Download - Avalon Rare Metals Corporate Presentation
Corporate Presentation
Donald S. Bubar, President & CEO
April 20, 2015
Safe Harbour Statement
Forward looking information This corporate presentation contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act
of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements related to the
Company's anticipation that it would proceed with certain plans and activities. Generally, these forward-looking statements can be identified by the
use of forward-looking terminology such as "potential", "scheduled", "anticipates", "continues", "expects" or "does not expect", "is expected",
"scheduled", "targeted", "planned", or "believes", or variations of such words and phrases or state that certain actions, events or results "may",
"could", "would", "might" or "will be" or "will not be" taken, reached or result, "will occur" or "be achieved". Forward-looking statements are subject
to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of
Avalon to be materially different from those expressed or implied by such forward-looking statements. Forward-looking statements are based on
assumptions management believes to be reasonable at the time such statements are made. Although Avalon has attempted to identify important
factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that
cause results not to be as anticipated, estimated or intended. Factors that may cause actual results to differ materially from expected results
described in forward-looking statements include, but are not limited to market conditions, and the possibility of cost overruns or unanticipated
costs and expenses as well as those risk factors set out in the Company's current Annual Information Form, Management's Discussion and
Analysis and other disclosure documents available under the Company's profile at www.SEDAR.com. There can be no assurance that such
statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Such
forward-looking statements have been provided for the purpose of assisting investors in understanding the Company's plans and objectives and
may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking statements. Avalon does not
undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities laws.
The technical information contained in this presentation has been reviewed and approved by Donald Bubar, P.Geo. (Ont), President and CEO of Avalon, qualified persons for the purposes of National Instrument 43-101. For additional information on the Nechalacho Rare Earth Elements Project, see the technical report entitled “Technical Report Disclosing the Results of the Feasibility Study of the Nechalacho Rare Earth Elements Project” dated May 31, 2013 and effective April 17, 2013.
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CORPORATE OVERVIEW
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Vision and Mission
Vision
Avalon will be the leading outside-of-China supplier of heavy rare
earths and other rare metal and mineral products to the global
market.
Mission
Avalon will create shareholder value and community prosperity
through the development of scalable, multi-generational businesses
that will deliver quality rare metals products to customers while
remaining committed to the principles of sustainable practices,
effective partnerships, and high performance in all aspects of its
operations and business practices.
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Corporate Sustainability
Placed 17th in Corporate Knights’ Future 40
Responsible Corporate Leaders in Canada 2015
ranking
Avalon’s third annual report released Dec 2014
● MAC TSM Self Assessment and GRI Level G4,
core level
● Aligns the Company’s operating philosophy with
cleantech customers
2014 Performance
● No recordable injuries
● Published new Sustainability Policy and continued
to develop policies, procedures and mgt. plans in
anticipation of Nechalacho development
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Rare Metals Projects Avalon is not just about rare earths
All projects 100% owned –
Three at an advanced stage
Avalon offers
diversified
exposure to a
broad range
of critical raw
materials
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Capital Structure (As at April 10, 2015)
Canada - TSX: AVL
United States – NYSE MKT: AVL Frankfurt- OU5
Shares Outstanding 141,752,858
Fully Diluted 160,233,950
Market Capitalization US$37 million (S/O @ $0.26)
Recent Price Range US$0.28 - $0.23
52 Week High / Low US$0.73 - $0.16
Cash Reserves C$5.0 million
Insider Share Position Approx. 4 million shares
Institutional Investors UBS, Empery, CPP, Global X, Carnegie,
Hancock, DFA, Chilton & others
Analyst Coverage HCW, Edison, Secutor
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AVL One Year Price Chart ($US)
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Management and Board of Directors
● Donald S. Bubar, P.Geo.
President, CEO & Director
● Jim Andersen, CA, CPA
V.P. Finance, CFO & Corporate Secretary
● David Marsh, FAusIMM (CP)
Senior V.P. Metallurgy
● Bill Mercer, Ph.D., P.Geo.
