Avalon Advanced Materials Inc. · TSX:AVL
Avalon Advanced Materials — Investor Presentation (April 2018)
51 slides from Avalon Advanced Materials's investor presentation, Apr 24, 2018
Slide 1: Corporate Presentation
Corporate Presentation TSX: AVL Donald S. Bubar, President & CEO OTCQX: AVLNF April 24, 2018 CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 2: Safe Harbour Statement
2 Safe Harbour Statement Cautionary Statement Regarding Forward Looking information This corporate presentation contains or incorporates by reference “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securiti
Slide 3: Corporate Overview
3 Corporate Overview CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 4: Who is Avalon Advanced Materials?
4 Who is Avalon Advanced Materials? • Toronto-based, operates in Canada • Focused on technology minerals and metals with three advanced projects (lithium, REE, tin-indium) • Listed: TSX (AVL), OTCQX (AVLNF), Frankfurt (OU5) • Market Cap: USD$25M (214 million S/O @ $0.14), Fully diluted: 249 million
Slide 5: Technology Metals and Minerals Project Pipeline
5 Technology Metals and Minerals Project Pipeline Rare Earths, Lithium “Energy Metals” vital to EV Technology Lithium Critical ingredient both for energy storage and high strength glass products Tin An emerging technology metal vital in electronics with potential in batteries CRITICAL MATERIALS FOR
Slide 6: Avalon's Business Objective
6 Avalon’s Business Objective Create shareholder value and potential for long term growth by establishing a sustainable, diversified technology metals business, building initially with small-scale production from our lithium, tin and REE assets CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 7: Avalon is a leader in the implementation of sustainability in mineral development
7 Avalon is a leader in the implementation of sustainability in mineral development • Focused on the supply of critical materials for clean technology, such as: • renewable energy (tin, indium, REE) • energy storage (tin, lithium) • EV motors (REE) • Excellent track record for indigenous community e
Slide 8: Management Team and Board of Directors
Management Team and 8 Board of Directors • Mary Kita, M.Sc. MANAGEMENT Director of Communications • Donald S. Bubar, P.Geo. • Melanie Smith, LLB President & CEO Senior Legal Counsel (on maternity leave) • Jim Andersen, CA, CPA • Ron Malashewski, P.Eng (AB) V.P. Finance, CFO & Corporate Secretary Com
Slide 9: Experienced management team includes:
9 Experienced management team includes: Don Bubar Dave Marsh President & CEO SVP, Metallurgy & MSc, P. Geo Technology Development ● Geologist with 40 years of FAusIMM (CP) experience ● Metallurgist with 40 years of experience in mineral processing ● Established Avalon in 1995 ● Brings engineering an
Slide 10: Lithium
10 Lithium CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 11: A global lithium supply-demand imbalance is looming…
11 A global lithium supply-demand imbalance is looming… Demand in China alone may exceed 340,000 tpa LCE by 2021 Demand growth is likely to exceed new supply Source: Seeking Alpha. Commentary by Livio Filice, Nov. 17, 2017 CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 12: …creating upward pressure on lithium chemical prices
…creating upward pressure on lithium 12 chemical prices Lithium hydroxide attracts a premium to lithium carbonate. Current Price in China: $22-23,000/t Recent lithium hydroxide pricing $19,500/t Recent Lithium $US/tonne Carbonate pricing $17,000/t Recent prices as reported by Benchmark at October 9,
Slide 13: China is "driving" the way forward
13 China is “driving” the way forward • Shift to EVs driven by production quotas, preferred licensing regulations & other government policies • >500k EVs sold so far in 2017, 2.4m by 2019 and 7m by 2025 (sold ~24m total cars in 2016) • China planning to dominate the lithium battery supply chain • In
Slide 14: Lithium Demand by Application (2018)
14 Lithium Demand by Application (2018): Batteries now dominate, but ceramics and glass remain a major market Batteries 2% Ceramics & Glass 5% 9% 4% 46% Lubricating 7% Greases Casting Mold Flux Powders 27% Polymer Production Air Treatment Other Lithium demand for all applications in 2017 Source: USG
Slide 15: Lithium Minerals: enable innovation in high strength glass products
15 Lithium Minerals: enable innovation in high strength glass products • Glass and Ceramics • Lithium creates thermal shock resistance Glass-ceramic stovetops Corningware® Cookware Fireplace Shields • Lithium additions also strengthen glass and are being used to develop innovative high strengt
Slide 16: Lithium Materials Supply Chain
16 Lithium Materials Supply Chain Pegmatites are often sources of lithium Lithium-rich ore is extracted and sorted Ore is processed to concentrate lithium minerals. Petalite used directly in high strength glass products Lithium minerals are further processed to produce battery-grade lithium material
Slide 17: Separation Rapids lithium
