TIDMSAV
RNS Number : 3272C
Savannah Resources PLC
12 June 2023
12 June 2023
Savannah Resources Plc
(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the
'Company')
Barroso Lithium Project: New Scoping Study
New Scoping Study for the Barroso Lithium Project demonstrates
Outstanding Economics: Post-tax NPV of US$953 million , IRR of 77%
and 1.3 year Payback
Savannah Resources Plc, the European lithium development
company, is pleased to announce, following the positive
Environmental Impact Statement ('DIA') from the Portuguese
regulator on the Project's revised and optimised design, the
results of a new Scoping Study (the 'Study' or the 'Scoping Study')
undertaken on the Company's 100% owned Barroso Lithium Project (the
'Project'), located in northern Portugal.
Scoping Study Highlights
-- The new Scoping Study reconfirms the Project has the
potential to be a major European producer of spodumene concentrate,
the industry's standard lithium raw material. Located in close
proximity to the emerging European battery supply chain, including
a number of planned lithium chemical plants, the Project has the
potential to be a domestic source of conventional, low cost, low
carbon, lithium raw material for the region.
-- Demonstrates excellent Project economics, with the potential
to deliver substantial shareholder value:
o Base Case post -tax NPV(8) of US$953 million, IRR of 77% and
payback period of 1.3 years
o Life of Mine ('LOM') revenue of US$4.2 billion
o LOM EBITDA of US$2.8 billion
o LOM post-tax free cash flow of US$1.7 billion
o Based on average 5.5% grade spodumene concentrate LOM price of
US$1,464/t vs. current 6% grade spot prices of US$3,500/t
-- Project considered by independent consultants to be of low
technical risk with open pit mining and conventional processing
combining Dense Media Separation ('DMS') and a flotation circuit
utilising environmentally friendly reagents to produce a 5.5% Li(2)
O grade spodumene concentrate:
o Resource of 28Mt at 1.05% Li O with a lithia content of
293,400 tonnes
o Resource Utilised in Mine Plan, 20.5Mt at 1.05% Li O and
average annual run-of-mine production of 1.5Mtpa, over 14 years
o LOM production of 2.6Mt of 5.5% Li(2) O grade spodumene
concentrate at an average annual production rate of 191,000tpa
o Average LOM C1 Operating Cost of US$292/t of concentrate
(including by-product credits)
o Initial CAPEX of US$236 million (excluding contingencies)
which includes US$40 million for community related measures
-- Project is likely to have a significant cost advantage due to
its close proximity to the local ceramics market where a large
portion of the tailings could be sold as Ceramic By-products.
-- Project scheduled to commence producing concentrate in
mid-2026 subject to completion of DFS and project financing.
To view the full press release including any maps, figures or
tables, please use the following link:
http://www.rns-pdf.londonstockexchange.com/rns/3272C_1-2023-6-11.pdf
Dale Ferguson, CEO of Savannah said, " Following on from the
recent positive Environmental Impact Statement ('DIA') from the
Portuguese regulator, we are delighted to have been able to publish
the findings of the new Scoping Study on the Project ahead of the
H2 2023 deadline we had set ourselves. This study, alongside the
receipt of the positive DIA decision represents a major milestone
for Savannah, as well as a significant step-change as we look to
accelerate the development of the Project.
"Having just received the environmental regulator's endorsement
for the revised and optimised design of the Project, the new
Scoping Study now highlights the outstanding investment case of the
proposed development. Based on long term forecast prices, which are
below current spodumene prices, the Project generates an
exceptional IRR and significant cash generation . Hence, we hope
that this Scoping Study makes clear the inherent value in this
Project which Savannah seeks to unlock for shareholders, for
customers, for Portugal, for Europe, and all stakeholders.
"Importantly, these robust economics are achievable alongside
minimising the environmental impact of the Project. Our analysis
shows that C1 operating costs are in the second quartile of the
spodumene lithium cost curve and CAPEX remains achievable despite
additional environmental impact mitigations incorporated in the
revised and optimised Project design and the new bypass road which
will benefit the regions' residents. With the Project's close
proximity to the developing European lithium value chain, it will
also enjoy low transport costs with all costs referred to in the
Scoping Study being delivered to European customers.
"Capable of producing just under 200,000tpa of spodumene
concentrate, or c.25ktpa LCE (Lithium Carbonate Equivalent), the
Barroso Lithium Project is one of the most significant potential
lithium raw material sources in the European Union. The European
Commission's Critical Raw Material Act calls for at least 10% of
European demand for materials such as lithium to be met from
domestic supply by 2030. Having received its key environmental
approval last month and now with the strong business case implied
by the Scoping Study, the Barroso Lithium Project is well placed to
fulfil its role as a major source of responsibly produced lithium
in Europe. In this way, it can help to establish Portugal as a key
player in Europe's own end-to-end lithium-ion battery value
chain.
"With the DIA received and the Scoping Study now completed,
Savannah is focused on reaching its next Project milestones, the
completion of the environmental licencing process and the
Definitive Feasibility Study. To complete both these tasks Savannah
will be ensuring that the conditions associated with the DIA are
incorporated in the Project's final engineering design. We expect
to achieve both milestones in H2 2024.
"We will also be continuing with our stakeholder engagement
programme. We are keen to ensure that all stakeholders are aware of
and understand the activities we will be undertaking to prepare for
the future development of the Project. We will also be seeking
their input to optimise the delivery of the significant
socio-economic benefits the Project can bring to the local
villages, the Municipality and to Portugal
"The commercial arrangements for the Project will also receive
greater focus as we look to close in on offtake and financing
arrangements now that the licencing of the Project has taken a
significant step forward, and the favourable economics are clearly
demonstrated by the Scoping Study. From the foundation created by
the DIA, now the Scoping Study and the fact that we still have not
committed any of the Project's offtake the next 12 months are set
to be a busy and defining period for the Project and Savannah."
Further Information
Summary of key Scoping Study input and Outcomes
Outcome:
Parameter Unit Base Case
------------ ----------
Post-Tax NPV(8) US$ M 953
------------ ----------
Post-Tax IRR % 77.3
------------ ----------
Post-Tax Payback Period Years 1.3
------------ ----------
Initial CAPEX (excluding contingencies) US$ M 236
------------ ----------
LOM Operation Expenditure US$ M 1,066
------------ ----------
Average LOM C1 Operating Cost** US$/t conc 292
------------ ----------
LOM Revenue US$ M 4,151
------------ ----------
LOM EBITDA US$ M 2,793
------------ ----------
LOM Post-Tax Free Cash Flow US$ M 1,694
------------ ----------
Input:
Parameter Unit Base Case
------------ ----------
Start of Production Date Mid-2026
------------ ----------
Potential Mine Life Years 14yrs
------------ ----------
Target LOM Ore Mined Mt 20.5
------------ ----------
Measured Mineral Resources % 32
------------ ----------
Indicated Mineral Resources % 48
------------ ----------
Inferred Mineral Resources % 18
------------ ----------
Exploration Target* % 2
------------ ----------
Annual Ore Throughput Mtpa 1.5
------------ ----------
Average LOM Strip ratio (waste to plant feed) w:o 5.9:1
------------ ----------
Average Resource Grade % Li(2) O 1.05
------------ ----------
Plant Li O Recovery % 73
------------ ----------
Potential Annual 5.5% Spodumene Production tpa 191,000
------------ ----------
Average Government Royalty rate on revenues % 4
------------ ----------
Average 6% Spodumene Concentrate Price Equivalent US$/t 1,597
------------ ----------
Average 5.5% Spodumene Concentrate Price US$/t 1,464
------------ ----------
*Cautionary Statement: The potential quantity and grade of the
Exploration Target is conceptual in nature, there has been
insufficient exploration work to estimate a mineral resource and it
is uncertain if further exploration will result in defining a
mineral resource. As such, potential investors should not rely upon
this Exploration Target as indicative of a mineral resource and
should not base their investment decision, in whole or in part, on
such Exploration Target.
** C1 Operating Costs include all mining, processing, transport,
G&A, and community costs, and are net of Ceramic By-Products
credits.
Study Background
The Barroso Lithium Project is located in northern Portugal near
the town of Boticas and around 145km by road from the deep-water
port of Leixões near the city of Porto (Figure 1). The object of
the Scoping Study was to produce a preliminary development base
case centred on the defined JORC (2012) compliant Mineral Resource
Estimate of 28Mt at 1.05% Li O, using conventional processes to
produce a marketable Li O concentrate to demonstrate the potential
economics of the Project.
Figure 1. Project Location Map
The Project's Scoping Study is based on a mine and concentrator
only development for the production of spodumene concentrate.
Additional revenue potential comes from the production of C eramic
B y- P roducts ( combined feldspar and quartz products ('Ceramic
By-Products')) from t he spodumene lithium concentrator circuit and
the sale of low-grade pegmatite material. The Scoping Study is
based on the Mine Plan and Environmental Report which were
submitted to the Portuguese regulator in March 2023 and which
received a positive Environmental Impact Statement (DIA) in May
2023, and also includes the Aldeia deposit which Savannah has the
right to acquire once the related mining licence is issued.
The Project's flowsheet, which has been designed and tested to
Feasibility Study requirements, combines DMS and a flotation
circuit for the recovery of spodumene into a concentrate. The
resulting tails are thickened and dry stacked which eliminates the
need for a tailings dam and reduces the overall footprint of the
operation. Low-grade pegmatite material that did not form part of
the concentrator feed was quantified so that the opportunity of
selling this material can be evaluated. The Scoping Study assumes
sales of 100,000t/year at US$23.8/t. The opportunity of producing a
C eramic B y- P roducts (feldspar /quartz) from the processing
plant tailings for the local ceramics industry was also
investigated, and the Scoping Study assumes annual sales of
400,000t of this material at a price of US$53.5/t. Lithium and
feldspar are designated respectively as Strategic and Critical Raw
Materials in the proposed EU Critical Raw Materials Act.
The Project's NPV was calculated by Savannah on an equity basis
owning 100% of the Project, and has been estimated via cash flow
modelling, discounted at 8%. The deterministic sensitivity analysis
of the Base Case NPV estimates have been calculated on a range of
-20% to +30%. These estimates accommodate fundamental uncertainties
at the scoping level of this study and will be refined through
feasibility level studies. It is important to note that many
aspects of the work completed to date, like the metallurgy test
work, has been completed to DFS level which will aid in shortening
the time for the next phase of work. The sensitivity analysis was
undertaken on all of the key inputs (spodumene concentrate price,
initial CAPEX, operating expenditure ('OPEX'), discount rate, Li(2)
O recovery rates and feed grade) to arrive at a range of Project
NPVs and IRRs for any given sensitivity.
Geology
The Barroso - Alvão Region is characterised by the presence of a
large field of outcropping pegmatites and aplite-pegmatite dykes of
granitic composition. Pegmatite dykes are mainly intruded in the
granitic rocks of the region whilst aplite-pegmatite dykes are
hosted by low to medium grade metasedimentary rocks of Silurian age
that are strongly deformed (B. CAROY et al., 1992). The thickness
of these dykes ranges from less than 1m up to 50m.
The Barroso Lithium Project is centred on a series of spodumene
rich aplite-pegmatite dykes and sills, which have formed the basis
of this study.
Tenure
The Barroso Lithium Project comprises the C100 Mining Lease
(Figure 2) which is 100% owned by Savannah Resources Plc and is
currently undergoing a 250m expansion along its northern boundary.
Savannah has received written confirmation from the Portuguese
mining bureau, DGEG, that on the basis of article 24 of Decree-Law
no. 88/90 of 16 March (1990) and based on the resources allocated,
exploited and intended, the article can be utilised to request the
DGEG for an expansion up to 250m of the C100 Mining Lease in
specific areas where a resource has been defined and the
requirement for the expansion can be justified. The DGEG have
confirmed in writing that the licence for the extension would be
granted upon a positive approval of the DIA which occurred on 30
May 2023. Discussions with the DGEG on the process for the
expansion and re-definition of the boundary is currently underway
in the Reservatorio area and, as a result, potential mineralisation
in the area has been included into the Scoping Study.
