12 June 2023

Savannah Resources Plc

(AIM: SAV, FWB: SAV and SWB: SAV) ('Savannah', or the 'Company')

Barroso Lithium Project: New Scoping Study

New Scoping Study for the Barroso Lithium Project demonstrates Outstanding Economics: Post-tax NPV of US$953 million, IRR of 77% and 1.3 year Payback

Savannah Resources Plc, the European lithium development company, is pleased to announce, following the positive Environmental Impact Statement ('DIA') from the Portuguese regulator on the Project's revised and optimised design, the results of a new Scoping Study (the 'Study' or the 'Scoping Study') undertaken on the Company's 100% owned Barroso Lithium Project (the 'Project'), located in northern Portugal.

Scoping Study Highlights

·    The new Scoping Study reconfirms the Project has the potential to be a major European producer of spodumene concentrate, the industry's standard lithium raw material. Located in close proximity to the emerging European battery supply chain, including a number of planned lithium chemical plants, the Project has the potential to be a domestic source of conventional, low cost, low carbon, lithium raw material for the region.

·    Demonstrates excellent Project economics, with the potential to deliver substantial shareholder value:

o  Base Case post -tax NPV₈ of US$953 million, IRR of 77% and payback period of 1.3 years

o  Life of Mine ('LOM') revenue of US$4.2 billion

o  LOM EBITDA of US$2.8 billion

o  LOM post-tax free cash flow of US$1.7 billion

o  Based on average 5.5% grade spodumene concentrate LOM price of US$1,464/t vs. current 6% grade spot prices of US$3,500/t

·    Project considered by independent consultants to be of low technical risk with open pit mining and conventional processing combining Dense Media Separation ('DMS') and a flotation circuit utilising environmentally friendly reagents to produce a 5.5% Li₂O grade spodumene concentrate:

o  Resource of 28Mt at 1.05% Li₂O with a lithia content of 293,400 tonnes

o  Resource Utilised in Mine Plan, 20.5Mt at 1.05% Li₂O and average annual run-of-mine production of 1.5Mtpa, over 14 years

o  LOM production of 2.6Mt of 5.5% Li₂O grade spodumene concentrate at an average annual production rate of ~191,000tpa

o  Average LOM C1 Operating Cost of US$292/t of concentrate (including by-product credits)

o  Initial CAPEX of US$236 million (excluding contingencies) which includes US$40 million for community related measures

·    Project is likely to have a significant cost advantage due to its close proximity to the local ceramics market where a large portion of the tailings could be sold as Ceramic By-products.

·    Project scheduled to commence producing concentrate in mid-2026 subject to completion of DFS and project financing.

To view the full press release including any maps, figures or tables, please use the following link:

http://www.rns-pdf.londonstockexchange.com/rns/3272C_1-2023-6-11.pdf

Dale Ferguson, CEO of Savannah said, "Following on from the recent positive Environmental Impact Statement ('DIA') from the Portuguese regulator, we are delighted to have been able to publish the findings of the new Scoping Study on the Project ahead of the H2 2023 deadline we had set ourselves. This study, alongside the receipt of the positive DIA decision represents a major milestone for Savannah, as well as a significant step-change as we look to accelerate the development of the Project.

"Having just received the environmental regulator's endorsement for the revised and optimised design of the Project, the new Scoping Study now highlights the outstanding investment case of the proposed development. Based on long term forecast prices, which are below current spodumene prices, the Project generates an exceptional IRR and significant cash generation. Hence, we hope that this Scoping Study makes clear the inherent value in this Project which Savannah seeks to unlock for shareholders, for customers, for Portugal, for Europe, and all stakeholders.

"Importantly, these robust economics are achievable alongside minimising the environmental impact of the Project. Our analysis shows that C1 operating costs are in the second quartile of the spodumene lithium cost curve and CAPEX remains achievable despite additional environmental impact mitigations incorporated in the revised and optimised Project design and the new bypass road which will benefit the regions' residents. With the Project's close proximity to the developing European lithium value chain, it will also enjoy low transport costs with all costs referred to in the Scoping Study being delivered to European customers.

"Capable of producing just under 200,000tpa of spodumene concentrate, or c.25ktpa LCE (Lithium Carbonate Equivalent), the Barroso Lithium Project is one of the most significant potential lithium raw material sources in the European Union. The European Commission's Critical Raw Material Act calls for at least 10% of European demand for materials such as lithium to be met from domestic supply by 2030. Having received its key environmental approval last month and now with the strong business case implied by the Scoping Study, the Barroso Lithium Project is well placed to fulfil its role as a major source of responsibly produced lithium in Europe. In this way, it can help to establish Portugal as a key player in Europe's own end-to-end lithium-ion battery value chain.

"With the DIA received and the Scoping Study now completed, Savannah is focused on reaching its next Project milestones, the completion of the environmental licencing process and the Definitive Feasibility Study. To complete both these tasks Savannah will be ensuring that the conditions associated with the DIA are incorporated in the Project's final engineering design. We expect to achieve both milestones in H2 2024.

"We will also be continuing with our stakeholder engagement programme. We are keen to ensure that all stakeholders are aware of and understand the activities we will be undertaking to prepare for the future development of the Project. We will also be seeking their input to optimise the delivery of the significant socio-economic benefits the Project can bring to the local villages, the Municipality and to Portugal

"The commercial arrangements for the Project will also receive greater focus as we look to close in on offtake and financing arrangements now that the licencing of the Project has taken a significant step forward, and the favourable economics are clearly demonstrated by the Scoping Study. From the foundation created by the DIA, now the Scoping Study and the fact that we still have not committed any of the Project's offtake the next 12 months are set to be a busy and defining period for the Project and Savannah."

Further Information

Summary of key Scoping Study input and Outcomes

*Cautionary Statement: The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration work to estimate a mineral resource and it is uncertain if further exploration will result in defining a mineral resource. As such, potential investors should not rely upon this Exploration Target as indicative of a mineral resource and should not base their investment decision, in whole or in part, on such Exploration Target.

** C1 Operating Costs include all mining, processing, transport, G&A, and community costs, and are net of Ceramic By-Products credits.

Study Background

The Barroso Lithium Project is located in northern Portugal near the town of Boticas and around 145km by road from the deep-water port of Leixões near the city of Porto (Figure 1). The object of the Scoping Study was to produce a preliminary development base case centred on the defined JORC (2012) compliant Mineral Resource Estimate of 28Mt at 1.05% Li₂O, using conventional processes to produce a marketable Li₂O concentrate to demonstrate the potential economics of the Project.