V.P. Exploration
● Pierre Neatby, BA Econ
V.P. Sales and Marketing
● Mark Wiseman, B.Sc., MBA
V.P. Sustainability
● Cindy Hu, CA, CPA, CGA
Controller
● Gerry Liepert , P.Eng.
Senior Project Manager
● Melanie Smith , LL.B
Senior Legal Counsel
● Brian St. Louis, BA, Political Studies
Manager, Government Affairs
● Ron Malashewski, P.Eng (AB)
Manager, Investor Relations
● Ian Taylor, CHRL
Manager, Human Resources
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BOARD OF DIRECTORS
• Brian D. MacEachen, C.A.
Chairman and Audit Committee Chair
• Donald S. Bubar, P.Geo. CEO
• Alan Ferry, CFA
Past Chairman
• Phil Fontaine, B.A., LL.D.
Sustainability Advisory Committee Member
• Peter McCarter, B.A., LL.B., M.B.A.
Governance/Compensation Committee Chair
• Kenneth Thomas, Ph.D., P. Eng.
RARE EARTHS INDUSTRY
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Rare Metals and Rare Earth Elements
Light REE:
La = Lanthanum
Ce = Cerium
Pr = Praseodymium
Nd = Neodymium
Sm = Samarium
Heavy REE:
Eu = Europium
Gd = Gadolinium
Tb = Terbium
Dy = Dysprosium
Ho = Holmium
Er = Erbium
Tm = Thulium
Yb = Ytterbium
Lu = Lutetium
Y = Yttrium
“Critical Five:” Neodymium, Dysprosium, Terbium, Europium and Yttrium
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Report on Critical Materials for the EU
Report of the Ad hoc Working Group on defining critical raw materials May 2014
Heavy Rare Earth Elements
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Rare Earths and Rare Metals are found in many everyday applications
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Rare Metals in a smart phone
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China and Rare Earths
● China continues to consolidate the domestic market to
control illegal production of HREE
● China has replaced export quotas with “tightly controlled
export licenses” to comply with WTO ruling
● The impact is expected to be a less transparent market and
more uncertainty for end users outside China
● HREE and Nd/Pr prices will rise in and outside China as
demand for REE magnets continues to grow
● At present, Global demand in 2020 is forecasted at 180-200
ktpa REO, compared with 120 ktpa in 2014
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NECHALACHO PROJECT
Thor Lake, Northwest Territories, Canada
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NORTHWEST TERRITORIES
Fort Smith
Fort Resolution Hay River/
K’atl’odeeche
Canadian National
Railway
Yellowknife
Pine Point
Bluefish
Hydro Dam
Taltson
Hydro Dam
Great
Slave
Lake
Behchoko
Nechalacho Project: Thor Lake Area and Regional Infrastructure
]
] Snare
Hydro Dam
]
Lutsel K’e
Proposed
National Park
Thor Lake
(Nechalacho Mine and Concentrator)
ALBERTA
N
0 100 km
Whati
SASKATCHEWAN
Potential
Hydro Line
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Nechalacho General Geology (Vertical Cross Section Looking West)
Looking west at 416200E
S N
1600 metres
Upper Zone
Basal Zone HREE Deposit
High Grade “Basin”
Lakes and Overburden
Lower Zone
1,600 metres N S
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Measured and Indicated Resources in the Basal Zone at Various NMR Cut-offs
(August 2013)
Basal Zone Tonnes
(millions)
%
TREO
%
HREO
% HREO/
TREO
%
ZrO2
%
Nb₂O₅ %
Ta₂O₅
US$345 NMR Cut-Off (Reflects entire Basal Zone)
Measured 12.56 1.71 0.38 22.50 3.20 0.405 0.0404
Indicated 49.33 1.62 0.35 21.27 3.07 0.405 0.0398
US$800 NMR Cut-Off (Approximately Reflects High Grade “Basin”)
Measured 5.11 2.20 0.58 26.17 4.23 0.52 0.0544
Indicated 16.15 2.20 0.55 24.87 4.13 0.52 0.0542
US$1,000 NMR Cut-Off (Selected parts of High Grade “Basin”)
Measured 2.49 2.49 0.68 27.38 4.77 0.59 0.0620
Indicated 6.99 2.52 0.66 26.03 4.66 0.58 0.0614
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See Avalon’s August 15, 2013 News Release “Avalon Reports on Summer Work Program at the Nechalacho Rare Earth
Elements Project and Provides Mineral Resource Update” for further information.
