TIDMSAV
RNS Number : 4777L
Savannah Resources PLC
06 September 2023
6 September 2023
Savannah Resources Plc
(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the
'Company')
Barroso Lithium Project Update
Savannah Resources Plc, the European lithium development
company, is pleased to provide an update on several key workstreams
at its 100% owned Barroso Lithium Project (the 'Project')
including, its ongoing commercial negotiations, completion of the
Definitive Feasibility Study ('DFS'), the environmental licencing
process ('RECAPE'), and land purchasing and land access
arrangements.
Highlights:
-- Commercial arrangements for the Project:
o Savannah has a strong negotiating position as it owns 100% of
the Project and has yet to commit to any offtake arrangements
o Following the endorsement of the Project (the 'DIA') by the
Portuguese environmental regulator, the level of strategic
partnership interest in the Project has increased notably
o The Company is currently working to identify a shortlist of
potential strategic partners which are willing to assist with the
financing of the Project's construction
o Savannah expects to provide an update on the Project's
commercial arrangements towards the end of the year
-- DFS and RECAPE: Significant progress has been made on
preparations for the commencement of both the DFS and RECAPE with
six tenders issued, 4 tenders awarded and 2 tenders under final
review
-- DFS:
o DFS Processing Work Package: awarded to a collaboration
between the plant construction experts Sedgman Pty Ltd ('Sedgman')
and the processing experts Minsol Engineering Pty Ltd
('Minsol')
o DFS Infrastructure Work Package: tenders under final
review
o DFS Drilling Programme Phase 1: awarded to EDASU S.L ('EDASU')
and SPI S.A. ('SPI'); drilling is expected to begin in
mid-September on land owned by Savannah
-- RECAPE:
o Barroso Lithium Project RECAPE contract: awarded to Quadrante
Engenharia e Consultoria, S.A. ('Quadrante')
o Bypass Road RECAPE contract: tenders under final review
o Ongoing stakeholder consultation work: Completion of Social
Impact Assessment, tender awarded to Community Insights Group PTE
LTD ('Community Insights')
-- Savannah expects to complete the environmental licencing and
the DFS in the second half of 2024
-- Land acquisition & access arrangements:
o To date Savannah has acquired or is in the process of
acquiring approximately 45% of the private land it requires for the
Project from more than 40 local landowners.
o In total, Savannah expects to spend approximately EUR5M[1] on
the acquisition of private land identified to date which is
required for the Project
o The Company has also made offers to two relevant community
land management groups ('Baldios') for long term access to
community lands required for the Project and associated
compensation to community members. The Company estimate these
offers would total approximately EUR10M(1) over the life of the
Project
o The Company will always seek to reach mutually acceptable
agreements with all landowners and Baldios groups as it progresses
the Project.
Savannah's Chief Executive Officer, Dale Ferguson said , "As the
summer in Europe draws to a close, Savannah is completing its
preparations for the next phase in the development of the Barroso
Lithium Project. The Project contains the largest JORC compliant
spodumene resource in Europe making it hugely strategic in the
continent's plans for a domestic lithium battery value chain.
Savannah owns 100% of the Project meaning the Company is fully
leveraged to the potential value that can be created by advancing
the Project in this supportive environment.
"Savannah is pleased to have received significant commercial
interest in the Project for several years now and following the
endorsement of the DIA and the completion of the new positive
Scoping Study, there has been additional interest generated from
across the lithium value chain. With the visibility we now have on
the end of the licencing process and completion of the DFS, it is
the right time to also create an effective commercial structure
around the Project. Our focus is on identifying partners which can
assist us in financing the capital expenditure requirement of the
Project and bring complementary skills or additional opportunities
to a long-term partnership with Savannah. Our discussions with a
large range of groups continue and we are currently working to
identify a shortlist of potential strategic partners. We expect to
provide an update on this front later in the year.
