Savannah Resources has received its first non-binding project-finance proposals for the Barroso lithium project in northern Portugal, starting lender due diligence as the company works toward a construction funding package.
A shortlist of European and international lenders is conducting technical, environmental, social and legal reviews. Savannah expects conditional financing proposals by the end of 2026, although debt size, maturity, pricing, security and completion guarantees have not been disclosed.
Grant support reduces initial funding requirement
Barroso’s Phase 1 definitive feasibility study puts initial capital expenditure at US$417.5 million including contingency, or US$377 million excluding contingency. Portugal’s previously awarded grant reduces the disclosed requirement excluding contingency to approximately US$283 million. The Portuguese support package is worth up to €110 million, although only around €82.25 million is allocated to initial construction expenditure, with the remainder linked to operating milestones. Savannah will therefore need to cover the project’s approximately US$40 million contingency, working capital and expenditure outside the grant’s eligible categories.
Savannah is also discussing potential German support with KfW IPEX-Bank and export-credit agency Euler Hermes. The discussions concern a possible German government loan guarantee and associated debt facility, following non-binding offtake heads of terms agreed with AMG Critical Materials. No KfW loan or guarantee has been approved.
Offtake discussions cover concentrate and by-products
Savannah is negotiating with potential counterparties for a second spodumene offtake agreement to complement AMG. The company has also signed non-binding letters of intent covering potential demand for up to 865,000 tonnes a year of ceramic and industrial by-products. The feasibility study modelled sales of 600,000 tonnes a year of these materials at a weighted average price of US$27 per tonne. The by-products account for about 5% of projected revenue, while also affecting waste volumes and storage requirements.
The current letters of intent are not binding sales contracts and therefore do not yet provide the enforceable cash flows lenders typically require for project financing.
Barroso targets 183,000 tonnes of concentrate annually
The proposed operation is designed to produce an average 183,000 tonnes a year of 5.5% lithium-oxide spodumene concentrate over an initial 14-year mine life. The feasibility study estimates an unlevered post-tax NPV of US$913 million, an internal rate of return of 43.2% and a 1.9-year payback, based on an average spodumene concentrate price of US$1,788 per tonne.
The project remains subject to environmental and social due diligence, including issues related to community opposition and legal challenges concerning its strategic-project status.Savannah plans to prepare for construction during 2027, with production targeted thereafter. The financing process is now progressing through lender due diligence, while binding offtake agreements, firm debt terms, completed reviews and funding for contingency remain outstanding before financial close.
