Mina do Barroso Project, Portugal

Key Info

The Mina do Barroso Lithium Project is located in northern Portugal approximately 145km northeast of the City of Porto and the industrial port of Leixões. Having taken an initial 75% stake in the Project in May 2017, Savannah has subsequently become its sole owner and expanded the Project, adding the adjacent, 3 block, ‘Aldeia’ Mining Lease Application (2.94km²) to the original granted Mina do Barroso Mining Lease (5.42km², valid until 2036, extendable for 20 years). The Project is now well established as Western Europe’s most significant spodumene lithium project.

Thanks to the Project’s lithium 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 and Mining Lease Application, a current 27Mt Mineral Resource which remains open to further expansion, robust project economics, established infrastructure, and preliminary metallurgical test work indicating that a battery grade (6% Li2O), clean, low iron, spodumene concentrate can be produced, Mina do Barroso offers significant and very attractive near-term lithium production potential.

Mineral Resources

Based on results received to date, Savannah believes Mina do Barroso is the closest European analogue to the successful Australian hard-rock lithium surface mine developments, which produce highly sought-after lithium spodumene concentrates for international markets.

When Savannah acquired its initial interest in the Project in May 2017, there was no mineral resource estimate on the Project. Since that time, the company has completed over 31,000m of resource-focused drilling and rapidly delineated a JORC Code (2012) compliant resource of 27Mt containing 285,900t of Li2O at an average grade of 1.06% Li2O (707,000t lithium carbonate equivalent, “LCE”) across five orebodies as of May 2019. Also of note is the Project’s low iron grade (averaging 0.8% Fe2O3) as this is considered a deleterious element in spodumene lithium concentrates.

As the following table shows, 55% of the total current ore and contained Li2O resources are classified in the Measured and Indicated categories and 66% of the total resource (17.7Mt, 181,800t Li2O) is located in the Grandao orebody on the existing Mining Lease.

May 2019 Mineral Resource Summary (0.5% Li2O cut-off)

Deposit

Resource
Classification

Tonnes

Li2O

Fe2O3

Li2O

Mt

%

%

Tonnes

Grandao

Measured

6.6

1.1

0.7

71,600

Indicated

6.4

1.0

0.8

61,300

Inferred

4.8

1.0

0.7

48,900

Total

17.7

1.04

0.7

181,800

Reservatorio

Measured

 

 

 

 

Indicated

 

 

 

 

Inferred

3.2

1.0

1.4

32,000

Total

3.2

1.0

1.4

32,000

Pinheiro

Measured

 

 

 

 

Indicated

 

 

 

 

Inferred

2.0

1.0

0.7

20,000

Total

2.0

1.0

0.7

20,000

NOA

Measured

 

 

 

 

Indicated

0.4

1.2

0.8

4,200

Inferred

0.3

1.0

0.9

2,900

Total

0.6

1.1

0.9

7,100

Aldeia

Measured

 

 

 

 

Indicated

1.6

1.3

0.5

21,300

Inferred

1.8

1.3

0.4

23,700

Total

3.5

1.3

0.4

45,000

All Deposits

Measured

6.6

1.1

0.7

71,600

Indicated

8.4

1.0

0.7

86,700

Inferred

12.0

1.1

0.9

127,600

Total

27.0

1.06

0.8

285,900

*Rounding discrepancies may occur

Drilling to date across the multiple orebodies identified on the Mina do Barroso Project

Exploration Targets & Further Exploration Potential

Many of the orebodies on the Project remain open to further resource expansion in multiple directions, and much of the wider Project area remains relatively underexplored to date. Hence Savannah believes that there is significant potential for further resource definition. Some of this additional potential is represented by the supplementary Exploration Targets which have been estimated for three of the current five orebodies. Furthermore, it should be noted that despite the increase in the JORC Resource estimate, these Exploration Targets have also increased significantly in tonnage over time to reach a range of 11-19Mt as at May 2019.

May 2019 Exploration Target Summary*

Deposit

Tonnage Range (Mt)

Li2O

%

Lower

Upper

Reservatorio

5.0

7.0

1.0-1.2%

Grandao

4.0

8.0

1.0-1.2%

Aldeia

2.0

4.0

1.0-1.3%

Total Mina do Barroso Exploration Target

11.0

19.0

1.0-1.2%

While the Exploration Target is conceptual in nature, Savannah believes it gives some indication of the potential lithium inventory that may be defined at the Mina do Barroso Project over the longer term. In turn, this could support extensions to the life of the Project once production is established.

*Cautionary Statement: The potential quantity and grade of the Additional Resource Targets is conceptual in nature, there has been insufficient prospecting work to estimate a mineral resource and it is uncertain if further prospecting will result in defining a mineral resource.

Scoping Study

The Scoping Study published in June 2018 highlighted the robust economic features and investment appeal of the Mina do Barroso Project.

Based on the then resource of c.14Mt (now 27Mt), a modest initial capex of US$109m, average annual production of 175,000t of 6% spodumene concentrate, a life of mine average concentrate price of US$685/t and operating costs, including freight to China, of US$271 per tonne of concentrate, the Scoping Study returned a post-tax NPV(8% discount rate) of US$241m and post-tax IRR of 48.6%.