Savannah has a fully signed and executed agreement for the
purchase of the Aldeia licences (Figure 2) which are subject to the
final condition precedent around the granting of the mining
concessions for the area. Based on current discussions it is
anticipated that concessions could be granted later this year or
early next year. Based on this information, the Aldeia resource has
been included in the Scoping Study.
Mineral Resource and Exploration Target
Savannah commenced drilling at the Barroso Lithium Project in
2017 and has completed over 31,000m of drilling using a combination
of RC (21,889m) and diamond drilling (9,515.5m) to define a JORC
(2012) compliant resource of 28Mt at 1. 05 % Li (2) O. The resource
is comprised of five main deposits, Grandao, Reservatorio,
Pinheiro, NOA and Aldeia.
Grandao Deposit: Is the primary deposit of the Project with a
mineralised zone of 650m long and 500m wide, and a thickness of up
to 50m. The deposit exhibited consistency of mineralisation within
the pegmatite body and has produced the most significant results to
date.
Reservatorio: Is a moderately dipping outcropping pegmatite with
over 450m of strike exposure that can be traced for at least 170m
down dip. The pegmatite thickness is up to 40m and has exhibited
consistent lithium mineralisation throughout the body.
Pinheiro: is made up of two converging steeply dipping pegmatite
bodies that have been traced for 200m on the surface and by
drilling and down dip for 150m, with thickness up to 25m. Lithium
mineralisation occurs throughout both pegmatites and remains open
along both strike and down dip.
NOA: is a semi contiguous, moderately dipping pegmatite body
that has been traced for 350m along strike and down dip for 140m.
The lithium mineralisation is consistent both down dip and along
strike.
Aldeia: is a northwest dipping tabular pegmatite with several
minor subsidiary bodies that can be traced for 200m along strike
and 250m down dip. The lithium mineralisation is consistent
throughout the pegmatite and is of a higher grade compared to the
other deposits.
The previous JORC (2012) compliant Measured, Indicated, and
Inferred Mineral Resource for the Barroso Lithium Project,
calculated by PayneGeo, May 2019 of 27Mt at 1.06% Li(2) O with a
lithia content of 285,900 tonnes was updated in June 2023 to 28Mt
at 1.05% Li(2) O with a lithia content of 293,400 tonnes as shown
in Table 1 with full details in Appendix 1. To further show the
potential of the Project an Exploration Target* has been refined
based on results of the drilling for the Grandao, Reservatorio and
Aldeia deposits. The Exploration Target* projects a potential of
11Mt to 19Mt at 1.0% - 1.2% Li(2) O and is also shown in Table 1.
This gives an overall combined Project Resource and Exploration
Target* of 39Mt to 47Mt at 1.0% - 1.2% Li(2) O.
Table 1. Combined Resource Estimate and Exploration Target for
the Project
Mineral Resource Estimate and Exploration Target* for the
Project
Deposit Tonnes (Mt) Li(2) O% Li(2) O
Tonnes
------------ --------- --------
Grandao 17.7 1.1 181,800
------------ --------- --------
Reservatorio 4.2 0.94 39,500
------------ --------- --------
Pinheiro 2.0 1.0 20,000
------------ --------- --------
Noa 0.6 1.1 7,100
------------ --------- --------
Aldeia 3.5 1.3 45,000
------------ --------- --------
Total Mineral Resources 28.0 1.05 293,400
------------ --------- --------
Exploration Target * 11-19 1.0-1.2
------------ --------- --------
Total Current Project Target 39-47 1.0-1.2
------------ --------- --------
*Cautionary Statement: The potential quantity and grade of the
Exploration Target is conceptual in nature, there has been
insufficient exploration work to estimate a mineral resource and it
is uncertain if further exploration will result in defining a
mineral resource. As such, potential investors should not rely upon
this Exploration Target as indicative of a mineral resource and
should not base their investment decision, in whole or in part, on
such Exploration Target.
Mine Plan
The planning for the Barroso Lithium Project was based on an
annual run of mine rate of 1.5Mt of ore per annum with an estimated
life of mine average head grade of 0.96% Li(2) O (diluted), an
overall strip ratio of 5.9:1 (waste:ore ratio) and a 14-year mine
life (LOM). It is important to note that this is a scoping study,
and the resulting 20.5Mt mine plan cannot be classified as an Ore
Reserve under JORC (2012) guidelines.
In general, the mineralisation grades are fairly consistent
throughout the deposits so to improve the Project economics basic
pit stages were identified with the intention of deferring
stripping requirements over the LOM. The concept plan incorporates
seven pit stages from the five deposits modelled to date (see
conceptual site layout in Figure 2)
-- Pinheiro (single stage)
-- Grandao (2 stages), see Figure 3
-- Reservatorio (2 stages)
-- NOA (single stage)
-- Aldeia (single stage)
The total optimised pit shell inventories are listed in Table 2.
Five geological block models (one for each respective deposit) were
provided, and conceptual pit shells were generated using
optimisation software founded on the Lurchs Grossman algorithm.
Figure 2. Conceptual Site Layout
Figure 3 . Cross section through Grandao Deposit showing the
conceptual stage 1 and 2 pits
Table 2. Conceptual Optimised Shell and Mine Plan
Diluted Strip
Deposit Stage Feed Li(2) O Stripping Ratio
(Mt) (%) (Mt) (w:o)
--------------- ------- ------ ---------- ----------- --------
Pinheiro 1 1.3 0.99 11.2 8.8
------- ------ ---------- ----------- --------
Grandao 1 5.2 1.05 34.4 6.7
------- ------ ---------- ----------- --------
Grandao 2 5.8 0.78 13.3 2.3
------- ------ ---------- ----------- --------
Reservatorio 1 2.7 0.93 11.8 4.4
------- ------ ---------- ----------- --------
Reservatorio 2 1.8 0.96 10.4 5.6
------- ------ ---------- ----------- --------
NOA 1 0.5 0.90 2.8 5.4
------- ------ ---------- ----------- --------
Aldeia 1 3.1 1.19 36.6 11.7
------- ------ ---------- ----------- --------
Total 20.5 0.96 120.6 5.9
--------------- ------- ------ ---------- ----------- --------
Minor rounding discrepancies may occur in the table.
The optimised shells used in this evaluation are based on
Measured, Indicated, and Inferred Mineral Resource Estimates
together with a minor amount of the Exploration Target. All
materials had appropriate dilution and mining recovery factors
applied. The quantities for each type of material are reported in
Table 3.
Table 3 . Plant Feed Inventories by Pit and Material Type
Measured Indicated Inferred Exploration
Resource Resource Resource Target*
---------------
Deposit Tonnes Li(2) Tonnes Li(2) Tonnes Li(2) Tonnes Li(2) Total Li(2) Percentage
(M) O% (M) O% (M) O% (M) O% (Mt) O%
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ -----------
Pinheiro - - - - 1.3 1.0 - - 1.3 0.99 6%
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ -----------
Grandao 6.6 1.05 4.4 0.7 - - - - 11 0.91 54%
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ -----------
Reservatorio - - 3.5 0.95 0.7 0.93 0.3 0.9 4.5 0.94 23%
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ -----------
NOA - - 0.3 0.94 0.2 0.84 - - 0.5 0.9 2%
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ -----------
Aldeia - - 1.6 1.23 1.5 1.15 - - 3.1 1.19 15%
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ -----------
Total
(Mt) 6.6 1.05 9.8 0.88 3.7 1.04 0.3 0.9 20.5 0.96 100%
------- ------ ------- ------ ------- ------ ------- ------ ------ ------ -----------
Percentage 32% 48% 18% 2% 100%
--------------- --------------- --------------- --------------- -------------- -----------
Minor rounding discrepancies may occur in the table.
*Cautionary Statement: The potential quantity and grade of the
Exploration Target is conceptual in nature, there has been
insufficient exploration work to estimate a mineral resource and it
is uncertain if further exploration will result in defining a
mineral resource. As such, potential investors should not rely upon
this Exploration Target as indicative of a mineral resource and
should not base their investment decision, in whole or in part, on
such Exploration Target.
Infrastructure
The Project's total site conceptual infrastructure stretches
6.5km by 2.5km over relatively steep and undulating terrain as
shown in Figure 2. All conceptual mine infrastructure and
excavations developed in this study were restricted to:
-- within tenement boundaries where space allowed;
-- minimised sterilisation of prospective target exploration zones;
-- respected offset boundaries for major watercourses; and
-- legacy travel routes (where available).
Mining Schedule
The conceptual mine production plan is summarised in Table 4 and
Figure 4. As the Project progresses further refinements to haul
routing plans, waste rock storage management and pit staging should
be targeted to take advantage of opportunities for reduced haulage
capital and operating costs.
Table 4. Conceptual Barroso Lithium Project Mine Production Plan
(pre-strip incl. in year 1)
Conceptual Mine
Production Total Year of Production
1 2 3 4 5 6 7 8 9 10 11 12 13 14
--------------------
Days (Days) 4,953 360 360 360 360 360 360 360 360 360 360 360 360 360 273
----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Plant Feed (Mt) 20.5 1.3 1.4 1.5 1.5 1.5 1.4 1.6 1.5 1.5 1.5 1.6 1.5 1.4 1.2
-------- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Li O
(diluted) (%) 0.96 0.99 0.81 0.83 0.85 0.94 0.95 0.97 0.89 1.04 0.99 0.95 0.98 1.09 1.26
----------- -------- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Mining
(waste
+ peg +
plant
feed) (Mt) 141 20.8 16 8.8 6.4 5 4.8 4.7 4.5 14.2 18.6 15.5 9.6 8.7 3.5
--------
Strip
Ratio (w:o) 5.9 14.4 10.2 4.8 3.3 2.3 2.4 2.0 2.0 8.5 11.8 8.5 5.4 5.1 2.0
--------
(
Li(2) O k t) 196.6 13.4 11.6 12.7 12.8 14.0 13.7 15.1 13.5 15.5 14.3 15.4 14.7 15.6 14.8
-------- ------ ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- ----- -----
Minor rounding discrepancies may occur in the table.
Figure 4. Conceptual Barroso Lithium Project Mine Plan by
Deposit
Mining Costs
A contract mining model was developed for the potential
development by Minesure using the schedules shown in Table 4 and
Figure 4.
Annual operating costs for each major item of plant were
estimated from first principles using data supplied by major mining
fleet suppliers. Labour costs were provided by Savannah.
The cost components were combined to derive an annual operating
cost for each machine which were then applied to the mining
schedule to generate an overall cost per tonne for mining.
The mining activities will utilise excavators matched with dump
trucks. Due to the relatively high production rates, it is
estimated that it will be required to operate three dozers whilst
only mining at Pinheiro and Grandao, increasing to four dozers when
Reservatorio comes on stream. Initially only one water cart should
be required as the haul distances are quite short however an
additional cart will be required when mining Reservatorio and NOA.
A front-end loader is costed to operate throughout the Project life
as a back-up dozer and for doing general clean up works. Allowance
has been made for the operation of a service truck, light vehicles,
and other ancillary equipment.
Capital expenditure is initially incurred in mobilising the
mining fleet to site and setting up maintenance facilities.
Pre-stripping activities costs are included in CAPEX. Prior to
mining commencing, areas to be disturbed would be cleared, grubbed,
and have the topsoil recovered and stored. This is undertaken by a
dozer and loader as the pushing distances are relatively short.
Further clearance works need to be undertaken when new deposits are
brought online, or existing ones cut back.
