Avalon signs LOI for partnership for refinery support

2022-04-04 10:30 ET - News Release

Mr. Don Bubar reports

AVALON ANNOUNCES PARTNERSHIP AGREEMENT TO ESTABLISH ONTARIO'S FIRST REGIONAL LITHIUM BATTERY MATERIALS REFINERY IN THUNDER BAY

Avalon Advanced Materials Inc. has signed a binding letter of intent with RenJoules International Ltd., an Essar Group company, to become a strategic partner and co-developer in support of Avalon's plans to establish a regional lithium battery materials supply chain to serve the needs of future electric vehicle and battery manufacturers in Ontario and elsewhere.

This agreement involves providing initial financial and development support for building a lithium refinery in Thunder Bay, Ont., that will be designed to accept lithium minerals concentrates, not only from Avalon's Separation Rapids lithium project north of Kenora, Ont., but also from other aspiring new producers from the many lithium pegmatite resources that occur in Northwestern Ontario. It will operate as a separate private business called Avalon Lithium Inc., a newly established Avalon subsidiary in which Essar will become a co-owner.

With the agreement announced today, the partners will immediately begin the key next steps, including finalizing initial commercial terms and completion of final feasibility studies for both the refinery operations and lithium mineral concentrate production at the Separation Rapids site that will provide the initial feed for the refinery until other new producers also get started. This will also include finalizing the exact location for the refinery in Thunder Bay and proceeding with initial site preparation work both at Separation Rapids and the Thunder Bay site.

Present indications on demand for lithium battery materials produced in Ontario are supporting an initial production capacity for the refinery of 20,000 tonnes per annum of lithium hydroxide and/or lithium carbonate. This will require a capital investment in the order of $500-million, which Essar and Avalon would jointly finance, with financing also anticipated from applicable government programs and other private investors, including indigenous businesses in Northern Ontario. With construction planned to begin this year, it could be in operation by 2025. This will also create new economic development opportunities for first nations to take advantage of lithium resources in their traditional territories to produce lithium mineral concentrates for purchase by Avalon Lithium.

Demand for lithium hydroxide and lithium carbonate continues to grow in North America as new electric vehicle and battery manufacturing capacity is established both in the United States and in Canada. Ontario is now well positioned to take advantage of the rapid growth with the recent announcement of Ontario's first-ever critical minerals strategy, which Premier Doug Ford described as "the government's blueprint to connect industries, resources and workers in our province's north to the future of manufacturing in the south as we build up home-grown supply chains." Avalon Lithium will deliver on a key priority of the government's plan: growing domestic processing and creating resilient local supply chains, and help the province become a global leader in the sector. Ontario's rich endowment in critical minerals in the north uniquely positions Ontario to create the full supply chains and take advantage of the demand for critical minerals in the emerging new advanced manufacturing sector of the economy.

Speaking on the partnership, Kush Singh, chief executive officer, Essar Power said: "We truly believe that green energy is the future. This initiative of setting up a lithium refinery is a core part of Essar's global strategy of investments in the energy transition toward decarbonization with a prime focus on green hydrogen and storage. Lithium is a foundational critical mineral for the battery supply chain and, with the Ontario government's stellar vision through its critical mineral strategy, we are confident that this is the right location and time for our strategic partnership with Avalon and other stakeholders."

Avalon president Don Bubar commented: "While EV manufacturing and lithium battery materials production can be the initial catalyst for starting critical minerals supply chains in the north, it is just the beginning where innovation of new products and new efficient processing technologies for other critical minerals, such as tantalum, cesium and rare earths, can inspire future growth into other areas of advanced manufacturing, including aerospace technology."

The agreement builds on growing Canada-India bilateral economic ties, and supports clean energy and foreign direct investment objectives. The company wishes to thank the Ontario division of Invest-in-Canada for introducing Avalon to Essar last year.

About Avalon Advanced Materials Inc.

Avalon Advanced Materials is a Canadian mineral development company specializing in sustainably produced materials for clean technology. The company now has four advanced-stage projects, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, cesium and zirconium. Avalon is currently focusing on developing its Separation Rapids lithium project near Kenora, Ont., while continuing to advance other projects, including its 100-per-cent-owned Lilypad cesium-tantalum-lithium project located near Fort Hope, Ont. Social responsibility and environmental stewardship are corporate cornerstones.

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