14th Jun 2018 11:48
LONDON (Alliance News) - Savannah Resources PLC on Thursday said a scoping study for its Mina do Barroso project confirms that it has the potential to be a major European lithium producer.
Shares in the company were 14% higher Thursday morning at 15.10 pence each.
Savannah said the targeted ore mined for the approximate 11 years life-of-mine is 14.4 million tonnes at a grade of 1.1% lithium oxide. Average annual production is forecast at 175,000 tonnes of spodumene concentrate a year at 6% lithium oxide.
Construction is proposed to begin in the second quarter of 2019 and production to start in the first three months of 2020.
Revenue for Mina do Barroso, in Portugal, across the life-of-mine is forecast at USD1.56 billion, with operation expenditure at USD553 million and initial capital expenditure of USD109 million.
Earnings before interest, taxes, depreciation, and amortisation across the mine's lifetime is forecast at USD805 million, and USD72 million annually.
Mina do Barroso has a pretax net present value of USD356 million and an internal rate of return of 63%.
All of the above figures are the base case scenario, with the potential for upgrade.
Chief Executive 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 capital expenditure estimate of USD109 million, 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."
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