Time has come for Avalon

Avalon Advanced Materials has been looking to create new critical mineral supply chains for over 25 years now! They first acquired their advanced lithium asset, the Separation Rapids Project back in 1996-97, hosting the Big Whopper pegmatite (BWP), as it was referred to by the Ontario Minister of Mines George Pirie in an opening speech during the CEN CAN Expo Conference (Projects in the Pipeline) held September 15th in Thunder Bay.

 

Donald Bubar, President and CEO of Avalon Advanced Materials addressed a full house at the conference starting off by stating that “maybe it was a bit early back then (referring to 1996-97), and that it now looks like our time has finally come”. What interested Bubar in getting involved with the exploration of critical minerals back then was the gold price collapse and added to that was the BRE-X scandal which for a junior company made it very difficult to raise capital if you wanted to do gold exploration. Donald thought he should look at something else.
Donald said in his presentation, “Separation Rapids had been a new discovery that had just been made by a geologist working for the OGS. I decided that it was an interesting opportunity to do something different, that’s not gold. So I’ve been running Avalon since 1995 and being a small cap company, we’ve been around for awhile accessing capital through the equity markets. And one of the things I learned early on was that if you’re going to produce materials for clean technology, the end users often audit their supply chains back to the source to make sure they’re produced in sustainable ways. So that’s what inspired us over 10 years ago to start implementing basic principles of sustainability as part of our overall business model. And we’ve been producing an annual GRI compliant sustainability report for over 10 years now. We just got an ESG risk rating from Sustainalytics Morningstar last year, and that’s helped introduce our story and get more interest from the growing ESG investment community.”
Avalon Advanced Materials is a very diversified company now. As the company had learned early on that it was all about having the right product at the right time when new technology creates new demand for one of these non-traditional commodities. Don saw the future with rare earths over 15 years ago. Avalon now has a diversified asset base with exposure to a broad range of different critical minerals.
Don has tried to educate people more on how this is quite a different business from traditional mining of exchange traded commodities, in that it’s more like a manufacturing business because it’s all about how you process it to meet the needs of the end user that would have an interest in the product and then making the derivative product to meet their specifications.
“So it’s time for the regulations to get updated to recognize some of these fundamental differences in the approach you have to take because it’s unlike traditional mining, as it’s not just about tons and grade, it’s about designing the process and the product. You then scale your operation based on the market demand, not the size of the resource. So, it’s very different in that regard and therefore, bulk sampling is one of the first things you need to do.   The next step is to do the process test work and make trial quantities of the product so the end users can test it and make sure it’s going to meet their requirements. But unfortunately, the mining regulations have typically blocked you from taking a bulk sample until you’re at an advanced stage in the mine development.”
Don has also been advocating for how closed mine sites and historic mine wastes now need to be looked at as opportunities to extract value from the waste. “This is because there are many examples of resources that were developed decades ago for one traditional commodity where the resource contained a whole lot of other minerals that had no value then but do today. With the wastes sitting there on surface you don’t have to mine them. Just reprocess the waste and remediate the long term environmental liability while you do it,” said Don.
Avalon has been very pleased with all the recent developments here in Ontario with the provincial government creating the Critical Minerals Strategy earlier this year.  A lot of the components of that strategy are things Don has been advocating for many years now. “It looks like maybe they are starting to get it now, on the different ways to promote getting these new supply chains started here in Northern Ontario. And we want to also show how this is a really important economic development opportunity for the First Nations to take advantage of, as many of these critical minerals like lithium can be produced in low impact sustainable ways”.

 

One of the things that attracted Avalon’s interest in the Project was that the deposit contained a rare lithium mineral called Petalite, which has been in demand for a long time as a high purity specialty mineral. Because it’s a high purity lithium aluminum silicate mineral, it can be used directly to introduce lithium into the batch formulation for high strength glass ceramic products. At that time, there was demand for it North America as Corning used Petalite to invent Corningware cookware.
But unfortunately, they exited that business, just when Avalon thought they were going to get going. Avalon knew they would have another day and actually, demand for Petalite in glass ceramics is growing rapidly as it is now in short supply and a lot of international glass-ceramic companies are interested in the product. There is a lot of innovation on new types of high-strength glass-ceramic products creating another important market opportunity for Avalon going forward.
The Separation Rapids project is located just north of Kenora, Ontario in the traditional territory of the Wabaseemoong Independent Nations. Avalon has had a good relationship with the community there ever since they got started. Avalon first signed an MOU to collaborate with them back in 1999 and they continue to be interested in the economic development opportunity. It is hoped that the project can get started soon for Avalon and their First Nation partners.
The mineralogy is a little different from most of the lithium resources that are spodumene pegmatites, in that this one contains Petalite and Lepidolite, a lithium mica that’s got that purplish color to it. They are both minerals that can be concentrated to recover the lithium and to produce lithium battery materials.
The original Big Whopper resource is on a mining lease and Avalon has added more claims on to the northwest side of the property as the belt hosting the pegmatites trends to the northwest.
Don commented, “we know there are more lithium pegmatites out there. In fact, we discovered a new one last year that we haven’t drilled yet that looks really good, actually, in terms of being very coarse grained, and probably having more sub zones of other minerals within it. But everyone wants to see the lithium battery materials supply chain established here now and in Northwestern Ontario. So, we been looking at producing lithium hydroxide for quite awhile and we first did a PEA on it back in 2016. I realized awhile ago that creating the midstream processing capacity is the key next step and the most expensive part of the production process. Establishing that facility in a central location with good transportation infrastructure, so that it can serve other new producers of lithium mineral concentrates makes sense since there is an abundance of lithium pegmatites in Northwestern Ontario.
So if you’re going to establish such a facility in Northwestern Ontario, Thunder Bay is a perfect location for it because it’s the transportation hub of the Northwest and has good proximity to all kinds of lithium pegmatites of various sizes.

