Developing critical materials for the green economy in a sustainable way is the Avalon Advanced Materials’ highway

Avalon Advanced Materials Inc. (TSX: AVL | OTCQB: AVLNF) is a new breed of resource company that places environmental stewardship at the top of the list of priorities as opposed to it being an afterthought. The Company has embraced the principles of sustainability as core to its business practice and has made a strong commitment toward implementing corporate social responsibility best practices and recently secured a top 5% ESG Risk rating amongst its peer companies from Sustainalytics.

Avalon is a Canadian mineral development company that operates primarily in Canada with a focus on the metals and minerals for use in clean energy and new technology including lithium, rare earths, cesium, tin, indium, gallium, germanium, tantalum and zirconium. The Company is in various stages of developing three of its five mineral resource properties with particular emphasis on lithium, cesium and rare earths.

Avalon’s most advanced project is the 100% owned Separation Rapids Lithium Project, located in the Paterson Lake Area of Ontario. The Separation Rapids deposit is a potential source of lithium minerals for use in the glass and ceramics industry as well as lithium compounds for the battery industry. The company completed a Pre-Feasibility Study in 1999 to produce petalite (the predominant lithium mineral at Separation Rapids) for glass-ceramics. A new Preliminary Economic Assessment model was created in 2016 to produce lithium battery materials, which was subsequently updated in 2018 based on new glass-ceramic markets. The simplified business model with initial focus on lithium mineral concentrates for glass and ceramics has an initial CAPEX of C$77.7 million (475,000 tpa mill capacity) for a 20 year operational life with average annual revenues of C$90 million and average annual costs of C$60 million for an NPV pre-tax (8% discount rate) of $156 million and an IRR (pre-tax) of 27.1%.

Building on the Separation Rapids opportunity, Avalon recently announced it has entered into a Letter of Intent (LOI) with Fort William First Nation (FWFN) to collaborate on the development of a lithium battery materials refinery located on industrial lands owned by FWFN in Thunder Bay, Ontario. This facility would be designed to accept lithium mineral concentrates from Avalon’s Separation Rapids Lithium Project (70 km north of Kenora) and Rock Tech’s Georgia Lake Lithium Project (145 km northeast of Thunder Bay), as well as potentially other emerging, new lithium mining operations in northern Ontario, to produce lithium hydroxide and other lithium battery materials.

Another example of what makes Avalon different than most resource companies is the binding LOI signed in February for four industrial minerals properties and a demonstration-scale processing plant located at Matheson, Ontario to process the tailings from a historic phosphate mining operation at the site. Work done has demonstrated that the tailings contain phosphate levels ranging from 15-20% P2O5 and can be sold “as is” for use in various agricultural fertilizer products. Additionally, analytical work done on the tailings indicates the presence of significant concentrations of rare earths, scandium and zirconium, which preliminary tests indicate will be recoverable through additional processing. The phosphate-rich tailings are already generating revenues and additional processing of the tailings could provide significant potential for future revenue growth. This is a great example of Avalon’s core values working in harmony. The company gets access to a closed mine site with potential to recover critical minerals like rare earths from the mine wastes, while remediating the long term environmental liability.

Avalon is a leader among mineral developers in adopting best practices to reduce its environmental footprint, prevent water contamination and engage with local communities. This focus gives Avalon a strategic advantage when it comes to securing grants, funding and partnerships with governments and First Nations, let alone the evolving investment community. Aligning the company with its stakeholders’ values reduces risk and creates opportunities like the Fort William First Nation LOI. Just remember, it’s not easy being green, but it can be profitable.




Avalon’s lithium project moves to center stage

Avalon Advanced Materials Inc. (TSX: AVL | OTCQX: AVLNF) is something prismatic as, if one looks at it from different angles at different times, one sees different things. Management cannot be accused of not being nimble, neither can they be accused of short-termism. The company’s main three targets it has had since last decade or before with the three foci being long-terms cultivars of the company, Nechalacho in the REE space, East Kemptville in the Tin space and Separation Rapids in the Lithium space.

When the latter project was just a twinkle in Avalon’s eye late last century (sounds a long time ago!) the goal was the mining of Petalite as Lithium ion batteries were around but were not moving the needle in investors’ Moodometers. Now the sex has been put into the Lithium equation it is timely for Avalon to breathe life into a project that had migrated to the backburner. The action here has been intense since last year and the project is now centre-stage at Avalon so we shall give it a look here and see what has been going on.

Petalite

Petalite is the preferred lithium mineral feedstock for certain specialty glass-ceramic products. Petalite is preferred over other lithium alternatives in glass-ceramic products for technical reasons, notably its consistently low impurity levels.

The petalite found at the Separation Rapids deposit contains very low levels of impurities, also offering potential for a high purity lithium chemical product at a relatively low-cost, to serve the needs of lithium ion re-chargeable battery manufacturers. A PEA was completed in September 2016, confirming a technically viable process and that the recovery of a battery-grade lithium hydroxide product from Separation Rapids’ petalite was a viable option.

