Aim-listed Savannah Resources has been awarded a non-reimbursable grant of up to about €110-million from the Portuguese State to support construction of its Barroso lithium project, in northern Portugal, a project designated as strategic under the European Critical Raw Materials Act.

The company said the funding represents a major public financial contribution to the development of the Barroso lithium project, which is Europe’s largest known spodumene lithium deposit, and reflects support from Portuguese and European authorities for the creation of a domestic lithium supply chain linked to the transition to a net-zero emissions economy.

According to Savannah, the grant will be provided under Portugal’s Investments in Strategic Sectors Incentive Scheme and falls within the contractual investment regime for large-scale projects in sectors considered fundamental to carbon neutrality and economic transition. The funding is supported by national resources and the European Commission Temporary Crisis and Transition Framework.

The grant totals up to about €110-million and is split into two components. About 75% of the funding, or €82.25-million, is earmarked for the project’s initial capital expenditure, while the remaining 25%, or €27.42-million, is linked to performance milestones during the operational phase of the mine. The funding does not need to be repaid.

Savannah said the award will be formalised through an investment agreement with Portuguese Trade and Investment Agency (AICEP), following approval by the managing authority of the Innovation and Digital Transition Programme (Compete) 2030 and the Ministry of Economy and Territorial Cohesion. The company noted that the grant is subject to certain conditions and project timelines that must be met before funds are released.

Following the signing of the investment contract, Savannah said it will work with AICEP to ensure the grant can be integrated with any future project financing or additional funding options. The company expects drawdown from the first tranche of funding to occur alongside the initial capital development phase of the project.

Savannah Resources CEO Emanuel Proenca said the funding marked a major milestone for the company and the project.

“The award of this grant marks another, highly important, milestone for Savannah and the Barroso lithium project. The scale of the financial commitment being made by the Portuguese state will provide a significant contribution towards the project's capital expenditure as we target production from 2028. It also underlines the Portuguese state's significant support for the project's delivery, and mirrors similar recent actions taken by other governments in support of strategic projects elsewhere in Europe and around the world,” Proenca said.

He said the project is expected to deliver social and economic benefits, including the development of a new industry in Portugal, improved European energy independence through a domestic source of lithium, and job creation in the Barroso region and the wider northeast of the country.

“There are multiple social and economic benefits associated with bringing our project into production, including creating a new industry and economic growth for Portugal, providing a domestic source of responsibly produced lithium raw material for Europe's greater energy independence, and bringing much needed development and job opportunities to the Barroso region and the wider northeast of Portugal,” Proenca said.

He added that Savannah is committed to meeting international standards and the responsibilities associated with State investment.

“We are conscious of the responsibility we have to deliver a project in accordance with the best international standards and to the benefit of many people and entities on the ground in the Barroso region with whom we already work. We are committed to fulfilling the demands and responsibilities associated with Portuguese State investment, and we have strong confidence in the State's commitment to continue to do its part in making Portugal's lithium battery value chain a success for the country's current and future generations,” Proenca said.

Savannah Resources CFO Henrique Freire said the grant strengthens the project’s financial position as the company moves toward a final investment decision expected later in the year.

“This grant is . . . represents strong financial and national support to our project, which will instil . . . confidence in our existing and future stakeholders,” he added.

He said Savannah has already advanced several elements of its financing strategy.

“Savannah has already made good progress on key elements of the potential financing package for the project, including this grant, ahead of a final investment decision expected later in the year. In the months ahead we will continue to work on additional elements, such as debt financing and additional partnerships, so that we have a full suite of financing options available to deliver full execution of this highly strategic project,” Freire said.

The Barroso lithium project has been identified by Savannah as a cornerstone asset for Portugal and the EU as both seek to secure critical raw materials for battery manufacturing and reduce reliance on external supply sources.