Nechalacho Feasibility Study Development Concept (as of April 2013)
● Planned initial production of
7,000 tpa separated REE oxides
plus EZC (with Nb, Ta, HREE)
● CAPEX: CAD$1.575 billion
(includes refinery and sustaining
capital)
● Operating Costs: CAD$265
million/ year or $362/mined
tonne of ore (all inclusive)
● Revenues: CAD$646 million /yr
or $885/ mined tonne of ore
● Pre-tax IRR: 22.5%
● NPV @ 10%: $1.35 billion
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Solvay Toll Refining Agreement and Strategic Partnership
● 10 year binding agreement
● Removes Capex for Refinery from economic model
● Reduced project risk due to increased certainty over refining, meeting product quality and delivery expectations with potential off-takers
● Assistance on hydromet plant design & commissioning
● Solvay to manage concentrate storage and finished goods inventory at their plant
● Solvay can produce “special” products (i.e. Y-Eu oxide)
● Solvay to do French customs clearance
● Can assist with design and construction of a new refinery if Avalon expands after 10 years
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Nechalacho Current Work
● Updated Feasibility Study in progress.
● Investigating sites for Hydromet plant in western Canada
● Preparing for full pilot plant trial of new flow sheet
● Investigating alternatives for financing pilot plant
● Advancing permitting process steadily with
completion anticipated in 2015
● Monitoring REE markets, maintaining dialogue with
government and customers
● Continuing relationship with refining partner, Solvay
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How Avalon’s Nechalacho Project is Positioned to Succeed
● Unusual Heavy Rare Earth Enrichment ● Large resource with multi-generational operational potential
● Completed Feasibility Study ● Can engage in more formal discussions on off-take and investment
● Relatively low CAPEX estimate for large HREE rich deposit
● Approved Report of Environmental Assessment ● More certainty around permitting timelines
● Strong Management Team ● Committed to developing the Project through to production
● Principles of Sustainability are Core Values ● Environment, health and safety and community partnerships are priority
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TIN INDUSTRY
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Growing Tin Demand Lead-free solders now account for over 50% of market and is growing with electronics demand
Source: Hallgarten & Co 14 02
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Tin found in automobiles
Source: ITRI’s Tin for Tomorrow : Contributing to Global
Sustainable Development (www.ITRI.co.uk)
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New applications for tin (Source: ITRI Tin for tomorrow)
● Fuel catalysts ● Saves energy and reduces
emissions as fuel additive
● Solar Panels ● Next generation of lower
cost solar cell materials
● Lithium Ion Batteries ● Tin can make them last
three times longer
● Fire Retardants ● Tin is replacing antimony
as fire retardant in plastics
● Animal Healthcare ● Heals wounds and kills
bacteria
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Tin supplies increasingly constrained Indonesian policy and exhaustion of resources
Source: Hallgarten & Co 14 02
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EAST KEMPTVILLE
Yarmouth, Nova Scotia, Canada
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East Kemptville, Nova Scotia: North America’s Only Primary Tin Producer
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Produced from 1985-92 when it
closed due to low tin prices.
Significant resources left unmined.
10,000 tpd mill
subsequently
removed and pit flooded.
Operated as a closed mine
site since 1992.
