Avalon Advanced Materials Corporate Presentation

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  • Last year I spoke on what Sustainability meant and the reasons for doing it. This year I would like to focus on the progress we made and the benefits achieved. Chief Louis Baslille
  • Avalon Advanced Materials Corporate Presentation

    1. 1. Corporate Presentation Donald S. Bubar, President & CEO April 10, 2017
    2. 2. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Safe Harbour Statement Cautionary Statement Regarding Forward Looking information This corporate presentation contains or incorporates by reference “forward looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation, which may not be based on historical fact. Readers can identify many of these statements by looking for words such as “believe”, “expects”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “continues” or similar words or the negative thereof. Statements that are not based on historical fact contained in this presentation, including through documents incorporated by reference herein, are forward-looking statements that involve risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in the forward-looking statements . Such forward-looking statements reflect the Company’s current views with respect to future events and include, among other things, statements regarding targets, estimates and/or assumptions in respect of reserves and/or resources , and are based on estimates and/or assumptions related to future economic, market and other conditions that, while considered reasonable by the Corporation, are inherently subject to risks and uncertainties, including significant business, economic, competitive, political and social uncertainties and contingencies. These estimates and/or assumptions include, but are not limited to: grade of ore; rare earth and by-product commodity prices; metallurgical recoveries; operating costs; achievement of current timetables for development; strength of the global economy; availability of additional capital; and availability of supplies, equipment and labour. Factors that could cause the Company’s actual results, performance, achievements, developments or events to differ materially from those expressed or implied by forward-looking statements include, among others, but are not limited to, market conditions, the possibility of cost overruns or unanticipated costs and expenses, the impact of proposed optimizations at the Company’s projects, actual results of exploration activities , mineral reserves and mineral resources and metallurgical recoveries, discrepancies between actual and estimated production rate, mining operational and development risks and delays, regulatory restrictions (including environmental), activities by governmental authorities, financing delays, joint venture or strategic alliances risks, or other risks in the mining industry, as well as those risk factors discussed or referred to in the Company’s annual Management’s Discussion and Analysis and Annual Report filed with the securities regulatory authorities in all provinces and territories of Canada, other than Québec, and available at www.sedar.com. Most of the foregoing factors are beyond Avalon’s ability to control or predict. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. The forward-looking statements contained herein are qualified in their entirety by this cautionary statement. Readers should not place undue reliance on the forward-looking statements, which reflect management’s plans, estimates, projections and views only as of the date hereof. The forward looking statements contained herein is presented for the purpose of assisting readers in understanding the Corporation’s expected financial and operating performance, and the Company’s plans and objectives, and may not be appropriate for other purposes. Avalon does not undertake to update any forward-looking statements that are contained herein, except in accordance with applicable securities law. The geological information contained in this presentation has been reviewed and approved by Bill Mercer, P. Geo. (NS) and Vice President, Exploration, Avalon Advanced Materials, qualified person 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. 2
    3. 3. CORPORATE OVERVIEW 3
    4. 4. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Corporate Sustainability Avalon placed among Corporate Knights’ Future 40 Responsible Corporate Leaders in Canada for two consecutive years (2015, 2016) Avalon’s 5th annual report released November 2016 ● MAC TSM Self Assessment and GRI Level G4, core level ● Aligns Avalon’s operating philosophy with clean tech customers ● Sustainability reduces social licence risk to investors 4
    5. 5. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Specialty Metals and Minerals Project Pipeline 5 All projects 100% owned Three are at Advanced Stage Avalon offers diversified exposure to a broad range of specialty metals and minerals Current Priorities are: Separation Rapids Lithium East Kemptville Tin-Indium
    6. 6. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Capital Structure (as at March 13, 2017) Canada - TSX: AVL United States – OTCQX: AVLNF Frankfurt- OU5 Shares Outstanding Common: 189,344,660 Preferred: 500 Fully Diluted 219.7 million (19.1 mill. wts @avg. $0.39, 11.2 mill. opts @avg. $0.55, various expiry dates over 5 years) Market Capitalization USD$25 million (S/O @ $0.135) Recent Price Range USD$0.12 - $0.16 52 Week High / Low USD$0.26 - $0.10 Cash Reserves CAD$3.0 million Shareholders Insiders (15%), Institutional (15%) Retail (70%) Institutional Investors UBS, CPP, Hancock, Lind, Marquest & others Analyst Coverage Secutor, RB Milestone Group 6
    7. 7. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE AVL Price Charts ($CAD) 7 10 Year Chart 2010-11 REE “Bubble” After being known mainly as a REE company, Avalon’s valuation has just begun to reflect its lithium asset value Name Change Tesla, NMX news 1 Year Chart
    8. 8. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Management and Board of Directors MANAGEMENT ● 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 & Technology Development ● 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 Controller ● Melanie Smith, LLB Senior Legal Counsel ● Brian St. Louis, Honours BA, GDip Public Policy Manager, Government Affairs ● Ron Malashewski, P.Eng (AB) Manager, Investor Relations 8 BOARD OF DIRECTORS • Brian D. MacEachen, C.A. Chairman and Audit Committee Chair • Donald S. Bubar, P.Geo. CEO • Alan Ferry, CFA Past Chairman • Kenneth Thomas, Ph.D., P. Eng. • Jane Pagel, M.Sc. • Patricia Mohr, B.A., M.A.
