Avalon Advanced Materials has attracted a strategic European partner to invest $63 million to speed its lithium projects into mines and to move towards establishing a processing facility in Thunder Bay.
Avalon, a Toronto-based lithium company, announced Thursday it has signed a binding term sheet with Belgium’s SCR-Sibelco NV to form and finance a proposed joint venture to advance Avalon’s two lithium projects in northwestern Ontario into production and to site a lithium hydroxide processing facility in Thunder Bay.
The $63-million transaction results in Sibelco owning 19.9 per cent of the issued and outstanding common shares. The deal should be finalized at the end of August.
The money will be rolled out in tranches, including upfront financing of $13 million to purchase a piece of industrial land in Thunder Bay to construct the lithium processing plant to make a battery-grade material for electric vehicle companies. Some of the money is earmarked to tackle a $1.9-million company debt and for working capital purposes.
Sibelco will be the operator of the joint venture, holding a 60-40 split with Avalon.
In recent months and weeks, Avalon has added new management to rekindle investor interest in the company. With a new vision, Avalon is talking about “organic growth” in compiling a stable of lithium projects and other critical minerals ventures across Canada.
The company’s flagship project is the Separation Rapids lithium project, 70 kilometres north of Kenora, which has an estimated 20-year mine life. Next is the project pipeline is its Lilypad Project, a cesium, tantalum and lithium property near Fort Hope.
Avalon said the joint venture will put them on an accelerated path to become a leading North American vertically integrated lithium producer as a miner and a processor.
In recent years, Avalon has had promoted the idea of building a lithium hydroxide chemical processing plant in Thunder Bay, but they have yet to announce the acquisition of an industrial property.
The lithium hydroxide plant is a chemical conversion facility which transforms lithium concentrate, mined at places like Separation Rapids, into lithium hydroxide, a battery-grade material that’s in demand by the electric vehicle companies.
There are no lithium processing facilities in Ontario, forcing most of the leading lithium exploration companies in the northwest to search for funding for both mine development and the processing plant.
Avalon is out to serve two customer bases: the high-strength glass and ceramic market, and the North American electric vehicle sector.
“We are thrilled to execute on a plan to reliably produce a key resource required for North America's clean-energy transition — and, in so doing, deepen ties between Canada and the European Union in this geopolitically sensitive sector," stated Avalon president Zeeshan Syed, who took the helm in March.
In the news release, Avalon’s new chief executive, Scott Monteith, calls the partnership a “significant step forward in scaling our business towards full vertical integration of our lithium production.”
“Sibelco's investment is a major vote of confidence in our vision, resources and capabilities by a respected and established international operator — and now partner."
Antwerp-headquartered Sibelco is a diverse multinational player that mines, processes and sells specialty industrial minerals like silica, clays and feldspathics. Sibelco is considered a global leader in glass recycling and its group of companies serve a range of industries in semi-conductors, solar, glass, ceramics, construction, coatings, polymers and water purification. They employ 5,000 people in production facilities in more than 30 countries.
"Our partnership with Avalon will focus both on the clean energy growth agenda and the technical glass and ceramics markets in which Sibelco has deep and time-tested expertise" said Hilmar Rode, Sibelco's CEO.
"This dual-market strategy combined with a cash-generative business plan will lay the foundation for accelerated growth, and ultimately the venture's sustained success going forward."
