Avalon’s CEO on the achieving the latest Separation Rapids Lithium Project milestone

“Because of Lepidico’s interest in the lepidolite product at Separation Rapids, which is a relatively minor byproduct, and the fact that they were building a process plant in Ontario, it makes sense for us to recover that as a byproduct from the Separation Rapids ore and serve their needs as well. Their initial needs fit with the amount of product. It looks like we can deliver at this early stage in the development. It is a good fit for us, but the primary focus will be on the petalite for the glass industry. That is the main mineral in the resource. As the PEA shows, we can do that at a relatively modest capital expenditure compared to what is costing to bring new lithium battery materials supply to the market.” States Don Bubar, President, CEO and Director of Avalon Advanced Materials Inc. (TSX: AVL | OTCQX: AVLNF), in an interview with InvestorIntel Corp. CEO Tracy Weslosky.

Tracy Weslosky: You just put out your announcement on the completed PEA for the Separation Rapids Lithium Project. Talk to us about your results Don.  

Don Bubar: Obviously we are pretty pleased with the results and the market reaction to it. It is an important milestone for the project. Ironically we are, sort of, going back to the original thesis we had for that project 20 years ago, which was to focus on producing a lithium mineral product for applications and specialty glass and ceramic product. We are seeing that as a logical thing for us to do now, at least to get started in business. We see it as, kind of, phase one, get into production at a relatively modest scale and build scalability into it to allow us to add in lithium battery material product at a later date as a future scale-up of the operation.

Tracy Weslosky: Don you have an offtake agreement already with Lepidico. Do you want to talk about that and where you are going to take it next, how you plan on doing this say in the next couple of quarters? 

Don Bubar: Because of Lepidico’s interest in the lepidolite product at Separation Rapids, which is a relatively minor byproduct, and the fact that they were building a process plant in Ontario, it makes sense for us to recover that as a byproduct from the Separation Rapids ore and serve their needs as well. Their initial needs fit with the amount of product. It looks like we can deliver at this early stage in the development. It is a good fit for us, but the primary focus will be on the petalite for the glass industry. That is the main mineral in the resource. As the PEA shows, we can do that at a relatively modest capital expenditure compared to what is costing to bring new lithium battery materials supply to the market. That is an attractive feature at $70 to $80 million dollars in capital to get started. Given how lithium has been repriced, it allows for very attractive returns on investment there with IRRs above 20%.

Tracy Weslosky: You mentioned $70 to $80 million. Your news release I think indicated $77 million, but then the revenue looks quite good. Do you want to speak to us about that and what we are looking for as shareholders?

Don Bubar: That is based on the model we have there now. We think you have to anticipate how much product you think you can sell in the marketplace. We have got lots of expressions of interest out there, some from some large players, some from some smaller players. We think the scale we have conceived us at is reasonable given the demand in the marketplace. That is what governs the size of the operation at this stage. Of course, thanks to all the demand for lithium, lithium has been repriced from what it used to be to make a more attractive return on investment…to access the complete interview, click here

Disclaimer: Avalon Advanced Materials Inc. is an advertorial member of InvestorIntel Corp.




Avalon CEO presents an “advanced lithium development opportunity” in Ontario

In a recent presentation at InvestorIntel’s 6th Annual Technology Metals Summit, Don Bubar, President and CEO of Avalon Advanced Materials Inc. (TSX: AVL | OTCQX: AVLNF) delivered a presentation titled, “The Separation Rapids Lithium Project: An Advanced Lithium Development Opportunity in North-western Ontario”. Addressing industry and investors alike, Don provides an overview of Avalon’s multi-market opportunity with The Separation Rapids Lithium Project, which is rich in petalite and lepidolite. Avalon’s competitive advantage is their ability to either sell petalite into the glass-ceramics market, or process it into lithium hydroxide (along with lithium carbonate from lepidolite) for the battery market… to access the complete presentation, click here




Crunch Time on Avalon’s Lithium Potential

Any day now, Avalon Advanced Materials Inc. (TSX:AVL | OTCQX:AVLNF) (“Avalon”) will be completing a drill project that should considerably increase their resource. In fact, renowned lithium developers Lepidico issued a letter of intent earlier this year based on their confidence that Avalon’s Separation Rapids project can deliver the goods; a combination of a great resource, proprietary processing and valuable relationships has my attention firmly fixed on the Avalon curve.

