JOHANNESBURG (miningweekly.com) – Multicommodity company Savannah Resources has announced an agreement to buy a series of highly prospective lithium prospects in Portugal, including an advanced-stage project, as the company seeks to tap into the world’s second-largest lithium market after China.

As part of the transaction to buy a 75% interest in four projects in the north of the country, Savannah will acquire the Mina do Barroso prospect, which the company sees as one of the most advanced lithium development projects in Europe.

Backed by an approved mining plan, environmental-impact assessment and mining licence, the project could be fast-tracked to production, with the potential to produce high-grade lithium product.

“We believe the Mina do Barroso prospect could transform the European lithium and electric vehicle (EV) industry by becoming the first producer of battery-quality lithium in Europe,” CEO David Archer said on Wednesday.

Work has started on defining a Joint Ore Reserves Committee-compliant resource at Mina do Barroso, which will allow the Aim-listed company to make a development decision by the end of next year.

“This is undoubtedly a highly strategic and valuable growth opportunity for Savannah,” Archer said.

Mainland Europe currently consumes about a quarter of the world’s lithium and is an early adopter of EVs and battery storage solutions, but besides small Iberian production for local ceramics use, the European Union has no internal lithium supply.

Battery manufacturing by major European manufacturers is rapidly expanding, making potential local supplies from mainland Europe highly sought after. On Monday, German Chancellor Angela Merkel broke ground on automotive group Daimler’s €500-million factory in Germany to assemble lithium-ion battery packs for Mercedes Benz models. The factory is likened to Tesla’s ‘gigafactory’, in the US.

As part of the agreement with a consortium of vendors led by Slipstream Resources Investments, Savannah is acquiring a 75% interest in actual and contingent assets spread over four project areas, including one granted mining concession (5.42 km²) and nine pending exploration licence applications. Of the 1 018 km² project area relating to the pending applications, 348 km² is on track for government approval and 670 km² is subject in part to overlapping exploration licence applications from third parties.

Savannah has secured Mineralia Minas, Geotecnia e Construcoes (Mineralisa) as its Portuguese operating partner.

The company will make an initial cash payment of A$1-million and 20-million ordinary shares at 1p each to the vendors. Additional milestone-based payments could lead to an aggregate consideration of A$10.1-million in cash and shares.

Savannah also owns the Mutamba heavy minerals project in joint venture with Rio Tinto, in Mozambique, and a high-grade copper project, in Oman.