Processing
A series of metallurgical tests were conducted at Nagrom in
Perth, Western Australia on representative samples from the
Pinheiro, Aldeia, Reservatorio and Grandao deposits under the
supervision of Minsol Engineering Pty Ltd. This information was
used to develop the Scoping Study flow sheet for a combined 1.5
Mtpa DMS and flotation circuit (Figure 5) with an overall plant
availability of 85% for the recovery of spodumene into a
concentrate product that contains a 5.5% Li(2) O. Tails from the
process would be thickened and dry stacked in a lined tailings
storage facility .
The processing of ore to produce concentrates will comprise
several stages:
-- Crushing and reclaim - a multiple stage crushing and
screening circuit crushes the ore to -14mm then discharges the ore
onto the fine ore stockpile. The stockpile is reclaimed via belt
feeders which feed the primary screen.
-- Primary Comminution and Classification - the reclaimed
material is split into oversize (+3.35mm), which is fed to the
primary mill, and undersize, which is further split into the DMS
pre-treatment stage (+0.85mm). The 0.85mm fraction will then be
treated through classification to produce an underflow (+0.18mm)
which reports to the secondary mill and an overflow (-0.18mm) to
bypass the secondary mill and be recomposited prior to undergoing
magnetic separation.
-- DMS - The DMS will operate as a conventional pump-fed DMS
circuit, utilising a low SG (Specific Gravity) media to act as a
pre-concentration stage. The floats produced will be disposed of to
the floats stockpile, whilst the upgraded sinks will report to the
regrind mill.
-- Flotation Preparation Circuit - A secondary mill will operate
in closed circuit with the secondary mill stacksizers to produce a
product P80 of 0.150mm. The mill discharge will then undergo
magnetic separation and desliming prior to mica flotation to remove
all highly magnetic material and ultra fines.
-- Mica Flotation Circuit - The mica flotation feed will undergo
conditioning in tanks prior to being fed to the mica rougher
flotation cells. The rougher concentrate then reports to the mica
cleaner flotation cells to minimise Li(2) O losses in the mica
concentrate. The mica cleaner concentrate is collected and reports
to the mica thickener, whilst the mica cleaner tails is combined
with the mica rougher tails and then undergoes two stages of
cyclones to remove the mica reagents prior to entering the
spodumene flotation circuit.
-- Spodumene Flotation Circuit -Spodumene flotation will include
a rougher, cleaner and recleaner stage, with the tails from each
stage reporting to the prior stage to improve the Li(2) O recovery.
The spodumene flotation area utilises flotation water recovered
from the spodumene tails and concentrate thickeners to minimise the
impact of flotation chemical on other equipment.
-- Concentrate and Tailings Dewatering and Storage - the
spodumene concentrate, Ceramic By-Products and tailings streams are
dewatered by a combination of cyclones, thickeners, belt filters
and filter presses before being dry stacked in a purpose-built
storage area immediately adjacent to the processing plant. The
spodumene concentrate and Ceramic By-Products will then be
transported off-site.
-- Water Circuits - Three unique process water circuits will be
used during processing to minimise the impact of flotation reagents
on equipment, allow dry stacked tailings, reduce the overall amount
of fresh water required to operate the process plant and ensure an
optimal environmental outcome.
-- Reagents - The proposed reagents are all environmentally
friendly and meet European Reach requirements. These include sodium
silicate, soda ash, flocculant, Armeen T, and an oleic acid based
collector will be the main reagents used within the process plant.
Storage and delivery of minor reagents including soda ash, mica
collector, coagulant, and frother have been included.
-- Services - provision of raw water and compressed air are
required to support the processing plant.
Figure 5. A Summary Diagram of the Environmentally Friendly
Process Plant Flowsheet
A summary of parameters for the concentrator flowsheet is shown
in Table 5.
Table 5. Concentrator Production
Parameter Units Value
Plant Annual Treatment Rate tpa 1,500,000
----------- ----------
Crushing Plant Utilisation % 65
----------- ----------
Crushing Plant Throughput tph 263.4
----------- ----------
Process Plant Utilisation % 85
----------- ----------
Process Plant Throughput tph 202
----------- ----------
Ore Feed Grade % Li(2) O 0.96
----------- ----------
Concentrate Grade % Li(2) O 5.5
----------- ----------
Li(2) O Recovery % 73
----------- ----------
SC 5.5 Production tpa 190,525
----------- ----------
Ceramic By-Products Sold tpa 400,000
----------- ----------
Total Tails Disposed tpa 909,475*
----------- ----------
* This is including tails that could be sold as Ceramic
By-Products after further study of the ceramic market
Spodumene Conversion
Based on the mineral and chemical composition and MinSol's
previous project experience, the Barroso Lithium Project
concentrate is considered high quality, and suitable for conversion
via the conventional sulfate route. To support this, conversion
testing has been undertaken with multiple laboratories in Europe
and Australia to determine the following:
-- Conduct sighter decrepitation tests on a range of spodumene
concentrates and under a range of conditions (temperature and
time).
-- Conduct sighter sulfation bake / water leach tests to determine the extraction of lithium.
-- Identify optimal decrepitation conditions for each spodumene
mineral concentrate and differences in reactivity between those
mineral concentrates.
The most recent conversions test work undertaken at the
Australian Government's Science and Technology Organisation 'ANSTO'
proves good conversion and leach recoveries without requiring
detailed investigations or optimisation to improve. Key results are
summarised in Table 6 below:
Table 6. Summary of Lithium, Aluminium, and Iron Extractions
Sample Li(2) Li Extraction (%) Al Extraction Fe Extraction (%)
ID O (%)
(wt%)
----------------------
Decrepitation Conditions Decrepitation Conditions Decrepitation Conditions
----------------------------------- --------------------------------- ----------------------------------
1050 degC 1100degC 1150degC 1050 degC 1100degC 1150degC 1050 degC 1100degC 1150degC
------------- --------- --------- ----------- --------- --------- ------------ --------- ---------
60 90 90 90 60 90 90 90 60 90 90 90
min min min min min min min min min min min min
4 6.4 98.2 98.4 98.7 99.1 3.7 4 4.1 3.8 19.6 21.2 19.6 18.6
5 5.8 96.8 96.7 96.5 97.4 3.8 3.6 3.5 3.6 12.8 13.2 11.6 10.9
6 5.5 96.3 79.7^ 95.5 96.7 4.2 2.4 3.5 3.6 13.6 6.6 10.6 12.2
7 5.4 97.1 96.9 97.7 96.9 3.7 3.7 2.8 3 13.9 14.9 11.6 14
8 5.6 95.7 95.6 95.1 96.1 2.9 3.1 2.7 3.5 10.4 12 9.1 11.2
------ ----- ------ --------- --------- ---- ----- --------- --------- ----- ----- --------- ---------
^ Determined to be due to incorrect acid addition.
Project infrastructure
Infrastructure requirements for the mine and concentrator
include:
-- Site Access Road : for the mine/concentrator, upgrade of a
6.6km length of road is required to provide access to the site for
the delivery of supplies and reagents and for the export of the
spodumene concentrate. Roads will be required both for heavy
vehicles associated with the mine production and tailings
management, as well as light vehicles used to support the operation
of the concentrator.
-- Bypass Road : A new 17km public road to bypass the local
villages and connect to the A24 highway is required to minimise
interaction between heavy and light vehicles and reduce the impact
on the local villages.
-- Power : required for both the mine and concentrator. The
largest individual consumers of power will be the key comminution
equipment (e.g., crushers, ball mill, etc.). Electricity will be
supplied by the high-voltage power lines near the site to a power
transformer that Savannah will need to licence and build. The
licencing is undertaken through DGEG services (Direção Geral de
Energia e Geologia).
-- Water : required to support the concentrator operations,
almost all material from the mine will be subjected to some form of
wet processing. Most of the water is recycled within the
concentrator although a freshwater make-up is required to account
for the water lost primarily as moisture content within the
tailings and concentrate streams. Water will be obtained from the
dewatering of the proposed pits and from water reservoirs that will
be constructed.
Transport and Logistics
Given the likelihood that there will by downstream processing
facilities in Portugal coming online around the same time Savannah
commences spodumene concentrate production it has been assumed that
the product is sold locally and therefore the only cost is the
transport from the mine to Leixoes (Matosinhos) (no storage nor
ocean freight costs) where there is capacity to build a lithium
refinery. The cost assumed for the transport of the concentrate was
US$12.3/t which is significantly different to most other lithium
projects which contain a significant inter-continental ocean
freight cost.
Project Licencing
Savannah's revised design and optimisation for the Barroso
Lithium Project, which captured feedback from stakeholders to
further minimise the environmental and social impact of the Project
received a positive DIA from APA on 30 May 2023. This represents a
major milestone for the Project and is the first positive DIA for a
lithium raw material supply project in Portugal. As expected, in
line with international practice, the DIA has been issued with a
set of conditions, measures and compensations (the 'Conditions')
which Savannah has agreed to, and which should provide further
assurance that the Project will be developed and operated in a
responsible way and that socio-economic benefits will be shared
with stakeholders.
Savannah expects the remainder of the environmental licencing
process to take 9-12 months to complete:
-- Savannah must now complete the Environmental Compliance
Report of the Execution Project ('RECAPE'). During this phase of
the licencing process the Company will again engage with APA to
ensure that all the conditions set in the DIA are captured in the
final design of the Project. Savannah will then submit the final
designs for the Project along with the measures and environmental
monitoring plans to be implemented during the construction and
operating phases to meet the criteria established by the DIA. If
these designs and plans are approved by APA the environmental
conformity of the detailed design can be declared ("DCAPE").
-- Running in parallel with the RECAPE process is the licencing
award process. Once the DCAPE declaration has been made the Project
can be awarded its final Environmental Licence, 'Título Único
Ambiental'. APA is expected to take around 60 working days to
review the submission.
Environmental Considerations
The optimised site layout from the recently approved DIA which
the new Scoping Study is based on considers the following key
environmental points.
Water
-- Supply: The Project will source all its own water onsite.
Water will be predominantly collected in the mining areas as well
as from other surface sources. Water will not need to be abstracted
from the Covas River.
-- Water quality: The Project will have a 'closed' water system,
meaning process water will be stored, treated, and recycled onsite
and not be discharged from the Project.
Infrastructure
-- A new road layout avoids all Project-related traffic passing
through local villages and towns, connects directly to A24, and
requires just one new bridge (onsite) to reduce impact on local
rivers and riverbank ecosystems; offsite Project-related traffic
will be restricted to weekdays only.
-- The revised site layout reduces environmental and visual
impact as well as noise and light emissions by moving site
infrastructure, such as the processing plant, further from
watercourses and local communities and keeping development heights
below the relevant ridge lines.
Ecology
-- The water management plan and level of water consumption
means the impact on rivers and the aquatic ecosystem is
minimised.
-- Iberian wolf: Independent studies show wolf packs are not
living on the Project area and mitigation measures have been put in
place to protect wildlife.
-- Impact on oak groves and meadows is further reduced in the latest Project layout.
-- Revegetation to utilise native species and other suitable
plants with good pollination characteristics.
Noise and ground vibrations
-- Savannah is committed to operating well below legal limits
for noise and ground vibrations. Onsite truck movements will be
prohibited overnight.
Air quality
-- Dust is identified as the highest risk impact to air quality
which will be mitigated by treating unpaved roads with water and
using fog cannons used when haul trucks tip loads at the processing
plant.
Processing plant waste ('tailings') storage facility ('TSF')
-- The plant will produce inert tailings that will be stored
separately to waste rock in a highly stable 'dry stack' structure.
The Project will not use a traditional 'wet' tailings dam.
-- For additional environmental protection, the TSF will be
built on a waterproof lining and located at a safe distance from
the Covas River. The TSF will be revegetated progressively over the
life of the Project.
Waste rock storage facilities
-- The waste rock from the mining areas (also inert material)
will be stored in 1 temporary structure and 3 permanent structures,
separate to the plant tailings and away from water courses; rock
from the temporary facilities will be used in rehabilitation and
landscaping while permanent waste rock formations will be contoured
into the existing landscape and revegetated.