Figure 1. Project Location Map

The Project's Scoping Study is based on a mine and concentrator only development for the production of spodumene concentrate. Additional revenue potential comes from the production of Ceramic By-Products (combined feldspar and quartz products ('Ceramic By-Products')) from the spodumene lithium concentrator circuit and the sale of low-grade pegmatite material. The Scoping Study is based on the Mine Plan and Environmental Report which were submitted to the Portuguese regulator in March 2023 and which received a positive Environmental Impact Statement (DIA) in May 2023, and also includes the Aldeia deposit which Savannah has the right to acquire once the related mining licence is issued.

The Project's flowsheet, which has been designed and tested to Feasibility Study requirements, combines DMS and a flotation circuit for the recovery of spodumene into a concentrate. The resulting tails are thickened and dry stacked which eliminates the need for a tailings dam and reduces the overall footprint of the operation. Low-grade pegmatite material that did not form part of the concentrator feed was quantified so that the opportunity of selling this material can be evaluated. The Scoping Study assumes sales of 100,000t/year at US$23.8/t. The opportunity of producing a Ceramic By-Products (feldspar /quartz) from the processing plant tailings for the local ceramics industry was also investigated, and the Scoping Study assumes annual sales of 400,000t of this material at a price of US$53.5/t. Lithium and feldspar are designated respectively as Strategic and Critical Raw Materials in the proposed EU Critical Raw Materials Act.

The Project's NPV was calculated by Savannah on an equity basis owning 100% of the Project, and has been estimated via cash flow modelling, discounted at 8%. The deterministic sensitivity analysis of the Base Case NPV estimates have been calculated on a range of -20% to 30%. These estimates accommodate fundamental uncertainties at the scoping level of this study and will be refined through feasibility level studies. It is important to note that many aspects of the work completed to date, like the metallurgy test work, has been completed to DFS level which will aid in shortening the time for the next phase of work. The sensitivity analysis was undertaken on all of the key inputs (spodumene concentrate price, initial CAPEX, operating expenditure ('OPEX'), discount rate, Li₂O recovery rates and feed grade) to arrive at a range of Project NPVs and IRRs for any given sensitivity.

Geology

The Barroso - Alvão Region is characterised by the presence of a large field of outcropping pegmatites and aplite-pegmatite dykes of granitic composition. Pegmatite dykes are mainly intruded in the granitic rocks of the region whilst aplite-pegmatite dykes are hosted by low to medium grade metasedimentary rocks of Silurian age that are strongly deformed (B. CAROY et al., 1992). The thickness of these dykes ranges from less than 1m up to 50m.

The Barroso Lithium Project is centred on a series of spodumene rich aplite-pegmatite dykes and sills, which have formed the basis of this study.

Tenure

The Barroso Lithium Project comprises  the C100 Mining Lease (Figure 2) which is 100% owned by Savannah Resources Plc and is currently undergoing a 250m expansion along its northern boundary. Savannah has received written confirmation from the Portuguese mining bureau, DGEG, that on the basis of article 24 of Decree-Law no. 88/90 of 16 March (1990) and based on the resources allocated, exploited and intended, the article can be utilised to request the DGEG for an expansion up to 250m of the C100 Mining Lease in specific areas where a resource has been defined and the requirement for the expansion can be justified. The DGEG have confirmed in writing that the licence for the extension would be granted upon a positive approval of the DIA which occurred on 30 May 2023. Discussions with the DGEG on the process for the expansion and re-definition of the boundary is currently underway in the Reservatorio area and, as a result, potential mineralisation in the area has been included into the Scoping Study.

Savannah has a fully signed and executed agreement for the purchase of the Aldeia licences (Figure 2) which are subject to the final condition precedent around the granting of the mining concessions for the area. Based on current discussions it is anticipated that concessions could be granted later this year or early next year. Based on this information, the Aldeia resource has been included in the Scoping Study.

Mineral Resource and Exploration Target

Savannah commenced drilling at the Barroso Lithium Project in 2017 and has completed over 31,000m of drilling using a combination of RC (21,889m) and diamond drilling (9,515.5m) to define a JORC (2012) compliant resource of 28Mt at 1.05% Li₂O. The resource is comprised of five main deposits, Grandao, Reservatorio, Pinheiro, NOA and Aldeia.

Grandao Deposit: Is the primary deposit of the Project with a mineralised zone of 650m long and 500m wide, and a thickness of up to 50m. The deposit exhibited consistency of mineralisation within the pegmatite body and has produced the most significant results to date.

Reservatorio: Is a moderately dipping outcropping pegmatite with over 450m of strike exposure that can be traced for at least 170m down dip. The pegmatite thickness is up to 40m and has exhibited consistent lithium mineralisation throughout the body.

Pinheiro: is made up of two converging steeply dipping pegmatite bodies that have been traced for 200m on the surface and by drilling and down dip for 150m, with thickness up to 25m. Lithium mineralisation occurs throughout both pegmatites and remains open along both strike and down dip.

NOA: is a semi contiguous, moderately dipping pegmatite body that has been traced for 350m along strike and down dip for 140m. The lithium mineralisation is consistent both down dip and along strike.

Aldeia: is a northwest dipping tabular pegmatite with several minor subsidiary bodies that can be traced for 200m along strike and 250m down dip. The lithium mineralisation is consistent throughout the pegmatite and is of a higher grade compared to the other deposits.

The previous JORC (2012) compliant Measured, Indicated, and Inferred Mineral Resource for the Barroso Lithium Project, calculated by PayneGeo, May 2019 of 27Mt at 1.06% Li₂O with a lithia content of 285,900 tonnes was updated in June 2023 to 28Mt at 1.05% Li₂O with a lithia content of 293,400 tonnes as shown in Table 1 with full details in Appendix 1. To further show the potential of the Project an Exploration Target* has been refined based on results of the drilling for the Grandao, Reservatorio and Aldeia deposits. The Exploration Target* projects a potential of 11Mt to 19Mt at 1.0% - 1.2% Li₂O and is also shown in Table 1. This gives an overall combined Project Resource and Exploration Target* of 39Mt to 47Mt at 1.0% - 1.2% Li₂O.

Table 1. Combined Resource Estimate and Exploration Target for the Project

*Cautionary Statement: The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration work to estimate a mineral resource and it is uncertain if further exploration will result in defining a mineral resource. As such, potential investors should not rely upon this Exploration Target as indicative of a mineral resource and should not base their investment decision, in whole or in part, on such Exploration Target.

