Savannah Resources (LON: SAV) has raised $30 million to advance its Barroso lithium project in Portugal through engineering, permitting and early development work.
The financing came as the company issued 408 million shares at £0.055 each. Savannah said it would also enter subscription agreements with institutional and individual investors, including four of its largest shareholders, to raise $11.2 million.
Combined with Savannah’s existing $15.5 million cash balance, the proceeds will fund early works including vendor data, fabrication notices for long-lead items and groundworks ahead of access road construction.
The company also plans to conditionally award engineering, procurement and management and bulk earthworks contracts while progressing front-end engineering design for the processing plant and infrastructure.
The fresh funds give Savannah additional capital to move Barroso towards construction following completion of a phase-one definitive feasibility study (DFS) in July, which outlined a 14-year operation producing an average 183,000 tonnes of spodumene concentrate grading 5.5% lithium oxide annually.
Development spending
Savannah also plans to use the funds for project financing, environmental submissions, industrial permit applications and bypass road designs, as well as geotechnical and resource work.
Other spending will cover land-use rights, community initiatives, general and administrative costs and additional working capital.
The phase-one DFS estimated Barroso could generate $3.2 billion in earnings before interest, taxes, depreciation and amortization and $1.9 billion in free cash flow over its initial mine life, based on an average sales price of $1,788 per tonne. It calculated a post-tax net present value of $913 million.
Those projections remain dependent on assumptions in the DFS, including lithium prices, project financing, permitting and Savannah successfully moving the development through construction and into production.
European supply
Barroso has been designated a Strategic Project under the European Union’s Critical Raw Materials Act and is described by Savannah as Europe’s largest spodumene lithium deposit. The project hosts a resource of 39 million tonnes grading 1.05% lithium oxide for an estimated 411,900 tonnes of contained lithium oxide.
Despite its strategic significance, Barroso has faced opposition from local communities and environmental groups concerned about potential effects on land use, water and biodiversity. The surrounding Barroso region has been recognized as a Globally Important Agricultural Heritage System since 2018.
Savannah has sought to build local support as it advances the development. In August, the company announced three benefit-sharing agreements with communities that hold and manage communal lands, known as baldios, near the project.
The agreements add a community component to Savannah’s efforts to advance a project positioned as a potential domestic source of lithium for Europe.
Source: https://www.mining.com/savannah-raises-30m-to-advance-barroso-lithium-project/
