Savannah Resources Plc (LON:SAV) is to move into the lithium space following its application for licenses over two new projects in Finland, Somero and Erajarvi.
Work previously completed by the Finnish geological survey has shown the presence across this ground of key lithium minerals in 117 individual occurrences, according to Savannah chief David Archer.
The projects are at an earlier stage than Savannah’s other two assets, the Jangamo mineral sands project in Mozambique, and the Copper Project in Oman.
Nevertheless, the addition of lithium to the portfolio adds an exciting dimension to the company’s future.
David Archer talks of the new energy matrix that the world is currently developing, and in his mind lithium and copper will be key – lithium for battery power and energy storage, and copper for the distribution of that power.
“Lithium makes enormous sense from a pollution point of view,” he says. “People do want to get away from internal combustion energies.”
He’s probably not the only one thinking that, since, as Savannah noted in its announcement, the lithium price has moved from US$8.00 per kg over the past 12 months to a current price of around US$25 per kg.
And there’s no doubt the market is waking up to lithium as companies like Bacanora continue to make significant progress with project development and funding.
With that in mind, the newsflow from Savannah ought to be fairly constant.
Archer says that as soon as the licence applications are signed off Savannah will get onto the ground in Finland and go to work doing geological reconnaissance work and fencing.
“The idea is to have drill-ready targets by the end of the year,” he says.
What’s more the cost will be fairly low – probably something in the order of €100,000.
That should be well-covered by the £1.7 mln that the company raised at a premium a few months ago to help it progress with the Oman copper and with the mineral sands.
The source of that funding was Al Marjan, a big Omani backer that has stated that it’s willing to follow its money. Archer says Al Marjan is more than happy with the lithium deal and will be watching progress with interest.
Still, the fact remains that first production is likely to come from the Oman copper asset itself.
Archer calls this asset “a very modest, but very high grade copper project.”
The costs of getting it built will, he says, be “relatively easy to handle.”
The smart money would speculate that the presence of Al Marjan on the register is a key element in his confidence, but it’s also worth noting that at grades over 5%, with fuel costs very low in Oman, not to mention a benign tax environment, the economics are likely to stack up well.
It’s therefore perhaps not surprising that Savannah’s shares ticked up by more than 3% on the news of the lithium deal.
This is clearly a company that’s willing and able to seize opportunities in the market when they arise. And with the strength in depth provided by the near-term copper production, investors are clearly in a confident mood.