East Kemptville Location and Regional Infrastructure
East Kemptville
location, 270 km
west of Halifax
Power lines
69kV
138kV
● On paved highway
● Grid power on site
● Yarmouth (55 km)
and other
communities
commuting
distance
● Ample water
● Skilled labour
available locally
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East Kemptville Avalon’s Project History
● 2005: Initial Special Licence granted
● Required access agreement with surface rights holder
● 2010: Avalon completed an unreleased Desktop Study in with an
independent engineering company
● Included resource estimation and preliminary metallurgical
test work utilizing archived core samples
● May 2014: Access Agreement with surface rights holder for
confirmation drilling program
● Oct. 2014: NI 43-101 Resource completed
● Feb. 2015: Conceptual Redevelopment Study completed on NI
43-101 Resources utilizing new development model (including tin
refinery)
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Avalon Claims: East Kemptville Area
Avalon claims (purple boundary)
Avalon Special Licence (red boundary)
Rio Algom/BHPB
Closure (blue area)
33
New Special Licence Application Approved by Cabinet March, 2015
Closure
area
(brown
cross
hatch
New
Special
Licence
50462 Three year term
Requires aggregate
expenditures of $5.25
million over three years
Incl. $750,000 in 2015
Access agreement still
required with surface
rights holders
Avalon
Claims
(light blue)
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Mineral Resources Estimate October 31, 2014
● CIM definitions were followed for Mineral Resources.
● The Independent Qualified Person for this Mineral Resource estimate is Don Hains, P. Geo.
● The resource estimate is based on 275 drill holes totalling 29,587 metres drilled between 1979 and 1991 by previous operators and 7 holes totalling 984 metres drilled by the Company in 2014.
● Mineral resources do not have demonstrated economic viability and their value may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other issues.
● Full footnotes are with October 31, 2014 News Release “Avalon reports Resource Estimate for East Kemptville TinZinc-Copper-Indium Deposit, Nova Scotia, Canada”
Cla ss ifica tio nSn Cut-o ff
Gra d e
T o nne s
(mT )Sn % Zn % Cu %
>= 0.05 46.07 0.104 0.132 0.051
INDICAT ED >= 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 34.29 0.102 0.104 0.052
INFERRED >= 0.10 16.95 0.148 0.122 0.062
>= 0.15 2.66 0.203 0.13 0.075
>= 0.20 0.82 0.311 0.138 0.12
>= 0.25 0.58 0.342 0.171 0.117
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Indium Occurs at East Kemptville
● Not analyzed for historically
● Increased Demand for:
Electronics ● Touch screens
● Thin Film Solar Panels
● Electroluminescent displays
● LEDs
● Superconductors
Nuclear power
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SOURCE: USGS
Indium closely associated with zinc Demonstrated by microprobe analysis of drill core
● Strong
correlation
indium-zinc
● Microprobe
analysis shows
about 0.25% In
in sphalerite
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N Sn % Zn % Cu % In % Fe %
Sphalerite 63 0.01 56.564 0.159 0.249 8.557
Chalcopyrite 41 1.37 0.059 33.128 0.082 29.881
Cassiterite 89 99.73 0.004 0.004 0.014 0.153
East Kemptville Conceptual Redevelopment Study Model
● Purpose: to confirm business case for redevelopment of
historic tin mine
● Assumed open pit mine design and similar production rate
(10,000 tpd) with truck and shovel operation
● Similar process flowsheet combining selective flotation of
tin, copper and zinc with gravity concentration of tin using
updated technology. Note: The flowsheet needs further
testwork to bring up to standards for a PEA.
● Addition: Electric arc refinery would take cassiterite
concentrate to 99.85% Sn ingots (LME grade)
● Environmental aspects of model to be confirmed incl.
development of new waste management plan
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Conceptual Redevelopment Study Cautionary Statement
● The Conceptual Economic Study is preliminary in nature and includes inferred
mineral resources that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to be
categorized as mineral reserves. There is no certainty that the preliminary
economics indicated in the Study will be realized.
