Savannah Resources (LSE:SAV) is close to signing a key second offtake deal for future output from its flagship Barroso lithium project in northern Portugal, with an agreement expected this quarter, CEO Emanuel Proenca said on an analyst call on Wednesday.
The Barroso project hosts more than 39 million tonnes of spodumene resources, Europe’s largest deposit of the lithium-bearing mineral.
The company has said further exploration upside could lift resources above 100 million tonnes and extend the mine’s life beyond 50 years.
Proenca said Savannah was “quite advanced” in negotiations for a second offtake agreement, with a “very final shortlist of candidates, all of them very credible players in the global scene of lithium”, with a deal expected this quarter.
He gave no further details but said a second offtake agreement was a key step towards securing project financing, as lenders want 70%-75% of Barroso’s future output contracted through long-term supply deals.
Dutch miner and lithium supplier AMG Critical Materials (AMS:AMG) signed an offtake agreement in June 2024 to buy 45,000 tonnes of spodumene concentrate annually from the Barroso project for five years, equivalent to about 25% of the mine’s planned output.
As part of the deal, AMG Critical Materials became Savannah’s largest shareholder, with a 16% stake.
Savannah estimates construction of the Barroso mine will cost about US$420 million. Banks are expected to provide 60%-65% of the funding, with the remainder coming from a Portuguese state grant of up to €110 million, existing cash and new equity.
The project remains on track for construction in 2027 and first production in 2028, Proenca said.
(Reporting by Sergio Goncalves; Editing by Cynthia Osterman)
Main Image: Savannah Resources
