Savannah Resources (LSE: SAV) which describes itself as ‘a growth oriented, multi-commodity, exploration and development company operating in the Jangamo exploration project in a world class mineral sands province in Mozambique’ is a tiny little AIM listed mining company that reported an operating loss of £1,917,190 on 25 February as well as what is called a ‘comprehensive loss’ of £2,191,872 due to the write down of an investment into another mining outfit Alecto Minerals Plc:
During the year we increased our shareholding in AIM listed Alecto Minerals Plc (‘Alecto’) by 42.8% via the conversion of a loan note and the divestment of the Company’s legacy Mali projects (Karan and Diatissan) to Alecto in March 2014 for GBP250,000 worth of shares in Alecto. At the end of 2014 we had a 19.6% shareholding in Alecto and as of 23 February 2015 the shareholding had reduced to 14.5%.
The reported loss of GBP1.92m for 2014 was only slightly less than 2013’s loss of GBP2.04m:
for which the significant driver is the write down in the value of the Company’s investment in Alecto, whose share price had been at a 2 1/2 year high at the end of 2013
Okay so we get that Savannah made a huge error on betting that Alecto would produce the goods.
To the numbers.
The Income Statement
Here’s a diabolical income statement pic.twitter.com/1kqDclKG7C
— David Thomas (@djthomas) April 8, 2015
It gets better when you look at the balance sheet which states current assets at £3 million, £1.7 million of which is cash against total liabilities of £257,137 although intangible assets ballooned.
But where exactly is this company with negative earnings going?
Much of the cash has been generated not by profits but by placings.
Lots of them.
It is using this cash to try and extract something of value from the ground but it has yet to do so.
Savannah also likes RNS announcements to come through thick and fast telling the market about magnetic surveys, gold and copper drilling, the identification of assets, some drilling, database acquisitions, survey results, confirmations of high-grade mineralisation deposits and placings.
Absolutely zero forward guidance on earnings because it’s management team do not know themselves when earnings from it’s core business rather than from placings will even remotely occur.
At 1.23p the share price is at all time lows and an AIM casino archetype.
Having identifiable assets in the ground is one thing but extracting them and making a profit in today’s precious metals bear market is another.