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LONDON (Alliance News) - Savannah Resources PLC Thursday said it has applied for reservation permits covering two new lithium projects in Finland as the company looks to bolster its existing portfolio of copper and heavy mineral sands assets.
If granted, the two-year reservation permits would give Savannah the sole right to apply for exploration licenses over the two project areas. The Somero project covers an area of 60.5 kilometres squared and lies around 100.0 kilometres north of Helsinki whilst the 98.5 kilometre squared Erajarvi project is located around 200.0 kilometres north of the Finnish capital.
Savannah would wholly-own both projects if successful and would hold them through its subsidiary, Finkallio Oy, which has been used to make the permit applications.
"Subject to their grant, our Finnish projects provide our shareholders with an excellent entrée to lithium which complements our copper and heavy mineral sands projects," said Chief Executive David Archer.
The two other projects within the company's portfolio are the Jangamo heavy mineral sands project in Mozambique and copper projects covering three blocks in Oman.
Savannah, and other miners, are looking to move into lithium as the commodity is expected to experience increased demand in the near future as it will be a major ingredient used for batteries and other technology products, with upcoming markets such as electric cars expected to increase demand.
Demonstrating the shift in demand and supply of lithium, Savannah said the price of lithium carbonate is currently around USD25 per kilogramme, more than three times higher than the price of USD8 per kilogramme only 12 months ago - caused by supply shortages.
"The commercialisation of the lithium-ion battery in the 1990's powered a 20-year surge in the telecommunication and computing industries following the rapid development of light, powerful, rechargeable batteries. As we enter the second half of this decade, the emergence of the electric vehicle is potentially a globally significant thematic based on the same battery technology," said Savannah.
"Beyond traditional demand markets and the emergence of the electric vehicle, another potential market is beginning to be developed. Battery energy storage on a grid, industrial, commercial and consumer-scale is reaching commercial viability, and rapidly falling battery costs suggest that the energy storage sector could grow materially over the next 10 years," the company added.
The two project areas benefit from nearby infrastructure but are also close to battery producers - potential customers for Savannah's lithium should the projects get off the ground.
Notably, Savannah said it thinks another company has made a competing application covering a similar area to its own application covering the Somero project, but said it is in a one-horse race for the Erajarvi project area application.
Reservation permits only allow companies to conduct limited exploration activity like geological mapping, soil sampling and rock chip sampling. If Savannah wants to drill the areas it will either need to gain permission of the landowner or secure an ore prospecting permit, which would take three to four months to be approved from an application being submitted.
Ore prospecting permits can be renewed on a regular basis for a period up to 15 years.
Savannah aims to complete the work it can if the permits are awarded and said it hopes to identify drill targets during this year.
Looking at the projects in more detail, the Somero project area covers the "more prospective parts" of the Somero-Tammela rare earth pegmatite belts and comprises of "at least" 56 complex pegmatites (a type of igneous rock) containing lithium, niobium and tantalum.
Niobium is used with iron and other elements in stainless steel alloys and also in alloys with a variety of nonferrous metals and is used for things such as pipeline construction and superalloys for jet engines whilst tantalum, much like lithium, is used within the electronics industry but also used to make alloys.
The Somero area lies just south of the Kietyonmaki and Hirvikalio lithium deposits which are owned by Toronto-listed Nortec Minerals.
Around 61 complex pegmatites have been mapped at the Erajarvi project area to date and said the area is known to contain lithium rich minerals including spodumene and lepidolite.
Both projects have undergone geological mapping by the Finnish government which has highlighted the presence of those key lithium minerals.
Savannah shares were trading up 2.4% to 3.25 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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