Avalon Completes PEA: Post-Tax C$4.1 Billion NPV (8%) and 48% IRR at its Thunder Bay
Avalon Completes PEA: Post-Tax C$4.1 Billion
NPV (8%) and 48% IRR at its Thunder Bay
Lithium Processing Facility, ON
Toronto, Ontario--(Newsfile Corp. - September 3, 2024) -
Avalon Advanced Materials
Inc.
(TSX: AVL) (OTCQB: AVLNF) ("Avalon" or the "Company")
, is pleased to announce the
completion of a Preliminary Economic Assessment
("PEA") for its Lithium Hydroxide Processing Facility
project in Thunder Bay, Ontario, Canada (the Project or the "Lake Superior Lithium Project").
The PEA prepared by DRA Americas Inc. demonstrates the Project's compelling economic viability. The
PEA considers a design capacity for the annual production of 30,000 tonnes of battery-grade lithium
hydroxide (LiOH).
All dollar values in this news release are expressed in Canadian Dollars unless
indicated. (USD:CAD = 1.36).
Key Highlights include:
After-tax Net Present Value ("NPV") of $4.1 billion at 8% discount rate
After-tax Internal Rate of Return ("IRR") of 48% for the 30-year period
Initial Capital Cost $1.2 billion and Total Capital Cost $1.3 billion
All-in Life-of-Project Operating Costs of $13,029/tonne (includes spod. purchased)
Innovative Metso Technology provides an environmentally clean process over conventional lithium
hydroxide processes
Strategically located in historical industrial land with well-established infrastructure
Avalon's CEO and Director Scott Monteith commented: "We are extremely pleased with the positive
outcomes of the PEA and will be advancing the project with a strong focus on environmental
sustainability. The strategic location of the Lithium Processing Facility on a brownfield industrial property,
positions us exceptionally well for permitting with existing infrastructure such as roads, rail, ports, and
utilities, supported by a strong local workforce.
These results reaffirm our view of the project's robustness and substantial economic potential for the
company, province and the country. The Project is poised to provide high-quality, battery-grade lithium
hydroxide to supply Canada's projected demand from the rapidly growing EV industry."
The study summary outcome is outlined in Table 1 below. The study assumes a spodumene concentrate
price of $1,360/tonne (USD$1,000/tonne) for the 30-year life of the project.
The spodumene concentrate
is expected to be sourced through competitive offtake agreements, purchasing of spodumene feed from
neighbouring mines, and potentially being supplied by the Separation Rapids Ltd. Joint Venture.
The long-term pricing of lithium hydroxide is assumed to be $35,360 /tonne (USD$26,000/tonne). A
Clean Technology Manufacturing Industrial Tax Credit of 30% was applied against the initial capital cost.
Table 1: Project Summary Financial Outcomes
Items
Units
PEA Sept. 2024
Operating Life
years
30
Steady State Annual Spodumene Feed
tpa
196,000
Spodumene Concentrate Pricing @ 6%
$ per tonne
1,360
Annual LiOH Production
tpa
30,000
LiOH Sale Price (long term) Life of Project
$ per tonne
35,360
Total Capital Cost
$Billion
1.3
After-Tax Net Present Value (NPV) @ 8% discount rate
$Billion
4.1
After-Tax Rate of Return (IRR %)
%
48
Steady State LiOH Conversion Costs
$/t LiOH
3,898
Spodumene Purchase Cost Delivered to Site
$/t LiOH
9,131
After-Tax Payback
years
2.5
LAKE SUPERIOR LITHIUM: PRELIMINARY ECONOMIC ASSESSMENT STUDY
The basis of this PEA is built on the utilization of the innovative Metso lithium hydroxide conversion
technology that is currently being tested.
This technology allows for a clean zero-discharge process with
no acid roasting and the production of a by-product that can be used as an industrial building material.
