Imagine buying a penny stock and watching it go up 5,775%…

For savvy investors who bought Filtronic at 8p five years ago, that’s not a theoretical scenario. The stock now costs about 470p!

Such eye-popping returns are very rare, of course, but they do happen. Normally they’re driven by some sort of big theme that investors get excited about (AI, defence, quantum computing etc).

In the case of Filtronic, it was space due to its strategic partnership with SpaceX. The rocket firm could break all records when it goes public soon — that certainly helps build excitement!

The Barroso Project

Enter Savannah Resources (LSE:SAV), a 7p stock that’s already up over 100% since July 2025. This gives it a £188m market-cap, which technically places it outside the penny stock realm. Hence why I said ‘ex-penny stock’.

However, I’d say Savannah ticks the box for a big, potential, exciting investing theme. That’s because the mining explorer is the owner of Europe’s largest spodumene lithium deposit — the Barroso Lithium Project in Portugal.

The majority of lithium mined today goes straight into electric vehicle (EV) batteries. But while demand’s accelerating, global supply of lithium’s lagging.

Savannah estimates its project has sufficient lithium for at least 20m EV batteries. However, there could be enough for 50m!

According to the miner, the total future profit of the initial 14-year mine life is worth $953m (about £708m). Savannah’s targeting 2028 to start production.

2028 ahoy

Now, at this point, I’d normally bring up the political risks of such projects. For example, how precarious mining in Burkina Faso can be. But we’re talking about sunny, stable Portugal here, in the heart of the European Union. So there’s far less political risk.

Not only that, but the Portuguese government is actually paying Savannah €110m via a non-reimbursable grant to help finance construction. That’s because Barroso has been designated a ‘Strategic Project’ under the European Critical Raw Materials Act.

The reason for this is that the EU desperately wants its own supply of lithium for EV batteries and energy storage. At the moment, Europe is dangerously dependent on China for critical materials.

Looking at this then, there appear to be a few things that make this small-cap mining stock less risky:

• Developed European nation on board.
• Classified as an EU Strategic Project.
• The €110m grant helps financing.
• $270m German government loan guarantee.
• Fast-tracked administrative permitting.
• The definitive feasibility study is on track for completion in July.
• Savannah has a supply agreement with a major lithium refinery in Germany.

Road to riches?

So is this my potential ticket to escape the day job? Probably not, in all honesty. That’s because I wouldn’t make this a core holding, even if I was minded to invest.

If I do buy small-caps, I keep these as small positions to manage risk, and there’s still quite a bit here. After all, Savannah remains a pre-revenue developer completely dependent on external funding. There could be technical hiccups that delay production and nobody knows what price lithium will be at in 2028 (it crashed in 2023).

That said, I do think this is an interesting, speculative stock that adventurous investors might want to check out. I’ll be keeping an eye on Savannah’s progress.

Should you invest £5,000 in Savannah Resources Plc right now?

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Ben McPoland has no position in any of the companies mentioned.