"Regarding our ongoing work on licencing and technical aspects
of the Project, we are encouraged by the number and quality of the
proposals which we have received from the six tenders for the
RECAPE and DFS work, which has enabled us to build a team of
first-class consultants primarily based in Portugal. We are pleased
that two key consultants who contributed to the positive DIA from
the Portuguese environmental regulator in May, Quadrante and
Community Insights, will again be on the team to help us through
the final stages of the Project's licencing.
"It is also a pleasure to be continuing our association with
Minsol, which has led on our metallurgical test work programme
since 2021 and produced the final design of the process flowsheet.
Drilling groups EDASU and SPI have also both worked on the Project
before and we look forward to restarting our partnerships with them
as we undertake the outstanding drilling required for the DFS from
mid-September onwards. We expect to make the remaining contractor
appointments for the DFS infrastructure and RECAPE bypass road work
packages in the coming weeks.
"Given some recent press commentary on the subject, we thought
it useful to clarify our position for all stakeholders and
shareholders around land ownership and land access in relation to
the Project. As many will know we have been purchasing land from
local people via a transparent and rigorous process since 2021. To
date we have purchased, or are in the process of purchasing 70
hectares, or approximately 45% of the total privately owned land we
have identified as required for the Project from more than 40 local
landowners. In addition, Savannah has purchased, or is in the
process of purchasing, a further 23 hectares of ground adjacent to
the Project, making total land acquired or being acquired in the
area to date, 93 hectares. We have also made offers for the
provision of access to land managed on behalf of the community by
two relevant Baldios groups. In total, over the life of the
Project, we estimate our land access proposal to the Baldios groups
will total approximately EUR10M , with approximately EUR4M being
payments directly to community members.
"The 30-year Mining Lease granted in 2006 safeguards Savannah's
access to land that may be necessary for the development of the
Barroso Lithium Project. Despite the existing legal coverage,
Savannah will always favour direct agreement with landowners and
representatives of the Baldios. The Company will use the mechanisms
provided in Portuguese law but only when it is not possible to
reach an agreement. Savannah wants to build the Barroso Lithium
Project with the community, to benefit its members, not to impact
them.
"With much going on we now look forward to providing regular
news flow during the remainder of the year including on the RECAPE
and DFS work programmes we are about to start, the commercial
opportunities around the Project and additions to the Savannah
team."
Further Information
Following the award of the DIA for the Company's proposed
development of the Barroso Lithium Project in May 2023, focus has
now moved to the finalisation of the DFS which is now possible as
the site layout was completed as part of the DIA approval process
and the finalisation of the RECAPE. During July and August,
Savannah has been running a series of tenders to support the works
required to complete both the DFS and the RECAPE which include:
-- DFS Processing Work Package (Awarded)
-- DFS Infrastructure Work Package (Tenders under final review)
-- DFS Drilling Programme (Phase 1 awarded)
-- Barroso Lithium Project RECAPE (Awarded)
-- Bypass Road RECAPE (Tenders under final review)
-- Completion of Stakeholder Impact Assessment (Awarded)
Summaries of the DFS and RECAPE tenders awarded to date and the
Company's land acquisition activities and land access proposals are
provided below.
DFS Processing Work & Infrastructure Work Packages
Savannah has completed the tendering exercise for the DFS
processing work package which includes the final design of the
Processing Plant, detail forecasts of the CAPEX and OPEX for the
processing plant (+/-15%) and a scope of work for the Project's
Implementation. Following the review of the tender proposals
received, based on a high level of lithium processing experience,
competitive cost, and plan to carry out much of the work using
teams based in the Iberian Peninsula, this work package was awarded
to a collaboration between Sedgman and MinSol, subject to final
negotiation of the contract.
The DFS work for the key project infrastructure was the subject
of a second tender process which is now nearing completion with the
final assessment of tenders received now underway.