Table 2: Project Summary
Unit
(PEA) Results
Operating Costs
Steady State LiOH Conversion Cost
$/t LiOH
3,898
Spodumene Concentrate Price Assumption
$/t (6%)
1,360
Steady State Spodumene Cost
$/t LiOH
9,131
Capital Costs
Development Cost
$Million
931
Owners Cost
$Million
50
Contingency
$Million
233
Initial Capital Cost
$Billion
1.2
Sustaining Cost (over 30 years)
$Million
62
Closure Capital
$Million
40
Total Capital Cost
$Billion
1.3
Financial Performance
LiOH Sale Price Assumptions
$/t
35,360
After-Tax Net Present Value (NPV @ 8% discount rate)
$Billion
4.1
After-Tax IRR
%
48
After-Tax Payback
years
2.5
LAKE SUPERIOR LITHIUM HYDROXIDE FACILITY OVERVIEW
Avalon Advanced Materials Inc. owns 100% of the property situated on the north shore of Lake Superior
approximately 13 km northeast of Thunder Bay, at 965 Strathcona Avenue.
It was formerly a pulp and
paper facility last owned by Smurfit-Stone.
Figure 1: Location of Lake Superior Lithium Facility
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_73c1f74084c8c9ff_001full.jpg
METSO PROCESS DESIGN
The plant will utilize Metso's proprietary technologies, which includes calcination, pressure leaching,
conversion, purification through ion exchange (IX), and crystallization before the drying and packaging
processes to ensure the production of high-quality lithium hydroxide monohydrate.
Metso's technologies will enable the creation of a compact, energy-efficient lithium hydroxide production
plant with minimal chemical usage, aiming to produce 30,000 tpa of battery-grade lithium hydroxide
monohydrate (LHM).
A simplified Block Flow Diagram (BFD) of the process is shown below.
Figure 2: Simplified Block Flow Diagram of the Processing Facility to Produce LiOH
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_fig2avalon.jpg
Notes:
The production process includes the following stages: calcination of alpha spodumene, grinding, pulping of the ground beta spodumene,
slurry preparation for pressure leaching, pressure leaching of β-spodumene calcine in an autoclave, solid/liquid separation of pressure leach
slurry, conversion of autoclave residue, filtering and handling of leach residue, IX and solution polishing, crystallization of lithium hydroxide and
product handling, and effluent treatment.
SITE LAYOUT PLAN
Avalon holds 154 acres of lake front property east of Thunder Bay as well as 220 acres of property
covered by Lake Superior for a total of 374 acres. An aerial plan of the site layout has been developed
and is shown in the figure below.
Figure 3: Plan View of Site Area
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_73c1f74084c8c9ff_005full.jpg
Infrastructure
The Project benefits from having significant existing infrastructure, enabling accelerated development of
the project.
Roads
The property is accessed via Shipyard Road which intersects Strathcona Avenue.
Strathcona Avenue is
linked to the Trans-Canada Highway (Highway 11 / 17) by Spruce River Road just East of the property.
Internal roads for the property will be developed to access all buildings for personnel movement and
commercial deliveries.
Port
An existing deep-water port will provide access to the property via Lake Superior, enabling the products
to reach customers in Ontario and beyond. Plans are in place to refurbish the existing port. An existing
warehouse adjacent to the deep-water port will be utilized for offloading spodumene concentrate from
the Great Lakes freighters. The warehouse will be refurbished and retrofitted with material handling
equipment to receive the spodumene concentrate.
Figure 4: 3D Conceptual Design of Enhanced Deep-Water Port
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_73c1f74084c8c9ff_006full.jpg
Rail
A CN Rail line runs along the property dead ending just east of the property.
A spur from the rail line
currently enters from the northeast corner.
The rail spur splits into multiple spurs and enters the existing
warehouse adjacent to the deep-water port.
Additional spurs will be added to allow for spodumene
concentrate offload and analcime load out.
The existing spurs entering the warehouse will require
refurbishment.
Rail will be the primary method used for the delivery of spodumene concentrate when the lithium mines in
the region come online in the years to come.
Rail will also be utilized to transport reagents to site and
byproducts from site.
