Separation Rapids Lithium
LITHIUM & OTHER ADVANCED MATERIAL POTENTIAL
Avalon’s Separation Rapids Lithium Project has the potential to produce high purity lithium compounds for two distinct markets: a specialty mineral product for high strength glass-ceramics and lithium battery materials, notably lithium hydroxide.
The Separation Rapids Big Whopper pegmatite deposit is one of the largest “complex-type” lithium-cesium-tantalum “LCT” pegmatite deposits in the world, unusual in its enrichment in the rare, high purity lithium alumino-silicate mineral petalite. Petalite is the preferred lithium mineral feedstock for a number of high strength glass-ceramic products for technical reasons, notably its consistently low impurity levels and the fact that alumina and silica are also ingredients in the glass formulation.
Petalite also offers potential to produce a high purity lithium chemical product at a relatively low-cost to serve the needs of lithium-ion re-chargeable battery manufacturers. Growing demand for rechargeable batteries in electric vehicles and home energy storage is expected to result in continued rapid growth in global consumption of lithium. The recent surge in demand has resulted in supply shortages and much higher prices for lithium hydroxide than were used in Avalon’s 2016 PEA on lithium hydroxide production.
In August 2018, Avalon completed an updated Preliminary Economic Assessment, reflecting a simplified business model that focuses on initial production of lithium mineral concentrates, for glass-ceramics with potential for future expansion into production of the battery material lithium hydroxide.
In 2020, Avalon began to look at establishing a regional lithium battery materials process facility in Thunder Bay, Ontario. This facility would be designed to accept lithium mineral concentrates from Avalon's Separation Rapids Lithium Project and other new producers from the many lithium pegmatites that occur in northwestern Ontario.
Petalite is not the only lithium mineral of interest at the Separation Rapids project. Petalite production will be supplemented with the production of a second lithium mineral concentrate: lepidolite. It will provide an additional lithium mineral concentrate for treatment at Avalon’s planned lithium refinery in Thunder Bay.
Highly fractionated pegmatites, like the Separation Rapids deposit, contain many minerals of economic importance. The deposit has the potential for recovery of by-products including high purity silica, rubidium feldspar, cesium and tantalum.
Separation Rapids Lithium Deposit
LOCATION, ACCESS, OWNERSHIP AND TOPOGRAPHY
The 100% owned Separation Rapids property is situated approximately 70 km by road north of Kenora, Ontario. The property consists of 19 mineral claims and one mining lease covering a combined area of approximately 4,414 hectares (10,910 acres) in the Paterson Lake Area, Kenora Mining Division, all of which are 100% owned by Avalon. The lease covers an area of 420.39 hectares over the area of the main lithium pegmatite deposit (the Big Whopper) and adjacent lands that may be used for mine development infrastructure. Avalon also owns an aggregate permit on southern part of the property that is presently being used for gravel to upgrade the access road to the Big Whopper to better accommodate heavy equipment.
LOCATION AND INFRASTRUCTURE and MINERAL CLAIMS MAPS
The Separation Rapids property is directly accessible by a private road. The main line of the Canadian National Railway passes by 50 km south of the Separation Rapids property while the main line of the Canadian Pacific railway passes by 27 km further south.
The Separation Rapids property claim map.
Since acquiring the property in 1996, Avalon has expended over $10 million on exploration and development work, primarily focused on the deposit’s lithium potential. Initial exploration work conducted in 1997-2001 included geological mapping, trenching, ground magnetic surveys, mineralogical studies and diamond drilling totalling 10,152 m in 69 holes. Subsequent work focused on tantalum potential and other potential specialty mineral products.
Early exploration work culminated in 1999 with the completion of a comprehensive Pre-Feasibility Study on the viability of producing petalite with by-product feldspars, by independent consultant Micon International Inc. The business model at the time involved production of high purity concentrates of petalite for sale to glass-ceramics manufacturers. While the study produced a positive result, Avalon was unable to secure the necessary commitments on off-take from consumers to justify further investment at that time and the project was put on hold.