Landscape & Rehabilitation
-- Rehabilitation of the Project is guaranteed. It will be a
requirement of the Project's environmental licence and Savannah is
required to lodge a rehabilitation bond (cash) with the government
before any work can commence.
-- Due to the phased nature of the Project, rehabilitation can
commence during the operating phase including on 3 out of 4 mining
areas.
-- Backfilling or partially backfilling and relandscaping the
mining areas once ore extraction has ceased.
-- The impacted areas including all mining areas, tailings and
permanent waste rock storage facilities, and infrastructure such as
the processing plant and water storage facilities will be
comprehensively rehabilitated, landscaped and revegetated with
native species. Impacted water courses will be reinstated, as far
as practically possible, to their original locations. On closure
the land will be made available for alternative use such as
agriculture or tourism.
-- The landscape recovery of the affected area aims to recover
the levels of biodiversity in the area and integrate it into the
surrounding landscape.
CAPITAL COST
The capital cost estimate ("CAPEX") for the concentrator shown
in the following Table 7 was based on preliminary major equipment
sizing, with budget estimates provided for major mechanical
equipment and recent pricing for similar equipment used for minor
equipment. The total installed plant cost was then built-up using
accepted industry factors (based on the major equipment cost) for
installation, minor equipment, trades, bulks, and indirect costs.
Installation labour costs and productivity were adjusted for the
plant location.
Costs for non-process infrastructure have been estimated
separately based on estimated quantities and budget pricing on unit
rates from contractors.
The mining costs associated with the mining contractor
(contractor establishment, mobilisation and pre-production costs
incurred constructing access roads, clearing sites and
pre-stripping for ore mining) are included in the capital cost.
The contingency was estimated for each item within the estimate
based on the level of definition, and the overall contingency is
19%. The estimate accuracy is -20% to +30%.
Table 7. Summary of Project CAPEX
Description Cost (US$
M)
Mining 13.6
----------
Processing Facilities 107.8
----------
Process Infrastructure 17.4
----------
Non-Process Infrastructure 35.5
----------
Land Acquisition 5.8
----------
Freight 9.4
----------
Project Indirects 40.1
----------
General 6.3
----------
Initial CAPEX (excl. contingency) 235.9
----------
Contingency (average 19%) 44.4
----------
Total Initial CAPEX 280.3
----------
Sustaining CAPEX over the LOM amounts to US$49 million and
includes costs related to the process plant (US$25 million), site
roads (US$9 million) and tailing facilities (US$9 million).
Closure and rehabilitation programs will start during the second
year of mining. These costs amount to US$102 million and include
the restoration of water lines and land rehabilitation in
accordance with the DIA.
OPERATING COST
The concentrator operating cost estimate were calculated at a
scoping level of accuracy (-20% / +35%). Table 8 shows a summary of
the operating cost ("OPEX") estimate and Table 9 shows a summary of
the OPEX, C1 Operating Costs and All-in Sustaining Costs.
Table 8. Summary of Operation Expenditure (OPEX)
Description Total US$ Total US$/t of
M LOM US$ M/Year concentrate
Mining
Equipment Operating Costs 364.5 26.7 140.1
---------- ------------ -------------
Labour 49.4 3.6 19.0
---------- ------------ -------------
Drill and Blast 88.9 6.5 34.2
---------- ------------ -------------
Indirect Costs 30.6 2.3 11.7
---------- ------------ -------------
Subtotal Mining 533.4 39.1 205.0
---------- ------------ -------------
Concentrator
Power 67.0 4.9 25.7
---------- ------------ -------------
Processing Supplies and Consumables 91.3 6.7 35.1
---------- ------------ -------------
Reagents 106.9 7.8 41.1
---------- ------------ -------------
Water and Tails Disposal 56.3 4.1 21.6
---------- ------------ -------------
Maintenance Supplies 34.5 2.5 13.3
---------- ------------ -------------
Labour 81.6 6.0 31.4
---------- ------------ -------------
Operating Contractors and Services 6.4 0.5 2.5
---------- ------------ -------------
Subtotal Concentrator 444.0 32.5 170.7
---------- ------------ -------------
General and Admin 69.1 5.1 26.6
---------- ------------ -------------
Community Benefits 19.7 1.4 7.6
---------- ------------ -------------
Total OPEX 1,066.2 78.1 409.9
---------- ------------ -------------
Table 9. Summary of OPEX, C1 Operating Costs and All-in
Sustaining Costs
Description US$/t of
concentrate
Mining 205.0
-------------
Concentrator 170.7
-------------
General and Admin 26.6
-------------
Community Benefits 7.6
-------------
OPEX 409.9
-------------
Freight 13.9
-------------
Credit By-Products (132.1)
-------------
C1 Operating Costs 291.7
-------------
Royalties 58.7
-------------
Sustaining Capex 19.0
-------------
Closure and Rehabilitation 39.3
-------------
All-in Sustaining Costs 408.7
-------------
Tax and Government Royalties
It is expected that over its life the Project will generate
direct income for the local and national governments of Portugal of
US$924 million, comprised of US$771 million from corporation tax
and royalties of US$153 million. This does not include the
significant payroll taxes related to the people to be employed at
the Project.
For reference, in their updated Economic & Social Impact
study on the Project (March 2023), Professors Carballo-Cruz and
João Cerejeira from NIPE - Research Center in Economic and Business
Policies of the School of Economics and Management of the
University of Minho, estimated that the Project will increase
Portugal's gross value of national production by EUR420 million
during the investment (construction) phase and by EUR210 million
per year during the operating phase. They also estimated that the
Project's contribution to GDP is EUR173 million in the investment
phase and EUR95 million per year in the operating phase (EUR1.37
billion in total), and that the Project will generate over 5,000
indirect and induced jobs in the investment phase and over 2,500 in
the operating phase.
Timetable and Project Implementation
The current target for the commencement of spodumene concentrate
production is mid 2026, with detail of the proposed timeline
provided in Figure 6.
Figure 6. Estimated Project Timeline
The execution schedule is based on a number of key
assumptions:
-- The execution strategy considers the concentrator and TSF
(Tails Storage Facility) will be operated by Savannah, with mining
operations performed by a mining contractor.
-- The execution schedule assumes the remainder of the
environmental licencing process will be completed in a timely
manner.
-- The schedule assumed that the Feasibility would take 14
months to complete due to the time taken to complete the resource
update which be around mid-2025. An early engineering program is
scheduled to commence prior to the end of the Feasibility Study to
facilitate the procurement of long lead items and complete
engineering required to support the planned early works.
-- Procurement activities for the concentrator will start early
during the engineering cost study to enable early contract of long
lead items. A period of 15 months (including manufacture and
transport to site) was allowed for long lead items for the
concentrator.
-- Early works comprising construction of access roads and bulk
earthworks has been assumed to take 6 months.
-- Following the early works period, Concentrator construction
is scheduled to take 12 months and finishing 6 months following
long lead equipment arrival on site.
-- TSF (dry stack) will be conducted in several stages to
minimise upfront capital costs. Approximately 2 years of storage
capacity will be constructed initially. Construction is assumed to
take 6 months (TSF land has been identified and construction
materials from bulk earthworks excavation to be used).
-- Ramp up for the concentrator is expected to take 4-6 months to ramp up to full capacity.
Product Pricing
Since 2021 lithium supplies have failed to keep up with the
demand created by year-on-year record sales of electric vehicles
which are powered by lithium-ion batteries (Figure 7 and 8).
Furthermore, the widely held expectation is for this market
imbalance, in which supply consistently lags demand, to persist for
the remainder of the decade.
Figure 7. Global Electric vehicles sales Figure 8. Lithium
market supply & demand
Source: ev-volumes.com Source: Canaccord Genuity: Lithium H1'23
recharge
As a result, prices for lithium raw material including that of
spodumene concentrate have risen substantially over the period.
In the case of spodumene concentrate the price has risen by
nearly 10 times since the sub US$400/t lows reported in the second
half of 2020. While spodumene prices have retreated from the record
highs of over US$7,000/t in late 2022, the current pricing
environment for spodumene concentrate remains extremely strong
compared to historical levels. For the period Q1 2023, Australian
miner, Pilbara Minerals, reported average spodumene concentrate
prices of US$4,840/t CIF China (relating to 144,312 tonnes shipped
at an average grade of 5.3% Li O, equating to US$5,522/t on an 6.0%
Li O equivalent basis) in its quarterly activities update.
Savannah plans to bring the Project into production at a time
when lithium concentrate prices are expected to remain robust.
Savannah has not established any contracts or committed any of its
production pursuant to an off-take agreement at this time and will
be producing a much sought after, locally produced, low-carbon
product for a vibrant European market where there is effectively no
local supply of battery grade lithium raw materials at present.
Forecasts for lithium prices are available from independent
industry analysts, price reporting agencies, investment banks and
brokers. For this study Savannah has used average annual forecast
prices drawn from a pool of spodumene concentrate price forecasts
published during H1 2023 by a group of leading market participants
including the Company's Joint Broker, RBC.
Based on those forecasts, in the Base Case, the LOM average
price is US$1,464/t for a 5.5% Li O concentrate (6.0% US$1,597/t
equivalent), with annual prices ranging from US$2,569/t in 2026 to
US$1,238/t from 2033 (Figure 9).
Figure 9. Forecast Pricing for Spodumene Concentrate at 5.5%
Li(2) O and 6% Li(2) O
The pricing utilised for the Ceramic By-Products is US$53.5/t,
which is based on the independent market analysis conducted on
behalf of the Company in 2018 by First Test Minerals, adjusted for
inflation. The Ceramic By-Products revenues over the LOM equate to
approximately 8% of forecast revenue from spodumene.
Financial analysis
The technical and economic parameters that were developed for
the Scoping Study were used in a real-US dollar MS-Excel based
financial model to estimate future cash flows and evaluate the
Project cases based on net present value (NPV), internal rate of
return (IRR) and payback period. Savannah selected an 8% discount
rate for the evaluation and sales of Ceramic By-Products were
included in the model.
The results of the financial analysis for the mine and
concentrator are provided in Table 1, Table 10, and Figure 10.
Related sensitivity analyses are included in Figures 11, 12 and
13.
Table 10. Summary of Financial Information
Description Unit Base Case
Pre-Tax NPV(8) US$ M 1,419
------------ ----------
Post-Tax NPV(8) US$ M 953
------------ ----------
Pre-Tax IRR % 101.8
------------ ----------
Post-Tax IRR % 77.3
------------ ----------
Pre-Tax Payback Period Years 1.1
------------ ----------
Post-Tax Payback Period Years 1.3
------------ ----------
LOM EBITDA US$ M 2,793
------------ ----------
Annual EBITDA US$ M 205
------------ ----------
LOM Post-Tax Free Cash Flow US$ M 1,694
------------ ----------
Annual Post-Tax Free Cash
Flow US$ M 124
------------ ----------
Initial CAPEX (excluding contingencies) US$ M 236
------------ ----------
LOM Operation Expenditure US$ M 1,066
------------ ----------
Average LOM C1 Operating Cost US$/t conc 292
------------ ----------
LOM Revenue US$ M 4,151
------------ ----------
Annual Revenue US$ M 304
------------ ----------
Exchange Rate EUR:USD US$ 1.054
------------ ----------
Exchange Rate AUD:USD US$ 0.695
------------ ----------
Figure 10. Post-Tax Free Cash Flow
Sensitivity analysis
Sensitivity analysis was undertaken showing the effect that
changes in the key inputs have in the NPV and the IRR. The summary
of this analysis is reflected in Figures 11, 12 and 13.