Figure 5: Proposed Rail Offload
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_73c1f74084c8c9ff_007full.jpg
Spodumene Concentrate Storage
After being offloaded the spodumene concentrate will be conveyed from the rail and deep-water port
facilities to a spodumene concentrate storage building.
The facility will provide dry storage feed buffering
for management of feed material and inventories, ensuring stable continuous operation of the process.
Fresh Water
Fresh water is required for the process, a freshwater intake is envisioned in Lake Superior.
Potable Water and Sewage
The property is serviced by Thunder Bay municipal sewage and potable water utilities.
Other Utilities
Two 115kVA power lines run adjacent to the property to the north.
An electrical substation will be
installed to connect to the grid power and provide electricity to the process. Natural gas is available on
site and will be primarily used for heating in the calciner process, and for building area heating.
Analcime Storage
A by-product, mix of Analcime and calcium carbonate will be produced from the process. The by-product
material will be dried and conveyed to the analcime storage building. The Analcime material can be
loaded onto railcars and shipped externally to customers to be used in industrial applications and
construction material such as concrete additive.
Figure 6: Analcime Storage Building
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_73c1f74084c8c9ff_008full.jpg
Office Building and Laboratory
An administrative office and analytical laboratory will be located on site north of the railroad tracks.
The
administration building will house offices, kitchen / lunchroom, conference rooms and restroom facilities.
The laboratory will be used for research and to test spodumene samples as well as product and
byproduct streams and internal streams within the process to ensure quality is met throughout the
process.
Figure 7: Administrative and Laboratory Building
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_73c1f74084c8c9ff_009full.jpg
LOGISTICS
The Thunder Bay industrial site is in an ideal location, facilitating efficient transportation of plant feed and
supplies.
Spodumene feed delivery will primarily utilize the CN rail line. The site's port facility is equipped
to receive feed material from international sources, while road accessibility and proximity to the main
Trans-Canada Highway provide additional logistical flexibility. This multi-modal transportation network
ensures that materials can be delivered via the most cost-effective and efficient means, whether by rail,
sea, or road.
Lithium hydroxide, the primary product, will be transported via truck and/or rail to various battery
manufacturers in southern Ontario and beyond. Given the significant daily production volume, the site will
maintain minimal on-site inventory, with product being shipped soon after packaging is completed.
PERMITTING
The Province of Ontario is committed to making the support of all projects in the battery supply chain a
top priority. The Premier and Cabinet have laid out a plan to drive investment, development, and
approvals of projects in the battery supply chain, a key part of the economic future of the province.
Expediting approvals for these projects will enable a timeline that meets the demands of end-users in the
province. Avalon will work closely with the province to ensure that the Government's objectives in the
battery supply chain are met.
GLOBAL LITIHUM MARKET OUTLOOK
According to a report by Fortune Business Insights, the global lithium market was valued at USD $22.19
billion in 2023 and is projected to grow significantly. It is expected to expand from USD $22.88 billion in
2024 to USD$134.02 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 22.1%
during the 2024-2032 forecast period.
This robust trajectory highlights the increasing demand for lithium, driven by its critical applications in
electric vehicles (EVs), energy storage systems, and portable electronics. Avalon's efforts are aimed at
integrating our high-quality, battery-grade lithium hydroxide into the supply chains that will fuel the future
of transportation and energy storage solutions, reinforcing our position as a pivotal supplier in the lithium
market.
The figure below shows the global lithium demand projected to surpass 3 million metric tons by 2030.
Figure 8: Lithium Supply and Demand Forecast
To view an enhanced version of this graphic, please visit:
https://images.newsfilecorp.com/files/3386/221680_fig8avalon.jpg
CAPITAL COST ESTIMATE
The development capital costs are summarized in the table below:
Table 3: Development Capital Costs
Description
Cost (CAD$ Million)
Direct Costs
713
Indirect Costs
218
Owners Costs
50
Contingency
233
Total
1,213
PROJECT SCHEDULE
The project timeline is presented below.
Production of lithium hydroxide is anticipated to commence in
Q4 2028. Continuous project schedule optimization will be ongoing to strike a balance of permitting