● The results were released in Avalon’s News Release of February 25th, 2015
● The Study was prepared by Don Hains, P. Geo, with contributions from the
following independent consultants and "Qualified Persons" for the purposes of
National Instrument 43-101, who have reviewed and approved this portion of the
presentation:
● Bruce Brady, P. Eng. Associate of Hains Engineering Mine Capital &
Operating Costs
● Ross MacFarlane, P. Eng Associate of Hains Engineering Metallurgical
analysis, Process Capital and Operating costs
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Whittle Pit Mine Design Used in Conceptual Redevelopment Study
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Ore Waste Strip Grade Grade Grade
Tonnes Tonnes Ratio SN ZN CU
(t) (t) (w:o) (%) (%) (%)
49,335,577 43,378,243 0.88 0.113 0.131 0.053
In pit (light blue) tonnes and grade
Notes:
• Mining rate:10,000 tpd;
• Conventional truck and
shovel open pit mining
operation
• Stripping ratio: 0.88:1
• Recovery of Sn (87%),
Zn (86%) and Cu (75%)by
flotation and gravity
Main Zone
Baby Zone
Tailings Stockpiles
Estimated Costs and Revenues in Conceptual Study
● 3.5 million tonnes per year
● Capital cost of order CAD$200 million
● Operating costs CAD$15/tonne (inclusive of waste)
● Annual operating cost CAD$50 million per year
● Annual revenues CAD$100 million per year
● Metal price assumptions: ● Tin US$23,500 per tonne
● Zinc US$1.00 per lb
● Copper US$3.00 per lb
● 85% of revenue from tin
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Proposed Mineral Processing Flowsheet (test work to confirm)
42
Potential Mill Recoveries
Sn……..87%
Zn……...86%
Cu……..75%
Next Steps
2015
● Secure full surface tenure
● Aboriginal community
engagement
Commence feasibility work
● $20 million budget (2 years)
● Definition drilling
● Exploration drilling
● Metallurgical test work
● Environmental baseline
Future
● Evaluate the potential of
recovering tin from tailings
● Resource drilling
● Mine and plant engineering
● Environmental assessment
● Waste water management
studies
● Capital Cost ~$200 million
● Initiate Production in 2018?
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SEPARATION RAPIDS Kenora, Ontario, Canada
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Separation Rapids: A unique, giant deposit of high purity lithium
minerals: Petalite
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Redditt
GrassyNarrows
Whitedog
Minaki
Lac du Bonnet
C.P.R.
C.P.R.
C.N.R.
C.N.R.
TRANS-CANADA H IGHWAY
Kenora
BERNIC LAKETANCO MINE
SEPARATION RAPIDSPROPERTY
hydro line
railway
road
0 20
kilom etres
LakeWinnipeg
Winnipeg
cover
greenstone
sediments
granite
71
658
596
525
MANITOBA ONTARIO
Lake ofthe Woods
C.N
.R.
Separation Rapids Location Plan
46
Separation Rapids: New opportunities in petalite market
● Growing demand for glass-ceramics (stovetops)
● Manufacturers looking for new supply sources due to
apparent limits on future supply from traditional source
in Zimbabwe
● Separation Rapids pegmatite is the only known large
undeveloped resource of petalite in the world
● New process development work needed to prove
efficiency of recovery process and provide high purity
product test samples
● Specialized test lab and pilot plant facility identified in
Germany (Anzaplan)
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Separation Rapids Project 2014 Testwork Overview
● Petalite and feldspar extraction testwork conducted by
ANZAPLAN in Germany during Q1 & Q2, 2014
● Excellent quality Petalite concentrate produced assaying
>4% Li2O (up to 4.3%) & <0.01% Fe
● High purity feldspar product also successfully produced for
potential glass and ceramic markets
● 20 kg of petalite product recently shipped to various
customers for detailed evaluation
● Looking at other product alternatives including high purity
lithium metal or chemicals for battery applications
● Initial leach tests produced encouraging results
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Separation Rapids Project Ongoing Work
● New core racks were installed and
core transferred from old racks to
new in 2014
● Planning underway for collecting
and processing larger bulk samples
● Consultations with local contractors
and Aboriginal contractors on road
construction and logistics
● Work Permit Application for road
repairs underway.
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130 Adelaide St. W., Suite 1901
Toronto, Ontario, Canada M5H 3P5
+1 (416) 364-4938
www.avalonraremetals.com