    9. 9. LITHIUM 9
    10. 10. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Lithium Demand by Application 10 Source: USGS Jan 2017 39% 30% 8% 5% 5% 3% 10% Batteries Ceramics & Glass Lubricating Greases Casting Mold Flux Powders Polymer Production Air Treatment Other (Including Pharmaceuticals)
    11. 11. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Lithium Supply Sources: Hardrock deposits becoming more important Lithium Deposits ● Sub-surface saline brines ● Lithium in low concentrations (100-200ppm) recovered as by- product of salt product in evaporation ponds ● Lithium in low concentrations (1,000-2,000ppm) in clays ● Hard rock pegmatites ● Granitic pegmatites, containing lithium as spodumene in concentrations from 1.0-2.5% ● Highly-evolved “LCT” type also contain economically significant rubidium, cesium, tantalum and other by-product opportunities ● Lithium Minerals ● Spodumene ● Petalite ● Lepidolite ● Li micas Separation Rapids Lepidolite -Petalite 11
    12. 12. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Lithium Minerals: Still an important market opportunity for Avalon ● Glass and Ceramics ● Lithium creates thermal shock resistance ● Glass-ceramic stovetops ● Corningware® Cookware ● Fireplace Shields ● Lithium additions reduce the melting temperature and improve quality of soda-lime (container) glass, reducing costs of production and shipping ● Ceramic tiles, dinnerware, frits and glazes ● Refractories, specialty composites and concrete ● Minerals still account for 50,000-60,000 tonnes (30%) of total LCE (Lithium carbonate equivalent) demand 12
    13. 13. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE What’s driving lithium chemical demand? Tesla Model 3 Tesla Model S 13
    14. 14. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Lithium Chemicals for Batteries: ● Rechargeable battery cathodes are the main demand for lithium chemicals ● Lithium carbonate (traditional product) ● Lithium hydroxide (new chemistries) ● Lithium metal (solid state batteries) ● Demand for increasing purities (>99.9%) to achieve optimal battery performance ● By 2020, rechargeable batteries will account for +/- 50% of total lithium demand (currently 35%) ● Total lithium demand is forecast to increase at 10-40% CAGR creating new lithium demand for 500k - 900k LCE over 10 years ● Forecasts mostly based on EV uptake, not including stationary energy storage systems 14
    15. 15. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE A global supply-demand imbalance is looming 15 Supply forecasts base on Producer estimates but delays are likely Demand growth is likely to exceed new supply
    16. 16. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE …creating upward pressure on lithium chemical prices $US/tonne Lithium Hydroxide attracts a premium to Lithium Carbonate. The premium is forecast to increase due to growing demand from EV battery makers. 16
    17. 17. SEPARATION RAPIDS LITHIUM PROJECT 17 Kenora, Ontario, Canada
    18. 18. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE A strategic approach to building new lithium production through… ● Product design: working with our customers to create the best quality products to serve their needs at attractive prices ● Innovative metallurgy: Designing an efficient process flowsheet to produce the best quality product at the lowest cost ● Staged development: Start with a demonstration plant to prove process and scale up after products specs are optimized ● Minimizing environmental impacts: recycling of reagents and creating markets for by-products ● Sustainable development: Utilize renewable energy and maximize use of the ore body 18
    19. 19. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Separation Rapids Lithium A rare form of lithium pegmatite enriched in the high purity alumino-silicate mineral petalite 19 Large, high quality resource amenable to open pit mining • Secure Tenure under a Mining Lease • 100% Ownership • Road accessible, proximity to clean hydro-power • Strong community support including First Nations • No toxic waste materials
    20. 20. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Separation Rapids Location and Infrastructure 20
    21. 21. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Separation Rapids Property Geology & Mineral Occurrences 21 ACCESS ROAD 0 400 meters English River 387200 E 388000 E 388800 E CAMP SITE 1.55% Li2O 1.68% Li2O 14.5 m 1.56% Li2O 8.9 m N Petalite Pegmatite Albitic Pegmatite Pegmatitic Granite Separation Rapids Pluton Greenstone Pegmatite Dyke Swarm Lithium Showing Tantalum Showing MAIN OUTCROP
    22. 22. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Objective: resource estimate for units 5 and 6d (lithium mica bearing units) Detailed geology from drilling and surface mapping. Large purple 6D areas are lepidolite rich (lithium mica) zones that are not included in the current mineral resource 22 “Big Whopper” outcrop area
