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Savannah Resources PLC

Analysing Savannah Resources' metallurgical results from Portugal - it's worth digging a little deeper

These metallurgical results have proven to be anything but boring

Digger
Potentially we could see an improvement in the part of the economics driven by processing when Savannah completes its DFS

Savannah Resources PLC (LON:SAV) announced boring metallurgical results from Mina do Barroso, but are they really boring or is there something more interesting occurring if we look a little deeper?

This morning Savannah Resources announced its latest set of metallurgical results from the Grandao, Pinheiro and Aldeia deposits at the Mina do Barroso Spodumene Lithium Project, located in Portugal.

The results demonstrate recoveries of:

  • 74%-76% at the Grandao Deposit, producing a 6% spodumene concentrate;
  • 77% at the Pinheiro Deposit, producing a 6.1% spodumene concentrate;
  • 73% at the Aldeia Deposit, producing a 5.5% spodumene concentrate.

At first look, these results are not particularly exciting; let’s face it metallurgical results themselves aren’t normally anything to jump up and down about, but as far as metallurgical results go these appear middle of the road.

Recoveries of 77% to 73% would place the project in the mid-recovery range of its peer group, which is hardly awe-inspiring. The recovery is also lower than recovery rate used in the scoping study for the project, so that should mean the project economics in the definitive feasibility study (DFS) are potentially not going to be as good.

Well, that might not be the case; there is a bit more to this announcement than it first appears. To get these recoveries Savannah used a processing technique called whole-of-ore flotation, whereas in the previous scoping study the company used dense media separation (DMS) followed by flotation.

So the processing flow sheet for the project has changed. Using a single method recovery circuit rather than the dual circuit in the scoping study means Savannah will not need to purchase a DMS, so the processing plant capital expenditure (capex) could be lower on a like-for-like basis. It could also be the case that the processing operating expenditure (opex) is also lower, as a DMS requires additional consumables that add to the opex.

So, potentially we could see an improvement in the part of the economics driven by processing when Savannah completes its DFS. Whether these changes result in an overall improvement to the project's economics in the DFS, remains to be seen as there are many other variables that need to be factored in such as the recent fall in the spodumene concentrate price, improvement in the co-product pricing and a potential change in production levels; however, these metallurgical results have proven to be anything but boring and we look forward to seeing the results of the DFS, which is targeted for completion in Q220.

Quick facts: Savannah Resources PLC

Price: 2.35 GBX

Market: AIM
Market Cap: £30.49 m
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