Savannah Resources Plc (LON:SAV) is setting itself up to become a substantial battery lithium producer with the acquisition of an asset near to production in Portugal.
The Mina do Barroso prospect in the north of the country already has an approved Mining Plan, Environmental Impact Assessment (EIA) and a 30-year mining licence, which means that with a defined JORC resource a development decision could be made by the end of 2018.
Preliminary metallurgical test work meanwhile has indicated that a high-grade (over 6% Li2O), clean, low iron, lithium concentrate can be produced, Savannah added.
WATCH: Savannah Resources to become first lithium producer in Europe
The acquisition will be effected through Savannah taking a 75% stake in the vendor Slipstream Investments and in total includes four project areas covering up to 1,018 sq km with proven high-grade lithium mineralisation.
Savannah will pay A$1mln plus the issue of 20mln shares.
Additional milestone based payments can lead to an aggregate consideration of A$10.1mln (£5.8m).
David Archer, chief executive, said: "This transaction provides Savannah with a unique opportunity to secure what we believe to be one of the most advanced lithium mining concessions in Europe, in a low-cost and stable political environment.
With an approved Mining Plan, Environmental Impact Assessment, Mining Licence and the potential to produce high grade lithium product, we believe the Mina do Barroso prospect could transform the European lithium / Electric Vehicle ('EV') industry by becoming the first producer of battery quality lithium in Europe.
"Mainland Europe currently consumes around 25% of the world's lithium and is an early adopter of EVs and battery storage solutions
Work is now underway to define a JORC resource at Mina do Barroso so that we may be in a position to make a development decision by the end of 2018.