @ 2.2% Cu. The projects feature significant advantages, including a supportive, pro-mining Government, attractive fiscal terms (five year tax holiday and 12% corporation tax thereafter), good infrastructure and a proximal commercial port and copper float plant and smelter. Furthermore, Oman has one of the best preserved copper-rich Ophiolite Belts in the world. The deposits, while smaller in size, have generally medium to higher grades of copper. These attractive fundamentals, coupled with the underexplored nature of the region and especially Block 4, made Oman a highly attractive setting for Savannah in which to operate.

It is our objective to become the partner of choice in Oman and a favoured mining operator in the region. With this in mind we are continuing to build a strategic foothold in the country to consolidate isolated volcanic massive sulphide ('VMS') deposits, such as those displayed at our Block 4, 5 and 6 projects, which are deemed highly prospective for copper discoveries; implement defined exploration and development programmes to help build our existing resource base; and establish a central copper processing facility targeting commercial production by late 2017.

Since acquiring the Projects, we have been active at Blocks 4 and 5, with the aim of expanding the established Indicated and Inferred Mineral Resource Estimate of 1.7Mt at 2.2% Cu defined at the Mahab 4 and Maqail South deposits on Block 5. To achieve this, we have undertaken drilling at both Blocks, which we believe are prospective for the definition of additional resources, and have focused on identifying both brownfield and new, greenfield drill targets. In line with this, we acquired an extensive, digitised exploration database relating to Block 4 in January 2015; conducted a heliborne Versatile Time Domain Electromagnetic ('VTEM') survey programme to identify potential clusters of VMS targets, and completed a rock chipping and geological mapping programme targeting near surface gold mineralisation associated with copper.

As noted above, Block 5 has an existing near surface Indicated and Inferred Mineral Resource Estimate of 1.7Mt @ 2.2% Cu with 37,000t of contained copper. This has been defined from the Mahab 4 Prospect (1.51Mt at 2.1%) and Maqail South Prospect (0.16Mt at 3.8%). Importantly, the Mahab 4 deposit remains open along strike to the north, and both up and down dip. High priority resource targets at Mahab 4 have returned intersections of up to 56.4m at 6.2% Cu (GRB5D035), whilst Maqail South has returned intersects of 6.68m at 7.42% Cu (GRB5D024). Consequently, we are optimistic that there is excellent potential to further expand our Mineral Resource inventory.

Block 4, which includes over 35km of prospective strike, covers four significant historic mines (Aarja, Lasil, Lasil West and Bayda), which produced over 212,000t of contained copper from mining operations that commenced in 1983 and concluded in 1994. These mines and the areas around them have excellent potential for further mineralised extensions to be identified both down dip and along strike.

During the period we outlined significant gold mineralisation within Block 4, with associated copper and zinc. High levels of gold mineralisation have been identified around the Gaddamah West Prospect, where individual 1m trench samples produced results of up to 60.7g/t gold, 9.1% zinc and 1% copper. Furthermore, the Salahi 1 Prospect has been identified as highly prospective for gold, with individual trench/rock chip, channel and grab samples returning results of up to 72.2g/t gold. It is our aim to aggregate high grade deposits for early gold production. Indeed, the Rakah Mine, which is located west of Block 4, profitably mined some 700,000t at an average grade of 6.73g/t gold and 6.9g/t silver between 1994 to 2001.

Figure 2: Map of Oman Copper Projects - please see the PDF link

Exploration at Block 4 and 5

During the period under review we conducted a five hole, diamond drilling programme totalling 779m, which tested a series of high calibre ground electromagnetic (EM) anomalies at the Sarami West (Block 5) and Ghayth (Block 4) Prospects. Drilling at the Ghayth Prospect confirmed the presence of VMS mineralisation intersecting both massive and disseminated copper sulphides with best results including 1.15m at 3.6% copper from 35.5m (15B4GD001). Following these results, further drilling is now planned at Block 4 to define the full extent of mineralisation and potentially establish a JORC 2012 compliant Mineral Resource Estimate. At the Sarami West target, whilst drilling intersected a strong alteration system similar to those seen around the margins of VMS deposits, it failed to locate the targeted EM anomalies. Planning is now underway for a downhole EM survey to optimise targeting for further drilling at Block 5.

Also at Block 4 we completed and received positive results from the VTEM survey programme, which indicated potential clusters of VMS mineralisation within the project area. The VTEM flight survey lines were spaced at 100m spaced and were run from east to west, for a total of 3,727 line kilometres covering an area of 336km².

We received the results from this programme at the end of June 2015. The programme identified a total of 10 Priority 1, 33 Priority 2 and 146 Priority 3 VTEM anomaly targets, in addition to three major potential VMS clusters. The VTEM anomalies are prioritised from 1 to 3 based on geophysical and geological criteria. Interestingly, the selected anomalies possess similar electromagnetic anomaly responses to the known VMS deposits of the Semail Ophiolite Belt, such as Maqail South (Block 4), Mahab 4 (Block 5) and Ghayth (Block 4). A string of strong, Priority 1 VTEM anomaly responses were clustered around the old copper mines at Aarja and Bayda and further south in the greenfields Zuha area at Block 4, confirming the prospectivity of Block 4 to host further VMS style copper mineralisation.  The success of these results demonstrates the efficacy of the VTEM to quickly generate high quality exploration targets. We are developing an RC drill programme over select targets to further define the mineralisation potential and aim to start drilling in Q4 2015.

