KEY POINTS
- Savannah expects a second lithium deal this quarter.
- Barroso holds more than 39 million tonnes of resources.
- Mine construction is planned for 2027.
Savannah Resources is close to securing a second long-term supply agreement for its Barroso lithium project in northern Portugal, a deal that could help unlock financing for the planned mine.
The London-listed company is in advanced discussions with potential buyers for future lithium output with an agreement expected before the end of the year.
CEO Emanuel Proenca said Savannah had narrowed the negotiations to a final shortlist of credible international lithium companies.
He said the company was “quite advanced” in the discussions and expected to conclude the second offtake agreement during the current quarter.
Savannah has not disclosed the companies still in contention or the expected volume and value of the proposed agreement.
The deal is important because project lenders are expected to require between 70% and 75% of Barroso’s future production to be covered by long-term supply agreements before providing financing.
Barroso holds major lithium resources
The Barroso project contains more than 39 million tonnes of spodumene resources, making it the largest known deposit of the lithium-bearing mineral in Europe.
Savannah believes further exploration could significantly increase the resource base, potentially taking it above 100 million tonnes.
The company has also said additional resources could extend the mine’s operating life beyond 50 years.
Lithium-bearing spodumene concentrate from Barroso would feed into the growing battery materials supply chain, as Europe seeks to develop more domestic sources of critical minerals.
Existing deal covers 25% of output
Savannah already has one major offtake agreement in place with Dutch mining and lithium company AMG Critical Materials.
Under the agreement signed in June 2024, AMG will purchase 45,000 tonnes of spodumene concentrate a year from Barroso for five years. That volume represents about 25% of the mine’s planned production.
The agreement also made AMG Savannah’s largest shareholder, giving the lithium producer a 16% stake in the company.
A second long-term customer would therefore move Savannah closer to the level of contracted production that banks are expected to require.
$420m mine moves toward construction
Savannah estimates that developing the Barroso mine will cost about $420 million.
Banks are expected to provide between 60% and 65% of the required project funding, with the remaining financing expected to come from a combination of a Portuguese government grant, existing cash and new equity.
The Portuguese state has approved a grant of up to €110 million, equivalent to about $123.09 million, to support the project.
Savannah is targeting construction in 2027, with first production expected in 2028.
Securing the second offtake agreement would represent an important step toward those targets because it would provide greater visibility over future sales and strengthen the project’s case for debt financing.
