Share price at 09:36

0.00 - 0.00%

Share price information delayed at least 15 minutes

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
  • Agência Portuguesa do Ambiente (APA) issued a Positive Declaration of Environmental Impact (DIA)
  • Lithium is designated as a Strategic and Critical Raw Material in the proposed EU Critical Raw Materials Act. Feldspar is designated as a Critical Raw Material.
  • New Scoping Study completed in 2023 demonstrated:
    • Highly positive economics
    • Low technical risk
    • Added value from by-products (feldspar/quartz)
  • Completion of licencing process
  • Completion of DFS
  • Offtake agreements & Strategic partnerships Final Investment Decision
  • Financing & Construction
  • Commissioning & Production
  • Cash flow generation
  • Decarbonisation of project, targeting zero-carbon lithium
  • Resource expansion and additional exploration

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 near the town of Boticas and around 145km by road from the deep-water port of Leixões near the city of Porto. Having taken an initial 75% stake in the Project in May 2017, Savannah secured 100% of the Project in 2019 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 28Mt containing 293,400t of Li2O at an average grade of 1.05% Li2O (725,521t lithium carbonate equivalent, “LCE”) across five orebodies as of June 2023. 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, 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.

 

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

3.5

0.95

0.8

33,000

Inferred

0.7

0.9

0.9

6,500

Sub­total

4.2

0.94

0.7

39,500

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

11.8

1.0

0.7

119,800

Inferred

9.6

1.1

0.9

102,000

Sub­total

28

1.05

0.8

293,400

*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)

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%

Aldeia

Aldeia

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 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.

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

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:

Mineable resource (June 2023)

Mineable resource (June 2023)

20.5Mt at 1.05% Li2O. All open pit. 

Life of mine strip ratio (waste: ore)

Life of mine strip ratio (waste: ore)

5.9: 1

Initial life of mine

Initial life of mine

14 years at 1.5Mtpa throughput rate

Processing route & recovery rate

Processing route & recovery rate

Crush-­grind-­Dense Media Separation-­flotation (73% recovery)

Concentrate production & spec

Concentrate production & spec

191ktpa (minimum), 5.5% Li2O grade spodumene concentrate

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)

25ktpa; 29ktpa. Sufficient for 0.5M 60kWh car battery packs per annum

Coproducts

Coproducts

400,000tpa of Ceramic By-product (Feldspar/quartz); 100ktpa of low grade pegmatite

Intial capex

Intial capex

US$236m (excluding contingencies and including US$40m of community related measures)

Sustaining capital & closure costs

Sustaining capital & closure costs

US$49m

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

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

US$292/t. C1 operating costs include all mining, processing, transport, G&A and community costs, and are net of ceramic by-products credits and exclude royalties

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.

Read More

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.