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Savannah's scoping study at Mina do Barroso lithium project pegs US$241M value

Savannah Resources PLC's scoping study at its 75%-owned Mina do Barroso lithium project in northern Portugal estimated a posttax net present value, discounted at 8%, of US$241 million, a 48.6% internal rate of return and a 2.1-year payback period.

The base case development is centered on a mineral resource estimate of 14 million tonnes at 1.1% lithium oxide, or Li2O.

Initial CapEx, excluding contingencies, is estimated at US$109 million, and average life-of-mine C1 cash operating costs are estimated at US$271/tonne of concentrate.

The project is expected to generate life-of-mine EBITDA of US$805 million, according to a June 14 release.

The study included an upside case, which can be achieved by increasing the mineral resource estimate and the mining rate, scheduling lower strip-ratio ores in the project's later years and optimizing site operational features to lower production cost.

The upside case pegs a posttax NPV of US$321 million, a 53.2% IRR and a 2.1-year payback period.

Initial CapEx in the upside scenario is the same at US$109 million, while the average life-of-mine C1 cash operating costs are expected to increase to US$274/tonne of concentrate.

Life-of-mine EBITDA is estimated to increase to US$1.02 billion in the upside case.

The project is expected to annually produce about 175,000 tonnes of spodumene concentrate at 6% Li2O, about 276,000 tonnes of feldspar and about 173,000 tonnes of quartz during a potential 11-year mine life.

Construction is expected to start in the second quarter of 2019 and take nine to 10 months, and production is expected to start in the first quarter of 2020.

The project is owned 25% by Sydney-based private equity firm Slipstream Resources Investments Pty. Ltd.