Mina do Barroso, Portugal
The Mina do Barroso Lithium Project in northern Portugal is Western Europe’s largest new spodumene lithium discovery. Thanks to the project’s grade, scale and location Savannah has the unique and highly strategic opportunity to become the first significant lithium producer in Europe. With a granted Mining Lease (valid until 2036, extendable for 20 years), a 20Mt Mineral Resource which has the potential to increase further, robust project economics, established infrastructure, and preliminary metallurgical test work indicating that a high-grade (over 6% Li2O), clean, low iron spodumene concentrate can be produced, Mina do Barroso offers significant and very attractive near-term production potential.
Savannah acquired a 75% interest in the project in May 2017, and has maintained a fast paced development approach.
Based on results received to date Savannah, believes Mina do Barroso is the closest European analogue to the very successful Australian hard-rock, open cut mine developments, which produce highly sought-after lithium spodumene concentrates for international markets.
The project has a current Mineral Resource of 20.1Mt at 1.04% Li₂O for 209,000t of contained Li₂O. Of this, 16.4Mt at 1.04% Li₂O for a total contained Li₂O of 171,400t has been defined at the Grandao deposit, with ~90% now reported at the higher confidence Measured and Indicated category, which represents the first 4-5 years of the mining inventory. The remaining Mineral Resources have been defined at the NOA and Reservatorio deposits. Crucially, significant expansion potential remains and the project has an Exploration Target* of 9-15Mt at 1.0-1.2% Li₂O, giving a potential mineral inventory of over 30Mt.
*Cautionary Statement: The potential quantity and grade of the Exploration Targets is conceptual in nature, there has been insufficient exploration work to estimate a mineral resource and it is uncertain if further exploration will result in defining a mineral resource.
The Scoping Study published in June 2018 highlights the robust features and outstanding investment appeal of Mina do Barroso with a very high-IRR of 63% and strong cash generation, even with conservative spodumene prices. The project, which is anticipated to produce average annual production of ~175,000tpa of spodumene concentrate at 6% Li₂O, has demonstrated an excellent base case pre-tax NPV8 of US$356m and a life of mine revenue of US$1,555m. This is matched by an attractive initial CAPEX estimate of US$109m, which includes the circuit for feldspar and quartz. The Project’s cash costs put it at the lower end of the spodumene lithium cost curve at US$271 per tonne of concentrate (CIF China).
The feasibility study is now being undertaken to build on the Scoping Study results. This is targeted for completion late Q1 2019.
It is Savannah's intention to be in a position to make a decision for a mine development by early 2019. To be able to advance a project from acquisition to making a development decision within two years will undoubtedly be a significant achievement. Hard rock lithium production has been identified as the key for future lithium supply to meet burgeoning international demand especially for batteries for Electric Vehicles. Savannah believes Mina do Barroso's location and near-term production potential will make its product highly sought after and it can be a strategic up-stream feature for the build-out of the European lithium value chain.
In support of this, with the Feasibility Study around a potential mine development well underway and a development decision targeted for early 2019, the project could be producing lithium concentrate in Q1 2020. Work has also begun to modify the licencing conditions under the Mining Lease Savannah currently has for the project; the Company has the right to mine approximately 7Mt of lithium, quartz and feldspar ore from seven mining nucleos and will be modifying the conditions for the extraction of additional tonnages and to build a plant specific to lithium processing.
The Company is also looking to secure offtakes with existing spodumene lithium converters.
Mina do Barroso is one of a number of prospective areas identified by Savannah in Northern Portugal that covers existing identified pegmatites that could host lithium mineralisation. The Company is currently awaiting a decision regarding exploration licence applications for three additional areas that are located close to Mina do Barroso - Calvelo, Meda and Ponte de Lima - and in July 2018 Savannah entered into an exclusive due diligence and option agreement with a view to acquiring a Mining Lease, once granted, over areas of land abutting the southern end and adjacent to Mina do Barroso.
Mainland Europe currently consumes around 24% of the world's lithium and is an early adopter of EVs and battery storage solutions. With battery production by major European manufacturers rapidly expanding, any potential local supplies from mainland Europe are being keenly sought; Savannah believes that the Mina do Barroso project, together with its portfolio of lithium exploration areas, is ideally positioned to address this strategic need.
The Mina do Barroso Lithium Project, June 2018