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Barroso Lithium Project

Barroso Lithium Project, Portugal

The most significant conventional lithium project in Europe

  • Europe’s most significant resource of hard rock spodumene lithium
  • Lithium produced responsibly with conventional techniques & a commitment to minimising carbon footprint
  • Sufficient lithium production for approximately 0.5 million vehicle battery packs per annum
  • Features a 30-year Mining Lease (awarded in 2006) and a 3-block mining lease application
  • Scoping study completed in 2018 demonstrated:
    • Highly positive economics
    • Low technical risk
    • Added value from co-products
  • Environmental licence award
  • Offtake agreements & associated financing
  • Strategic investments
  • Completion of DFS (Completion schedule subject to COVID-19 related restrictions and EIA review schedule set by Portuguese regulator)
  • Decarbonisation of project, targeting zero-carbon lithium
  • Resource expansion and additional exploration
  • Development of lithium conversion capacity in Portugal and across Europe by 3rd parties

Portugal’s renewable power and existing infrastructure adds to the Project’s potential

  • Project located in Northern Portugal, close to the Spanish border
  • Local electricity produced mainly from renewable sources with zero carbon emissions will power the Project
  • After processing, the spodumene lithium concentrate will be transported by truck to a local refinery or to other customers
  • Deep-water port of Leixões is located just 145 km by truck to the west
  • Short distance to port reduces carbon footprint for delivered product

Project overview

The 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 ‘Aldeia’ Mining Lease Application (3 blocks totalling 2.94km²) to the original granted C-100 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.

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 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 Grando orebody on the existing Mining Lease.

Deposit

Resource category

Tonnes (Mt)

Li2O Grade (%)

Fe203 Grade (%)

Li2O Contained (t)

Grandao

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

Sub­total

17.7

1.04

0.7

181,800

Reservatorio

Reservatorio

Measured

Indicated

Inferred

2.0

1.0

0.7

32,000

Sub­total

2.0

1.0

0.7

32,000

Pinheiro

Pinheiro

Measured

Indicated

Inferred

2.0

1.0

0.7

20,000

Sub­total

2.0

1.0

0.7

20,000

NOA

NOA

Measured

Indicated

0.4

1.2

0.8

4,200

Inferred

0.3

1.0

0.9

2,900

Sub­total

0.6

1.1

0.9

7,100

Aldeia

Aldeia

Measured

Indicated

1.6

1.3

0.5

21,300

Inferred

1.8

1.3

0.4

23,700

Sub­total

3.5

1.3

0.4

45,000

All deposits

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

Sub­total

27.0

1.06

0.8

285,900

*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, these Exploration Targets have also increased significantly in tonnage over time to reach a range of 11-19Mt as at May 2019.

TONNAGE RANGE(Mt)

Deposit

Low

High

Li2O Grade(%)

Reservatorio

Reservatorio

5.0

7.0

1.0-1.2%

Grandao

Grandao

4.0

8.0

1.0-1.2%

Alderia

Alderia

2.0

4.0

1.0-1.3%

All deposits

All deposits

11.0

19.0

1.0-1.2%

*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 quartz and feldspar, 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.

Deposit

Resource category

Tonnes (Mt)

Quartz grade (%)

Mt

Feldspar grade (%)

Mt

Grandao

Grandao

Measured

7.1

32.6

2.32

42.8

3.05

Indicated

6.3

34.6

2.17

42.6

2.67

Inferred

1.0

30.9

0.30

40.3

0.39

Total

14.4

33.4

4.79

42.6

6.11

The Scoping Study published in June 2018 highlighted the robust economic features and investment appeal of the Barroso Lithium 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 and associated quartz and feldspar products, a life of mine average spodumene concentrate price of US$685/t and operating costs, including freight to China, of US$271/t concentrate, the Scoping Study returned a post-tax NPV(8% discount rate) of US$241m and post-tax IRR of 48.6%.

Operating Parameters and assumptions:

Mineable resource (June 2018)

Mineable resource (June 2018)

14Mt at 1.07% Li2O. All open pit. 

Life of mine strip ratio (waste: ore)

Life of mine strip ratio (waste: ore)

5.2: 1

Initial life of mine

Initial life of mine

11 years at 1.3Mtpa throughput rate

Processing route & recovery rate

Processing route & recovery rate

Crush-­grind-­Dense Media Separation-­flotation (80% recovery)

Concentrate production & spec

Concentrate production & spec

175ktpa (minimum), 6% spodumene

Concentrate production as LCE/lithium hydroxide equivalent (net of assumed processing losses in a chemical conversion plant)

Concentrate production as LCE/lithium hydroxide equivalent (net of assumed processing losses in a chemical conversion plant)

22ktpa; 25.5ktpa. Sufficient for 0.5M 60kWh car battery packs per annum

Coproducts

Coproducts

Feldspar (276ktpa), quartz (173ktpa) for use in the ceramics and other industries

Intial capex

Intial capex

US$109m (Additional contingency of US$24.9m, included in financial model)

Sustaining capital & closure costs

Sustaining capital & closure costs

US$17.2m

LOM C1 cash operating cost (US$/t CONC)

LOM C1 cash operating cost (US$/t CONC)

US$271/t (US$210/t average in Years 1­4). Costs include all mining, processing, transport, shipping/freight, corporate, admin, marketing & royalty costs and are net of co­product credits (included in gross revenue)

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. 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 (DFS) has been completed.

As part of the ongoing DFS work, Savannah announced in February 2022 that it had finalised the design on the process flowsheet.

Savannah believes the Project's location and near-term production potential will make its product highly sought after and it can act as a strategic up-stream foundation for the build-out of a lithium value chain in Europe.

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.

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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.

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.

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. 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 and in our corporate presentation.