20 June 2019

Savannah Resources Plc

Agreement to Acquire the 25% Minority Interest in Mina do Barroso Project, and Agreement to Settle Deferred Consideration of Block 5 Licence in Oman

HIGHLIGHTS:

Acquisition of the 25% Minority Interest in Mina do Barroso Project

·    100% control of its flagship asset, the Mina do Barroso Lithium Project in Portugal ('Mina do Barroso' or the 'Project'), secured following approval at its AGM via an all-share transaction

·    Remaining 25% interest acquired from minority shareholders (the 'Vendors') including resource investment specialist Slipstream Resources Investments Pty Ltd ('Slipstream'), an existing shareholder in Savannah, which will increase its interest to 16.0% from 5.1%

·    100% ownership provides greater exposure to this significant lithium project and valuable optionality as the development and commercialisation of the Project progresses

·    Consideration has been satisfied through the issue of 163 million new ordinary shares of 1p each in Savannah ('Ordinary Shares') at USD 0.073 (circa. 5.63p) per share, ~13% premium to the last closing share price, valuing the Transaction at circa US$11.9m

·    Vendors have agreed to a 12-month lock-in arrangement on the Consideration Shares and a further 9-month orderly market restriction, following completion of the Transaction

·    The Acquisition demonstrates Slipstream's confidence in the potential of the Project and Savannah's overall asset portfolio

In connection with the Transaction, Savannah has retained Hannam & Partners (H&P Advisory Limited) as financial advisors.

Settlement of the Deferred Consideration in Respect of the Block 5 Licence in Oman

·    Agreement signed with Gentor Resources Inc ('Gentor') to settle the deferred consideration that is related to the original acquisition of the Block 5 licence on 10 April 2014 as part of the strategic review of the Oman portfolio

·    The deferred consideration of US$3,000,000 (payable 50% in cash) relating to the share purchase agreement between the parties shall be cancelled in full return for the issue of US$200,000 worth of Ordinary Shares which are subject to a six month orderly market agreement; and a cash payment of US$100,000. The number of Ordinary Shares to be issued in consideration shall be determined by reference to the volume weighted average price as traded on the AIM market of the London Stock Exchange PLC 30 dealing days prior to the execution of this Settlement Agreement which equates to a share price of 5.22p.

Savannah Resources plc (AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah' or the 'Company'), the resource development company with a portfolio of diversified assets, is pleased to announce that it has entered into an Share Purchase Agreement ('SPA'), to acquire the minority 25% shareholding in Savannah Lithium Lda, which owns the Mina do Barroso Lithium Project in Portugal.  The Transaction takes Savannah's ownership of the Project to 100% ahead of the completion of the Feasibility Study and a decision to mine.  It also has also reached a settlement to cancel the deferred contingent liability of US$3,000,000 in respect of the Block 5 licence in the Sultanate of Oman.

Commenting on the Transaction, Savannah's CEO David Archer, said: "We are delighted to have completed this Acquisition which increases Savannah's stake in the Mina do Barroso Project to 100%. We believe the Project will play a crucial role in securing Europe's new lithium battery supply chain by providing a long-term and reliable source of battery grade spodumene lithium concentrate. As we move into a critical phase in the Project's definition, permitting and financing, we believe the simplified ownership structure has significant benefits, and provides our shareholders with greater exposure to the Project's long-term value.

"The European lithium sector is developing at a very rapid rate.  For example, in the short period since we announced our intention to secure the outstanding 25% stake in the Project, the market has witnessed Northvolt AB's successful financing of 'Europe's first homegrown (16GWh) gigafactory' in Sweden and its 50/50 joint venture with Volkswagen to establish a second, 16GWh battery plant in Germany. At the same time, the European Commission has also reaffirmed its commitment to "completing the value chain" with greater financing to be made available for battery metal mining and refining from the EU via the EIB and the EBRD.

"As sole owner of Western Europe's most significant spodumene lithium project, Savannah is ideally placed to become a key player in Europe's new battery market."   