Already this month, Avalon stocks have seen a change in trend, switching from the year-to-date steady decline to a promising gain of a couple of points ahead of the news. The 2,000 meter drilling program was undertaken last month to scientifically verify the presence of large quantities of suspected lepidolite mineralization. Separation Rapids already has an NI 43-101 compliant petalite resource, but is also known to host a very large, but as yet unquantified, amount of lepidolite.

Upon the results of the current drill, we are expecting to see the expansion of the existing petalite resource, which is open along strike and at depth, as well as first data regarding an undrilled area one kilometer west of Separation Rapids, where the company sampled 1.56% Li2O over 8.9 meters back in 1997. Leading up to the release of the information, anticipatory movement has been seen on share prices, but we expect a significant jump when the results are confirmed.

Crucial for any lithium explorer is metallurgical processing, and Avalon’s agreements with Lepidico couldn’t be better placed. For anyone that follows us regularly, you’ll know that Lepidico have been developing the L-Max proprietary extraction process for quite some time, that promises the commercially viable recovery of lithium from lithium-bearing micas such as lepidolite and zinnwaldite. Before the advent of processing technologies such as L-Max, these rock types had largely been passed-over as a source of lithium due to the lack of an economically viable extraction process, making the current Avalon drill project one of the more exciting in recent years.

Samples of lepidolite outcroppings from a site just east of the Separation Rapids petalite resource were sent to Lepidico for laboratory bench tests using L-Max as part of their Pre-Feasibility Study (PFS). Excellent results were achieved, including the production of battery grade lithium carbonate of 99.88% purity, meaning that data already exists to demonstrate that both the feedstock and the relationship are working well; should Avalon prove that Separation Rapids has sufficient lepidolite to sustain long-term production, we may very well be looking at the next major producer.

Avalon boasts an enviable management team, and given the geological, exploration and processing experience totalling over a century, it’s no wonder that they’ve landed such a promising resource. The team developed a proprietary floatation process nearly twenty-years-ago for concentrating the petalite rock, which was further optimized during the 2016 pilot plant program and incorporated into the PEA model. This petalite concentrate can also be used as a direct input into high strength and thermal shock resistant specialty glass and ceramics products.

Surging demand for lithium from battery makers is disrupting traditional supply sources for innovators in the glass industry, which still accounts for 30% of global lithium demand as reported by the USGS. This creates an opportunity for new producers of high purity lithium minerals to fill the growing supply gap, and Avalon’s high purity petalite concentrate is ideally suited to meet this need. The company is currently pursuing a risk-reducing, staged construction of their demonstration plant in Kenora, but if the current drill program rubber-stamps the agreed 15,000 tpa of lepidolite concentrate to be shipped to Lepidico, we are looking at one serious leap forward very soon indeed.




Argentina Lithium & Energy – Probing the Depths

One of the paradoxes of recent times has been the “talking down” of brine lake Lithium deposits (salares) as being in some way “too difficult” or too “long term”. Having said that though two of the most high flying stories of recent times, Orocobre and Lithium Americas are both salar-based and there has been a staking boom in the Argentine part of the Lithium Triangle that makes California in the 1850s pale into insignificance. Explorers, quite literally, cannot get enough of Argentine lithium territory.

The caution relating to salares exploitation is powered by the mishaps that befell Orocobre and Rincon. However, in both these cases the lessons learnt will mean that others will have the benefit of their difficult experiences. The argument that there is a longer lead time for salar development (due to the need to kickstart the evaporation process) does not hold much water (pardon the bad pun) due to the much longer (and more expensive) drilling and resource estimation phase at a hardrock deposit and the much higher development costs at underground mines.

The Background Music

After nearly a decade and a half of irregular iconoclastic governments in Argentina ruled most recently by the dynasts of the Kirchner family and before that the Duhalde regime the country has returned to a certain orthodoxy with the election of Mauricio Macri as President in the last quarter of 2016. While not reinserting Argentine directly into the good books of mining investors it has certainly made thinking about the possibilities not being grounds for insanity. Amongst the measures taken so far that have enhanced the perspective for miners are:

  • Lifted currency controls – devalued Peso may result in lower costs for project development
  • Eliminated export taxes on concentrates and gold/silver doré
  • Some import restrictions lifted – may allow better sourcing of equipment

These changes have removed the major bugbears of foreign miners operating in the country. This reopening has coincided with the Lithium boom. There is a good case to be made that the relative lack of salares moving to production was due to the double negatives of the low lithium price between 2011 and 2016 and the death throes of the Kirchner regime making Argentina an unattractive place to advance projects.