Figure 11. Sensitivity analysis of Post-Tax NPV(8)
Figure 12. Sensitivity analysis of Post-Tax NPV(8)
Figure 13. Sensitivity analysis of Post-Tax IRR
Project Optimisation and Enhancements
Being a Scoping Study, opportunities remain to optimise and
enhance the Project to increase its economic return. Areas for
optimisation and enhancement include:
-- Resource to Reserve conversion through infill drilling
-- Conversion of Exploration Targets into Resources and then Reserves.
-- Pit design to maximise the head grade of the ore.
-- By-product business development plan to capitalise on capturing the best value.
-- The availability of development grants, subsidies, and tax concessions.
-- Electrification of the mine fleet and further decarbonisation initiatives.
-- Bring forward mining of the higher grade Aldeia resource,
which is currently scheduled to be mined during the last four years
of the Project.
-- Evaluation of potential to increase annual mining rates and
the capacity of the processing plant.
Conclusions and Next steps
This Scoping Study demonstrates that the Barroso Lithium Project
has the operational and economic potential to be a major European
producer of spodumene concentrate from 2026 onwards. The low cost,
responsible, production of over 190,000tpa of spodumene concentrate
(25ktpa LCE) from the Project would help to establish Portugal as a
major contributor to Europe's new lithium-ion battery value chain
and contribute towards meeting the European Commission's target of
fulfilling at least 10% of the region's demand for this critical
and strategic metal from domestic sources by 2030.
With a base case post-tax NPV (8) of US$953 million, IRR of 77%
and payback period of 1.3 years the Project has shown its economic
viability at this level of study and the financial contribution it
could make to the local and nation economies through the generation
of corporate and municipal taxes and royalties.
With the favourable DIA recently received and this Scoping Study
completed, Savannah's next steps include completion of the
remainder of the environmental licencing process and the Definitive
Feasibility Study, tasks which the Company expect to complete in H2
2024.
Savannah's stakeholder engagement programme will also be
maintained as the Company looks to optimise the delivery of the
significant socio-economic benefits that the Project can bring
through partnership with local communities.
Commercial arrangements for the Project will also be advanced as
Savannah looks to conclude its offtake and financing arrangements
ahead of the potential start of Project construction in 2025 .
Key Consultants
MinSol Engineering Pty Ltd, ("MinSol")
Minsol was engaged to provide engineering design services in
relation to Savannah's Scoping Study for the Barroso Lithium
Project and co-ordinate the compilation of the Scoping Study
report. The Scoping Study is based upon the proven flow sheet
developed by Savannah and Minsol. In addition, Minsol's services
were provided in combination and integrated with Savannah's own
inputs, and other 3rd Parties engaged by Savannah.
MinSol and its engineering team has a successful track record
over the past 15 years in metallurgical testwork, flow sheet
development, detailed design, and implementation for major lithium
projects for the likes of Talison Lithium (Greenbushes Lithium
Plants), Tianqi Lithium (Kwinana Lithium Hydroxide Plant) and
Global Lithium (Manna Lithium Project Studies). Additionally, the
engineering team at Minsol have significant experience in
international multi commodity processing and design.
PayneGeo Pty Ltd., ("PayneGeo")
PayneGeo developed the geological model and completed the
resource estimations utilised in the Scoping Study.
Minesure Pty Ltd., ("Minesure")
Minesure completed the analysis and definition of the scoping
level mine plan and built up the contractor costs model which is
the basis of the mining concept for the Scoping Study.
Competent Persons
The information in this announcement that relates to exploration
results is based upon information compiled by Mr Dale Ferguson,
Technical Director of Savannah Resources Limited. Mr Ferguson is a
Member of the Australasian Institute of Mining and Metallurgy
(AusIMM) and has sufficient experience which is relevant to the
style of mineralisation and type of deposit under consideration and
to the activity which he is undertaking to qualify as a Competent
Person as defined in the December 2012 edition of the "Australasian
Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves" (JORC Code). Mr Ferguson consents to the inclusion in
the report of the matters based upon the information in the form
and context in which it appears.
The information in this release that relates to metallurgy and
metallurgical test work has been reviewed by Mr Robert Simmons,
MAusIMM, B. Eng. (Chemical Engineering). Mr Simmons is not an
employee of the Company but is engaged as a contract consultant. Mr
Simmons is a Member of the Australasian Institute of Mining and
Metallurgy, he has sufficient experience with the style of
processing response and type of deposit under consideration, and to
the activities undertaken, to qualify as a competent person as
defined in the 2012 edition of the "Australian Code for the
Reporting of Exploration Results, Mineral Resources and Ore
Reserves". Mr Simmons consents to the inclusion in this report of
the contained technical information in the form and context as it
appears.
The Information in this report that relates to Mineral Resources
is based on information compiled by Mr Paul Payne, a Competent
Person who is a Fellow of the Australasian Institute of Mining and
Metallurgy. Mr Payne is a full-time employee of Payne Geological
Services. Mr Payne has sufficient experience that is relevant to
the style of mineralisation and type of deposit under consideration
and to the activity being undertaken to qualify as a Competent
Person as defined in the 2012 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves". Mr Payne consents to the inclusion in the report of the
matters based on his information in the form and context in which
it appears.
The scoping level mining assessment of the Barroso Lithium
Project has been completed by Mr Nigel Spicer who is a Member of
the Australasian Institute of Mining and Metallurgy and Chartered
Engineer (IOM3). Mr. Spicer has sufficient experience relevant to
the styles of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to
qualify as a Competent Person as defined in the 2012 Edition of the
"Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves". Mr Spicer is the principal of Minesure
Pty Ltd and is a consultant to Savannah Resources Plc and consents
to the inclusion in the presentation of the matters based on his
information in the form and context in which it appears.
It should be noted that as the Mining assessment has been
conducted at a scoping level no Ore Reserves are being reported for
the Barroso Lithium Project Deposit.
Forward Looking Statement
The information contained within this announcement may contain
references to forecasts, estimates, assumptions, and other
forward-looking statements. The Company believes that its
expectations, estimates and forecast outcomes are based on
reasonable assumptions, it can give no assurance that they will be
achieved. These assumptions may be affected by a variety of
variables and changes in the base assumptions that are subject to
risk factors associated with the nature of the business, which
could cause actual results to vary materially from those expressed
herein. Potential investors should make and rely upon their own
investigations before deciding on whether to acquire or deal in the
Company's securities.
Cautionary Statement
The Scoping Study referred to in this announcement is a
preliminary technical and economic study of the potential viability
of developing the Barroso Lithium Project via an open pit mining
operation and constructing a beneficiation and processing facility
on site. It is based on low level technical and economic
assessments that are not sufficient to support the estimation of
ore reserves or to provide assurance of an economic development
case at this stage or certainty that the conclusions of the Scoping
Study will be realized. Further exploration and evaluation work and
appropriate studies are required before Savannah will be able to
estimate any ore reserves or to provide any assurance of an
economic development case.
Approximately 80% of the life of mine production is in either
Measured (32%) or Indicated (48%) Mineral Resource category and 18%
in the Inferred Mineral Resource category with the remaining 2%
from the Exploration Target. The company has concluded that it has
reasonable grounds for disclosing the production target given that
the viability of the Project does not rely on the Inferred Resource
and Exploration Target.
There is a low level of geological confidence associated with
Inferred Mineral Resources/Exploration Target and there is no
certainty that further exploration work will result in the
determination of Indicated Mineral Resources or that the production
target itself will be realized. The stated production target is
based on the entity's current expectations of future results or
events and should not be solely relied upon by investors when
making investment decisions. Further evaluation work and
appropriate studies are required to establish sufficient confidence
that this target will be met.
The Scoping Study is based on the material assumptions outlined
throughout the document. These include assumptions about the
availability of funding. While Savannah considers all the material
assumptions to be based on reasonable grounds, there is no
certainty that they will prove to be correct or that the range of
outcomes indicated by the Scoping Study will be achieved.
To achieve the range of outcomes indicated in the Scoping Study,
funding in the order of US$236 million to US$280 million will
likely be required to build the mine, process plant, and related
infrastructure. Investors should note that there is no certainty
that Savannah will be able to raise that amount of funding when
needed. It is also possible that such funding may only be available
on terms that may be dilutive to or otherwise affect the value of
Savannah's existing shares.
Given the uncertainties involved, investors should not make any
investment decisions based solely on the results of the Scoping
Study.
Regulatory Information
This Announcement contains inside information for the purposes
of the UK version of the market abuse regulation (EU No. 596/2014)
as it forms part of United Kingdom domestic law by virtue of the
European Union (Withdrawal) Act 2018 ("UK MAR").
Savannah - Enabling Europe's energy transition.
**S**
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For further information please visit www.savannahresources .com
or contact:
Savannah Resources PLC Tel: +44 20 7117 2489
Dale Ferguson, CEO
SP Angel Corporate Finance LLP (Nominated Advisor Tel: +44 20 3470 0470
& Joint Broker)
David Hignell/ Charlie Bouverat (Corporate Finance)
Grant Barker/Abigail Wayne (Sales & Broking)
RBC Capital Markets (Joint Broker) Tel: +44 20 7653 4000
Farid Dadashev/ Jamil Miah
Tel: +44 20 3757 4980
Camarco (Financial PR)
Gordon Poole/ Emily Hall / Fergus Young
LPM (Portugal Media Relations) Tel: +351 218 508 110
Herminio Santos/ Jorge Coelho
About Savannah
Savannah Resources is a mineral resource development company and
sole owner of the Barroso Lithium Project in northern Portugal.
Savannah is focused on the responsible development and operation
of the Barroso Lithium Project so that its impact on the
environment is minimised and the socio-economic benefits that it
can bring to all its stakeholders are maximised. Through the
Barroso Lithium Project, Savannah can help Portugal to play an
important role in providing a long-term, locally sourced, lithium
raw material supply for Europe's rapidly developing lithium battery
value chain. Production is targeted to begin in 2026, producing
enough lithium for 0.5m vehicle battery packs per year.
The Company is listed and regulated on AIM and the Company's
ordinary shares are also available on the Quotation Board of the
Frankfurt Stock Exchange (FWB) under the symbol FWB: SAV, and the
Börse Stuttgart (SWB) under the ticker "SAV".
APPIX 1 - JUNE 2023 MINERAL RESOURCE UPDATE
Mineral Resource Summary
Table 1. Updated Mineral Resource Estimation Summary
Deposit Resource Tonnes Li(2) Fe(2) Li(2) O
Class O O(3)
-------------- -----------
Mt % % Tonnes
-------------- ----------- ------- ------ ------ --------
All Deposits Measured 6.6 1.1 0.7 71,600
--------------
Indicated 11.8 1.0 0.7 119,800
Inferred 9.6 1.1 0.9 102,000
Total 28.0 1.05 0.8 293,400
------- ------
*Rounding discrepancies may occur
Table 2. Exploration Target Summary
Deposit Tonnage Range (Mt) Li(2)
O
%
Lower Upper
---------- ---------
Reservatorio 5.0 7.0 1.0-1.2%
Grandao 4.0 8.0 1.0-1.2%
Aldeia 2.0 4.0 1.0-1.3%
---------- --------- ---------
Total Barroso Lithium Project
Exploration Target* 11.0 19.0 1.0-1.2%
---------- --------- ---------
*Cautionary Statement: The potential quantity and grade of the
Exploration Target is conceptual in nature, there has been
insufficient exploration work to estimate a mineral resource and it
is uncertain if further exploration will result in defining a
mineral resource.
Mineral Resource Estimate
A Mineral Resource Estimate for the Reservatorio Lithium Deposit
has been prepared by Payne Geological Services Pty Ltd, an external
and independent mining consultancy -
http://www.paynegeo.com.au/paul-payne. The Deposit forms part of
Savannah's Barroso Lithium Project, located in northern Portugal.
