Listed lithium developer Savannah Resources has added to its flagship Mina do Barroso project, in Portugal, by exercising its option to acquire the adjacent 2.94 km2 Aldeia mining lease.
The lease application consists of three blocks and yielded “excellent drilling results”, with a mineral resource estimate of 3.5-million tonnes at 1.3% lithium oxide (Li2O) on Block A, Savannah said in a statement on Wednesday.
“The drilling on Block A has returned the highest grade lithium intercept associated with the Mina do Barroso project to date, of 45 m at 1.67% Li2O, including 22 m at 2.00% Li2O,” said CEO David Archer.
The average grade for the initial resource estimate is also about 25% higher than the current average for the Mina do Barroso project.
“The Aldeia deposit also remains open to further resource expansion and bears many similar characteristics to the Grandao orebody, located just 2 km away,” Archer added.
The company recently also bought out the minority 25% shareholding in Mina do Barroso.
Savannah says the payment structure of the deal is attractive, as the company will pay for the acquisition through instalments over a six-year period. These instalments will start once the current mining lease application has been approved and transferred to a Savannah subsidiary company.
The total purchase price for the acquisition of the proposed lease area (once granted) is €3.25-million. Once triggered, the agreed payment schedule consists of an initial €55 000 payment upon execution with the balance due in 71 equal monthly instalments.
"Our Portuguese operations will provide the lithium raw material required for the significant market demand predicted to develop in Europe over the next decade. Following our increase of the mineral resources, resulting in the potential for an increase to the life-of-mine of the project, Savannah's spodumene lithium production will be key to groups interested in securing lithium chemicals in Europe, which is a high priority for the EU and highlights Savannah's potential role in the development of Western Europe's nascent lithium supply chain. Global lithium production deficits will likely drive lithium prices higher in the next few years and will provide an excellent industry setting for Savannah,” commented Archer.
Savannah announced in July last year that it had entered into a 70-day exclusive due diligence period in respect of an option to acquire the three blocks from private Portuguese company Aldeia and Irmão.