Barroso Lithium Project, Portugal

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)

*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.

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:

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.