Mine Plan

The planning for the Barroso Lithium Project was based on an annual run of mine rate of 1.5Mt of ore per annum with an estimated life of mine average head grade of 0.96% Li₂O (diluted), an overall strip ratio of 5.9:1 (waste:ore ratio) and a 14-year mine life (LOM). It is important to note that this is a scoping study, and the resulting 20.5Mt mine plan cannot be classified as an Ore Reserve under JORC (2012) guidelines.

In general, the mineralisation grades are fairly consistent throughout the deposits so to improve the Project economics basic pit stages were identified with the intention of deferring stripping requirements over the LOM. The concept plan incorporates seven pit stages from the five deposits modelled to date (see conceptual site layout in Figure 2)

·       Pinheiro (single stage)

·       Grandao (2 stages), see Figure 3

·       Reservatorio (2 stages)

·       NOA (single stage)

·       Aldeia (single stage)

The total optimised pit shell inventories are listed in Table 2. Five geological block models (one for each respective deposit) were provided, and conceptual pit shells were generated using optimisation software founded on the Lurchs Grossman algorithm.

Figure 2. Conceptual Site Layout

Figure 3. Cross section through Grandao Deposit showing the conceptual stage 1 and 2 pits

Table 2. Conceptual Optimised Shell and Mine Plan

Minor rounding discrepancies may occur in the table.

The optimised shells used in this evaluation are based on Measured, Indicated, and Inferred Mineral Resource Estimates together with a minor amount of the Exploration Target. All materials had appropriate dilution and mining recovery factors applied. The quantities for each type of material are reported in Table 3.

Table 3. Plant Feed Inventories by Pit and Material Type

Minor rounding discrepancies may occur in the table.

*Cautionary Statement: The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration work to estimate a mineral resource and it is uncertain if further exploration will result in defining a mineral resource. As such, potential investors should not rely upon this Exploration Target as indicative of a mineral resource and should not base their investment decision, in whole or in part, on such Exploration Target.

Infrastructure

The Project's total site conceptual infrastructure stretches 6.5km by 2.5km over relatively steep and undulating terrain as shown in Figure 2. All conceptual mine infrastructure and excavations developed in this study were restricted to:

·    within tenement boundaries where space allowed;

·    minimised sterilisation of prospective target exploration zones;

·    respected offset boundaries for major watercourses; and

·    legacy travel routes (where available).

Mining Schedule

The conceptual mine production plan is summarised in Table 4 and Figure 4. As the Project progresses further refinements to haul routing plans, waste rock storage management and pit staging should be targeted to take advantage of opportunities for reduced haulage capital and operating costs.

Table 4. Conceptual Barroso Lithium Project Mine Production Plan (pre-strip incl. in year 1)

Minor rounding discrepancies may occur in the table.

Figure 4. Conceptual Barroso Lithium Project Mine Plan by Deposit

Mining Costs

A contract mining model was developed for the potential development by Minesure using the schedules shown in Table 4 and Figure 4.

Annual operating costs for each major item of plant were estimated from first principles using data supplied by major mining fleet suppliers. Labour costs were provided by Savannah.

The cost components were combined to derive an annual operating cost for each machine which were then applied to the mining schedule to generate an overall cost per tonne for mining.

The mining activities will utilise excavators matched with dump trucks. Due to the relatively high production rates, it is estimated that it will be required to operate three dozers whilst only mining at Pinheiro and Grandao, increasing to four dozers when Reservatorio comes on stream. Initially only one water cart should be required as the haul distances are quite short however an additional cart will be required when mining Reservatorio and NOA. A front-end loader is costed to operate throughout the Project life as a back-up dozer and for doing general clean up works. Allowance has been made for the operation of a service truck, light vehicles, and other ancillary equipment.

Capital expenditure is initially incurred in mobilising the mining fleet to site and setting up maintenance facilities. Pre-stripping activities costs are included in CAPEX. Prior to mining commencing, areas to be disturbed would be cleared, grubbed, and have the topsoil recovered and stored. This is undertaken by a dozer and loader as the pushing distances are relatively short. Further clearance works need to be undertaken when new deposits are brought online, or existing ones cut back.

Processing

A series of metallurgical tests were conducted at Nagrom in Perth, Western Australia on representative samples from the Pinheiro, Aldeia, Reservatorio and Grandao deposits under the supervision of Minsol Engineering Pty Ltd. This information was used to develop the Scoping Study flow sheet for a combined 1.5 Mtpa DMS and flotation circuit (Figure 5) with an overall plant availability of 85% for the recovery of spodumene into a concentrate product that contains a 5.5% Li₂O. Tails from the process would be thickened and dry stacked in a lined tailings storage facility.

The processing of ore to produce concentrates will comprise several stages:

·    Crushing and reclaim - a multiple stage crushing and screening circuit crushes the ore to -14mm then discharges the ore onto the fine ore stockpile. The stockpile is reclaimed via belt feeders which feed the primary screen.

·    Primary Comminution and Classification - the reclaimed material is split into oversize ( 3.35mm), which is fed to the primary mill, and undersize, which is further split into the DMS pre-treatment stage ( 0.85mm). The 0.85mm fraction will then be treated through classification to produce an underflow ( 0.18mm) which reports to the secondary mill and an overflow (-0.18mm) to bypass the secondary mill and be recomposited prior to undergoing magnetic separation.

·    DMS - The DMS will operate as a conventional pump-fed DMS circuit, utilising a low SG (Specific Gravity) media to act as a pre-concentration stage. The floats produced will be disposed of to the floats stockpile, whilst the upgraded sinks will report to the regrind mill.

·    Flotation Preparation Circuit - A secondary mill will operate in closed circuit with the secondary mill stacksizers to produce a product P80 of 0.150mm. The mill discharge will then undergo magnetic separation and desliming prior to mica flotation to remove all highly magnetic material and ultra fines.

·    Mica Flotation Circuit - The mica flotation feed will undergo conditioning in tanks prior to being fed to the mica rougher flotation cells. The rougher concentrate then reports to the mica cleaner flotation cells to minimise Li₂O losses in the mica concentrate. The mica cleaner concentrate is collected and reports to the mica thickener, whilst the mica cleaner tails is combined with the mica rougher tails and then undergoes two stages of cyclones to remove the mica reagents prior to entering the spodumene flotation circuit.

·    Spodumene Flotation Circuit -Spodumene flotation will include a rougher, cleaner and recleaner stage, with the tails from each stage reporting to the prior stage to improve the Li₂O recovery. The spodumene flotation area utilises flotation water recovered from the spodumene tails and concentrate thickeners to minimise the impact of flotation chemical on other equipment.

