Savannah Resources PLC’s (LON:SAV) chairman said the company is in a “strong operational and financial position moving into the second half of 2021” and is “ideally placed to take advantage” of the evolution of the electric vehicle (EV) and lithium markets.
In a statement to be delivered at the AIM-listed firm’s AGM later today, chairman Matthew King said improving market trends established in the second half of 2020 have “continued strongly throughout [the first half of 2021” and that a race to secure lithium supply is “well and truly underway”.
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As a result, the firm said its Mina do Barroso project is “the most significant conventional lithium mine development in Europe” and is a prime example of critical raw materials projects in Europe that have been targeted by the European Commission as part of efforts to develop domestic end-to-end value chains for materials critical to the economy.
“We have been greatly encouraged by the developments we have seen in this value chain in the past year where a growing number of companies are now evaluating the option of building lithium chemical production capacity in Europe. With this development, it should be possible for Mina do Barroso's lithium concentrate to be refined in Europe, allowing Savannah to play its part in the production of low-carbon, responsibly manufactured, domestic lithium-ion batteries for use in Europe”, King said.
Meanwhile, the chairman said “progress has been made over the last year” at the Mina do Barroso project and that it expects to reach the important “Declaration of the Environmental Impact” stage of the project in the fourth quarter of this year. The firm also said it is continuing its ongoing Definitive Feasibility Study (DFS) at the project.
King also said the firm is seeing “increasing” commercial interest in the project as the spodumene lithium price increased, added that the company will “look to leverage the far more buoyant lithium market environment in our ongoing negotiations with multiple parties in the second half of 2021”.
"There is still much work to do at Mina do Barroso and it will remain our main focus throughout 2021. We also plan to add to our in-house team to have the skills and capacity we need for Mina do Barroso's development. In addition, we are also aware of the opportunity available to Savannah in the lithium sector given the supply-demand fundamentals and the Company's position in the European industry. Hence, we will be looking to add to our portfolio of assets to build up a pipeline of lithium projects”, the chairman said.
Elsewhere, King said that in Mozambique the company is working to meet the obligations of mining licences including initiating environmental impact assessments (EIAs) and other tasks, while a technical and corporate review of the project initiated last year to identify a clear path and structure for the project's development remains ongoing with our partner, Rio Tinto PLC (LON:RIO). The group also hopes to complete the review and action its findings in the remainder of the year.
“Savannah now stands ready to leverage its strong position in the rapidly developing European lithium sector over the coming years. The remainder of 2021 is set to be a very busy and exciting time for the Company as we continue to advance Mina do Barroso, hopefully add to our lithium portfolio and define our strategy around Mutamba with our partner, Rio Tinto. We look forward to providing news on all these fronts in the months to come", the chairman concluded.
Shares in Savannah were 0.7% lower at 3.8p in early deals on Wednesday.