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Savannah Resources moves to secure 100% control of the Mina do Barroso lithium project

The deal will give Savannah complete control of Europe's most significant spodumene lithium deposit
Savannah Resources moves to secure 100% control of the Mina do Barroso lithium project
Mina do Barroso now boasts a 23mln tonne lithium resource

Savannah Resources PLC (LON:SAV) shares were higher on Monday following news the firm is to take 100% control of its flagship asset, the Mina do Barroso Lithium project in Portugal.

The 25% that Savannah doesn’t already own is to be acquired from minority shareholders in an all-share transaction valued at approximately US$11.9mln.

WATCH: Savannah Resources boosts Mina do Barroso lithium resource to 23.5mln tonnes

Savannah will issue 163mln new shares at US$0.073 each, equating to 15.6% of the enlarged issued share capital of the company.

The largest of the vendors, resource investment specialist, Slipstream, will become a 16.0% shareholder in Savannah, increasing from a 5.1% stake.

"Since acquiring our initial 75% shareholding in Mina do Barroso in 2017, we have rapidly progressed the project, including delineating a 23.5mln tonne spodumene-bearing JORC compliant resource and completing a positive scoping study,” said Savannah chief executive David Archer.

“At the same time, legislators and battery end users in the region have come to appreciate the need for Europe to have domestic sources of battery raw materials as the region seeks to reduce emissions from the transport sector via the transition to electric vehicles.

"As a result, we see great economic and strategic value in the project and we are pleased to have the opportunity to increase our stake to 100%. The company remains focused on completing the project's definitive feasibility Study and environmental impact assessment and permitting process, which will allow a development decision to be made,” he added.

In a note to clients, analysts at ‘house’ broker finncap pointed out that the around US$11.9mln valuation from the deal is at a “substantial discount to our unrisked valuation of 25% of the project.”

As a result, finnCap raised its price target for Savannah Resources to 22p, up from 20p previously, with the shares currently trading at 5.70p, up 0.9% on Friday’s close.

 -- Adds analyst comment, share price --

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