The Mineral Resource Estimates for the Aldeia Deposit and other
deposits at the Project have been classified as Measured, Indicated
and Inferred Mineral Resource in accordance with the JORC Code,
2012 Edition and are summarised in Table 3 and Attachment 1. In
addition, the required JORC compliance tables can be found in
Attachment 2.
Table 3. June 2023 Mineral Resource Summary (0.5% Li(2) O
cut-off)
Deposit Resource Tonnes Li(2) Fe(2) Li(2) O
Classification O O(3)
Mt % % Tonnes
------- ------ ------ --------
Grandao Measured 6.6 1.1 0.7 71,600
Indicated 6.4 1.0 0.8 61,300
Inferred 4.8 1.0 0.7 48,900
Total 17.7 1.04 0.7 181,800
------- ------
Reservatorio Measured
Indicated 3.5 0.95 0.8 33,000
Inferred 0.7 0.9 0.9 6,500
-------------------------------- ------- ------ ------ --------
Total 4.2 0.94 0.8 39,500
-------------------------------- ------- ------ ------ --------
Pinheiro Measured
Indicated
Inferred 2.0 1.0 0.7 20,000
-------------------------------- ------- ------ ------ --------
Total 2.0 1.0 0.7 20,000
-------------------------------- ------- ------ ------ --------
NOA Measured
Indicated 0.4 1.2 0.8 4,200
Inferred 0.3 1.0 0.9 2,900
-------------------------------- ------- ------ ------ --------
Total 0.6 1.1 0.9 7,100
-------------------------------- ------- ------ ------ --------
Aldeia Measured
Indicated 1.6 1.3 0.5 21,300
Inferred 1.8 1.3 0.4 23,700
-------------------------------- ------- ------ ------ --------
Total 3.5 1.3 0.4 45,000
-------------------------------- ------- ------ ------ --------
All Deposits Measured 6.6 1.1 0.7 71,600
Indicated 11.8 1.0 0.7 119,800
Inferred 9.6 1.1 0.9 102,000
-------------------------------- ------- ------ ------ --------
Total 28.0 1.05 0.8 293,400
-------------------------------- ------- ------ ------ --------
*Rounding discrepancies may occur
Reservatorio Mineral Resource Estimate
Geology
At the Barroso Lithium Project, lithium mineralisation occurs
predominantly in the form of spodumene-bearing pegmatites, which
are hosted in metapelitic and mica schists, and occasionally
carbonate schists of upper Ordovician to lower Devonian age.
The Reservatorio deposit comprises one main pegmatite which
showed relatively clear geometry, and was modelled into a
continuous, tabular shape. It strikes broadly NE-SW and dips to the
NW at 25(o) to 40(o) and varies in thickness from 20m to 50m. Two
minor parallel pegmatites have also been interpreted. A weathering
boundary representing the top of fresh rock was also interpreted
(using drill hole logging codes) as a shallow zone of weak to
moderate weathering was noted. The main pegmatite zone remains open
along strike to the north and down dip (Figures 1-3).
At the Project, lithium is present in most pegmatite
compositions and laboratory test work confirms that the lithium is
almost exclusively within spodumene. Limited lithium grade zonation
occurs within the Aldeia pegmatites. Minor xenoliths and inliers of
schist are observed within the pegmatite.
The weathering profile comprises a shallow, surficial zone of
weak to moderate oxidation, particularly of the schistose country
rock with moderate oxidation to a depth of up to 20m.
Figure 1. Reservatorio pegmatite and drilling (looking east)
Figure 2. Reservatorio Cross Section (looking NE)
The Reservatorio deposit is defined by a total of 36 RC drill
holes and 8 diamond holes. All holes were completed by Savannah in
2017 and 2018. The holes were drilled on approximate spacings of
20m to 40m on 40m spaced cross sections. The majority of holes are
drilled at -60(o) to the southeast, however a small number of
vertical holes and one NW dipping hole were completed.
Figure 3. A Resource Model coloured by Li(2) O content (looking
East)
Drilling
Drilling completed at the Reservatorio prospect is summarised in
Table 4. The historic percussion holes were drilled by previous
operators and excluded from the estimate. All drilling used in the
Mineral Resource was completed by Savannah in 2017 and 2018.
Table 4: Summary of Reservatorio Prospect Drilling
Hole Type Holes In Database In Mineral Resource
Holes Metres Holes Metres
---------------- ---------------- --------------- ---------------
Historic Percussion 26 691
Savannah RC 36 3,282 36 3,282
Savannah DD 10 904 8 836
---------------- ---------------- --------------- ---------------
Total 72 4,877 44 4,118
---------------- ---------------- --------------- ---------------
All drilling data was contained in an Access database provided
to PayneGeo. All data was supplied in national grid coordinates
(UTM Zone 29N based on WGS84) and no data manipulation was carried
out by PayneGeo. A series of holes were validated by PayneGeo
during the site visit where original geological records and
laboratory reports were compared to database entries. No errors
were identified.
Sampling and Sub-Sampling Techniques
For the Savannah RC drilling, a face-sampling hammer was used
with samples collected at 1m intervals from pegmatite zones and the
surrounding 5m either side of the pegmatite. The rest of the schist
remains unsampled. The 1m samples were collected through a
rig-mounted splitter and were 4kg-6kg in weight. Samples were
weighed to assess the sample recovery which was determined to be
satisfactory.
Core was HQ in size and sampled to geological boundaries. Core
was cut using a diamond saw, and half core was collected for
assay.
Sample Analysis Method
For all Savannah drilling, whole samples were crushed then
riffle split to produce a 250g split for pulverising and
analysis.
The samples were analysed using ALS laboratories ME-MS89L Super
Trace method which combines a sodium peroxide fusion with ICP-MS
analysis and a multi-element suite was analysed.
QAQC protocols were in place for the drilling programmes and
included the used of blanks, standards and field duplicates. The
data has confirmed the quality of the sampling and assaying for use
in Mineral Resource estimation.
Estimation Methodology
For the Reservatorio Mineral Resource Estimate, a Surpac block
model was constructed with block sizes of 20m (EW) by 20m (NS) by
5m (elevation) with sub-celling to 5m by 5m by 1.25m.
Interpretation of the pegmatite dykes was completed using
detailed geological logging and Fe geochemistry. Wireframes of the
pegmatites were prepared and within those the sample data was
extracted and analysed. A clear break in the grade distribution
occurs at 0.5% Li(2) O and this grade threshold was used to prepare
the internal grade domains for estimation.
Sample data was composited into 1m intervals then block model
grades estimated using inverse distance squared ("ID2") grade
interpolation due to the small number of drill holes and limited
extent of mineralisation. A first pass search range of 70m was used
and oriented to match the dip and strike of the mineralisation. A
minimum of 10 samples and a maximum of 24 samples were used to
estimate each block. The majority of the Mineral Resource Estimate
(91%) was completed in the first pass with expanded search radii of
140m used for the blocks not estimated in the first pass. No
extreme high grades were present in the Li2O and Fe data, and the
CV of less than 1 for all elements suggested that high grade cuts
were not required. However, a small number of outliers of Ta were
present at Aldeia and a high grade cut of 100ppm was applied to all
Ta values.
Iron contamination via abrasion of RC drilling equipment and/or
sample preparation equipment is a recognized problem when
evaluating lithium deposits. To test the potential for iron
contamination at the MBLP, SAV carried out a preliminary program of
check assays and a series of comparisons were undertaken on samples
from the Grandao deposit.
It was concluded from the Grandao study that a significant
proportion of the iron being reported in the drilling assay data
was introduced as contamination during the sample preparation
process. It was determined that the amount of contamination was
proportional to the lithium content of the samples. A regression
formula was calculated using all samples, with the derived
regression formula being:
Fe_contamination = (0.1734 * Li(2) O grade) + 0.2308.
The amount of Fe contamination was determined using the derived
regression formula. A new field "Fe_factored" was inserted into the
drill hole database, and the original Fe value minus the calculated
contamination was stored in that field. This allowed a
"Fe_factored" value to be extracted from the database and used for
grade estimation in the Mineral Resource.
Bulk density determinations using the immersion method were
carried out on 280 half core samples from the Aldeia pegmatite.
Results from these tests were consistent with those from the
extensive density data throughout the Project. Values applied to
the Aldeia estimate were 2.5t/m(3) for oxide lithologies,
2.65t/m(3) for unoxidised pegmatite and 2.67t/m(3) for unoxidised
schist.
Mineral Resource Classification
The Mineral Resource Estimate was classified in accordance with
the Australasian Code for the Reporting of Exploration Results,
Mineral Resources and Ore Reserves (JORC, 2012).
Mineral Resource classification was considered on the basis of
drill hole spacing, continuity of mineralisation and data quality.
Accurate drill hole collar and topographic surveys have been
obtained for the deposit, so the spatial location of data and
topography has a high level of confidence. The quality of the
drilling and assaying has been confirmed through independent
verification of procedures and through a satisfactory QAQC
protocol.
The continuity of the Reservatorio pegmatite is well defined
within the upper portion of the deposit. Drilling is typically at
spacings of 20m to 40m on cross sections and the geometry of the
zone is consistent. This portion of the deposit has been classified
as Indicated Mineral Resource and includes extrapolation up to 60m
past drill hole intersections.
The lower portion of the deposit remains undrilled. The
pegmatite interpretations have been extended up to 300m past drill
hole intersections. The portion which has been extrapolated up to
120m past drill holes has been classified as Inferred Mineral
Resource. The deeper portion remains unclassified. The
classification and extent of the reported model as well as
unreported Mineral Potential is shown in Figure 4.
Figure 4. Resource Model coloured by Classification
Cut-off Grades
The shallow nature of the main Reservatorio pegmatite suggests
good potential for open pit mining if sufficient resources can be
delineated to consider a mining operation. As such, the Mineral
Resource Estimate has been reported at a 0.5% Li(2) O lower cut-off
grade to reflect assumed exploitation by low-cost mining
methods.
Metallurgy
Metallurgical test work has been conducted by Savannah on
representative mineralisation at the Barroso Lithium Project. The
work was completed by Nagrom Metallurgical in Australia and
confirmed that high-grade lithium, low-grade iron concentrate can
be generated from the mineralisation using conventional processing
technology. Although no samples from the Aldeia deposit have been
tested, initial assessments of the mineralogy and chemistry suggest
mineralisation is broadly similar to other deposits at the Barroso
Lithium Project. Samples have been collected from the Aldeia
deposit are currently being tested to determine their exact
processing requirement.
Modifying Factors
No modifying factors were applied to the reported Mineral
Resource Estimate. Parameters reflecting mining dilution, ore loss
and metallurgical recoveries will be considered during the any
future mining evaluation of the Project.
ATTACHMENT 1: Detailed Mineral Resource Tables
RESERVATORIO JUNE 2023 - TOTAL MINERAL RESOURCE 0.5% Li(2) O CUT-OFF
ATTACHMENT 2 - JORC 2012 Table 1 - Reservatorio
JORC Table 1 Section 1 Sampling Techniques and Data
Criteria JORC Code Explanation Commentary
Sampling
techniques * Nature and quality of sampling (e.g. cut channels, * The majority of holes were reverse circulation ("RC"),
random chips, or specific specialised industry sampled at 1m intervals. RC samples were collected in
standard measurement tools appropriate to the large plastic bags from an onboard rig splitter and a
minerals under investigation, such as down hole gamma 4-6kg representative sample taken for analysis.
sondes, or handheld XRF instruments, etc). These
examples should not be taken as limiting the broad
meaning of sampling. * A small number of diamond holes were also completed.
Core was HQ size, sampled at 1m intervals in the
pegmatite, or to geological boundaries. Half core
* Include reference to measures taken to ensure sample samples were collected for analysis.
representivity and the appropriate calibration of any
measurement tools or systems used.
* Drilling was on a regular grid with holes at 20- 40m
spacing on 40m spaced cross sections.
