Savannah Resources (SAV) share price charges higher on upgrade to its European lithium mine
Shares in Savannah Resources have jumped more than 10 per cent this morning after the company revealed an upgrade in the amount of lithium that can be extracted from a mine it says could become a key player in Europe’s shift to electric vehicles.
The firm, which is listed on London’s Alternative Investment Market (Aim), said its Mina do Barroso mine in Portugal is now believed to be western Europe’s largest mine for spodumene, a lithium bearing mineral, after it upgraded the mine’s mineral resource estimate by 52 per cent to 14m tonnes.
The firm’s shares were up 12.5 per cent at 6.3p in morning trading.
Read more: Satellites to search Cornwall for lithium amid growing demand for batteries
Lithium demand is expected to spike in the next few decades as more drivers opt for electric cars; Moody’s automotive analysts expect the share of new electric vehicle sales to rise from less than two per cent now to around seven or eight per cent in by the mid-2020s and reach nearly 17 to 19 percent by the late 2020s.
Energy storage is also driving the need for more lithium-ion batteries as it becomes a crucial element in balancing electricity supply with demand.
David Archer, the chief executive of Savannah Resources, has called the Mina do Barroso mine a “major new European mineral discovery”.
“With the strong growth prospects for lithium-ion batteries for electric vehicles and for electricity storage from the grid this is a critical time to be bringing a project of Mina do Barroso’s scale, grade and location, on stream.”
Archer said:
We believe that Mina do Barroso has the potential to be a key piece of Europe’s emerging lithium value chain that could help support the shift by European car manufacturers to the production of electric vehicles.
Spodumene concentrate is the dominant lithium mineral product traded internationally, Archer said, and there is currently no European producer.
Analysts at Northland Capital Partners said that although Savannah’s mine is not currently one of the largest spodumene deposits globally or one of the higher-grade deposits, “its jurisdiction combined with its existing mining license, the near-surface position of the mineralisation, the extensive supporting infrastructure, and relatively short development timeframe make it an attractive asset, when compared to its global peer group”.
Archer said: “We believe that Portugal could be the first European supplier of spodumene thanks to the near-term development potential of Mina do Barroso, which has already been granted a mining lease. Our focus now is to establish the project’s economics, with the results of the scoping study due this quarter. Further mineral resource upgrades are expected in coming months.”
Read more: Lithium prices are going to drop 45 per cent by 2021, Morgan Stanley says