About Sedgman
Sedgman is an Australian engineering company with a global
presence in the minerals and metals sector. Their 250-strong
portfolio of high-performing processing plants and supporting
mine-site infrastructure showcases the value of their specialist
focus. Since 1980, they have advanced the standard of excellence
and innovation in design, delivery, and operations of processing
facilities for their clients. Sedgman is a subsidiary of the
Australian company, CIMIC Group, which in turn is owned by
HOTCHTIEF, which is majority owned by ACS Group. In executing the
DFS Sedgman will draw on the regional project delivery expertise of
DRAGADOS, another ACS Group company, based in Spain.
About Minsol
MinSol is a Western Australian based resource development
consultancy, specialising in mineral and chemical processing
facilities and associated infrastructure.
The core engineering team at MinSol have been integral to the
development of the lithium industry for more than 15 years,
including implementation of the world's first dedicated spodumene
flotation plant for lithium chemical conversion (2008) as well as
major projects for the likes of Talison Lithium (Greenbushes) and
Tianqi Lithium (Kwinana). MinSol has contributed to the design,
implementation, and commissioning of numerous projects which now
have a combined production capacity of 1.7Mtpa (SC6.0), or circa
50% of Australia's current spodumene production capacity.
MinSol have been involved in the Barroso Project for nearly 3
years, having worked collaboratively with the Savannah team since
2021 to develop the metallurgical test work and Studies.
DFS Drilling
Phase 1 of the DFS drilling programme which includes 60 reverse
circulation ('RC') and Diamond drill holes is focused on upgrading
existing resources, providing further samples for metallurgical
test work and geotechnical drilling for the final open pit designs
and is due to get underway around mid-September. Subject to the
final negotiations of contracts the drilling has been split between
EDASU (RC Drilling) and SPI (Diamond Drilling) and is expected to
take around 2-3 months to complete.
About EDASU
EDASU S.L. (Española de Aguas Subterráneas) was created in 1980
as a groundwater collection company using direct rotary percussion
vertical boreholes. They have more than 40 years of experience in
drilling services mainly in the field of mining and hydrogeology
both on the Iberian Peninsula and internationally and specialises
in deep drilling and large diameters.
About SPI
SPI S.A. (Sondeos y Perforaciones Industriales de Bierzo S.A.)
are an experienced Spanish drilling company who has been in the
exploration sector for almost 20 years, participating in many
projects in the Iberian Peninsula.
RECAPE
The RECAPE is the Detailed Design Environmental Compliance
Report phase of the environmental licencing process and will be
developed with the objective of demonstrating the environmental
compliance of the detailed design of the Barroso Lithium Project,
regarding the measures/conditions established in the DIA. Savannah
ran a tender process for the scope of works for the Project's
RECAPE and has selected Quadrante who are a highly experienced
Portugal based consulting group and were the same group who helped
Savannah guide the DIA to a successful conclusion and subsequent
approval.
The RECAPE work for the bypass road was the subject of a second
tender process which is now nearing completion with the final
assessment of tenders received now underway.
About Quadrante
Quadrante is a global Engineering, Architecture, Environment and
Sustainability Services Group, with offices in three continents
(Europe, Africa and Latin America) and extensive experience in
Special Projects, Transports Infrastructures, Energy and Industry,
Buildings and Urban Development, Waste and Water Utilities,
Environment and Construction Management and Supervision. Services
provided by Quadrante Group range from Environmental Management
Planning, Strategic Environmental Assessments, and specific studies
that integrate the environmental licensing of projects and/or
accompany the various phases of a project: Environmental Due
Diligence, Environmental Feasibility Study, Environmental Impact
Studies, Environmental Compliance Report of the Execution Project,
and Environmental Monitoring.
Ongoing Stakeholder Consultation Works
Following the approval of the DIA in May 2023, the permitting
authority requested several additional elements for Savannah to
present in relation to stakeholders as part of the RECAPE process.
Savannah has now selected Community Insights Group to provide
support in responding to two elements (M31 and M32) relating to the
Project's interaction with local communities and stakeholders. Work
is due to commence later in September and take around 8 months to
complete.