17 Separation Rapids lithium Kenora, Ontario, Canada CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 18: A strategic approach to building new lithium production through…
18 A strategic approach to building new lithium production through… • Product design: working with our customers to create the best quality products to serve their needs at attractive prices • Innovative metallurgy: Designing an efficient process flowsheet to produce the best quality product at the
Slide 19: Separation Rapids Lithium
Separation Rapids Lithium 19 A rare LCT type of pegmatite deposit enriched in the lithium minerals petalite and lepidolite Large, high quality resource amenable to open pit mining • Discovered in 1996 and PFS initially completed in 1999 • Secure Tenure under a Mining Lease: 100% owned • 6,000 acres
Slide 20: Separation Rapids is located close to transportation and power infrastructure
20 Separation Rapids is located close to transportation and power infrastructure CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 21: Separation Rapids Mineral Tenure and Regional targets
Separation Glitter, Wolf and Rattler pegmatites 21 Rapids Mineral Tenure and Regional targets Regional trend of lithium pegmatites, where exploration commenced in summer 2018 and several new targets developed. Map includes new claims acquired in 2017 to the north and west of existing land holdings C
Slide 22: Lithium Minerals at Separation Rapids
22 Lithium Minerals at Separation Rapids • There are two main lithium ore minerals in Clear Crystalline Petalite the Separation Rapids LCT pegmatite: petalite & lepidolite. • Petalite ore comprises 80% of the known pegmatite deposit and lepidolite ore 20% • Petalite (Li Al Si4O10) contains up to 4.9
Slide 23: Separation Rapids 2015-17 Work programs
23 Separation Rapids 2015-17 Work programs: Focused on metallurgical process and product recovery • Pilot plant on 30 tonne ore sample produced 1 tonne of high purity petalite concentrate • Petalite product quality confirmed for high strength glass (very low iron and alkali content) • New hydromet p
Slide 24: Avalon's lithium hydroxide product successfully tested as lithium ion battery cathode material
24 Avalon’s lithium hydroxide product successfully tested as lithium ion battery cathode material • Lithium hydroxide product successfully made from petalite concentrate using Avalon’s proprietary hydrometallurgical process • Product sample evaluated by the National Research Council of Canada (NRC)
Slide 25: 2017 Work program: Drilling and Metallurgical Process Optimization Work
25 2017 Work program: Drilling and Metallurgical Process Optimization Work • Added cleaner stage to petalite flowsheet to produce a high grade (>4.5% Li2O) and very low impurity “Super Petalite” concentrate for glass applications • Produced trial quantities of petalite for glass marketing purposes •
Slide 26: Separation Rapids Lithium Resource Geological Model
26 Separation Rapids Lithium Resource Geological Model (as at Nov. 2017) Open to depth below 200m Lepidolite-rich Unit (LPZ) is highlighted in purple, petalite in yellow CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 27: Separation Rapids 2017 Resource Block Model
27 Separation Rapids 2017 Resource Block Model (with 2018 drill holes) measured indicated inferred 2018 drilling demonstrated continuity to depth adding inferred resources and converting to inferred to indicated CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 28: Separation Rapids Mineral Resources
28 Separation Rapids Mineral Resources using 0.6% Li2O Cut-off Grade (November 15, 2017) Lepidolite-Petalite Zone Petalite Zone (PZ) (LPZ) Total Tonnes Li2O Tonnes Li2O Tonnes Li2O (Mt) (%) (Mt) (%) (Mt) (%) Measured 2.86 1.39 1.18 1.38 4.04 1.39 Indicated 3.42 1.36 0.67 1.40 4.09 1.37 Measured + In
Slide 29: 2018 Work Program
29 2018 Work Program: Moving toward Phase 1 Production Facility • Minimum $3-5 million program planned for 2018 to prepare for construction of $50-70 million Phase 1 production facility in 2018- 19 to produce lithium mineral concentrates • 2018 program priorities: • Drill to expand resources and fin
Slide 30: Only 10% of the lithium ore is likely to be waste
Only 10% of the lithium ore is likely to be waste 10% of the ore from Separation Rapids lithium mine plan will end up 99.5% of the ore from 96% of the ore from a as waste. 90% will become product a typical gold mine typical nickel/copper (petalite, lithium chemicals, feldspar, ends up as waste mine
Slide 31: Multiple Lithium Market Opportunities
31 Multiple Lithium Market Opportunities Separation Rapids offers a unique opportunity to produce lithium materials for two markets: 1. High purity lithium chemicals for energy storage • Lithium hydroxide from petalite • Lithium carbonate from lepidolite 2. High purity lithium minerals (petalite) fo
Slide 32: Tin
32 Tin CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 33: Tin Demand Profile
33 Tin Demand Profile Lead-free solders for electronics remains dominant Source: ITRI, 2018 CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 34: Metals Most Impacted by New Technology: Tin is No. 1!