·    Concentrate and Tailings Dewatering and Storage - the spodumene concentrate, Ceramic By-Products and tailings streams are dewatered by a combination of cyclones, thickeners, belt filters and filter presses before being dry stacked in a purpose-built storage area immediately adjacent to the processing plant. The spodumene concentrate and Ceramic By-Products will then be transported off-site.

·    Water Circuits - Three unique process water circuits will be used during processing to minimise the impact of flotation reagents on equipment, allow dry stacked tailings, reduce the overall amount of fresh water required to operate the process plant and ensure an optimal environmental outcome.

·    Reagents - The proposed reagents are all environmentally friendly and meet European Reach requirements. These include sodium silicate, soda ash, flocculant, Armeen T, and an oleic acid based collector will be the main reagents used within the process plant. Storage and delivery of minor reagents including soda ash, mica collector, coagulant, and frother have been included.

·    Services - provision of raw water and compressed air are required to support the processing plant.

Figure 5. A Summary Diagram of the Environmentally Friendly Process Plant Flowsheet

A summary of parameters for the concentrator flowsheet is shown in Table 5.

Table 5. Concentrator Production

* This is including tails that could be sold as Ceramic By-Products after further study of the ceramic market

Spodumene Conversion

Based on the mineral and chemical composition and MinSol's previous project experience, the Barroso Lithium Project concentrate is considered high quality, and suitable for conversion via the conventional sulfate route. To support this, conversion testing has been undertaken with multiple laboratories in Europe and Australia to determine the following:

·    Conduct sighter decrepitation tests on a range of spodumene concentrates and under a range of conditions (temperature and time).

·    Conduct sighter sulfation bake / water leach tests to determine the extraction of lithium.

·    Identify optimal decrepitation conditions for each spodumene mineral concentrate and differences in reactivity between those mineral concentrates.

The most recent conversions test work undertaken at the Australian Government's Science and Technology Organisation 'ANSTO' proves good conversion and leach recoveries without requiring detailed investigations or optimisation to improve. Key results are summarised in Table 6 below:

Table 6. Summary of Lithium, Aluminium, and Iron Extractions

^ Determined to be due to incorrect acid addition.

Project infrastructure

Infrastructure requirements for the mine and concentrator include:

·    Site Access Road: for the mine/concentrator, upgrade of a 6.6km length of road is required to provide access to the site for the delivery of supplies and reagents and for the export of the spodumene concentrate. Roads will be required both for heavy vehicles associated with the mine production and tailings management, as well as light vehicles used to support the operation of the concentrator.

·    Bypass Road: A new 17km public road to bypass the local villages and connect to the A24 highway is required to minimise interaction between heavy and light vehicles and reduce the impact on the local villages.

·    Power: required for both the mine and concentrator. The largest individual consumers of power will be the key comminution equipment (e.g., crushers, ball mill, etc.). Electricity will be supplied by the high-voltage power lines near the site to a power transformer that Savannah will need to licence and build. The licencing is undertaken through DGEG services (Direção Geral de Energia e Geologia).

·    Water: required to support the concentrator operations, almost all material from the mine will be subjected to some form of wet processing. Most of the water is recycled within the concentrator although a freshwater make-up is required to account for the water lost primarily as moisture content within the tailings and concentrate streams. Water will be obtained from the dewatering of the proposed pits and from water reservoirs that will be constructed.

Transport and Logistics

Given the likelihood that there will by downstream processing facilities in Portugal coming online around the same time Savannah commences spodumene concentrate production it has been assumed that the product is sold locally and therefore the only cost is the transport from the mine to Leixoes (Matosinhos) (no storage nor ocean freight costs) where there is capacity to build a lithium refinery. The cost assumed for the transport of the concentrate was US$12.3/t which is significantly different to most other lithium projects which contain a significant inter-continental ocean freight cost.

Project Licencing

Savannah's revised design and optimisation for the Barroso Lithium Project, which captured feedback from stakeholders to further minimise the environmental and social impact of the Project received a positive DIA from APA on 30 May 2023. This represents a major milestone for the Project and is the first positive DIA for a lithium raw material supply project in Portugal. As expected, in line with international practice, the DIA has been issued with a set of conditions, measures and compensations (the 'Conditions') which Savannah has agreed to, and which should provide further assurance that the Project will be developed and operated in a responsible way and that socio-economic benefits will be shared with stakeholders.

Savannah expects the remainder of the environmental licencing process to take 9-12 months to complete:

·    Savannah must now complete the Environmental Compliance Report of the Execution Project ('RECAPE'). During this phase of the licencing process the Company will again engage with APA to ensure that all the conditions set in the DIA are captured in the final design of the Project. Savannah will then submit the final designs for the Project along with the measures and environmental monitoring plans to be implemented during the construction and operating phases to meet the criteria established by the DIA. If these designs and plans are approved by APA the environmental conformity of the detailed design can be declared ("DCAPE").

·    Running in parallel with the RECAPE process is the licencing award process. Once the DCAPE declaration has been made the Project can be awarded its final Environmental Licence, 'Título Único Ambiental'. APA is expected to take around 60 working days to review the submission.

Environmental Considerations

The optimised site layout from the recently approved DIA which the new Scoping Study is based on considers the following key environmental points.

Water

·    Supply: The Project will source all its own water onsite. Water will be predominantly collected in the mining areas as well as from other surface sources. Water will not need to be abstracted from the Covas River.

·    Water quality: The Project will have a 'closed' water system, meaning process water will be stored, treated, and recycled onsite and not be discharged from the Project.

Infrastructure

·    A new road layout avoids all Project-related traffic passing through local villages and towns, connects directly to A24, and requires just one new bridge (onsite) to reduce impact on local rivers and riverbank ecosystems; offsite Project-related traffic will be restricted to weekdays only.

·    The revised site layout reduces environmental and visual impact as well as noise and light emissions by moving site infrastructure, such as the processing plant, further from watercourses and local communities and keeping development heights below the relevant ridge lines.

Ecology

·    The water management plan and level of water consumption means the impact on rivers and the aquatic ecosystem is minimised.

·    Iberian wolf: Independent studies show wolf packs are not living on the Project area and mitigation measures have been put in place to protect wildlife.

·    Impact on oak groves and meadows is further reduced in the latest Project layout.

·    Revegetation to utilise native species and other suitable plants with good pollination characteristics.

Noise and ground vibrations

·    Savannah is committed to operating well below legal limits for noise and ground vibrations. Onsite truck movements will be prohibited overnight.