About Community Insights Group
Community Insights is a consultancy who helps businesses build
healthy relationships with their stakeholders. CIG does this by
helping them to gain trust, show respect for human rights, and
share benefits with local communities.
Land acquisition and land access arrangements
To develop the Project, Savannah must either own or have agreed
access rights to the land which is to be developed. Due to the
distance of the Project from the communities in the area, there is
no requirement to purchases any houses or other buildings from
local people for the Project to progress. Nor is there a
requirement for any resident to leave their home. All agreements
and proposed agreements relate only to land.
From an extensive mapping exercise, Savannah estimates that the
total area of land that is required for the Project, spread across
the Mining Lease, the proposed road, and ancillary areas is
approximately 840 hectares (8.4km(2) ) with private landowners
holding around 24% of the total. The remainder is managed on behalf
of the community by management groups ('Baldios'). The land is
spread across 4 parishes.
Savannah is committed to responsible land management and will be
comprehensively rehabilitating, relandscaping and revegetating
impacted areas during the operating life of the Project (beginning
in the second year of operation) and after it closes. At the end of
the Project's life, the land will be returned to the community for
its own use.
Land acquisition
Since 2021, Savannah has been operating a land acquisition
programme. To date more than 40 private landowners have sold, or
agreed to sell, their land to Savannah. Savannah offers landowners
EUR2 or EUR2.5/m(2) depending on the type of land (forest or
farmland, respectively). Savannah's analysis shows that these rates
are approximately twice the market price for such land in this
region. To date Savannah has acquired, or is in the process of
acquiring over 90 hectares of land in the local area and has paid
approximately EUR1.8m (including relevant taxes). Based on the
attractive rates which Savannah is offering, prior to mine
construction the Company expects to spend approximately EUR5m in
total on the acquisition of land identified to date, with the money
going directly to local people. Further investment on private land
will depend on matters including the progress of private property
identification and the completion of agreements.
Land Access
Savannah has engaged with the local Baldios communities from
Covas do Barroso and Dornelas, and presented financial proposals
(also included as part of the EIA submission to APA) to access the
Baldios lands. Savannah has offered a rental value of EUR335 per
hectare/year, a figure which is based on the current contract
Savannah has with the Covas do Barroso Baldios
(EUR258/hectare/year) adjusted for inflation. The Company has
benchmarked this figure against other relevant land access
agreement and transactions in Portugal and believes it to be a
highly attractive figure. For its total financial proposal,
Savannah has added to the land access fee calculated from this unit
price (on which an assumed inflation rate is added), a royalty
linked to the volume of spodumene concentrate production and
compensation for drilling platforms. Savannah is also offering
direct payments to all the community members in the impacted
parishes, will provide compensation for anyone losing agricultural
grants as a result of the Project, and provide financial support
for the local firefighters. Overall, Savannah estimates it would
pay approximately EUR10M for access to the community lands managed
by the Baldios over the Project's life, with approximately EUR4M
being paid directly to community members. Furthermore, where
practical, community members and the Baldios groups shall be able
to access the land during the operation of the Project for
recreation and work, even though Savannah commits to paying rent
for the full area of the Project's mining licence area and
ancillary land.
Savannah remains open to discussions with private landowners,
Baldios representatives, and other stakeholders around its land
acquisition programme and land access proposals. The Company's
preferred option is to secure the land or access to the land it
needs to develop the Project through direct negotiation and
agreement.
The 30-year Mining Lease granted in 2006 safeguards Savannah's
access to land that may be necessary for the development of the
Barroso Lithium Project. This condition applies to both private
land and land managed by the representatives of the Baldios.
Despite the existing legal coverage, Savannah will always favour
direct agreement with the owners of the lands and representatives
of the Baldios. The Company will use the mechanisms provided in
Portuguese law but only when it is not possible to reach an
agreement.
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**
Follow @SavannahRes on Twitter
Follow Savannah Resources on LinkedIn
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".
[1]Costs are in line with those set out in the Scoping Study
announced on 12 June 2023
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END
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