Over the next decade, Avalon continued to study alternative lithium product ideas for markets in glass- ceramics and specialty composite materials. The key next step has always been to provide potential glass-ceramic end-users with a sizeable product sample so they could confirm that the glass-ceramic product would meet their requirements. Unfortunately, the Mining Act made it difficult to recover a bulk sample quickly and there is a lack of properly equipped process facilities in Canada to process a large bulk sample and preserve its purity.
In 2014, Avalon re-activated the Separation Rapids project after receiving expressions of interest in its petalite from several international glass manufacturers. The process flowsheet was greatly simplified and in 2015 small new petalite samples were produced for analysis by these customers - all of whom confirmed they met the desired specifications in terms of lithium grade and impurity levels
Avalon concurrently began investigating how its petalite could be used to produce high purity lithium chemicals for the battery industry relatively inexpensively compared to other existing alternative lithium source materials. Market studies indicated that lithium hydroxide will be in increasing demand as a feedstock for lithium-ion battery cathode chemistries. Consequently, Avalon developed a process flowsheet to make lithium hydroxide from its petalite. The potential for production of high-grade lithium hydroxide (99.9%) was demonstrated through laboratory test work performed in 2015 and defined in a Preliminary Economic Assessment filed in 2016.
Avalon then carried out additional drilling (April-May 2017, Jan-Feb 2018) to expand the lithium resource and provide better definition of the lithium mineralogical zoning in the total resource.
Resource Estimate at 0.6% Li2O Cut-off Grade (As at November 15, 2017)
|Petalite Zone||Lepidolite-Petalite Zone||Total Tonnes (Mt)||Li2O (%)||Rb2O (%)|
|Tonnes (Mt)||Li2O (%)||Rb2O (%)||Tonnes (Mt)||Li2O (%)||Rb2O (%)|
|Measured + Indicated||6.28||1.37||0.327||1.85||1.38||0.473||8.12||1.37||0.360|
CIM definitions were followed for Mineral Resources. Footnotes:
- The Qualified Person for this Mineral Resource estimate is William Mercer, PhD, P.Ge(ON)
- The resource estimate is based on 74 drill holes totalling 11,644 metres drilled between 1997 and 2017 by Avalon.
- Drill data was organised in Maxwell DataShed and for estimation purposes was transferred to the Geovia GEMS 6.8 software, wherein the block model was developed.
- The geological units were modeled as outlined by drill core logs.
- Resources were estimated by interpolating composites within a block model of 10 x 10 x 3 metre blocks.
- Grade interpolation used the Ordinary Kriging method combined with variograms and search ellipses modeled for each rock unit.
- Measured material was defined as blocks using composites from ≥ 4 drill holes and a distance of ≤25 m to the nearest composite and additional blocks with excellent geological and grade continuity, while indicated material includes blocks using ≥ 3 drill holes and a distance ≤ 35 m to the nearest composite and blocks with geological and grade continuity, and inferred material was defined as blocks with composites from ≥ 2 drill holes and interpolated geological continuity up to 40 m below diamond drill holes.
- Two metre composites were used and no capping was necessary.
- The mean density of 2.65 t/m3 was used for unit 6ABC and 2.62 t/m3 for unit 6D.
- The cut-off grade reported in this resource estimate, 0.6% Li2O, is consistent with the previously published resource estimate by Avalon (Preliminary Economic Assessment, 2016).
Updated Preliminary Economic Assessment (August 2018)
The updated PEA utilizes a plant throughput rate of 475,000 tonnes per annum compared to the 950,000 tpa rate used in the 2016 PEA. This will result in a 20-year operating life, based on the present known mineral resources, with annual production of 71,500 tonnes of petalite concentrate; 11,800 tonnes of lepidolite concentrate (both for 18.5 years); and, commencing in Year 6, 100,000 tonnes of feldspar (through to Year 20). The upfront capital expenditure requirement was estimated to be C$77.7 million with a further C$13.7 million planned for the feldspar circuit in Years 5/6 (or once payback of the initial capital is complete). Average annual revenue is estimated at C$90 million versus average annual costs of C$60 million, resulting in a pre-tax Net Present Value (at 8% discount rate) of C$156 million and a pre-tax Internal Rate of Return of 27.1%. The post-tax NPV is calculated at C$102 million and the IRR at 22.7%.