Air quality

·    Dust is identified as the highest risk impact to air quality which will be mitigated by treating unpaved roads with water and using fog cannons used when haul trucks tip loads at the processing plant.

Processing plant waste ('tailings') storage facility ('TSF')

·    The plant will produce inert tailings that will be stored separately to waste rock in a highly stable 'dry stack' structure. The Project will not use a traditional 'wet' tailings dam.

·    For additional environmental protection, the TSF will be built on a waterproof lining and located at a safe distance from the Covas River. The TSF will be revegetated progressively over the life of the Project.

Waste rock storage facilities

·    The waste rock from the mining areas (also inert material) will be stored in 1 temporary structure and 3 permanent structures, separate to the plant tailings and away from water courses; rock from the temporary facilities will be used in rehabilitation and landscaping while permanent waste rock formations will be contoured into the existing landscape and revegetated.

Landscape & Rehabilitation

·    Rehabilitation of the Project is guaranteed. It will be a requirement of the Project's environmental licence and Savannah is required to lodge a rehabilitation bond (cash) with the government before any work can commence.

·    Due to the phased nature of the Project, rehabilitation can commence during the operating phase including on 3 out of 4 mining areas.

·    Backfilling or partially backfilling and relandscaping the mining areas once ore extraction has ceased.

·    The impacted areas including all mining areas, tailings and permanent waste rock storage facilities, and infrastructure such as the processing plant and water storage facilities will be comprehensively rehabilitated, landscaped and revegetated with native species. Impacted water courses will be reinstated, as far as practically possible, to their original locations. On closure the land will be made available for alternative use such as agriculture or tourism.

·    The landscape recovery of the affected area aims to recover the levels of biodiversity in the area and integrate it into the surrounding landscape.

CAPITAL COST

The capital cost estimate ("CAPEX") for the concentrator shown in the following Table 7 was based on preliminary major equipment sizing, with budget estimates provided for major mechanical equipment and recent pricing for similar equipment used for minor equipment. The total installed plant cost was then built-up using accepted industry factors (based on the major equipment cost) for installation, minor equipment, trades, bulks, and indirect costs. Installation labour costs and productivity were adjusted for the plant location.

Costs for non-process infrastructure have been estimated separately based on estimated quantities and budget pricing on unit rates from contractors.

The mining costs associated with the mining contractor (contractor establishment, mobilisation and pre-production costs incurred constructing access roads, clearing sites and pre-stripping for ore mining) are included in the capital cost.

The contingency was estimated for each item within the estimate based on the level of definition, and the overall contingency is 19%. The estimate accuracy is -20% to 30%.

Table 7. Summary of Project CAPEX

Sustaining CAPEX over the LOM amounts to US$49 million and includes costs related to the process plant (US$25 million), site roads (US$9 million) and tailing facilities (US$9 million).

Closure and rehabilitation programs will start during the second year of mining. These costs amount to US$102 million and include the restoration of water lines and land rehabilitation in accordance with the DIA.

OPERATING COST

The concentrator operating cost estimate were calculated at a scoping level of accuracy (-20% / 35%). Table 8 shows a summary of the operating cost ("OPEX") estimate and Table 9 shows a summary of the OPEX, C1 Operating Costs and All-in Sustaining Costs.

Table 8. Summary of Operation Expenditure (OPEX)

Table 9. Summary of OPEX, C1 Operating Costs and All-in Sustaining Costs

Tax and Government Royalties

It is expected that over its life the Project will generate direct income for the local and national governments of Portugal of US$924 million, comprised of US$771 million from corporation tax and royalties of US$153 million. This does not include the significant payroll taxes related to the people to be employed at the Project.

For reference, in their updated Economic & Social Impact study on the Project (March 2023), Professors Carballo-Cruz and João Cerejeira from NIPE - Research Center in Economic and Business Policies of the School of Economics and Management of the University of Minho, estimated that the Project will increase Portugal's gross value of national production by €420 million during the investment (construction) phase and by €210 million per year during the operating phase. They also estimated that the Project's contribution to GDP is €173 million in the investment phase and €95 million per year in the operating phase (€1.37 billion in total), and that the Project will generate over 5,000 indirect and induced jobs in the investment phase and over 2,500 in the operating phase.

Timetable and Project Implementation

The current target for the commencement of spodumene concentrate production is mid 2026, with detail of the proposed timeline provided in Figure 6.

Figure 6. Estimated Project Timeline

The execution schedule is based on a number of key assumptions:

·    The execution strategy considers the concentrator and TSF (Tails Storage Facility) will be operated by Savannah, with mining operations performed by a mining contractor.

·    The execution schedule assumes the remainder of the environmental licencing process will be completed in a timely manner.

·    The schedule assumed that the Feasibility would take 14 months to complete due to the time taken to complete the resource update which be around mid-2025. An early engineering program is scheduled to commence prior to the end of the Feasibility Study to facilitate the procurement of long lead items and complete engineering required to support the planned early works.

·    Procurement activities for the concentrator will start early during the engineering cost study to enable early contract of long lead items. A period of 15 months (including manufacture and transport to site) was allowed for long lead items for the concentrator.

·    Early works comprising construction of access roads and bulk earthworks has been assumed to take 6 months.

·    Following the early works period, Concentrator construction is scheduled to take 12 months and finishing 6 months following long lead equipment arrival on site.

·    TSF (dry stack) will be conducted in several stages to minimise upfront capital costs. Approximately 2 years of storage capacity will be constructed initially. Construction is assumed to take 6 months (TSF land has been identified and construction materials from bulk earthworks excavation to be used).

·    Ramp up for the concentrator is expected to take 4-6 months to ramp up to full capacity.

Product Pricing

Since 2021 lithium supplies have failed to keep up with the demand created by year-on-year record sales of electric vehicles which are powered by lithium-ion batteries (Figure 7 and 8). Furthermore, the widely held expectation is for this market imbalance, in which supply consistently lags demand, to persist for the remainder of the decade.

Figure 7. Global Electric vehicles sales                               Figure 8. Lithium market supply & demand

Source: ev-volumes.com                                                                 Source: Canaccord Genuity: Lithium H1'23 recharge

As a result, prices for lithium raw material including that of spodumene concentrate have risen substantially over the period.

In the case of spodumene concentrate the price has risen by nearly 10 times since the sub US$400/t lows reported in the second half of 2020. While spodumene prices have retreated from the record highs of over US$7,000/t in late 2022, the current pricing environment for spodumene concentrate remains extremely strong compared to historical levels. For the period Q1 2023, Australian miner, Pilbara Minerals, reported average spodumene concentrate prices of US$4,840/t CIF China (relating to 144,312 tonnes shipped at an average grade of 5.3% Li₂O, equating to US$5,522/t on an 6.0% Li₂O equivalent basis) in its quarterly activities update.

