Savannah Resources plc (AIM: SAV) announced that it has entered into an agreement with a consortium of vendors led by Slipstream Resources Investments Pty Ltd (‘Vendors’ or ‘Slipstream’) to acquire a series of highly prospective lithium projects with near-term production potential in the north of Portugal (the “Transaction”).
The deal is the strategic opportunity to become the first significant lithium producer in Europe having acquired the Mina do Barroso prospect in northern Portugal. Approved Mining Plan (‘MP’), Environmental Impact Assessment (‘EIA’) and a 30-year mining concession/Mining Licence (‘ML’) means that with a defined JORC resource a development decision could be made by the end of 2018;
Significant exploration results include:
- Due diligence rock chip sampling identifying desirable spodumene pegmatites >70m wide with Li2O grades > 3.12%
- Continuous rock chipping returning broad zones of lithium mineralisation including 30m at 1.18% Li2O, 30m at 1.35% Li2O and 35m at 1.67% Li2O
- High-grade drill results which commence from at or near surface including 32m at 1.16% Li2O from 20m, 12m at 1.6% Li2O from 1m and 16m at 1.35% Li2O from surface;
Preliminary metallurgical test work has indicated that a high-grade (over 6% Li2O), clean, low iron, lithium concentrate can be produced. Further exploration underway including mapping and rock chip sampling with drilling expected to commence in around two weeks with the initial focus on defining a JORC resource at Mina do Barroso to support a potential mine development.
Acquisition is part of an enlarged acquisition that included a 75% interest in four project areas covering up to 1,018km2 of tenure with proven high-grade lithium mineralisation offering additional upside potential.
Secured Portuguese operating partner Mineralia Minas, Geotecnia e Construcoes, Lda., which has commissioned over 11 quarries and mines in Portugal. Portugal has consistently ranked highly in the world for desirability for investment (2016 Fraser Institute study) and is in the top-7 lithium-producing countries (linked to the ceramics industry).
Consideration for the Transaction will comprise of initial cash consideration of AUD$1.0 million plus the issue of 20,000,000 ordinary shares of 1p each in Savannah (‘Ordinary Shares’) to the Vendors.
Additional milestone based, conditional consideration, as summarised below, which could lead to an aggregate consideration of AUD$10.1m (£5.8m) (cash and shares) based on Savannah’s closing share price on 24 May 2017.
Savannah is acquiring a 75% interest in actual and contingent assets spread over four project areas with over 1,018km2 of tenure including: one granted mining concession (5.42km2 ), and nine pending exploration licence applications (the ‘Projects’). Of the 1,018km2 Project area relating to the pending applications: 348km2 is on track for government approval and 670km2 is currently subject in part to overlapping exploration licence applications from third parties.
The advanced nature of the Mina do Barroso prospect, with an approved ML, MP and EIA means that with the definition of a JORC resource, a development decision could potentially be made by the end of 2018. Mina do Barroso is part of the enlarged Covas do Barroso Project area.