Savannah Resources has announced the results of a scoping study on the Mina do Barroso lithium project in northern Portugal, which confirmed the region’s potential to be a major spodumene lithium producer.

The company is targeting a mining inventory of 14.4 million tonnes at a grade of 1.1% lithium oxide for a mine life of 11 years from the project, of which it owns 75%.

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Average annual production at Mina do Barroso is expected to be 175,000t of spodumene concentrate per year at 6% lithium oxide.

“We believe significant further upside exists, with excellent potential to increase the mineral resource estimate and the mining rate.”

Construction is scheduled to commence in the second quarter of next year, while production is slated for early 2020.

Savannah Resources CEO David Archer said: “The scoping study highlights the robust features and outstanding investment appeal of the Mina do Barroso lithium project with a very high- internal rate of return (IRR) and strong cash generation, even with a conservative spodumene prices.”

The study outlined an initial capital expenditure of $109m for the project, which has a pre-tax net value of $356m and IRR of 63%, as well as earnings before interest, taxes, depreciation, and amortisation (EBITDA) of $805m across its lifetime.

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Through the development of the project, the company aims to leverage the growing demand for lithium-ion batteries from the automotive and energy storage sectors.

Archer added: “We are committed to maintaining this pace as we continue to fast-track towards production, and believe significant further upside exists, with excellent potential to increase the mineral resource estimate and the mining rate, schedule lower strip ratio ores in the latter years of the project and optimise site operational features to further lower the cost of production and increase the value of the project.”