The Prime Asset

It is probably evident to those who know the Grosso group that it should be so well-positioned here. Argentina Lithium & Energy Corp. (TSXV: LIT | OTCQX: PNXLF) has the option to earn a 100% interest in the Arizaro Lithium Brine Project. The terms of the option agreement include $6mn in staged payments and $4.2mn in expenditures over a four-year period. Additionally, the company must issue 2.5mn common shares with certain resale restrictions.

The territory optioned covers 20,500 hectares in the central core of the Arizaro Salar, the largest in Argentina and third largest in the “Lithium Triangle”. The whole salar covers an area of 1600 km2 within a watershed of 6000 kmand is located in the Andean province of Salta.

However, like many other salares in Argentina it has a portion of the pie rather than the whole pie. Other players with parts of the Salar de Arizaro are Lithium X, Eramet, Sentient and REMSA (an entity of Salta’s government).

Volcanic and associated hydrothermal activity is believed to be the main source of lithium and other solutes to the basin. This is verified by the deposits of travertine and occurrences of ulexite that have been found, as well as the presence of lithium bearing clay (hectorite), and lithium mica (lepidolite), in the surrounding areas of the basin. The generation of salt deposits has occurred in stages over time; early-deposited halite and gypsum layers that have been deformed by Andean tectonic activity are found on the eastern side of the salar. The rugged, lunar landscape nature of the salar’s surface can be seen below.

Very little historic exploration work has been done on the Arizaro Salar, however the central area is interpreted to have the geologic conditions and thickness to be the most prospective for quality brine resources. Historical sampling on the western margins of the Salar de Arizaro show elevated lithium values near surface contained within a classic halite dominant salar, much like nearby Rincon, Salar del Hombre Muerto and Atacama projects, all of which host advanced or producing lithium brine operations. This salar has a prevalence of halite to the west and gypsum to the east. These evaporites are covered by surficial deposits along the eastern margin of the salar.

The Arizaro salar benefits from good infrastructure in the Puna region, and is set to benefit from further development of adjacent large-scale mining projects, including First Quantum’s Taca-Taca copper project and Fortuna Silver’s Lindero gold project. Salar de Arizaro is traversed by a highway and railroad that connect the area to the Chile port of Anotfagasta some 450kms west and east to Pocitos on the main Argentine rail network, where natural gas and an industrial park are found.

The development of brine projects on some other salars in the region has been hindered by a lack of fresh water for processing. At Arizaro, there is a known water recharge area, and the Company has made securing a water source a key component of the exploration program in order to prepare for a feasible mining project.

Exploration

In association with work on the Taca Taca project, holes of approximately 100 metres depth were drilled into the salar and detected interbedded volcanic material, reflecting the volcanic activity that accompanied the evaporite sedimentation. The presence of geological structures such as faults and flow channels solutions were also detected. However, as might be expected these holes were not directed towards establishing the Lithium content of the salar.

Until recently little work had been done and the historical references are mainly to a report from the USGS in 1987 which reported date sampling of brines from the subsurface (to a mere two metres depth) that returned lithium values, up to 160 mg/L, confirming the presence of lithium in the basin but really only (literally) scratching the surface.

Argentina Lithium’s exploration campaign thus far includes both near-surface geochemical sampling and a Vertical Electric Sounding (VES) geophysical survey to delineate conductive zones at depth that may host lithium-bearing brines. Data from this first stage of the program has been used to define targets for a drill program that is planned for early in the second quarter of 2017.

The goal now is exploration for deep layers of lithium-rich brine which are not directly linked to the surface fluids at the Arizaro salar. This initial exploration program at Arizaro was, therefore, designed to acquire initial hydrogeological understanding of this largely un-tested salar and to identify conductive zones at depth that may host lithium-bearing brines. VES is effective to depths of approximately 400-500 metres below which alternative surveys such as Controlled Source Audio-frequency Magneto-tellurics are required.

