Savannah wins support for contentious Barroso

Savannah Resources (LSE: SAV) has secured fresh backing from local landowners in northern Portugal for the controversial Barroso lithium project, Europe’s largest, as the developer seeks to overcome years of community opposition ahead of a final construction decision.

Three new benefit-sharing agreements cover communal land managers, known as baldios, near Barroso, a $417-million capex project the EU has designated as strategic, the company said Wednesday. Savannah still expects to receive its final environmental licence in this year’s third quarter, make a final investment decision by year-end and begin production in 2028.

“This is not simply about securing access to land – it is about recognizing that the baldios belong to the communities that have managed them for generations, and that those communities have a voice in decisions and access a fair share of the benefits,” CEO Emanuel Proença said in a release.

The agreements represent another step forward for a project that protests and legal challenges have delayed for years. While Lisbon and Brussels view Barroso as central to building a European lithium supply chain, residents and environmental groups have opposed the mine over concerns about its effects on farming, water resources and biodiversity in the Barroso region, which is recognized by the UN as a Globally Important Agricultural Heritage System.

500,000 autos

Shares in Savannah Resources rose a tenth of a pence to 6.2 pence on Wednesday in London before easing to close on Thursday at 5.8 pence, valuing the company at £149 million (C$280 million).

Savannah’s definitive feasibility study, released in July, outlined a 14-year operation producing an average 183,000 tonnes of spodumene concentrate annually. It estimated an after-tax net present value of $913 million, an internal rate of return of 43% and a payback period of less than two years.

Savannah plans to develop four open-pit mines at Barroso capable of producing enough spodumene concentrate each year to supply batteries for about 500,000 electric vehicles.

The study ranked Barroso in the second quartile of the global hard-rock lithium cost curve, with average life-of-mine operating costs of $473 per tonne of concentrate. Savannah said the project’s economics compare with some of the world’s most competitive spodumene mines.

There’s also a plan for dry-stack tailings, a lined storage facility and a water recycling system to reduce the project’s environmental footprint, measures designed to address some of the environmental concerns that have fuelled local opposition.

Land access

The new agreements include a land access and benefit-sharing deal with the Baldio of the villages of Alijó, Canedo and Penalonga covering Blocks A and C of the Aldeia mining concession. Savannah also amended a 2020 agreement with the Baldio of Couto de Dornelas, which manages land on and adjacent to the western end of the C-100 mining concession.

A third agreement, with the Secretariat of the Baldios of Trás-os-Montes and Alto Douro, establishes a technical and strategic partnership to manage and enhance about 100 hectares of Savannah-owned agroforestry land.

Savannah now has land access agreements with two of the three baldios that manage land within the project’s mining concessions. The agreements provide for community participation in project oversight bodies, local reinvestment of project benefits and inflation-indexed rental payments.

The company said the partnership with the regional baldios secretariat would also support forest management and wildfire prevention, a major concern in northern Portugal.

Battery metal

Portugal has long produced lithium for the ceramics industry but has yet to develop a large-scale battery materials sector.

Earlier this year the government awarded Savannah a €110-million (US$128 million) grant to help advance Barroso, underscoring official support.

The company increased the project’s mineral reserve by 40% last year strengthening the economics of what would become western Europe’s first significant lithium mine.

Barroso hosts 26.6 million measured and indicated tonnes grading 1.05% lithium oxide for 280,800 tonnes of contained lithium oxide, according to a resource issued in September. It has 12.4 million inferred tonnes grading 1.06% lithium oxide for 131,100 tonnes of contained lithium oxide.

The combined resource totals 39.1 million tonnes grading 1.05% lithium oxide for 411,900 tonnes of contained lithium oxide.