Whitman Howard Research: Savannah Resources plc

50% resource increase at Mina do Barroso

The significant increase in compliant resource at their near surface Mina do Barroso hard rock lithium project in Portugal is very good news indeed. This spodumene resource is now probably Western Europe’s largest and totals 14 million tonnes (Mt) grading 1.1% lithium oxide (Li₂O), 7.2 Mt in the indicated category and 6.7 Mt in the inferred. Both resources grade 1.1% Li₂O and a 0.5% Li₂O cut off was used.

The 87% increase in the resource at Grandao deposit to 10.3 Mt @1.1% Li₂O is the reason for the overall increase. Here the quality improves, with a slight increase in average grade, while the deposit is open in a number of strike directions, as well as to depth. At Grandao, the Indicated resource of 7.2 Mt grades 1.1% Li₂O, while the 3.1 Mt that reports to the
inferred category is of similar grade. The 0.5 Mt of inferred resource at the smaller Noa deposit grades 1.2% Li₂O, while the slightly larger, but lower grade Reservatorio deposit, has an inferred resource of 3.2 Mt @ 1.0% Li₂O.

The company has shown these deposits to be low in iron and this is important in term of potential concentrate contaminants. Even here there is upside as it is to be investigated as to how much of the iron being recorded is from drill bit abrasion.

The scoping study for high quality spodumene concentrate production remains on track to be delivered by the end of June.

In our 12th March 2018 initiation BUY note we valued Mina do Barroso at £30m and had a valuation range using other projects as a guide of £18.75m to £54.3m. Overall we valued Savannah at £60m with half from Portugal, £25m for their Mozambiquan Heavy Mineral Sands project and £5m for their Omani copper project.

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