Separation Rapids

The Separation Rapids deposit is one of the largest “complex-type” lithium-cesium-tantalum pegmatite deposits in the world, unusual in its enrichment in the rare, high-purity Lithium mineral petalite.

The 100%-owned Separation Rapids property is situated approximately 70 km by road north of Kenora, Ontario. The property consists of 15 Mineral Claims and one Mining Lease covering approximately 2,421 hectares. Tenure for the mineral resource is held under a 421 hectare, 21-year Mining Lease. Avalon also added three claims to the property covering 28 units (448 hectares), covering a corridor over the property access road.

Since acquiring the property in 1996, Avalon has expended approximately CAD$10mn on exploration and development work. Initial exploration work conducted in 1997-2001 included geological mapping, trenching, ground magnetic surveys, mineralogical studies and diamond drilling totalling 10,152 m in 69 holes. Subsequent work focused on tantalum potential and other potential industrial mineral products.

Early exploration work culminated in 1999 with the completion of a comprehensive Pre-Feasibility Study on the viability of producing petalite with by-product feldspars, by independent consultant Micon International Inc.

Back in March 2017 Avalon announced it had closed a transaction with GoldON Resources Ltd. to acquire a 100% interest in the seven-claim, 1,008 hectare, Paterson Lake property (shown in blue abve) located adjacent to the north and west of the Separation Rapids Lithium Project.

The Paterson Lake claims host three known lithium pegmatite occurrences known as the Glitter, Wolf and Rattler, along with a number of other, smaller, under-explored lithium – tantalum – rubidium – tin bearing pegmatites. These have never been drilled. These lithium pegmatite occurrences are between 5 and 6 kilometres away on trend with the Separation Rapids deposit along with a number of other, smaller less explored pegmatite occurrences. One of these, called the Glitter pegmatite, according to the Ontario Geological Survey, contains both petalite and lepidolite, has yielded assays of between 1.03 and 1.64% Li2O over five successive 1m samples.

The Resource

At Separation Rapids the Measured and Indicated Mineral Resources are eight million tonnes averaging 1.29% lithium oxide and 39% feldspar. The Inferred Mineral Resources contribute an additional 1.63 million tonnes at 1.42% lithium oxide and 39% feldspar to a maximum vertical depth of 260 metres. The deposit is open to depth and along strike.

The PEA

In September 2016 the results of Preliminary Economic Assessment on project were announced. The goal here was to investigate the potential for recovery of a lithium product suitable for the battery market. The results confirmed a technically viable process for the recovery of a battery-grade lithium hydroxide product.

The PEA development concept includes an open-pit mine, with milling onsite to produce a lithium mineral concentrate and by-product feldspar. The lithium mineral concentrate would then be processed in a hydrometallurgical plant (presently contemplated for Kenora) to produce lithium hydroxide for the battery industry or sold directly into the ceramics industry.

The metrics of the mooted operation were:

  • 10 year mine life
  • An average mining rate of 950,000 tonnes per year would yield an average annual production of 14,600 tonnes of lithium hydroxide for 10 years and 100,000 tonnes per year of feldspar mineral concentrate for 20 years (recovered from previously processed material for an additional 10 years)
  • IRR of 19% on a pre-tax basis and a 16% IRR on an after-tax basis, assuming 100% equity financing.
  • NPV at an 8% discount rate is CAD$343 million pre-tax and CAD$228 million after-tax.
  • Total capital cost of $514mn, inclusive of $86 million in contingencies and $7 million in sustaining capital
  • Average lithium hydroxide price assumption of US$11,000/tonne and the CAD:USD exchange rate assumption was US$1.00 = CDN$1.30.

Next Steps

The company is planning a follow-up drilling program in the second half of 2017 to continue testing the depth extension of the known resource. The deepest intersection to date in Hole SR98-57 encountered 1.47% Li2O over a true width of 31.7m at a depth of 180m to 270m. As a result a minimum of 2,000m in five deeper holes is currently planned, subject to financing.

In addition, a summer geological mapping, prospecting and sampling program has been carried out to begin evaluation of numerous other known lithium pegmatite occurrences on the western part of the property. This will include the new Paterson Lake claims.

Conclusion

As we have noted in these pages recently Lithium is “taking a breather”… indeed it’s been holding its breath for almost a year now. The underlying dynamic, if anything, gets better and yet the Lithium stocks are almost universally still wallowing in misery as the market tries to work out who is real and who is just following the fad. With Avalon having been involved in this project since the 1990s one could not accuse of Avalon of that.

The dilemma now is the size of the capex. This is still in the upper quartile of Lithium projects and financing just isn’t easy these days. That situation can turn on a dime though if an amenable offtaker walks in the door with a large chequebook and determination to see a project through to production.  In the short term it would be good to see some scaled down production scenarios or at least a phased onset of production.

Most of the crop of 2016 Lithium wannabes don’t even have drilling results let alone a PEA or PFS so Avalon has set itself in a category apart. Now the task is to find a partner that might make this one of the few from this latest “go around” to move to the higher plane of actually having output of Lithium for a burgeoning marketplace.




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.




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.”