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Savannah Resources to fast-track lithium project as scoping study highlights value

That cost would be recouped in under two years with production of 175,000 tonnes of spodumene concentrate
electric vehicle
Electric vehicle development is driving lithium demand

Savannah Resources Plc (LON:SAV) has confirmed the cost of building a lithium mine at Mina do Barroso in Portugal will be around US$109mln.

That would be recouped in under two years with production of 175,000 tonnes of spodumene concentrate, a source ore for lithium, according to a scoping study. 

WATCH: Scoping study highlights 'outstanding appeal' for Savannah Resources' Lithium project

Consultant Hatch estimated that on a base case price of US$685 per tonne and 8% discount, Mina do Barroso is worth US$356mln and will generate revenues of US$1.56bn over eleven years of production.

David Archer, Savannah’s chief executive, said last week the company will look to raise around €100mln to fund the construction costs.

Building is scheduled to start this time next year with first production early in 2020.

Archer said "The Scoping Study highlights the robust features and outstanding investment appeal of the Mina do Barroso Lithium Project with a very high-IRR and strong cash generation, even with a conservative spodumene price.”

Capital outlays were attractive, he added, while cash costs are at the lower end of the spodumene lithium curve.

The upsurge in electric vehicle development also means it is a great time to bring a new lithium mine into development, said Archer

There is also considerable scope to boost resources and reduce operational costs in future years, he added.

Currently, Mina de Barroso has a Mineral Resource Estimate of 14 million tonnes at 1.1% Li₂O. 

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