Avalon dusts off lithium project in northwestern Ontario

Electric car battery market recharges junior miner

Lithium is the new gold in northwestern Ontario’s Kenora district.

With demand for the industrial metal going through the roof, interest in Avalon Advanced Materials’ Separation Rapids project near Kenora is picking up.

Exploration companies are scrambling around the globe to lock up sources of supply, but Don Bubar, president and CEO of Avalon, and his crew only had to dust off some old studies from their mothballed deposit in northwestern Ontario.

A preliminary economic assessment including plans for designing an extraction process to make lithium hydroxide to meet the anticipated demand for the auto sector was scheduled for release by August.

“That’s where the biggest growth is right now,” said Bubar, whose company picked up the high purity lithium property 70 kilometres north of Kenora in late 1996.

Avalon drilled off a 10-million tonne lithium resource in the late 1990s and completed a pre-feasibility study, but hadn’t done much since.

“We really hadn’t done a lot except try to monitor the lithium market for an opportunity to advance it,” said Bubar.

Back then, the rechargeable battery market was in its infancy and didn’t represent much of an opportunity because the market was served by other low-cost producers.

“Everything’s changed since then,” said Bubar.

For years, lithium-ion batteries have been used in all kinds of electronic gadgets, but demand is expected to reach new heights as carmakers like Tesla look to mass produce electric vehicles.

It prompted the company to ice its Nechalacho rare earth metals project in the Northwest Territories earlier this year to focus on Separation Rapids, and rebrand from Avalon Rare Metals to its current name.

Unlike other commodities where you mine it and convert it into a concentrate for a ready market, lithium is a specially engineered chemical product that must meet certain customer specifications.

Bubar said determining that final product has been a moving target as the technology in lithium-ion batteries is rapidly evolving.

“You could design a product based on today’s needs, get into production three years from now and everything’s changed again.”

From the auto sector, there’s a growing demand for lithium hydroxide, the ideal feed for the battery chemistries, said Bubar.

“We pretty much have to build it into the overall business model because there’s no one to send it to in North America.”

If the economics look good, Bubar said there’s no reason the final processing can’t be done in northwestern Ontario. “We think so. The infrastructure is there.”

Bubar said they haven’t ruled out also supplying the glass ceramics market at some point, which was their initial focus in the 1990s.

As the Big Whopper deposit remains open at depth and along strike, he expects to launch a new drill program later this year.

“It would be helpful to have a better understanding of the overall resource potential in order to scale the operation appropriately,” he noted.

The financing climate for lithium-based exploration and development is getting better all the time as investor awareness grows, but to bring the project to the development stage, Bubar wants to partner with some strategic funding partners, in the form of customers, who’ll put some skin in the game.

The revival of Avalon’s lithium program is good for the area, said Kenora district geologist Craig Ravnaas of the Ontario Geological Survey.

“We’ve got some of the highest number of known lithium occurrences in Ontario,” he said. “They just require the exploration activity.”

New Gold’s Rainy River gold mine development near Fort Frances is stealing most of the headlines in northwestern Ontario, but Ravnaas said the district is in “good shape” as the three-fold increase in lithium prices since last fall has generated more interest.

“The Dryden area has a really good pegmatite field with lithium in it, and a couple of companies are working there, plus there are lithium occurrences around Ignace.”

Pegmatite is a typical host rock for lithium.

Ravnaas says the region is home to a plethora of very grassroots programs targeting gold, lithium, copper, nickel, and even diamonds, as well as more advanced stage projects by New Gold, Avalon and Treasury Metals.

“Don Bubar is a prime example. They’ve done the bulk of their work drilling off the deposit in the past, and now they’re into the economic end of it.

“We’re seeing the success of sustained development activity over a multitude of years, and it’s peaking in that the programs that were active are moving away from exploration to development.”