Commenting on the Transaction, Geoffrey Stewart, CEO of Slipstream, said: "Following completion of the Transaction, we will be fully aligned with Savannah's other shareholders.  We strongly support and endorse the Board's strategy and the management team's sustained efforts to rapidly advance the development of the Mina do Barroso Project.  It has been a truly remarkable achievement that, in under two years, Savannah has developed what was a promising exploration project into what is likely to be Europe's first significant producer of high-grade, low impurity spodumene concentrate.  We are excited and confident that the Project will become both economically and strategically important in Europe's rapidly developing electric vehicle industry."

Benefits of the Transaction for Savannah and its shareholders include:

•     Providing Savannah with 100% control over Mina do Barroso, Savannah's flagship asset and Europe's most significant spodumene lithium deposit, with a JORC Compliant Mineral Resource Estimate currently standing at 27Mt

•     Significant simplification of Savannah's group structure and Project decision making process

•     Reduction in Project funding uncertainty related to Project level minority shareholders

•     Expected cost savings and efficiency gains from the reduced complexity related to joint venture management and reporting

•     The lock-in and orderly market arrangements provide protection for the Company's existing shareholders during the funding phase of the Project

Terms of the Transaction

Pursuant to the term sheet ('Term Sheet', announced on 15 April 2019), the SPA has been entered into and the total consideration remains at US$11.9m for the Vendors combined 25% shareholding in the Project. This has been settled by the issue of 163 million Consideration Shares at 0.073 USD (circa. 5.63p at the time of entering into the Term Sheet) per share, equating to 15.6% in the enlarged issued share capital of the Company.  The Consideration Shares will rank pari passu with the Company's existing Ordinary Shares. 

Slipstream, an existing 5.1% shareholder in Savannah, and the largest of the Vendors, has seen its holding in the Company increase to 16.0%, making it Savannah's second largest shareholder.  The Vendors have agreed to a 12-month lock-in arrangement on their Consideration Shares and a further 9-month orderly market restriction, whereby any sale of the Consideration Shares by a vendor would be through a Savannah nominated broker. 

Savannah and the Vendors have entered into a legally binding SPA.  The Company's shareholders have approved the resolutions related to the approval of the Transaction at the Company's AGM on 18 June 2019.

Acquisition of 25% of the Issued Share Capital of Savannah Lithium LDA

In connection with the Transaction, Savannah has retained Hannam & Partners (H&P Advisory Limited) as financial advisors.

Settlement of the Deferred Consideration in Respect of the Block 5 Licence in the Sultanate of Oman

As part of the work being undertaken in relation to the strategic review of Savannah's Oman portfolio, the Company has come to an agreement to settle the deferred consideration that is related to the Block 5 licence.  Specifically, the Company has agreed with Gentor that the deferred consideration of US$3,000,000 relating to the Share Purchase Agreement between the parties dated 10 April 2014 shall be cancelled in full return for the issue of US$200,000 worth of Ordinary Shares, being 3,008,025 shares which are subject to a six month orderly market agreement ('Settlement Shares'); and the cash payment of US$100,000. 

Regulatory Information

Application has been made for 163,000,000 Consideration Shares and 3,008,025 Settlement Shares (together the 'New Ordinary Shares'), which rank pari passu with the existing Ordinary Shares, to be admitted to trading on AIM ('Admission').  It is expected that Admission will become effective and dealings will commence at 8:00 a.m. on or around 26 June 2019.

Following Admission, the total issued share capital of the Company will consist of 1,047,459,820 Ordinary Shares. This number may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure and Transparency Rules. Following the Transaction, the percentage holdings of certain significant shareholders will increase as per the table below:

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

Mr Dale Ferguson

Mr Dale Ferguson, the Company's Technical Director, is also a Director of and minority shareholder in Slipstream Resources Investments Pty Ltd (one of the Vendors).  As such, Dale Ferguson has been excluded from any of Savannah's commercial negotiations with the Vendors and was precluded from voting on any Board matters relating to the Term Sheet and the SPA between Savannah and the Vendors.

**ENDS**

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

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 the communities we work with and our staff.

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: SAV, and the Börse Stuttgart (SWB) under the ticker "SAV".