* Aspects of the determination of mineralisation that
are Material to the Public Report. In cases where
'industry standard' work has been done this would be * Collar surveys are carried using differential GPS
relatively simple (e.g., 'reverse circulation with an accuracy to within 0.2m.
drilling was used to obtain 1 m samples from which 3
kg was pulverised to produce a 30 g charge for fire
assay'). In other cases, more explanation may be * A down hole survey for each hole was completed using
required, such as where there is coarse gold that has gyro equipment.
inherent sampling problems. Unusual commodities or
mineralisation types (e.g. submarine nodules) may
warrant disclosure of detailed information. * The lithium mineralisation is predominantly in the
form of Spodumene-bearing pegmatites, the pegmatites
are unzoned and vary in thickness from 10m to 50m.
---------------------------------------------------------------- -------------------------------------------------------------
Drilling
techniques * Drill type (e.g., core, reverse circulation, * RC drilling used a 120mm bit diameter.
open-hole hammer, rotary air blast, auger, Bangka,
sonic, etc) and details (e.g. core diameter, triple
or standard tube, depth of diamond tails, face- * Core drilling was carried out using an HQ triple tube
sampling bit or other type, whether core is oriented core barrel.
and if so, by what method, etc).
---------------------------------------------------------------- -------------------------------------------------------------
Drill sample
recovery * Method of recording and assessing core and chip * RC drilling sample weights were monitored to ensure
sample recoveries and results assessed. samples were maximised. Samples were carefully loaded
into a splitter and split in the same manner ensuring
that the sample split to be sent to the assay
* Measures taken to maximise sample recovery and ensure laboratories were in the range of 4-6kg.
representative nature of the samples.
* Core recovery was measured and was found to be
* Whether a relationship exists between sample recovery generally excellent.
and grade and whether sample bias may have occurred
due to preferential loss/gain of fine/coarse
material. * No obvious relationships between sample recovery and
grade.
---------------------------------------------------------------- -------------------------------------------------------------
Logging
* Whether core and chip samples have been geologically * RC holes were logged in the field at the time of
and geotechnically logged to a level of detail to sampling. Core was logged in detail in a logging
support appropriate Mineral Resource estimation, yard.
mining studies and metallurgical studies.
* Each 1m sample interval was carefully homogenised and
* Whether logging is qualitative or quantitative in assessed for lithology, colour, grainsize, structure
nature. Core (or costean, channel, etc) photography. and mineralisation.
* The total length and percentage of the relevant * A representative chip sample produced from RC
drilling was washed and taken for each 1m sample and
stored in a chip tray which was photographed.
intersections logged.
* Core was photographed.
---------------------------------------------------------------- -------------------------------------------------------------
Sub-sampling
techniques * If core, whether cut or sawn and whether quarter, * 1m RC samples were split by the riffle splitter on
and sample half or all core taken. the drill rig and sampled dry.
preparation
If non-core, whether riffled, The 4m composites were collected
tube sampled, rotary split, using a spear with the spear
etc and whether sampled wet inserted into the bag at
or dry. a high angle and pushed across
* For all sample types, the nature, quality and the sample to maximise representivity
appropriateness of the sample preparation technique. of the sample.
* Core was cut in half using a diamond saw with 1m half
core samples submitted for analysis.
* Quality control procedures adopted for all sub-
sampling stages to maximise representivity of
samples. * The sampling was conducted using industry standard
techniques and were considered appropriate.
* Measures taken to ensure that the sampling is
representative of the in situ material collected, * Field duplicates were used to test repeatability of
including for instance results for field the sub-sampling and were found to be satisfactory.
duplicate/second-half sampling.
* Every effort was made to ensure that the samples were
* Whether sample sizes are appropriate to the grain representative and not biased in any way.
size of the material being sampled.
---------------------------------------------------------------- -------------------------------------------------------------
Quality
of assay * The nature, quality and appropriateness of the * Samples were received, sorted, labelled and dried.
data and assaying and laboratory procedures used and whether
laboratory the technique is considered partial or total.
tests * Samples were crushed to 70% less than 2mm, riffle
split off 250g, pulverise split to better than 85%
* For geophysical tools, spectrometers, handheld XRF passing 75 microns and 5g was split of for assaying.
instruments, etc, the parameters used in determining
the analysis including instrument make and model,
reading times, calibrations factors applied and their * The samples were analysed using ALS Laboratories
derivation, etc. ME-MS89L Super Trace method which combines a sodium
peroxide fusion with ICP-MS instrumentation utilising
collision/reaction cell technologies to provide the
* Nature of quality control procedures adopted ( e.g., lowest detection limits available.
standards, blanks, duplicates, external laboratory
checks) and whether acceptable levels of accuracy
(i.e., lack of bias) and precision have been * A prepared sample (0.2g) is added to sodium peroxide
established. flux, mixed well and then fused in at 670degC. The
resulting melt is cooled and then dissolved in 30%
hydrochloric acid. This solution is then analysed by
ICP-MS and the results are corrected for spectral
inter-element interferences.
* The final solution is then analysed by ICP-MS, with
results corrected for spectral inter- element
interferences.
* Standards/blanks and duplicates were inserted on a
1:20 ratio for both to samples taken.
* A duplicate sample regime is used to monitor sampling
methodology and homogeneity.
* Routine QA/QC controls for the method ME- MS89L
include blanks, certified reference standards of
Lithium and duplicate samples. Samples are assayed
within runs or batches up to 40 samples. At the
fusion stage, quality control samples are included
together with the samples so all samples follow the
same procedure until the end. Fused and diluted
samples are prepared for ICP-MS analysis. ICP
instrument is calibrated through appropriate
certified standards solutions and interference
corrections to achieve strict calibration fitting
parameters. Each 40 sample run is assayed with two
blanks, two certified standards and one duplicate
sample and results are evaluated accordingly.
* A QA/QC review of all information indicated that all
assays were satisfactory.
---------------------------------------------------------------- -------------------------------------------------------------
Verification
of sampling * The verification of significant intersections by * All information was internally audited by company
and assaying either independent or alternative company personnel. personnel.
* The use of twinned holes. * Several historical holes were twinned for comparison
purposes with the modern drilling.
* Documentation of primary data, data entry procedures,
data verification, data storage (physical and * Savannah's experienced project geologists supervised
electronic) protocols. all processes.
* Discuss any adjustment to assay data. * All field data is entered into a custom log sheet and
then into excel spreadsheets (supported by look-up
tables) at site and subsequently validated as it is
imported into the centralised Access database.
* Hard copies of logs, survey and sampling data are
stored in the local office and electronic data is
stored on the main server.
* Results were reported as Li (ppm) and were converted
to a percentage by dividing by 10,000 and then to
Li2O% by multiplying by 2.153.
---------------------------------------------------------------- -------------------------------------------------------------
Location
of data * Accuracy and quality of surveys used to locate drill * The coordinate of each drill hole was taken at the
points holes (collar and down-hole surveys), trenches, mine time of collecting using a handheld GPS with an
workings and other locations used in Mineral Resource accuracy of 5m. All collars were subsequently
estimation. surveyed using DGPS with an accuracy of 0.2m.
* Specification of the grid system used. * The grid system used is WSG84.
* Quality and adequacy of topographic control. * Topographic control was based on a drone based aerial
survey system. The accurate topographic data
encompasses the full extent
* of the deposit.
---------------------------------------------------------------- -------------------------------------------------------------
Data spacing
and * Data spacing for reporting of Exploration Results. * Drilling was on a nominal 20-40m spacing on 40m
distribution spaced cross sections.
* Whether the data spacing and distribution is
sufficient to establish the degree of geological and * Drill data is at sufficient spacing to define
grade continuity appropriate for the Mineral Resource Indicated and Inferred Mineral Resource.
and Ore Reserve estimation procedure(s) and
classifications applied.
* Compositing to 1m has been applied prior to resource
estimation.
* Whether sample compositing has been applied.
---------------------------------------------------------------- -------------------------------------------------------------
Orientation
of data * Whether the orientation of sampling achieves unbiased * Drilling was generally angled to the SE and
in relation sampling of possible structures and the extent to intersected the gently dipping deposit at close to
to geological which this is known, considering the deposit type. orthogonal to the known dip of the main pegmatite. A
structure small number of vertical and NW dipping holes were
completed to minimise pad requirements.
* If the relationship between the drilling orientation
and the orientation of key mineralised structures is
considered to have introduced a sampling bias, this * Intersections were close to true width for the main
should be assessed and reported if material. pegmatite. In the few vertical and NW dipping holes,
the true thickness is approximately half of the down
hole thickness.
* No orientation-based sampling bias has been
identified in the data.
---------------------------------------------------------------- -------------------------------------------------------------
Sample
security * The measures taken to ensure sample security. * Samples were delivered to a courier and chain of
custody is managed by Savannah.
---------------------------------------------------------------- -------------------------------------------------------------
Audits
or reviews * The results of any audits or reviews of sampling * Internal company auditing and a review by PayneGeo
techniques and data. during the April 2018 site visit found that all data
collection and QA/QC procedures were conducted to
industry standards.
---------------------------------------------------------------- -------------------------------------------------------------
JORC Table 1 Section 2 Reporting of Exploration Results
Criteria JORC Code explanation Commentary
Mineral
tenement * Type, reference name/number, location and ownership * All work was completed inside the Barroso Lithium
and land including agreements or material issues with third Project C-100.
tenure status parties such as joint ventures, partnerships,
overriding royalties, native title interests,
historical sites, wilderness or national park and * Savannah has received written confirmation from the
environmental settings. DGEG that under article 24 of Decree-Law no. 88/90 of
March 16 being relevant justification based on the
resources allocated exploited and intended, Savannah
* The security of the tenure held at the time of has been approved an expansion up to 250m of C100
reporting along with any known impediments to mining concession in specific areas where a resource
obtaining a license to operate in the area. has been defined and the requirement for the
expansion can be justified
------------------------------------------------------------- ------------------------------------------------------------------
Exploration
done by * Acknowledgment and appraisal of exploration by other * Limited exploration work has been carried out by
other parties parties. previous operators.
* No historic information has been included in the
Mineral Resource estimate.
------------------------------------------------------------- ------------------------------------------------------------------
Geology
* Deposit type, geological setting and style of * The lithium mineralisation is predominantly in the
mineralisation. form of Spodumene-bearing pegmatites which are hosted
in meta-pelitic and mica schists, and occasionally
carbonate schists of upper Ordovician to lower
Devonian age. The
pegmatites vary in thickness
from 10m to 50m.
------------------------------------------------------------- ------------------------------------------------------------------
Drill hole
information * A summary of all information material to the * Drill hole intersections used in the resource have
under-standing of the exploration results including a been previously reported.
tabulation of the following information for all
Material drill holes:
* easting and northing of the drill hole collar
* elevation or RL (Reduced Level - elevation above sea
level in metres) of the drill hole collar
* dip and azimuth of the hole
* down hole length and interception depth
* hole length
* If the exclusion of this information is justified on
the basis that the information is not Material and
this exclusion does not detract from the
understanding of the report, the Competent Person
should clearly explain why this is the case.
------------------------------------------------------------- ------------------------------------------------------------------
Data
aggregation * In reporting Exploration Results, weighting averaging * Length weighted average grades have been reported.
methods techniques, maximum and/or minimum grade truncations
(e.g. cutting of high grades) and cut-off grades are
usually Material and should be stated. * No high-grade cuts have been applied to reported
grades for lithium. A high grade cut of 100ppm was
applied to the tantalum data.
* Where aggregate intercepts incorporate short lengths
of high grade results and longer lengths of low grade
results, the procedure used for such aggregation * Metal equivalent values are not being reported.
should be stated and some typical examples of such
aggregations should be shown in detail.
* The assumptions used for any reporting of metal
equivalent values should be clearly stated.