 

So if new producers find some that aren’t that big, but there’s a buyer of the concentrates for the refinery here in Thunder Bay, then they can develop it as a small quarry, use new processing technologies like dense media separation or sensor based ore sorting to concentrate it, then sell it and make a lot of money while not doing any harm to the environment.
Don noted that “We’re keen to work with Lakehead University on getting more education into the Earth Science program on how these new minerals are important to many new technologies and keep inspiring more research and ways to recover them efficiently and potentially new applications for them.
Don went on to say “we’ve created a subsidiary called Avalon Lithium Inc. to be the refinery owner.
Avalon is now starting to get a whole lot more interest from all the companies that you’ve been reading about in the news from Germany and elsewhere that are keen to take advantage of the resources in Northwestern Ontario.
Avalon recently signed an MOU with the major Korean battery manufacturer, LG Energy Solution who are planning to establish a battery manufacturing facility in southern Ontario so they can take advantage of the access to lithium battery materials supply chains to be developed in northern Ontario.
There is also a lot of interest now from First Nations, including the Fort William First Nation, in being an investing partner in the refinery. There are many lithium pegmatites  near First Nations communities in the north, the Ring of Fire and elsewhere,  providing opportunities to get started producing the lithium mineral concentrates for the refinery.
In terms of the economics, it keeps getting better and better, as Avalon first did their PEA in 2016 when the assumed price for lithium hydroxide used was $11,000 a ton and now more than tripled! If we use $20,000 a ton now maybe as a long term average, then the profitability is extremely good. The Separation Rapids Project now becomes a multi-billion dollar asset.
The demand for Petalite in glass ceramics is also growing rapidly and Avalon also wants to take advantage of that opportunity. Avalon recently signed one offtake agreement with a major international glass-ceramic manufacturer and now has lots more interest.
It’s the perfect storm as there’s more demand and there’s a real shortage of supply of this high purity lithium mineral, as most of it came from Zimbabwe, and now China controls all the resources there. “So we’ve got one of the few large petalite resources in the world that China doesn’t already control and that’s opening the door for us to create supply for the many end users out there that are looking for a new supply of this important specialty mineral.
There’s also lots of innovation happening in that space right now. I see lithium glass as potentially replacing windshield glass in electric vehicles as part of the whole light-weighting strategy for electric vehicles going forward”, said Bubar.
So the next steps moving forward for Avalon are in the market for glass ceramics and the key next step has always been to process a bulk sample and be able to provide product samples to the end users so they can try it out and make sure it’s going to meet their needs. Avalon took that bulk sample last year, but there’s still no facility in Canada that’s equipped properly to do the processing for us on a sample that big. Avalon is now in the process of acquiring their own Dense Media Separation (DMS) plant so they can do it themselves and get that whole supply chain started but recently had interest from a major international distributor of petalite in supporting Avalon’s petalite production aspirations.
The plans are to establish the lithium battery materials refinery in Thunder Bay as Avalon now has an industrial site picked out and are in the process of closing the deal to acquire it. At that time, Avalon will get started on the model for building it and then finalize their feasibility study cost estimates, complete the environmental assessment work at the site and then get started in the short term with the products for the glass ceramic industry, but also at the same time looking at all the other potential byproducts. With lithium pegmatites, like this one, almost everything in the rock is potentially a saleable commodity. Other critical minerals include cesium, tantalum and rubidium bearing K-feldspars. So the plan is to recover all those mineral by-products too and enhance the overall value of the asset. And then hopefully, we’ll be able to get the battery materials production started by 2025-26.

For this article and more visit the digital copy of: The Northern Ontario Mining Report

 

Tags: Northern Ontario / Green Mining / Battery Metals / All Articles