Savannah Resources PLC (LON:SAV) confirmed after the market close on Tuesday that it had raised gross proceeds of £2.34mln in what it said was a "significantly oversubscribed" placing of shares at 1.8p each.
The proceeds will be used to supplement Savannah's existing working capital as it continues to advance its Mina do Barroso lithium project in Portugal and Mutamba Mineral sands joint venture in Mozambique.
In particular, the company is working to finalise an offtake agreement for lithium concentrate, to continue negotiating with potential strategic partners, to move Mina do Barroso through to the definitive feasibility study stage.
The European Commission estimates that the region will need up to 18 times more lithium in 2030, and Mina do Barroso looks well-positioned to supply that need.
In a statement confirming the placing result, David Archer, Savannah's CEO commented: "'We have been delighted to see the strong equity capital market support for the Placing which was heavily over-subscribed by both existing and new shareholders. Existing institutional shareholders participated in the Placing together with subscriptions from new institutions and sophisticated investors. The overall interest goes to underscore the strong emerging investment interest in the fast-growing, lithium value chain in Europe."
He added: "The recent share price performance of electric vehicle manufacturers such as Tesla (+820% in last 12 months) and the 60% increase in first-half sales of electric vehicle in the EU, despite the impact of the Coronavirus, provide good indications of the positive outlook for the e-mobility revolution, which is so dependent on lithium and lithium-ion battery technology. At the same time, the addition of lithium to the European Commission's list of critical raw materials last week highlights the concern the European authorities have about the future availability of this key metal in light of the supply deficit that is expected to materialise in the 2020s. These factors, coupled with the post-COVID recovery funding and new industrial initiatives which have been proposed by the Portuguese Government and the European Commission, are creating an extremely supportive backdrop to the development and long - term successful operation of Mina do Barroso.
"Focusing on the near term, the working capital secured by this placing will give Savannah a more robust financial position while it finalises an offtake agreement for the Project's lithium concentrate, continues its negotiations with potential strategic partners, progresses the Project's Definitive Feasibility Study DFS) towards completion, and responds to further information requests from Portugal's environmental regulator following the submission of the Project's Environmental Impact Assessment and Mine Plan in May."
"With the company's cash position strengthened and our focus now wholly on Mina do Barroso and Mutamba, Savannah expects to make significant progress in the months ahead. This should result in important newsflow, particularly regarding the commercialisation of Mina do Barroso," Archer concluded.
-- Updates with placing result, CEO comment --