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Savannah Resouces expects 'significant revenues' from Mina do Barroso

Savannah Resources sees potential to increase the current mineral resource estimate of the Mina do Barroso project
savannah
A feasibility study on Mina do Barroso is due to be delivered in 2019

Savannah Resources PLC (LON:SAV) expects a boost to revenues after ongoing metallurgical test work successfully produced saleable quartz and feldspar products from its Portuguese Mina do Barroso project.

The products are used in the ceramics industry with strong demand coming from the Portuguese and Spanish markets.

The company said the production of quartz and feldspar products will mean that the company will reduce the volumes of non-saleable material that will need to be emplaced on site in contoured and vegetated landforms. 

What that means is a significant proportion of the material that is mined and processed through the plant will be shipped off site as a saleable product, which will lift revenue and reduce costs.

READ: Savannah Resources says successfully produced saleable quartz, feldspar products for use in ceramics industry

Chief executive David Archer said the quartz and felspa are of “very high quality” and will therefore fetch a premium pricing.

Mina do Barroso - Europe’s biggest lithium mine – is expected to produce volumes of about 300,000 tonnes per annum of saleable feldspa and 200,000 tonnes of saleable quartz per annum.

“(The products) should be able to generate some very significant revenues and help build a dynamic, new operation in the northern part of Portugal,” he said.

The group hopes to progress its definitive feasibility study towards delivery in 2019 with the aim of first production in 2020.

Potential to increase resource estimate and mine life at Mina do Barroso

Savannah sees potential to increase the current mineral resource estimate of Mina do Barroso, which currently stands at over 20mln tonnes.

Archer said the company hopes to revisit the resource estimate in the new year after carrying out more than 25,000 metres of drilling and 250 drill holes, making it one of the most active exploration programmes in Europe in recent years.

 

“It’s been one of those fabulous projects that really gets both bigger and better with more drilling that we undertake,” he said.

“It’s one of the most intensively executed drill campaigns that I think has been undertaken in Europe in recent years.”

Savannah has already increased the mineral resource estimate by more than 500% in just over a year and the recent discovery of three new lithium pegmatites at the Pinherio deposit could add to the overall mine life.

The new discoveries covered a considerable strike of over 250 metres and depths over 100m and are expected to positively impact the feasibility study.

Meanwhile, recent drilling at its Reservatorio and NOA deposits has also confirmed the continuity and grade of the mineral resource estimate reported in February.

'Encouraging grades' at Mina do Barroso

Overall, grades at Mina do Barroso are encouraging, according to Archer.

“The grades are very encouraging indeed, we’ve got intersections of up to 34 metres of 1.6% lithium, which is regarded at the high end of the lithium grade range so it should be very accretive to the overall mine development plan or help the initial cash flows as we take the project forward into development,” he said.

“We think it will really help to enhance the feasibility study and the overall economics of the plan.”

Savannah is currently in discussions with potential offtake partners and commercial partners for the project. Archer said these potential partners are “keen to see a project like this with a good mine life so I think we’ll be extending that mine life”.

Other assets

Savannah also holds the Mutamba mineral sands project in Mozambique, the Block 4 and 5 copper projects in Oman, and the Somero and Eräjärvi lithium projects in Finland.

The company’s subsidiary Matilda Minerals submitted an application for an additional mining lease in Mozambique over an area of 119 square kilometres, with a defined mineral resource estimate of 65mln tonnes.

The lease covers an area contiguous to two pending lease applications made by FTSE 100 miner Rio Tinto PLC (LON:RIO) and formed part of a consolidation of mineral sands projects under a consortium agreement between the two companies.

Once granted, the total area of the three leases will cover 399 square kilometres.

At Oman, the project is in the final stages of licensing and the group hopes to see that completed shortly. “It’s a project that’s on a fairly modest scale, but we’ve been overwhelmed by the degree of interest from copper traders," Archer said. 

Meanwhile, early work at Eräjärvi has confirmed encouraging grades and defining significant pegmatites at surface containing key lithium minerals.

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