Savannah plans to bring the Project into production at a time when lithium concentrate prices are expected to remain robust. Savannah has not established any contracts or committed any of its production pursuant to an off-take agreement at this time and will be producing a much sought after, locally produced, low-carbon product for a vibrant European market where there is effectively no local supply of battery grade lithium raw materials at present.

Forecasts for lithium prices are available from independent industry analysts, price reporting agencies, investment banks and brokers. For this study Savannah has used average annual forecast prices drawn from a pool of spodumene concentrate price forecasts published during H1 2023 by a group of leading market participants including the Company's Joint Broker, RBC.

Based on those forecasts, in the Base Case, the LOM average price is US$1,464/t for a 5.5% Li₂O concentrate (6.0% US$1,597/t equivalent), with annual prices ranging from US$2,569/t in 2026 to US$1,238/t from 2033 (Figure 9).

Figure 9. Forecast Pricing for Spodumene Concentrate at 5.5% Li₂O and 6% Li₂O

The pricing utilised for the Ceramic By-Products is US$53.5/t, which is based on the independent market analysis conducted on behalf of the Company in 2018 by First Test Minerals, adjusted for inflation. The Ceramic By-Products revenues over the LOM equate to approximately 8% of forecast revenue from spodumene.

Financial analysis

The technical and economic parameters that were developed for the Scoping Study were used in a real-US dollar MS-Excel based financial model to estimate future cash flows and evaluate the Project cases based on net present value (NPV), internal rate of return (IRR) and payback period. Savannah selected an 8% discount rate for the evaluation and sales of Ceramic By-Products were included in the model.

The results of the financial analysis for the mine and concentrator are provided in Table 1, Table 10, and Figure 10. Related sensitivity analyses are included in Figures 11, 12 and 13.

Table 10. Summary of Financial Information

Figure 10. Post-Tax Free Cash Flow

Sensitivity analysis

Sensitivity analysis was undertaken showing the effect that changes in the key inputs have in the NPV and the IRR. The summary of this analysis is reflected in Figures 11, 12 and 13.

Figure 11. Sensitivity analysis of Post-Tax NPV₈

Figure 12. Sensitivity analysis of Post-Tax NPV₈

Figure 13. Sensitivity analysis of Post-Tax IRR

Project Optimisation and Enhancements

Being a Scoping Study, opportunities remain to optimise and enhance the Project to increase its economic return. Areas for optimisation and enhancement include:

·    Resource to Reserve conversion through infill drilling

·    Conversion of Exploration Targets into Resources and then Reserves.

·    Pit design to maximise the head grade of the ore.

·    By-product business development plan to capitalise on capturing the best value.

·    The availability of development grants, subsidies, and tax concessions.

·    Electrification of the mine fleet and further decarbonisation initiatives.

·    Bring forward mining of the higher grade Aldeia resource, which is currently scheduled to be mined during the last four years of the Project.

·    Evaluation of potential to increase annual mining rates and the capacity of the processing plant.

Conclusions and Next steps

This Scoping Study demonstrates that the Barroso Lithium Project has the operational and economic potential to be a major European producer of spodumene concentrate from 2026 onwards. The low cost, responsible, production of over 190,000tpa of spodumene concentrate (25ktpa LCE) from the Project would help to establish Portugal as a major contributor to Europe's new lithium-ion battery value chain and contribute towards meeting the European Commission's target of fulfilling at least 10% of the region's demand for this critical and strategic metal from domestic sources by 2030.

With a base case post-tax NPV₈ of US$953 million, IRR of 77% and payback period of 1.3 years the Project has shown its economic viability at this level of study and the financial contribution it could make to the local and nation economies through the generation of corporate and municipal taxes and royalties.

With the favourable DIA recently received and this Scoping Study completed, Savannah's next steps include completion of the remainder of the environmental licencing process and the Definitive Feasibility Study, tasks which the Company expect to complete in H2 2024.

Savannah's stakeholder engagement programme will also be maintained as the Company looks to optimise the delivery of the significant socio-economic benefits that the Project can bring through partnership with local communities.

Commercial arrangements for the Project will also be advanced as Savannah looks to conclude its offtake and financing arrangements ahead of the potential start of Project construction in 2025.

Key Consultants

MinSol Engineering Pty Ltd, ("MinSol")

Minsol was engaged to provide engineering design services in relation to Savannah's Scoping Study for the Barroso Lithium Project and co-ordinate the compilation of the Scoping Study report. The Scoping Study is based upon the proven flow sheet developed by Savannah and Minsol. In addition, Minsol's services were provided in combination and integrated with Savannah's own inputs, and other 3rd Parties engaged by Savannah.

MinSol and its engineering team has a successful track record over the past 15 years in metallurgical testwork, flow sheet development, detailed design, and implementation for major lithium projects for the likes of Talison Lithium (Greenbushes Lithium Plants), Tianqi Lithium (Kwinana Lithium Hydroxide Plant) and Global Lithium (Manna Lithium Project Studies). Additionally, the engineering team at Minsol have significant experience in international multi commodity processing and design.

PayneGeo Pty Ltd., ("PayneGeo")

PayneGeo developed the geological model and completed the resource estimations utilised in the Scoping Study.

Minesure Pty Ltd., ("Minesure")

Minesure completed the analysis and definition of the scoping level mine plan and built up the contractor costs model which is the basis of the mining concept for the Scoping Study.

Competent Persons

The information in this announcement that relates to exploration results is based upon information compiled by Mr Dale Ferguson, Technical Director of Savannah Resources Limited. Mr Ferguson is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the December 2012 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" (JORC Code). Mr Ferguson consents to the inclusion in the report of the matters based upon the information in the form and context in which it appears.

The information in this release that relates to metallurgy and metallurgical test work has been reviewed by Mr Robert Simmons, MAusIMM, B. Eng. (Chemical Engineering). Mr Simmons is not an employee of the Company but is engaged as a contract consultant. Mr Simmons is a Member of the Australasian Institute of Mining and Metallurgy, he has sufficient experience with the style of processing response and type of deposit under consideration, and to the activities undertaken, to qualify as a competent person as defined in the 2012 edition of the "Australian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Simmons consents to the inclusion in this report of the contained technical information in the form and context as it appears.