Avalon's 2016 PEA presented a model focused on the conversion of petalite concentrate into lithium hydroxide for the battery and energy storage industries. This remains an opportunity for a future expansion of the operation as additional mineral resources are delineated. Development into these markets would start with the addition of a pilot scale lithium hydroxide production circuit at the mine site to produce trial quantities of the battery material product and prove the innovative, new process flowsheet developed by Avalon in 2016. This process offers a number of advantages over the traditional flowsheet, mainly through lower chemical consumption and less waste products for disposal.
The 2018 development model results in a small environmental footprint, including low GHG emissions and almost non-existent air emissions. There are no anticipated environmental impacts of concern, with the mineral deposit and waste rock being non-toxic and non-acid generating and minimal water discharge being anticipated.
RECENT ACTIVITIES AND FUTURE PLANS
In 2021 Avalon received the necessary approvals to proceed with a 5,000-tonne bulk sample extraction program that was originally planned for 2019 for pilot plant processing to recover petalite product samples for testing and qualification by glass and ceramic companies that have expressed interest in the high-purity petalite mineral product. Interest in Avalon’s petalite product accelerated in 2022 when China took control of the traditional petalite supply sources in Zimbabwe and denied access to the product from non-Chinese end users.
A comprehensive Feasibility Study will be completed once off-take agreements are concluded and additional financing is in place. Some additional drilling will be undertaken to bring more of the Inferred resources into the Measured and Indicated categories.
Avalon continues to explore for new lithium pegmatites, particularly on the western extension of the property, where a number of new petalite occurrences have been identified, including the recently discovered Snowbank petalite pegmatite with high contents of coarse grained petalite. Avalon plans to begin drilling it once the permit has been secured.
With the growing demand for lithium battery materials and the advanced status of the Separation Rapids Project, Avalon is well positioned to serve both the battery materials market and the glass-ceramics market. On the battery materials opportunity next steps involve securing an industrial property in Thunder Bay on the waterfront and securing a strategic investing partner to collaborate with Avalon on building the lithium refinery. After signing an MOU with LG Energy Solution in September 2022 and subsequently receiving expressions of interest from other automotive manufacturers, Avalon is now well-positioned to move the project forward and secure additional funding from government.
ENVIRONMENT, PERMITTING and COMMUNITY
Avalon completed environmental baseline studies in the project area in 1999, ensuring that local environmental sensitivities were identified at an early stage. This study was updated in 2007 and was further updated in 2013 to completion of a Species at Risk Act study. Additional environmental studies have been completed since 2019 to update the previous work. The Company now plans to concentrate the petalite at the site using new environmentally benign processes that do not use chemical reagents including sensor-based ore sorting and dense media separation (DMS). There will also be little, or no waste rock generated as most of the minerals in the ore are potentially saleable products and wastes can likely be used for aggregate. Lastly there is nothing toxic in the ore and lithium is beneficial for human health.
The property lies within the traditional land use area of the Wabaseemoong Independent Nations (“WIN”) of Whitedog, Ontario: an Aboriginal community located approximately 35 km southwest of the property. In August 1999, Avalon signed a Memorandum of Understanding with WIN which was renewed in May 2013. Avalon is committed to developing the project in co-operation with WIN. Interestingly, a WIN elder informed Avalon several years ago that they were aware of the Big Whopper pegmatite and had a name for it their traditional language which was “the healing rock”. When community members were suffering from depression they would go and camp there for a week or two and come back happy!
In addition, Avalon has initiated discussions with the Métis Nation of Ontario and several other First Nation communities in the region.
LAND USE INSPECTION REPORTS
Avalon Compliance Summary Inspection Report - August 30, 2018
Avalon Exploration Activity Inspection Report – August 14, 2017
*These programs are being conducted under the direction of David Marsh, Metallurgical Consultant and the Qualified Person for the technical and scientific information.