Savannah Resources has raised around £11.5m through an oversubscribed placing to fund the next stage of development for its Mina do Barroso lithium project located in northern Portugal.

The company placed 92,535,277 new ordinary shares of 1p each and secured commitments to subscribe for 35,811,979 ordinary shares.

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According to the company, institutional investors showed an interest in the placing.

“The funds raised will allow us to continue to fast-track the development of our Mina do Barroso lithium project.”

In view of positive results of the scoping study announced last month, Savannah intends to undertake a feasibility study over Mina Do Barroso in an effort to reach a decision to mine by early next year.

Savannah Resources CEO David Archer said: “The funds raised will allow us to continue to fast-track the development of our Mina do Barroso lithium project, which has the potential to be the leading European producer of spodumene lithium.

“The net funds raised will enable us to advance our project in Portugal through a feasibility study, with a view to making a final development decision early next year.”

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The company has also received a letter of intent from its major shareholder Al Marjan for an additional £1m under the terms of the relationship agreement between the companies.

This will give Savannah gross proceeds of £12.5m, including the placing and subscriptions.

Based on the scoping study, the project has base case pre-tax net present value (NPV) of $356m and internal rate of return (IRR) of 63%.

Over the mine life of 11 years, the project is expected to deliver revenues of $1.55bn.

A portion of the proceeds from the fundraising will be used to progress Savannah’s projects in Mozambique and Oman, which are currently undergoing mining lease applications.