Avalon Secures $3.5M from Sibelco to Advance Lithium and Rare Earth Projects

Avalon Advanced Materials Inc. has announced the completion of $3.5 million in convertible debenture financing from its significant shareholder, SCR-Sibelco NV. The funding will support the advancement of Avalon’s Lake Superior Lithium Project in Thunder Bay, the Nechalacho Rare Earths and Zirconium Project in the Northwest Territories, and general corporate operations.

“We are very pleased to have secured this new $3.5 million financing from our JV partner Sibelco. We are preparing our new Mineral Resource Estimate at the Separation Rapids JV project, and this new funding will enable us to accelerate the technical studies on our Lake Superior Lithium Project,” said Scott Monteith, CEO and Director of Avalon.

Details of the Financing

The newly amended and restated debenture replaces a previous $3 million convertible secured debenture, increasing the principal amount to $6.5 million. Key terms include:

• Interest Rate: 7.5% per annum, with principal and accrued interest payable on maturity, November 18, 2026.

• Conversion Rights: Sibelco may convert the outstanding principal and interest into common shares of Avalon or shares in the joint venture company, Separation Rapids Ltd. (SRL). If fully converted, Sibelco’s JV interest in SRL could increase to 90%, reducing Avalon’s stake to 10%.

• Additional Conditions: Sibelco retains the right to exercise conversion prior to maturity if Avalon does not meet agreed reductions in corporate and administrative costs.

 

Advancing the Lake Superior Lithium Project

 

The Lake Superior Lithium Project, a cornerstone of Avalon’s strategy, recently received positive results in its Preliminary Economic Assessment (PEA) published in September 2024. Highlights include:

• After-Tax NPV: CAD $4.1 billion at an 8% discount rate.

• Capital Expenditure: CAD $1.3 billion.

 

Avalon has applied for federal and provincial funding to further accelerate this project, which is poised to play a significant role in Ontario’s EV battery supply chain.

 

Broader Development Initiatives

 

Avalon’s partnership with Sibelco extends to the Separation Rapids lithium deposit near Kenora, Ontario, and the Company continues to advance its Snowbank and Lilypad lithium-caesium projects. Additionally, Avalon is developing the Nechalacho project in the Northwest Territories, a critical mineral deposit catering to advanced technology applications in communications and defence.

 

A critical initiative underway is Avalon’s plan to establish Ontario’s first midstream lithium hydroxide processing facility in Thunder Bay. This facility will serve as a vital link between northern lithium resources and southern EV battery manufacturing hubs.

 

Path Forward

 

This funding agreement strengthens Avalon’s position to advance exploration and production at its key assets while continuing to grow Ontario’s lithium supply chain. With support from its strategic partner, Sibelco, Avalon is well-positioned to meet the increasing global demand for critical minerals.

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