Scoping Study for the Mina do Barroso Lithium Project Delivers NPV of US$356m
Solid Basis to Fast Track the Project to a Feasibility Study
Savannah Resources plc (AIM: SAV and SWB: SAV) (‘Savannah’ or ‘the Company’), the AIM quoted resource development company, is pleased to announce the results of its Scoping Study (the ‘Study’) undertaken on the Company’s 75% owned Mina do Barroso Lithium Project (‘Mina do Barroso’ or the ‘Project’), located in northern Portugal (Figure 1).
To view the press release with the illustrative maps and diagrams please use the following link:
KEY FINDINGS OF SCOPING STUDY (ON 100% PROJECT BASIS)
· Confirms that Mina do Barroso has the potential to be a major European producer of spodumene lithium
· Demonstrates robust project economics with the potential to deliver substantial shareholder value
· Project considered to be of low technical risk with open pit mining and conventional processing combining Dense Media Separation (‘DMS’) and flotation circuit to produce a spodumene concentrate for export sale
· Excellent base case pre-tax NPV8 of US$356m and IRR of 63%
· Strong outcomes based on a Mining inventory of 14.42Mt at 1.07% Li₂O and average annual run-of-mine production of 1.3Mtpa, over 11 years
· Average annual production of ~175,000tpa of spodumene concentrate at 6% Li₂O
· Life of Mine (‘LOM’) EBITDA of US$805m with payback period of 1.7 years
· Average EBITDA of US$72m per annum
· LOM revenue of US$1,555m
· Strip ratio of 1.6:1 (waste to ore) for first four years, 5.2:1 for LOM
· Average LOM C1 Cash Operating Cost of US$271 per tonne of concentrate (CIF China)
· Initial CAPEX of US$109m (including feldspar and quartz circuit, and excluding contingencies)
· Solid basis to fast track the Project towards a Feasibility Study
· Fast tracked development could see the Project producing concentrate in Q1 2020
Opportunities for Growth and Optimisation
· Current scenario is considered as a base case, with significant opportunity to expand and improve the Project through further Mineral Resource increases and further project definition and optimisations
· Expansion of the current Mineral Resource base is likely to provide a significant opportunity to expand mine life and potentially increase annual processing rates
· Expanding the site footprint will potentially improve infrastructure options and reduce mining and infrastructure costs
· Replacing higher strip ratio ore in the later years of the current mining schedule to reduce average mining costs and footprint of any potential development
· Review and optimisation of the Project’s CAPEX requirement
· Metallurgical optimisation to potentially increase spodumene recovery rates from 80%
Savannah’s CEO, David Archer said: “The Scoping Study highlights the robust features and outstanding investment appeal of the Mina do Barroso Lithium Project with a very high-IRR and strong cash generation, even with a conservative spodumene prices. This is matched by an attractive initial CAPEX estimate of US$109m, which includes the circuit for feldspar and quartz. The Project’s cash costs put it at the lower end of the spodumene lithium cost curve. We believe these results show that we are on track to become a low-cost producer of quality spodumene lithium concentrate by early-2020.
“There is exponential growth across the lithium supply chain as the industry gears up for transformational change to meet demand from the automotive and energy storage sectors, with Bloomberg New Energy Finance recently reporting that the transport sector is fast becoming the main driver of demand for lithium-ion batteries, overtaking consumer electronics for the first time this year. This is a great time to be bringing a new lithium mine into development.
“Since acquiring the Project just over a year ago we have achieved an enormous amount, having delivered not only a maiden Mineral Resource Estimate but two major Mineral Resource Estimate upgrades with the current estimate at 14Mt at 1.1% Li₂O, and now, a Scoping Study. We are committed to maintaining this pace as we continue to fast-track towards production, and believe significant further upside exists, with excellent potential to increase the Mineral Resource Estimate and the mining rate, schedule lower strip ratio ores in the latter years of the Project and optimise site operational features to further lower the cost of production and increase the value of the Project.
“Mina do Barroso is developing fast and it is clear that it will be a key feature in the up-stream part of the European lithium value chain and will help to drive European lithium independence.”
A video of the Company’s Mina do Barroso Lithium Project is now available on the Company’s website at www.savannahresources.com.
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