The Information in this report that relates to Mineral Resources is based on information compiled by Mr Paul Payne, a Competent Person who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Payne is a full-time employee of Payne Geological Services. Mr Payne has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Payne consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The scoping level mining assessment of the Barroso Lithium Project has been completed by Mr Nigel Spicer who is a Member of the Australasian Institute of Mining and Metallurgy and Chartered Engineer (IOM3). Mr. Spicer has sufficient experience relevant to the styles of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Spicer is the principal of Minesure Pty Ltd and is a consultant to Savannah Resources Plc and consents to the inclusion in the presentation of the matters based on his information in the form and context in which it appears.

It should be noted that as the Mining assessment has been conducted at a scoping level no Ore Reserves are being reported for the Barroso Lithium Project Deposit.

Forward Looking Statement

The information contained within this announcement may contain references to forecasts, estimates, assumptions, and other forward-looking statements. The Company believes that its expectations, estimates and forecast outcomes are based on reasonable assumptions, it can give no assurance that they will be achieved. These assumptions may be affected by a variety of variables and changes in the base assumptions that are subject to risk factors associated with the nature of the business, which could cause actual results to vary materially from those expressed herein. Potential investors should make and rely upon their own investigations before deciding on whether to acquire or deal in the Company's securities.

Cautionary Statement

The Scoping Study referred to in this announcement is a preliminary technical and economic study of the potential viability of developing the Barroso Lithium Project via an open pit mining operation and constructing a beneficiation and processing facility on site. It is based on low level technical and economic assessments that are not sufficient to support the estimation of ore reserves or to provide assurance of an economic development case at this stage or certainty that the conclusions of the Scoping Study will be realized. Further exploration and evaluation work and appropriate studies are required before Savannah will be able to estimate any ore reserves or to provide any assurance of an economic development case.

Approximately 80% of the life of mine production is in either Measured (32%) or Indicated (48%) Mineral Resource category and 18% in the Inferred Mineral Resource category with the remaining 2% from the Exploration Target. The company has concluded that it has reasonable grounds for disclosing the production target given that the viability of the Project does not rely on the Inferred Resource and Exploration Target.

There is a low level of geological confidence associated with Inferred Mineral Resources/Exploration Target and there is no certainty that further exploration work will result in the determination of Indicated Mineral Resources or that the production target itself will be realized. The stated production target is based on the entity's current expectations of future results or events and should not be solely relied upon by investors when making investment decisions. Further evaluation work and appropriate studies are required to establish sufficient confidence that this target will be met.

The Scoping Study is based on the material assumptions outlined throughout the document. These include assumptions about the availability of funding. While Savannah considers all the material assumptions to be based on reasonable grounds, there is no certainty that they will prove to be correct or that the range of outcomes indicated by the Scoping Study will be achieved.

To achieve the range of outcomes indicated in the Scoping Study, funding in the order of US$236 million to US$280 million will likely be required to build the mine, process plant, and related infrastructure. Investors should note that there is no certainty that Savannah will be able to raise that amount of funding when needed. It is also possible that such funding may only be available on terms that may be dilutive to or otherwise affect the value of Savannah's existing shares.

Given the uncertainties involved, investors should not make any investment decisions based solely on the results of the Scoping Study.

Regulatory Information

This Announcement contains inside information for the purposes of the UK version of the market abuse regulation (EU No. 596/2014) as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR").

Savannah - Enabling Europe's energy transition.

**ENDS**

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About Savannah

Savannah Resources is a mineral resource development company and sole owner of the Barroso Lithium Project in northern Portugal.

Savannah is focused on the responsible development and operation of the Barroso Lithium Project so that its impact on the environment is minimised and the socio-economic benefits that it can bring to all its stakeholders are maximised. Through the Barroso Lithium Project, Savannah can help Portugal to play an important role in providing a long-term, locally sourced, lithium raw material supply for Europe's rapidly developing lithium battery value chain. Production is targeted to begin in 2026, producing enough lithium for 0.5m vehicle battery packs per year.

The Company is listed and regulated on AIM and the Company's ordinary shares are also available on the Quotation Board of the Frankfurt Stock Exchange (FWB) under the symbol FWB: SAV, and the Börse Stuttgart (SWB) under the ticker "SAV".

APPENDIX 1 - JUNE 2023 MINERAL RESOURCE UPDATE

Mineral Resource Summary

Table 1. Updated Mineral Resource Estimation Summary

*Rounding discrepancies may occur

Table 2. Exploration Target Summary

*Cautionary Statement: The potential quantity and grade of the Exploration Target is conceptual in nature, there has been insufficient exploration work to estimate a mineral resource and it is uncertain if further exploration will result in defining a mineral resource.

Mineral Resource Estimate

A Mineral Resource Estimate for the Reservatorio Lithium Deposit has been prepared by Payne Geological Services Pty Ltd, an external and independent mining consultancy - http://www.paynegeo.com.au/paul-payne. The Deposit forms part of Savannah's Barroso Lithium Project, located in northern Portugal. The Mineral Resource Estimates for the Aldeia Deposit and other deposits at the Project have been classified as Measured, Indicated and Inferred Mineral Resource in accordance with the JORC Code, 2012 Edition and are summarised in Table 3 and Attachment 1. In addition, the required JORC compliance tables can be found in Attachment 2.

Table 3. June 2023 Mineral Resource Summary (0.5% Li₂O cut-off)

*Rounding discrepancies may occur

Reservatorio Mineral Resource Estimate

Geology

At the Barroso Lithium Project, lithium mineralisation occurs predominantly in the form of spodumene-bearing pegmatites, which are hosted in metapelitic and mica schists, and occasionally carbonate schists of upper Ordovician to lower Devonian age.

The Reservatorio deposit comprises one main pegmatite which showed relatively clear geometry, and was modelled into a continuous, tabular shape. It strikes broadly NE-SW and dips to the NW at 25^o to 40^o and varies in thickness from 20m to 50m. Two minor parallel pegmatites have also been interpreted. A weathering boundary representing the top of fresh rock was also interpreted (using drill hole logging codes) as a shallow zone of weak to moderate weathering was noted. The main pegmatite zone remains open along strike to the north and down dip (Figures 1-3).

At the Project, lithium is present in most pegmatite compositions and laboratory test work confirms that the lithium is almost exclusively within spodumene. Limited lithium grade zonation occurs within the Aldeia pegmatites. Minor xenoliths and inliers of schist are observed within the pegmatite.

The weathering profile comprises a shallow, surficial zone of weak to moderate oxidation, particularly of the schistose country rock with moderate oxidation to a depth of up to 20m.