34 Metals Most Impacted by New Technology: Tin is No. 1! Source: MIT / Rio Tinto , March, 2018 CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 35: East Kemptville tin, indium
35 East Kemptville tin, indium Yarmouth, Nova Scotia, Canada CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 36: East Kemptville, Nova Scotia: North America's Only Primary Tin Producer
36 East Kemptville, Nova Scotia: North America’s Only Primary Tin Producer Produced from 1985-92, when it closed prematurely due to low tin prices. Significant resources left behind both in the ground and in surface stockpiles. 10,000 tpd mill subsequently removed and pit flooded. Operated as a clos
Slide 37: East Kemptville Location and Regional Infrastructure
37 East Kemptville Location and Regional Infrastructure Power lines 69kV 138kV ● On paved highway ● Grid power on site ● Yarmouth (55 km) and other communities commuting distance East Kemptville ● Ample water location, 270 km ● Skilled labour west of Halifax available locally CRITICAL MATERIALS FOR
Slide 38: East Kemptville Site Layout and surface resources
38 East Kemptville Site Layout and surface resources Existing Tailings Dam with spare capacity North Waste Pile: 1.29M tonnes @ 0.089% tin` Low-grade Stockpile Inferred Resource: 5.87M tonnes @ 0.112% tin* In-ground resources: Main Zone Pit Indicated:18.5Mt @ 0.176% tin Inferred:17Mt @ 0.148% tin (R
Slide 39: Mineral Resources Estimate
39 Mineral Resources Estimate October 31, 2014 S n Cut-o ff T o nne s Cla s s ific a tio n Sn % Zn % Cu % Gra d e (mT ) >= 0.05 46.07 0.104 0.132 0.051 IN D ICA T E D >= 0.10 18.47 0.176 0.173 0.064 >= 0.15 6.83 0.239 0.204 0.077 >= 0.20 3.16 0.337 0.268 0.093 >= 0.25 2.93 0.344 0.275 0.092 >= 0.05
Slide 40: East Kemptville Proposed Small Scale Development Model
40 East Kemptville Proposed Small Scale Development Model Proposed concept for small scale operation: • Process low grade stockpile initially to recover a tin concentrate only (potential to feed new ore later) • Keep operation as simple and cost effective as possible • Crushing-Milling-Gravity Conce
Slide 41: Two Composite Views of Low Grade Stockpile at East Kemptville
Two Composite Views of Low Grade 41 Stockpile at East Kemptville 6 million tonnes of previously-mined tin ore now generating AMD Can be re-processed to recover tin and remove need for perpetual water treatment CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 42: East Kemptville Mini-Plant Project Implementation
42 East Kemptville Mini-Plant Project Implementation Current Activities • Arranging project financing and off-take agreements • Concluding arrangement on transition of tenure with RAL and Province • Initiating plant design and procurement activities • Detailing tailings management operating philosop
Slide 43: Avalon's East Kemptville site rehabilitation concept
43 Avalon’s East Kemptville site rehabilitation concept will: • Utilize existing on-site infrastructure • Remove or isolate historical sources of acid mine drainage • Eliminate long term environmental liabilities • Utilize proven technologies • Minimize long term closure and financial assurance cost
Slide 44: Nechalacho rare earth elements
44 Nechalacho rare earth elements Thor Lake, Northwest Territories, Canada CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 45: Nechalacho Project Area Regional Infrastructure
Nechalacho Project Area Regional 45 Infrastructure Snare ] Hydro Dam Whati Proposed N Bluefish ] Hydro Dam National Park Behchoko Lutsel K’e Yellowknife Great Thor Lake Slave (Nechalacho Mine and Concentrator) Lake Fort Resolution Hay River/ Potential K’atl’odeeche Pine Point Hydro Line ] Taltson Hy
Slide 46: Nechalacho Background
46 Nechalacho Background • First explored in 1970’s and early 80’s mainly for tantalum and niobium • High grade beryllium and rare earth North T deposit discovered and explored 1983-85 • Acquired by Avalon in 2005 with initial focus on REE; Basal Zone discovered • China export quotas created rare ea
Slide 47: What has changed since 2013?
47 What has changed since 2013? • Soaring demand for neodymium and praseodymium for use in high strength magnets - now vital for electric motors used in electric vehicles • Rising prices of neodymium and praseodymium • Presence of high grade, near surface Nd-Pr and Dy resources in T-Zone and Lake Zo
Slide 48: Polylithionite lithium mineralization from Thor Lake, NWT
Polylithionite lithium mineralization 48 from Thor Lake, NWT CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Slide 49: Electric Motors for EVs rely on rare earth magnets using Nd-Pr
49 Electric Motors for EVs rely on rare earth magnets using Nd-Pr • REE (NdFeB) or “Neo” Magnets reduce electric motor/generator size and weight, and 100 Kw generator improve efficiency with neo magnets • Major applications include: • Electric Cars (5-10 kg) • Hybrid-electric cars (1-3 kg) • Industr
Slide 50: Environmental and Social Responsibility
50 Environmental and Social Responsibility • Leaders in Aboriginal Community Outreach • Accommodation Agreements • Signed with Deninu K’ue First Nation and NWT Métis Nation (Participation Agreement) • Negotiations completed with Lutsel K’e Dene • Continuing engagement with NSMA, Yellowknives Dene, T
Slide 51: www.AvalonAdvancedMaterials.com
Contact us: 1901-130 Adelaide St. W. Toronto, Ontario, Canada M5H 3P5 TSX: AVL +1 (416) 364-4938 OTCQX: AVLNF ir@AvalonAM.com www.AvalonAdvancedMaterials.com CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
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