Barroso Lithium Project, Portugal

Based on its spodumene lithium mineralogy and the exploration and development results achieved to date, Savannah believes the Barroso Lithium Project is the closest European analogue to the successful Australian hard-rock lithium projects, which produce highly sought-after spodumene lithium 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 40,000m of drilling and rapidly delineated a JORC Code (2012) compliant resource of 28Mt containing 293,100t of Li₂O at an average grade of 1.05% Li₂O (725kt lithium carbonate equivalent, “LCE”) across five orebodies as of May 2024. Also of note is the Project’s low iron grade (averaging 0.7% Fe₂O₃) as this is considered a deleterious element in spodumene lithium concentrates.

As the following table shows, around 66% of the total current ore and contained Li₂O resources are classified in the Measured and Indicated categories and around 63% of the total resource (17.7Mt, 181,800t Li₂O) is located in the Grandao orebody on the existing Mining Lease.

*Rounding discrepancies may occur

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 since the maiden resource estimate in 2017, these Exploration Targets have also increased significantly in tonnage over time to reach a range of 11-19Mt as at June 2023.

TONNAGE RANGE(Mt)

*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

While lithium is the Project's main focus, it also has the capacity to produce other minerals, such as feldspar and quartz, which are in significant demand from the large ceramic and glass industries present in Portugal and Spain. In support of its plans to produce these minerals alongside lithium, Savannah published its maiden resource estimate for quartz and feldspar in the Grandao orebody in September 2019.

Savannah has produced two Scoping Studies on the Project, one in June 2018 and the latest, in June 2023.

As with the 2018 Scoping Study, the lastest Scoping Study is based on a mine and concentrator only development for the production of spodumene concentrate, and reconfirmed the Project has the potential to be a major domestic source of conventional, low cost, low carbon, lithium raw material for Europe.

The 2023 Scoping Study is based on the Mine Plan and Environmental Report which were submitted to the Portuguese regulator in March 2023 and which received a positive Environmental Impact Statement (DIA) in May 2023, and also includes the Aldeia deposit which Savannah has the right to acquire once the related mining licence is issued.

Mine Plan

The Mine Plan for the Scoping Study is based on an annual run of mine rate of 1.5Mt of ore per annum with an estimated life of mine average head grade of 0.96% Li₂O (diluted), an overall strip ratio of 5.9:1 (waste:ore ratio) and a 14-year mine life (LOM). It is important to note that this is a scoping study, and the resulting 20.5Mt mine plan cannot be classified as an Ore Reserve under JORC (2012) guidelines.

The concept plan incorporates seven pit stages from the five deposits modelled to date

• Pinheiro (single stage)
• Grandao (2 stages), see Figure 3
• Reservatorio (2 stages)
• NOA (single stage)
• Aldeia (single stage

Flow sheet

The Project’s flowsheet, which has been designed and tested to Feasibility Study requirements, combines DMS and a flotation circuit utilising environmentally friendly reagents to produce a 5.5% Li2O grade spodumene concentrate. Over the life of the mine, the Scoping Study shows the Processing Plant producing 2.6Mt of 5.5% Li₂O grade spodumene concentrate at an average annual production rate of ~191,000tpa

The tails from the Processing Plant are thickened and dry stacked which eliminates the need for a tailings dam and reduces the overall footprint of the operation. Low-grade pegmatite material that did not form part of the concentrator feed was quantified so that the opportunity of selling this material can be evaluated. The Scoping Study assumes sales of 100,000t/year. The opportunity of producing a ‘Ceramic By-Products’ (feldspar /quartz) from the processing plant tailings for the local ceramics industry was also investigated, and the Scoping Study assumes annual sales of 400,000t.

The 2023 Scoping Study also highlighted the robust economic features and investment appeal of the Barroso Lithium Project which is scheduled to commence producing concentrate in mid-2026 subject to completion of DFS and project financing.

Economic highlights included a post -tax NPV8 of US$953 million, IRR of 77% and payback period of 1.3 years based on Life of Mine (‘LOM’) revenue of US$4.2 billion; LOM EBITDA of US$2.8 billion; and LOM post-tax free cash flow of US$1.7 billion. Price assumptions in the Study included an average 5.5% grade spodumene concentrate LOM price of US$1,464/t vs. current 6% grade spot prices of US$3,500/t and average LOM C1 Operating Cost were calculated at US$292/t of concentrate (including by-product credits). Initial CAPEX was estimated at US$236 million (excluding contingencies) which included US$40 million for community related measures.

Operating Parameters and assumptions:

It is Savannah's intention to design and operate the Barroso Lithium Project in a way which minimises its impact on the natural environment and, while maximising the benefits to local communities and society, ensures its lithium product carries a minimal carbon footprint into the lithium battery supply chain.

To complement the highly comprehensive Environmental Impact Assessment submitted on the proposed development to Agência Portuguesa do Ambiente, (APA), the Portuguese Environmental Agency, Savannah announced the initiation of a decarbonisation strategy for the Project in March 2022. Working with leading consultants and service providers in the field, Savannah is committed to moving towards reducing the Scope 1 and 2 emissions at the Barroso Lithium Project to net zero once in production and, ultimately, to a position of net zero life-of-project, and targeting the reduction of its Scope 3 emissions in collaboration with its future customers.

Savannah provided an update on the initial phase of Study in February 2023 which confirmed that Battery Electric Mining Equipment will provide the most effective and flexible means to reduce Scope 1 emissions at the Project to zero (Scope 1 emissions represent 68% of the Scope 1 and 2 total). The initial study phase also found that the estimate of Scope 2 baseline emissions has been reduced by 54% from the original 2019 forecast, based on the potential for a reduction in the estimated power requirement of the Project's plant and a 41% reduction in the emissions associated with Portugal's grid power (In 2021, 62.2% of Portugal's grid power was generated from renewable sources).

Based on these initial findings, future work on the decarbonisation of the Project will include; more detailed analysis of the options available to Savannah to secure 100% renewable power to the Project and studies with a number of mining equipment OEMs to determine a site specific solution for a transition to battery operated mining fleet and associated charging infrastructure.

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Savannah is undertaking discussions with a range of potential offtake partners for the lithium concentrate, and the quartz and feldspar products from the 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.

Savannah made the strategic decision to leave 100% of production unallocated until permitting (DIA) was received and Scoping Study metrics had been updated to reflect the new project design. Given the ongoing tightness in the lithium market, the company has received unprecedented demand for spodumene concentrate offtake from the Project with interest received from refiners, battery value chain participants, OEMs, traders and more.

Savannah will be seeking to use commercial partnerships as funding sources to fast track the development of the Barroso Lithium Project and is targeting selection of partners in next 12 months.

Savannah increased its exposure to ground prospective for lithium in northern Portugal through its 2018 acquisition of the Aldeia Mining Lease application areas which are adjacent to the C-100 Mining Lease which underpins the Barroso Lithium Project.

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.

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. As a key pillar to its proposed Critical Raw Materials Act, the European Commission has set a target that at least 10% of Europe’s demand for critical raw materials such as lithium should be met from domestic supplies. Savannah believes that the Barroso Lithium Project is ideally positioned to address this strategic need. If the Project is developed as proposed it is expected to become one of the most significant lithium raw material production operation in the EU. You can find more about the e-mobility revolution in Europe in the Lithium section of our website.