Figure 1. Reservatorio pegmatite and drilling (looking east)

Figure 2. Reservatorio Cross Section (looking NE)

The Reservatorio deposit is defined by a total of 36 RC drill holes and 8 diamond holes. All holes were completed by Savannah in 2017 and 2018. The holes were drilled on approximate spacings of 20m to 40m on 40m spaced cross sections. The majority of holes are drilled at -60^o to the southeast, however a small number of vertical holes and one NW dipping hole were completed.

Figure 3. A Resource Model coloured by Li₂O content (looking East)

Drilling

Drilling completed at the Reservatorio prospect is summarised in Table 4. The historic percussion holes were drilled by previous operators and excluded from the estimate. All drilling used in the Mineral Resource was completed by Savannah in 2017 and 2018.

Table 4: Summary of Reservatorio Prospect Drilling

All drilling data was contained in an Access database provided to PayneGeo. All data was supplied in national grid coordinates (UTM Zone 29N based on WGS84) and no data manipulation was carried out by PayneGeo. A series of holes were validated by PayneGeo during the site visit where original geological records and laboratory reports were compared to database entries. No errors were identified.

Sampling and Sub-Sampling Techniques

For the Savannah RC drilling, a face-sampling hammer was used with samples collected at 1m intervals from pegmatite zones and the surrounding 5m either side of the pegmatite. The rest of the schist remains unsampled. The 1m samples were collected through a rig-mounted splitter and were 4kg-6kg in weight. Samples were weighed to assess the sample recovery which was determined to be satisfactory.

Core was HQ in size and sampled to geological boundaries. Core was cut using a diamond saw, and half core was collected for assay.

Sample Analysis Method

For all Savannah drilling, whole samples were crushed then riffle split to produce a 250g split for pulverising and analysis.

The samples were analysed using ALS laboratories ME-MS89L Super Trace method which combines a sodium peroxide fusion with ICP-MS analysis and a multi-element suite was analysed.

QAQC protocols were in place for the drilling programmes and included the used of blanks, standards and field duplicates. The data has confirmed the quality of the sampling and assaying for use in Mineral Resource estimation.

Estimation Methodology

For the Reservatorio Mineral Resource Estimate, a Surpac block model was constructed with block sizes of 20m (EW) by 20m (NS) by 5m (elevation) with sub-celling to 5m by 5m by 1.25m.

Interpretation of the pegmatite dykes was completed using detailed geological logging and Fe geochemistry. Wireframes of the pegmatites were prepared and within those the sample data was extracted and analysed. A clear break in the grade distribution occurs at 0.5% Li₂O and this grade threshold was used to prepare the internal grade domains for estimation.

Sample data was composited into 1m intervals then block model grades estimated using inverse distance squared ("ID2") grade interpolation due to the small number of drill holes and limited extent of mineralisation. A first pass search range of 70m was used and oriented to match the dip and strike of the mineralisation. A minimum of 10 samples and a maximum of 24 samples were used to estimate each block. The majority of the Mineral Resource Estimate (91%) was completed in the first pass with expanded search radii of 140m used for the blocks not estimated in the first pass. No extreme high grades were present in the Li2O and Fe data, and the CV of less than 1 for all elements suggested that high grade cuts were not required. However, a small number of outliers of Ta were present at Aldeia and a high grade cut of 100ppm was applied to all Ta values.

Iron contamination via abrasion of RC drilling equipment and/or sample preparation equipment is a recognized problem when evaluating lithium deposits. To test the potential for iron contamination at the MBLP, SAV carried out a preliminary program of check assays and a series of comparisons were undertaken on samples from the Grandao deposit.

It was concluded from the Grandao study that a significant proportion of the iron being reported in the drilling assay data was introduced as contamination during the sample preparation process. It was determined that the amount of contamination was proportional to the lithium content of the samples. A regression formula was calculated using all samples, with the derived regression formula being:

Fe_contamination = (0.1734 * Li₂O grade) 0.2308.

The amount of Fe contamination was determined using the derived regression formula. A new field "Fe_factored" was inserted into the drill hole database, and the original Fe value minus the calculated contamination was stored in that field. This allowed a "Fe_factored" value to be extracted from the database and used for grade estimation in the Mineral Resource.

Bulk density determinations using the immersion method were carried out on 280 half core samples from the Aldeia pegmatite. Results from these tests were consistent with those from the extensive density data throughout the Project. Values applied to the Aldeia estimate were 2.5t/m³ for oxide lithologies, 2.65t/m³ for unoxidised pegmatite and 2.67t/m³ for unoxidised schist.

Mineral Resource Classification

The Mineral Resource Estimate was classified in accordance with the Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC, 2012).

Mineral Resource classification was considered on the basis of drill hole spacing, continuity of mineralisation and data quality. Accurate drill hole collar and topographic surveys have been obtained for the deposit, so the spatial location of data and topography has a high level of confidence. The quality of the drilling and assaying has been confirmed through independent verification of procedures and through a satisfactory QAQC protocol.

The continuity of the Reservatorio pegmatite is well defined within the upper portion of the deposit. Drilling is typically at spacings of 20m to 40m on cross sections and the geometry of the zone is consistent. This portion of the deposit has been classified as Indicated Mineral Resource and includes extrapolation up to 60m past drill hole intersections.

The lower portion of the deposit remains undrilled. The pegmatite interpretations have been extended up to 300m past drill hole intersections. The portion which has been extrapolated up to 120m past drill holes has been classified as Inferred Mineral Resource. The deeper portion remains unclassified. The classification and extent of the reported model as well as unreported Mineral Potential is shown in Figure 4.

Figure 4. Resource Model coloured by Classification

Cut-off Grades

The shallow nature of the main Reservatorio pegmatite suggests good potential for open pit mining if sufficient resources can be delineated to consider a mining operation. As such, the Mineral Resource Estimate has been reported at a 0.5% Li₂O lower cut-off grade to reflect assumed exploitation by low-cost mining methods.

Metallurgy

Metallurgical test work has been conducted by Savannah on representative mineralisation at the Barroso Lithium Project. The work was completed by Nagrom Metallurgical in Australia and confirmed that high-grade lithium, low-grade iron concentrate can be generated from the mineralisation using conventional processing technology. Although no samples from the Aldeia deposit have been tested, initial assessments of the mineralogy and chemistry suggest mineralisation is broadly similar to other deposits at the Barroso Lithium Project. Samples have been collected from the Aldeia deposit are currently being tested to determine their exact processing requirement.

Modifying Factors

No modifying factors were applied to the reported Mineral Resource Estimate. Parameters reflecting mining dilution, ore loss and metallurgical recoveries will be considered during the any future mining evaluation of the Project.