We also completed a rock chipping and geological mapping programme at Block 4, which as previously mentioned, highlighted a series of anomalies with significant gold mineralisation, with associated copper and zinc. In March 2015 rock chip sampling produced results of up to 5.7% copper and 3.7g/t gold (not from the same rock sample) from the Gaddamah Prospect. Further results were reported in June 2015, highlighting individual trench/rock chip, channel and grab sample results of up to 72.2g/t gold from the Salahi 1 Prospect, located approximately 20km away from the Gaddamah Prospect at Block 4. A significant trench sampling result included 12m at 11.87g/t gold and results from the programmes have identified anomalous gold results over 1km along strike, with widths of up to 26m and remains open to the north and south providing significant further upside potential.

Notably, at this early stage we are seeing some fantastic gold grades, which we are highly encouraged by, making the newly identified Salahi 1 Prospect attractive.  Additionally these gold prospects suggest there is potential for other metals within Block 4 in addition to its copper potential. Additional sampling is now being planned to further define the extent of the mineralisation as a precursor to drilling to define the strike and depth extents of the mineralisation and we look forward to reporting on this in due course.

Additionally at Block 4 we have identified new high grade copper mineralisation at the Aarja Prospect following a detailed collation of historical data. A new copper mineralisation model produced for the Aarja Main, Dogs Bone and Aarja South Zones demonstrates high grade copper mineralisation under the Aarja pit and along strike. Newly identified, historical results include 18.58m at 4.7% copper from 143m from the Aarja Main Prospect and 33.8m at 3.35% copper from 153.1m from the Dog's Bone Prospect. A series of holes will be drilled to confirm the historic results prior to the calculation of a JORC compliant Mineral Resource Estimate, targeted during Q4 2015.

 Board

During the period under review I was delighted to join the Board of Savannah as the Company's new Non-Executive Chairman. With more than 27 years' experience in the financial services industry, I have had extensive dealings with regulators on a global basis and have proven experience with a number of effective boards, risk and audit committees and management committees, and am well placed to help Savannah in achieving its objectives of building a successful exploration and development company that will transition into production over the next few years. Additionally I have operational experience in Oman, which I hope will prove extremely beneficial as we look to advance our portfolio of copper and gold projects in the country.

My appointment followed Professor Mike Johnson's retirement from the Board in February 2015. We would like to again take this opportunity to thank Mike for his very significant contribution towards Savannah during his two year tenure as Non-Executive Chairman and wish him well in all his future endeavours.

After the reporting date we announced that Charlie Cannon-Brookes, who served as Non-Executive Director since February 2013, has retired from the Board. His retirement, alongside Mike Johnson's, is a result of having successfully steered the Company through its strategic transformation which was evidenced in October 2013, where we exited our West African gold projects and acquired interests in projects Mozambique and subsequently in Oman. Again we would like to thank Charlie for his significant contribution and wish him well in all his future endeavours.

We are now in the process of seeking a new Non-Executive Director to support us in our active growth strategy as we advance into our next phase of development and look forward to updating shareholders on our progress in due course.

Financial

We were pleased to report in June 2015 that we raised approximately £0.55 million (before costs) to contribute towards our exploration and development activities that are designed to result in the achievement of a series of major milestones in 2015. For example, in the case of the newly announced Mutamba-Jangamo Project, the definition of a JORC Mineral Resource and, later in the year, the completion of a scoping study that will define the high level parameters around a potential mine development. We believe we are well placed to deliver on our 2015 objectives in both Mozambique and Oman.

Additionally, Savannah has a holding in AIM quoted Alecto Minerals ('Alecto'), an African focussed gold company. During the period we sold approximately 18.6% of our shareholding in Alecto for gross proceeds of £73k. Following the sale we now own approximately 10% of Alecto's issued share capital.

Outlook

It has been a highly active start to 2015; one that has seen us add considerable value to our portfolio of heavy minerals sands and copper assets in Mozambique and Oman as we continue to position ourselves as a leading junior exploration and development company. With our recent joint venture agreement with Rio in Mozambique and the very promising results from Oman, including the identification of associated gold mineralisation, we are very confident in the good sense of Savannah's approach. We look to maintain a strong news flow for the rest of 2015 and look forward to reporting on our progress in line with our commitment to maintaining active correspondence with shareholders.

Finally, I would like to take this opportunity to thank my fellow Directors, employees and our shareholders for their continued support.

Chairman

Matthew King

29 September 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2015

The interim financial statements were approved and authorised for issue by the Board of Directors on 29 September 2015 and were signed on its behalf by:

………………………………………………..

D S Archer

Executive Director

Company number: 07307107