------------------------------------------------------------- ------------------------------------------------------------------
Relationship
between * These relationships are particularly important in the * The majority of holes have been drilled at angles to
mineralisation reporting of Exploration Results. intersect the mineralisation approximately
widths and perpendicular to the orientation of the mineralised
intercept trend.
lengths * If the geometry of the mineralisation with respect to
the drill hole angle is known, its nature should be
reported.
* If it is not known and only the down hole lengths are
reported, there should be a clear statement to this
effect (e.g. 'down hole length, true width not
known')
------------------------------------------------------------- ------------------------------------------------------------------
Diagrams
* Appropriate maps and sections (with scales) and * A relevant plan showing the drilling is included
tabulations of intercepts should be included for any within this report.
significant discovery being reported. These should
include, but not be limited to a plan view of drill
hole collar locations and appropriate sectional
views.
------------------------------------------------------------- ------------------------------------------------------------------
Balanced
Reporting * Accuracy and quality of surveys used to locate drill * All relevant results available have been previously
holes (collar and down-hole surveys), trenches, mine reported.
workings and other locations used in Mineral Resource
estimation.
* Where comprehensive reporting of all Exploration
Results is not practicable, representative reporting
of both low and high grades and/or widths should be
practiced to avoid misleading reporting of
Exploration Results.
------------------------------------------------------------- ------------------------------------------------------------------
Other
substantive * Other exploration data, if meaningful and material, * Geological mapping and rock chip sampling have been
exploration should be reported including (but not limited to): conducted over the Project area.
data geological observations; geophysical survey results;
geochemical survey results; bulk samples - size and
method of treatment; metallurgical test results; bulk
density, groundwater, geotechnical and rock
characteristics; potential deleterious or
* contaminating substances.
------------------------------------------------------------- ------------------------------------------------------------------
Further
work * The nature and scale of planned further work (e.g. * Further RC and DD drilling to test for further
tests for lateral extensions or depth extensions or extensions and to increase confidence.
large- scale step-out drilling).
* Economic evaluation of the defined Mineral Resource.
* Diagrams clearly highlighting the areas of possible
extensions, including the main geological
interpretations and future drilling areas, provided
this information is not commercially sensitive.
------------------------------------------------------------- ------------------------------------------------------------------
JORC Table 1 Section 3 Estimation and Reporting of Mineral
Resources
Criteria JORC Code explanation Commentary
Database
integrity * Measures taken to ensure that data has not been * The assay data was captured electronically to prevent
corrupted by, for example, transcription or keying transcription errors.
errors, between its initial collection and its use
for Mineral Resource estimation purposes.
* Validation included visual review of results.
* Data validation procedures used.
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Site visits
* Comment on any site visits undertaken by the * Numerous site visits were undertaken by Dale Ferguson
Competent Person and the outcome of those visits. in 2017 which included an inspection of the drilling
process, outcrop area and confirmation that no
obvious impediments to future exploration or
* If no site visits have been undertaken indicate why development were present.
this is the case.
A site visit by Paul Payne
was undertaken in April 2018
to confirm geological interpretations,
drilling and sampling procedures
and general site layout.
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Geological
interpretation * Confidence in (or conversely, the uncertainty of) the * The pegmatite dykes hosting the Reservatorio
geological interpretation of the mineral deposit. mineralisation are defined in outcrop and in drilling
and boundaries are generally very sharp and distinct.
* Nature of the data used and of any assumptions made.
* The shape and extent of the >0.5% Li 2O
mineralisation is clearly controlled by the general
* The effect, if any, of alternative interpretations on geometry of the pegmatites.
Mineral Resource estimation.
* Zonation of lithium within the pegmatite is evident,
* The use of geology in guiding and controlling Mineral and typically the margins are weakly mineralised.
Resource estimation.
* The factors affecting continuity both of grade and
geology.
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Dimensions The extent and variability
of the Mineral Resource expressed * The Reservatorio main pegmatite has a drilled extent
as length (along strike or of 490m along strike and 200m down dip. The thickness
otherwise), plan width, and of the mineralisation ranges from 10m to 50m.
depth below surface to the
upper and lower limits of
the Mineral Resource.
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Estimation
and modelling * The nature and appropriateness of the estimation * Ordinary kriging (main pegmatites) and inverse
techniques technique(s) applied and key assumptions, including distance squared (minor zones) was used to estimate
treatment of extreme grade values, domaining, block grades within the resource.
interpolation parameters and maximum distance of
extrapolation from data points. If a computer
assisted estimation method was chosen include a * Surpac software was used for the estimation.
description of computer software and parameters used.
* Samples were composited to 1m intervals to match the
* The availability of check estimates, previous sample lengths. Due to the extremely low CV of the
estimates and/or mine production records and whether data no high grade cuts were applied to Li 2O in the
the Mineral Resource estimate takes appropriate estimate. A cut of 100ppm was applied to Ta values.
account of such data.
* At Reservatorio the parent block dimensions were 20m
* The assumptions made regarding recovery of by- EW by 10m NS by 5m vertical with sub-cells of 2.5m by
products. 5m by 1.25m.
* Estimation of deleterious elements or other non- * A previous estimate was completed in February 2018.
grade variables of economic significance (e.g.
sulphur for acid mine drainage characterisation).
* No assumptions have been made regarding recovery of
by-products.
* In the case of block model interpolation, the block
size in relation to the average sample spacing and
the search employed. * The grade of Fe 2O3 was estimated for the deposit,
using factored Fe data to eliminate Fe introduced in
the sample preparation stage. The mean grade of Fe2O3
* Any assumptions behind modelling of selective mining was determined to be 0.8% at Reservatorio.
units.
* An orientated ellipsoid search was used to select
* Any assumptions about correlation between variables. data and was based on drill hole spacing and the
geometry of the pegmatite dyke.
Description of how the geological
interpretation was used to * A search of 60m was used with a minimum of 10 samples
control the resource estimates. and a maximum of 24 samples which resulted in 61% of
* Discussion of basis for using or not using grade blocks being estimated at Reservatorio. A further 33%
cutting or capping. of blocks were estimated with a 120m search. The
final 5% of blocks required a 240m search and minimum
of 4 samples.
* The process of validation, the checking process used,
the comparison of model data to drill hole data, and
use of reconciliation data if available. * Selective mining units were not modelled in the
Mineral Resource model. The block size used in the
model was based on drill sample spacing and deposit
geometry.
* The deposit mineralisation was constrained by
wireframes prepared using a 0.5% Li 2O grade
envelope.
* For validation, quantitative comparison of block
grades to assay grades was carried out for each
estimated body.
* Global comparisons of drill hole and block model
grades were also carried out.
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Moisture
* Whether the tonnages are estimated on a dry basis or * Tonnages and grades were estimated on a dry in situ
with natural moisture, and the method of basis. No moisture values were reviewed.
determination of the moisture content.
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Cut-off
parameters * The basis of the adopted cut-off grade(s) or quality * The shallow, outcropping nature of the deposit
parameters applied. suggests good potential for open pit mining if
sufficient resources can be delineated to consider a
mining operation. As such, the Mineral Resource has
been reported at a 0.5% Li2O lower cut-off grade to
reflect assumed exploitation by open pit mining.
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Mining
factors * Assumptions made regarding possible mining methods, * Based on comparison with other similar deposits, the
or assumptions minimum mining dimensions and internal (or, if Mineral Resource is considered to have sufficient
applicable, external) mining dilution. It is always grade and metallurgical characteristics for economic
necessary as part of the process of determining treatment if an operation is established at the
reasonable prospects for eventual economic extraction Project.
to consider potential mining methods, but the
assumptions made regarding mining methods and
parameters when estimating Mineral Resources may not * No mining parameters or modifying factors have been
always be rigorous. Where this is the applied to the Mineral Resource.
* case, this should be reported with an explanation of
the basis of the mining assumptions made.
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Metallurgical
factors * The basis for assumptions or predictions regarding * Metallurgical test work has been conducted by
or assumptions metallurgical amenability. It is always necessary as Savannah on representative mineralisation at the
part of the process of determining reasonable Project. The work was completed by Nagrom
prospects for eventual economic extraction to Metallurgical in Australia and confirmed that high
consider potential metallurgical methods, but the grade lithium, low grade iron concentrate can be
assumptions regarding metallurgical treatment generated from the mineralisation using conventional
processes and parameters made when reporting Mineral processing technology. Microscopy confirmed that the
Resources may not always be rigorous. Where this is concentrate was almost entirely spodumene.
the case, this should be reported with an explanation
of the basis of the metallurgical assumptions made.
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Environmental
factors * Assumptions made regarding possible waste and process * The area is not known to be environmentally sensitive
or assumptions residue disposal options. It is always necessary as and there is no reason to think that proposals for
part of the process of determining reasonable development including the dumping of waste would not
prospects for eventual economic extraction to be approved if planning and permitting guidelines are
consider the potential environmental impacts of the followed.
mining and processing operation. While at this stage
the determination of potential environmental impacts,
particularly for a greenfields project, may not
always be well advanced, the status of early
consideration of these potential environmental
impacts should be reported. Where these aspects have
not been considered this should be reported with an
explanation of the environmental assumptions made.
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Bulk density
* Whether assumed or determined. If assumed, the basis * Bulk density determinations were carried out on 248
for the assumptions. If determined, the method used, pegmatite core samples.
whether wet or dry, the frequency of the measurements
,
the nature, size and representativeness of the * Bulk density values applied to the estimates were
samples. 2.3t/m3for transitional lithologies, 2.65t/m3for
unoxidised pegmatite and 2.70t/m3 for unoxidised
schist.
* The bulk density for bulk material must have been
measured by methods that adequately account for void
spaces (vugs, porosity, etc), moisture and
differences between rock and alteration zones within
the deposit.
* Discuss assumptions for bulk density estimates used
in the evaluation process of the different materials.
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Classification
* The basis for the classification of the Mineral * The Mineral Resource was classified in accordance
Resources into varying confidence categories. with the Australasian Code for the Reporting of
Exploration Results, Mineral Resources and Ore
Reserves (JORC, 2012).
* Whether appropriate account has been taken of all
relevant factors (i.e. relative confidence in
tonnage/grade estimations, reliability of input data, * The upper portion of the deposit showing consistent
confidence in continuity of geology and metal values, geometry and defined by 20m to 40m spaced holes on
quality, quantity and distribution of the data). 40m spaced cross has been classified as Indicated
Mineral Resource.
* Whether the result appropriately reflects the
Competent Person's view of the deposit. * Indicated Mineral Resource was extrapolated up to 60m
past drill hole intersections.
* Inferred Mineral Resource was extrapolated up to 120m
past drill hole intersections.
* The remainder of the model remains unclassified.
* The results reflect the view of the Competent Person.
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Audits
or * The results of any audits or reviews of Mineral * The Mineral Resource estimate has been checked by an
reviews Resource estimates. internal audit procedure.
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Discussion
of relative * Where appropriate a statement of the relative * The estimate utilised good estimation practices, high
accuracy/ accuracy and confidence level in the Mineral Resource quality drilling, sampling and assay data. The extent
confidence estimate using an approach or procedure deemed and dimensions of the mineralisation are sufficiently
appropriate by the Competent Person. For example, the defined by outcrop and the detailed drilling. The
application of statistical or geostatistical deposit is considered to have been estimated with a
procedures to quantify the relative accuracy of the level of accuracy reflected in the resource
resource within stated confidence limits, or, if such classification.
an approach is not deemed appropriate, a qualitative
discussion of the factors that could affect the
relative accuracy and confidence of the estimate. * The Mineral Resource statement relates to global
estimates of tonnes and grade.
* The statement should specify whether it relates to
global or local estimates, and, if local, state the * There is no historic production data to compare with
relevant tonnages, which should be relevant to the Mineral Resource.
technical and economic evaluation. Documentation
should include assumptions made and the procedures
used.
* These statements of relative accuracy and confidence
of the estimate should be compared with production
data, where available.
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