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Avalon plans smaller scale Ontario lithium project

23rd August 2018

By: Mariaan Webb

Creamer Media Senior Deputy Editor Online

     

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TSX-listed junior Avalon Advanced Materials has outlined a new preliminary economic assessment (PEA) for its Separation Rapids lithium project, which simplifies the Kenora, Ontario-based project to initially produce lithium mineral concentrates, with the potential for later expansion to produce battery materials lithium carbonate and lithium hydroxide.

The smaller scale development model “substantially” reduced capital expenditure (capex) requirements from the original model completed in September 2016, the company said in a news release, adding that the full updated PEA would be published online in the next few weeks.

The updated PEA uses a plant throughput rate of 475 000 t/y, compared with the 950 000 t/y rate used in the 2016 PEA. This will result in a 20-year operating life, based on the present known mineral resources, with production of 71 500 t/y of petalite concentrate and 11 800 t/y of lepidolite concentrate for 18.5 years. From year six to 20, the project will start producing 100 000 t/y of feldspar.

The upfront capex requirement is C$77.7-million, with a further C$13.7-million planned for the feldspar circuit.

The project is expected to generate an average of C$90-million a year in revenue and costs are estimated at C$60-million, resulting in a pretax net present value, at an 8% discount, of C$156-million and a pre-tax internal rate of return of 27.1%.

Avalon said this week that it believed Separation Rapids' petalite would be ideally suited in many applications that now had to compete for lithium supply with the rechargeable battery industry.

The company would call its product "super petalite” and said that it had attracted considerable interest from consumers in the glass and ceramics industry.

“Discussions toward concluding offtake agreements with major consumers of this product in the glass industry are now at an advanced stage,” Avalon stated.

Petalite production would be supplemented with the production of a second lithium mineral concentrate: lepidolite. Lepidolite is a lithium mineral which is in growing demand for conversion to lithium carbonate. Avalon already has a preliminary offtake agreement in place with Perth-based Lepidico, which is planning to develop a lithium carbonate demonstration production facility in Sudbury, Ontario.

Avalon said that it remains a possibility to convert petalite concentrate into lithium hydroxide for the battery and energy storage industries at a future stage.

The next step in the project's development is to proceed with a short pilot programme to finalise reagent recycling and water treatment processes, after which a comprehensive feasibility study will be completed. This work would proceed later in the year, once offtake agreements were concluded and additional project financing was in place.

Some additional drilling would also be required to bring more of the inferred resources into the measured and indicated categories.

Shares in Avalon gained 43% to C$0.10 a share on Wednesday.

Edited by Creamer Media Reporter

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