June 2018 Scoping Study headlines

Based on the positive results of the Scoping Study the decision was taken to complete a Definitive Feasibility Study on the Project which is currently underway.

Development Plan

It is Savannah's intention to design and operate the Mina do Barroso Project in a way which minimises its impact on the natural environment and, while maximising the benefits to local communities and society, ensuring its lithium product carries a minimal carbon footprint into the lithium battery supply chain. The Group expects to be in a position to make a final investment decision on the Project’s development once the current Definitive Feasibility Study has been completed. To be able to advance a pre-resource estimate project from acquisition to a final investment decision point in less than four 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 (EVs). More details on the lithium market can be found in the Lithium section of our website.

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 foundation for the build-out of a lithium value chain in Europe.

In May 2020, Savannah submitted highly comprehensive Environmental Impact Assessment and Mine Plan reports on the proposed development to Agência Portuguesa do Ambiente, (APA), the Portuguese Environmental Agency. Review and approval of the project’s expansion, which is expected to take 7-10 months, would result in the Project being awarded a ‘Título único Ambiental’ (TUA) or ‘single environmental title’ which is seen as a key element in the Project’s overall approval process.

Sales and Financing

Savannah is undertaking discussions with a range of potential offtake partners for the lithium concentrate, and the quartz and feldspar co-products from the Mina do Barroso Project. In order to diversify its counterparty risk, the company expects to have more than one customer for each of its products and expects the majority of sales to be made under long term contract agreements.

The company is also making preparations for the funding of the Project’s development and is engaging with a range of differing finance providers to secure a blended financing package which covers the Project’s capital expenditure and working capital requirements. To complement its own ongoing efforts to secure financing, technical partners and customers for the Project, Savannah announced in May 2020 that it had been successful in its application to receive support from EIT InnoEnergy through the Business Investment Platform of the European Battery Alliance (EBA).

EIT InnoEnergy, which is responsible for the industrial development programme of the EBA, has an excellent track record in supporting growth companies and new products within the sustainable energy space in Europe by finding investment and technical partners, and by investing itself. More details about the EBA, the European Commission’s initiative to create an end-to-end lithium battery value chain in Europe, can be found in the Lithium section of our website.

Expansion Potential

Savannah has already demonstrated its intent to increase its exposure to ground prospective for lithium in northern Portugal through its acquisition of the Aldeia Mining Lease application areas adjacent to Mina do Barroso. In fact Mina do Barroso is just one of a number of prospective areas covering pegmatites that could host lithium mineralisation which Savannah has identified. At present the Portuguese authorities are making preparations for a new lithium exploration licence tendering process which Savannah believes will help to establish northern Portugal as a key lithium production hub of the future for the EU-focused lithium battery supply chain. The Company is hopeful that once the current tendering process is finalised, it will receive approvals on the outstanding prospecting licence applications it has over ground located in the region (Calvelo, Meda and Ponte de Lima).

Market Opportunity

Mainland Europe currently consumes around one quarter 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 domestic sources of lithium raw material have become strategically important and will be much in demand. Savannah believes that the Mina do Barroso Project is ideally positioned to address this strategic need. If the Mina do Barroso Project is developed as proposed it is expected to become the most significant lithium raw material production operation in the EU on an annual LCE basis. You can find more about the e-mobility revolution in Europe in the Lithium section of our website and in our corporate presentation.

The Mina do Barroso Lithium Project Update, July 2020

The Mina do Barroso Lithium Project, June 2018

Related pages & reports

Green & Smart Mining Brochure

The Mina do Barroso Project - Economic & Development Impacts - Executive Summary - University of Minho - ENGLISH

The Mina do Barroso Project - Economic & Development Impacts - Executive Summary - University of Minho - PORTUGUESE

The Mina do Barroso Project - Economic & Development Impacts - University of Minho - ENGLISH

The Mina do Barroso Project - Economic & Development Impacts - University of Minho - PORTUGUESE

Lithium Overview

Lithium Market Dynamics

E-mobility in Europe

Lithium Battery Industry Initiatives in Europe


Western Europe’s most signicant spodumene lithium deposit

Opportunity to become the first significant lithium producer in Europe

Existing 30 year Mining Lease and approved Environmental Impact Assessment (both to be revised and updated)

27Mt Mineral Resource including 15Mt in the Measured & Indicated categories

Significant expansion potential including an 11-19Mt Exploration Target across three existing orebodies

June 2018 Scoping Study demonstrated robust project economics with excellent base case post-tax NPV8 of US$241m, IRR of 48.6% and attractive initial CAPEX estimate of US$109m

Definitive Feasibility Study underway

Preliminary test work has indicated that a high-grade (6% Li₂O), clean, low iron, spodumene lithium concentrate product can be produced

Located in a low-cost and stable jurisdiction within the EU and benefiting from good national government support

Ideally positioned to meet significant demand from European battery/EV markets

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