Speculative Stock Pick by Elias Jones
Having followed ValueTheMarkets since its launch, it gives me pleasure to share some thoughts and a personal stock pick I have made for my VTM debut article. As a stock market investor and a commentator of many years what interests me is the penny shares with transformational potential, and as a speculative stock pick comes in the resource sector Savannah Resources, with its two potential world class assets, 187m shares, highly experienced management team and a Chief Executive Officer who is invested and aligned with shareholders ticks the box for me. The CEO David Archer, during his time in his previous role as Managing Director of ASX listed Hillgrove Resources Limited, developed that company from a listed shell in 2002/2003, into a profitable, dividend paying mining company with a market capitalisation of AUS$200m which specialised in copper.
This week, Savannah has seen some interesting turn of events with regards to its share register, where the Bergen Global Fund have disposed of their entire 17.1m holding equating to over 9% of the company. This funding stream which is used by many AIM listed companies could be described as Marmite, loved by the directors and generally hated by the investors. Interestingly in the week Bergen are reduced to a zero holding the company raised £253,000 through placing shares with new and existing holders. More news will possibly follow on this situation in the coming week, where Savannah may well indicate a change of tact with regards to its future funding strategy.
Listed on AIM, Savannah Resources is an exploration and development company focussed on the Jangamo Heavy Mineral Sands Project in Mozambique, and two copper blocks located in the mineral rich Ophiolite belt in Oman. Previously trading as African Mining and Exploration the company changed its name in October 2013 to Savannah Resources and have set a Company strategy towards becoming a mid-sized copper producer and one of Oman’s leading mining companies.
A key project for Savannah Resources is its transformational first mover leap into mineral rich Oman by acquiring interest in two highly prospective copper-rich blocks in Oman. This strategic move represented the first step by Savannah Resources in fulfilling the Company’s strategy of becoming a mid-sized copper producer.
Exploration of Block 5, which has a near-surface Indicated and Inferred Mineral Resource of 1.7Mt at 2.2% Cu and high grade intercepts of up to 56.35m at 6.21% Cu, is set to be fast paced. Savannah is very much operationally active with field activities underway in order to identify priority, high quality targets for drilling. Savannah Resources have identified 94 prospective anomalies to date, of which eight have been marked as Priority 1, 12 as Priority 2 and 74 as Priority 3. High priority exploration targets areas include Maqail South with 6.68m at 7.42% copper, the Mahab 4 with Indicated and Inferred Mineral Resource of 1.7Mt at 2.2% copper, the Sarami with 4m at 3.3% copper, Sarami West, Hara Kilab with 5.54m at 3.96% copper and the Mahab 2 with 5m at 2.81% copper.
Following the name change Savannah Resources acquired an 80% interest in the highly prospective Jangamo Heavy Minerals Sands Project, which is located in a world class mineral sands region in Mozambique, covering an area of 180km2 along an extensive dune system near the village of Jangamo. Scout sampling in the region by the Company has returned up to 18.1% Total Heavy Minerals with ilmenite, zircon and rutile recorded in the mineral concentrate.
The Jangamo project lies immediately to the west of Rio Tinto’s Mutamba deposit, one of two major deposits Rio has defined in Mozambique, which collectively have an exploration target of 7-12 billion tonnes at 3-4.5% Total Heavy Minerals. Savannah Resources is set on defining a potential JORC Mineral Resource this year, and thereafter commencing a scoping study on a project that has the potential to generate significant value for the Company and its shareholders.
Savannah Resources also hold a 21.1% strategic investment in fellow AIM listed constituent Alecto Minerals, which provides exposure to both the Kossanto Gold Project in Mali and also to the Wayu Boda and Aysid Meketel gold and base metal projects in Ethiopia where Alecto Minerals have a joint venture with Centamin. Under the joint venture, Centamin is committing up to US$14m in exploration funding to earn up to 70% of each project.
There are many AIM listed junior exploration and development companies, but what makes Savannah Resources a speculative stock pick for me is the quality of its assets, touted to have world class potential and a proven management team lead by a CEO David Archer who has done it all before, by turning a listed shell into a profitable, dividend paying mining company which specialised in copper.
Ticker code: SAV, Shares in issue:187m, Current SP: 5.25p, Market Cap: £9.8m, 52 Wk Low: 2.85p, 52 Wk High: 13.88p
The author holds shares in Savannah Resources.
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