NEWS RELEASES AVALON ANNOUNCES UPDATED RESOURCE ESTIMATE AND DEVELOPMENT PLANS FOR SEPARATION RAPIDS LITHIUM PROJECT, KENORA, ONTARIO
May 23, 2018
Toronto, Ontario--(Newsfile Corp. - May 23, 2018) - Avalon Advanced Materials Inc.(TSX: AVL) (OTCQX: AVLNF) ("Avalon" or the "Company") is pleased to announce a mineral resource estimate update for the Separation Rapids lithium deposit which includes results from the 2018 winter drilling program disclosed in the Company's news release dated April 3, 2018. In this program, four holes extended the known deposit to depth on both its east and west ends, resulting in a 10% increase in overall tonnage. This brings the total Measured and Indicated Resources to 8.405 million tonnes at 1.408% Li2O, with an additional Inferred Resource of 1.791 million tonnes at 1.349% Li2O (as summarized in Table 1 below). The deposit remains open to depth. The new resource estimate will be incorporated into an updated Preliminary Economic Assessment ("PEA") now in preparation and targeted for completion by June 30, 2018.
Project Development Update
Development has been focused on evaluating several variants on the project model based on the relative proportions of the various potential lithium products. The current model, which will be the basis for the updated PEA, contemplates a staged development approach which begins with a Phase 1 plant capable of initially producing 75,000 tonnes per annum ("tpa") of lithium mineral concentrate (petalite) for sale as an industrial mineral product to consumers in the glass industry, in addition to a further 40,000 tpa of lepidolite concentrate for sale to lithium chemical producers. Once scaled up, this plant will produce almost 180,000 tpa of lithium mineral concentrate. The plant will also have the potential to produce a feldspar concentrate by-product for other markets.
Phase 2 would involve a demonstration-scale hydrometallurgical pilot plant to begin producing trial quantities of the lithium battery material derivative product (lithium hydroxide or carbonate) for evaluation by potential end-users. Following acceptance of the product in the market, the Company would then proceed with a scale-up of the hydrometallurgical plant in Phase 3 to produce up to 10,000 tpa of lithium battery materials in addition to continuing to serve its other customers with industrial mineral products.
This development model has several potential significant economic benefits that could greatly reduce overall investment risk compared to the model used in the Company's 2016 PEA that contemplated a relatively large initial capital investment ($450 million) to construct a 14,500 tpa dedicated lithium hydroxide production facility. These benefits include the potential of a relatively low initial CAPEX, (targeting in the range of $50-70 million), early positive cash flow from industrial minerals product sales and flexibility in product design to ensure broad market acceptance before incurring the larger capital investment required to build the Phase 3 hydrometallurgical plant.
Interest in the Company's lithium mineral (petalite) product from glass industry consumers is high due to its exceptional purity, which is an increasingly important factor in many new high-strength glass formulations. The Company is in advanced discussions with several glass industry customers with a view toward securing the offtake commitments required to finalize the project engineering and plant design and secure project financing.
With the completion of the updated PEA by June 30, 2018 and the necessary financing in place, Avalon intends to proceed with the necessary project engineering and process testwork to take the PEA development model to the Pre-Feasibility or Feasibility level of confidence on capital and operating cost estimates.
Sustainability and Permitting
The small environmental footprint, including low GHG emissions, and almost non-existent air emissions planned in the first stage, makes this phased development approach advantageous to the permitting process. There are no anticipated environmental impacts of concern at the project, with the mineral deposit and waste rock being non-toxic and non-acid generating, with minimal water discharge anticipated. Avalon continues to update and validate its completed 2007 environmental baseline study and the tailing management system design. The Company is planning to formally start the permitting process this summer, once sufficient engineering data and project financing are in place. Avalon is also currently working with Hydro One to determine the optimal route to deliver clean hydro-electric power to the site from one of the nearby dams on the English River.
The staged development approach is also advantageous to Avalon's potential Indigenous partners by providing time to consider opportunities for direct participation in project development and time for individual members to obtain the necessary training for jobs at the site. Engagement is ongoing with local Indigenous communities, regulators, and local government who continue to be supportive of the project.
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