Near-surface fluid samples collected from the trenches returned low lithium (<10 mg/l) and potash (<1,500 mg/l) levels. However, in the company’s opinion, the very large size of the salar and its geomorphology support the potential for discovery of deep brine layers with potential to host higher concentrations of lithium, as well as potash.

The consultants that undertook the VES tests have concluded from the results that, as well as the geologic and geomorphologic setting, climatic conditions, and hydrogeological environment at Arizaro, when compared to other well-studied salars, including Hombre Muerto, Rincón, Antofalla, Llullaillaco, and Rio Grande, indicate that there is a high probability to find brines at depth with high densities of 1,210 to 1,225 g/l and conductivities higher than 200 microS/cm. The VES results identified clear targets for an initial drill campaign. Now three or four holes of up to 400 metres in depth are planned to test these targets.

Conclusion

It’s early days for the companies in the Generation X of the Lithium wave. Those from the preceding generation that started out late last decade have moved towards production, now it’s the turn of those spawned by the 2016 Lithium price surge or those from the previous generation who were thwarted when prices took a tumble (and political circumstances deteriorated) resulting in wholesale shelving of development plans.

With a price tailwind, a dramatically improved political situation and the deep insertion of Joe Grosso in the Argentine political and economic scene, the scene is set for Argentina Lithium & Energy to make advances if the exploration data starts to stack up in a favorable way.




Avalon ignites interest with high-purity lithium

NY based asset firm Lind: “the time is right to invest in Avalon”….

A project in the making since Clinton was president, Separation Rapids has had a difficult upbringing, but like a failing college student graduating with surprise honours, the site recently revealed its long-concealed potential, reigniting development and attracting considerable interest.

100% owned by Avalon Advanced Materials Inc. (TSX: AVL |OTCQX: AVLNF) (“Avalon”), Separation Rapids is one of the largest lithium-cesium-tantalum pegmatite deposits in the world, including an unusual density of the rare crystal-like mineral petalite, a source of high-purity lithium.

Since the results of a 2016 preliminary economic assessment (“PEA”) confirmed that battery-grade lithium hydroxide could be reasonably and economically extracted from the resource, the project has gathered much more steam. More recently, major Australian processor Lepidico Ltd. have issued a letter of intent suggesting that they would purchase a minimum of 15,000 tpa for processing in their planned commercial facility. Additionally, Avalon have purchased a further 1,008 hectares of property from a neighbouring gold company.

According to the existing PEA, the mine has the potential to produce 14,600 tpa of lithium hydroxide for ten years, and another 100,000 tpa of feldspar mineral concentrates over twenty years. The discounted cash flow (“DCF”) analysis yields a 19% internal rate of return (“IRR”) on a pre-tax basis and a 16% IRR on an after-tax basis, assuming 100% equity financing. The Project’s net present value (“NPV”) at an 8% discount rate is CAD$343 million pre-tax and CAD$228 million after-tax.

Total Project construction capital costs are estimated at $514 million, which is inclusive of $86 million in contingencies and $7 million in sustaining capital.

Lithium hydroxide is to be in increasing demand for its use in battery cathode chemistries, and with half of the world seemingly digging for the stuff, it’s never going to be bad news to find that you’re sitting on a fair amount of it already.

Petalite and lepidolite are not the only minerals of interest at the Separation Rapids project. Highly fractionated pegmatites, like the Separation Rapids deposit, contain many minerals of economic importance. The deposit has the potential for recovery of several valuable by-products including high purity silica, feldspar, rubidium, cesium and tantalum. By-product recovery offers the possibility of significant increases to both revenue and efficiency.

Petalite is also the preferred lithium mineral feedstock for certain specialty glass-ceramic products precisely because of its consistently low impurity levels. This is essential if you want to serve the needs of lithium ion rechargeable battery manufacturers. 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 double over the next 5-10 years, creating a supply deficit, as existing producers struggle to meet the new demand.

No surprise, then, that Avalon scored C$2.5m in a private placement deal earlier this month from New York based asset firm Lind; Phillip Valliere, Managing Director at Lind, had this to say:

“We have been following Avalon’s progress for several years and, having developed confidence in the management team, we feel the time is right to invest in Avalon as it advances both its clean-tech materials business at its Separation Rapids Lithium Project as well as its East Kemptville Tin-Indium Project which is expected to be in a position to generate cash flow within the next two years.”