Avalon aims for 2020 rare earth production

Avalon Advanced Materials Inc. [AVL-TSX; AVLNF-OTC] said Tuesday April 2 that it hopes to start production at its Northwest Territories rare earth elements project by 2020.

Avalon made the announcement in a report that details the progress the company is making on all three of its advanced critical materials development projects in Canada.

Aside from the Nechalacho rare earth elements project at Thor Lake, NWT, Avalon is also working to develop the East Kemptville, Nova Scotia, tin-indium project, and Separation Rapids lithium project in northwestern Ontario.

Avalon said it recently struck a deal with private Australian company Cheetah Resources Pty Ltd., which has agreed to participate in the development of the Nechalacho Project at Thor Lake.

Under the deal, Cheetah agreed to become owner of the near surface resources in the T-Zone and Tardiff Zone for a $5 million cash payment, leaving Avalon as owner of the Basal Zone. The Basal Zone was the subject of a feasibility study in 2013.

Under the agreement, Avalon will continue to manage work programs on the property and retain its 3% net smelter return royalty.

Cheetah and Avalon are now working on finalizing the formal acquisition agreement and detailed work program and budget, to be funded by Cheetah, and executed over the next 12 months.

“The goal is to complete the permitting process in parallel with this work so that production can be initiated in 2020,” Avalon  said.

“Central to achieving this goal is confirming the appropriate ore-sorting technology to be applied to the simple bastnaesite-quartz mineralogy of the T-Zone rare earth mineral resources to sustainably extract neodymium and praseodymium [Nd-Pr],” the company said.

Avalon said this work is now in progress and the summer work program will include a diamond drilling program to confirm the resource along with further test work on defining the optimal rare earth extraction process for the T-Zone rare earth (bastnaesite) mineral concentrates.

Meanwhile, the company said demand for Nd-Pr, the rare earths needed in the permanent magnet applications for electric vehicles, continues to growth while supply sources remain limited outside China. Neodymium is also commonly used in high end speakers.

“China is now reportedly a net importer of rare earth concentrates,” Avalon said.

On Tuesday, Avalon shares rose 11% or $0.005 to 5 cents. The 52-week range is 4.5 cents and 14 cents.

The Nechalacho update comes after Avalon recently completed an updated preliminary economic assessment (PEA) for its flagship Separation Rapids Lithium Project near Kenora, northwestern Ontario.

The company said the updated PEA reflects a simplified business model that focuses on initial production of lithium mineral concentrates, with potential for future expansion into production of the battery materials lithium carbonate and lithium hydroxide.

The company said it is now beginning to make plans for the extraction of up to a 5,000 tonne-bulk sample this summer for trial processing. The aim is to recover larger quantities of the petalite (lithium ore) product for customer evaluation and process flowsheet optimization.

Meanwhile, at East Kemptville, Avalon is working with Cronimet Mining Processing SA (Pty) Ltd. to investigate the benefits of applying sensor-based ore-sorting technology. Back in January, CMPSA and Avalon extracted a 28-tonne bulk sample of stockpiled tin mineralization. The sample is now en route to a pilot-scale processing plant in Europe for the purpose of optimizing the ore-sorting process and bringing equipment design to a feasibility study level of confidence.

This program is expected to be completed in June.