Avalon helping to meet the lithium and rare earths demand
[Note from the Publisher: I was delighted to see that Matthew Bohlsen had elected to write an update on Avalon Advanced Materials, especially in lieu of the column published yesterday The Single Biggest Legislative Development in the Rare Earths Market since 2010. While this column highlights the latest in their Separation Rapids Lithium Project, I would like to remind our readers that InvestorIntel.com was the blending of 29 blogs, including RareMetalBlog.com in 2012. That particularly blog, and the associated rare earth education sites were inspired by conversations I had with the CEO of Avalon Advanced Materials Inc. Don Bubar. The Nechalacho Project is Avalon’s flagship rare metals NA project and is exceptional for its high concentrations of the more scarce heavy rare earth elements or rare earths — enjoy Matthew’s update!]
Avalon Advanced Materials Inc. (TSX: AVL | OTCQX: AVLNF) (“Avalon”) offer investors exposure primarily to lithium, in addition to tin, indium, silica, rubidium, cesium, tantalum, neodymium and praseodymium.
Lithium is the lightest known metal, and it can also lighten your mood. Lithium, atomic number 3, is an element of many uses. It’s used in aircraft manufacture and in certain batteries. Lithium is a special metal in many ways. It’s light and soft, so soft that it can be cut with a kitchen knife, and so low in density that it floats on water. Lithium-ion batteries are the key to lightweight, rechargeable power for laptops, phones and other digital devices. Growing demand for rechargeable batteries in electric vehicles and home energy storage is expected to result in continued rapid growth in global consumption of lithium. Many industry analysts are predicting that the demand for lithium will increase substantially over the next 5-10 years, possibly creating a supply deficit, as existing producers struggle to meet the new demand.
Avalon could be in a position to benefit from this demand with their Separation Rapids Lithium Project having the potential to produce high purity lithium compounds for two distinct markets – An industrial mineral product for glass-ceramics, and lithium chemicals for energy storage. The lithium petalite found at the Separation Rapids lithium deposit also offers potential to provide a high purity lithium chemical product at a relatively low-cost to serve the needs of lithium ion re-chargeable battery manufacturers. It also has potential for several by-products including feldspar’s, silica, rubidium, cesium and tantalum. The Company’s by-product recovery offers the possibility of significantly increased revenues and reducing the amounts of waste material having to be disposed. Petalite is the preferred lithium mineral feed-stock for certain specialty glass-ceramic products for technical reasons, notably its consistently low impurity levels.
Separation Rapids Lithium Project
On September 2016, Avalon announced the results of a positive Preliminary Economic Assessment on the Separation Rapids lithium project. The results confirm a technically viable process and positive economics for the recovery of a battery-grade lithium hydroxide product. The Project has a net present value (“NPV”) of C$ 228 million after-tax, an IRR of 16% after tax, while construction capital costs are estimated at $514 million, inclusive of $86 million in contingencies and $7 million in sustaining capital. The PEA was based on annual production of 14,600 tonnes of lithium hydroxide for 10 years, 100,000 tonnes per year of feldspar mineral concentrate for 20 years, with low production costs (estimates to be below US$5,000/t).
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East Kemptville Tin-Indium Project
Avalon’s other focus is their East Kemptville Tin-Indium Project. In July 2018, Avalon finalized its Preliminary Economic Assessment (PEA) on that project. The re-development model, as presently conceived, is an environmental remediation project that will be financed through the sale of tin concentrates recovered in large part from previously-mined mineralized material on the site supporting economic recovery of tin concentrates for at least 15 years. Total estimated Measured and Indicated Mineral Resources are now 22.97 million tonnes at 0.153% Sn, with an additional Inferred Resource estimate of 14.25 million tonnes at 0.139% Sn at a cut-off grade of 0.1% Sn.
Avalon also recently announced they will re-activate their 100% owned Nechalacho Rare Earth Elements Project, Thor Lake, NWT (“Nechalacho” or “the Project”) in 2018 due to strong demand for the ‘magnet rare earths’ neodymium and praseodymium.
Avalon Advanced Materials Inc. has a market cap of C$ 16 m. The Company is a Canadian mineral development company headquartered in Toronto, Ontario. Avalon specializes in critical metals and minerals with growing demand in new technology. One to follow.
Matthew Bohlsen is a Senior Editor for InvestorIntel.com. With a Graduate Diploma in Applied Finance and Investment (similar to CFA), and a Graduate Diploma in ... <Read more about Matthew Bohlsen>