Toronto-listed Avalon Advanced Materials reports that Finnish export credit agency Finnvera has issued a nonbinding letter of interest in connection with the potential financing of equipment and services to be supplied to Avalon's proposed Lake Superior lithium processing facility in Thunder Bay, Ontario, Canada, by Finland-headquartered global provider of sustainable technologies, end-to-end solutions and services for the aggregates, minerals processing and metals refining industries.

The letter follows an application submitted by Metso relating to an anticipated commercial contract with an estimated value of about €100-million. Finnvera has confirmed that sufficient Finnish interest has been established for it to consider supporting Metso's commercial contract through an export credit financing structure.

Subject to satisfactory due diligence, credit approval and the establishment of an appropriate financing and security structure, Finnvera may provide a buyer credit guarantee for the benefit of an eligible arranging commercial bank. Finnish Export Credit, Finnvera's subsidiary, may also act as lender under the potential export credit facility.

"This letter of interest represents an important initial milestone in the development of a comprehensive financing strategy for Avalon's Lake Superior lithium processing facility. Metso is a globally recognised processing technology and equipment provider and the potential availability of Finnish export credit support provides Avalon with a credible pathway to finance a significant equipment package while advancing the development of a secure and resilient North American lithium supply chain," says Avalon president and CEO Scott Monteith.

Under Finnvera's financing framework, an export credit may generally finance up to 85% of the value of eligible Finnish goods and services exported under the relevant commercial contract, together with certain eligible local costs, guarantee premiums and interest capitalised during construction. The ultimate amount and terms of any financing support would be determined following Finnvera's detailed assessment and would remain subject to its applicable policies, project-finance limits, internal credit requirements and final approvals.

"This development creates a potential foundation for long-term, government-supported project debt associated with the Metso equipment and services package."

"Importantly, it also enhances our ability to pursue an integrated financing structure that could combine export credit support with Canadian and US government programmes, commercial project debt, strategic investment and customer or offtake-related financing. Our objective is to develop an optimised capital structure that minimises our blended cost of capital by maximising long-term institutional, strategic and project-level financing while minimising reliance on parent-level common equity," adds Avalon CFO Lorin Crenshaw.

Avalon intends to work with Metso and Finnvera to further define the eligible equipment and services package, applicable due diligence requirements and the potential financing process. The company also plans to evaluate eligible arranging banks and advance discussions regarding the prospective credit amount, tenor, security structure, covenants, repayment profile and any applicable offtake requirements.

A 2024 preliminary economic assessment of the facility outlines the use of Metso proprietary technologies, including calcination, pressure leaching, conversion, purification through ion exchange and crystallisation before the drying and packaging processes to ensure the production of high-quality lithium hydroxide monohydrate (LHM).

The plant is expected to produce about 30 000 t/y of battery-grade LHM.