    23. 23. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Separation Rapids 2015-16 work program: making lithium battery materials from petalite ● $1.8 million program in fiscal 2016 ● Pilot plant on 30 tonne ore sample to produce one tonne of high purity petalite concentrate ● Product quality confirmed for glass-ceramics ● Potential by-products identified (feldspar) ● Market studies for battery industry completed ● Hydromet process to produce high purity (99.9%) lithium hydroxide product from petalite developed. ● Positive battery materials PEA prepared on petalite resource 23
    24. 24. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE 2016 PEA Model (petalite only scenario) confirmed low cost to make lithium hydroxide ● Assumes open pit mining at 950,000 tpy with concentrator at site to recover petalite and hydromet plant in Kenora to make Li hydroxide ● Min. 10 year life lithium, 20 years for feldspars ● 14,500 tpy lithium hydroxide & 100,000 tpy feldspars ● Prices: US$11,000/tonne LiOH and US$170/tonne feldspar ● Average lithium hydroxide production cost: US$4900/tonne ● F/X US$1.00 = CAD$1.30 ● IRR: 19% pre-tax, 16% after-tax ● NPV (8% Discount rate): C$343 million pre-tax, C$228 million after-tax ● CAPEX: C$514 million (including C$93 million in contingencies and sustaining capital) 24 Note the PEA is preliminary, includes inferred mineral resources 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 economic assessment will be realized.
    25. 25. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Resource Estimate at 0.6% Li2O Cut-off Grade (As at October 21, 2016) 25 Notes: 1. CIM Definition Standards for Mineral Resources and Mineral Reserves, 10 May, 2014 were followed for this mineral resource estimate. 2. The Qualified Person for this mineral resource is David Trueman, Ph.D., P.Geo. (MB). 3. The resource estimate is constrained by a 3D geologic model of the mineralized material. 4. Assay intervals for Li2O, Ta2O5, Cs2O and Rb2O were interpolated using the Inverse Distance Weighted method to create a 3D block model. 5. The resource cut-off grade of 0.6% Li2O was chosen to capture mineralization that is potentially amenable to mining, mineral concentration and off-site processing. 6. Li, Ta, Cs and Rb were originally analysed on all samples at XRAL Laboratory (Thunder Bay, Ontario) utilizing ICP (Li, Ta) and AA (RB and Cs) and check analyses completed at CHEMEX Laboratory (Don Mills, Ontario) utilizing AA (Li) and ICP (Rb). 7. As well as due diligence to verify historic data, Avalon completed additional check analyses of historic drill core in 2016 utilizing ALS Laboratory (Vancouver) with a combination of fusion and ICP (method CCP-PKG01). Included as QAQC procedures was a lithium rock standard within the check analysis batches. 8. Total Feldspar is the total of potassium feldspar (microcline) and sodium feldspar (albite) and the value reflects the mean and median value of all samples with quantitative mineralogy determined. 9. The percentage Total Feldspar is based on analyses completed utilizing X-Ray Diffraction and Qemscan instrumentation on samples representing all lithological subunits of the mineral deposit. These analyses were completed at Carleton University in 1999 (XRD) and ALS Global Laboratory in 2016 (XRD and Qemscan, Kamloops). This is supported by quantitative mineralogy of metallurgical samples determined at SGS (Lakefield) and Anzaplan (Germany) 10. All figures are rounded to reflect the relative accuracy of the estimates. Summation of individual columns may not add-up due to rounding. 11. Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resource will be converted into Mineral Reserves. Class Tonnes Li2O Total Feldspar Ta2O5 Cs2O Rb2O (Mt) (%) (%) (%) (%) (%) Measured 4.03 1.32 39 0.006 0.017 0.343 Indicated 3.97 1.26 39 0.007 0.025 0.362 Measured plus Indicated 8.00 1.29 39 0.006 0.021 0.352 Inferred 1.63 1.42 39 0.008 0.016 0.360
    26. 26. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Separation Rapids Recent Process Testwork ● 1 tonne petalite sample produced in pilot plant • Flotation process optimization work now planned • Product shipped for glass evaluation and lithium chemicals process work ● Lithium hydroxide process flowsheet development • Laboratory trials on 300kg of petalite product essentially completed with optimization initiated • Test quantities of product made for battery customer evaluation ● High purity silica product potential • Tails from feldspar and petalite recovery yield a grade of 99.5% SiO2 • Testwork underway to evaluate potential for high value product • Feldspar product potential • Potential application in paint fillers confirmed, test marketing planned • Further work to define milling requirements, reduce contained silica 26
    27. 27. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Lithium Micas (Lepidolite): a second lithium ore mineral at Separation Rapids ● There are three main lithium bearing micas at Separation Rapids: lepidolite, muscovite and biotite ● Lepidolite has around 8% Li2O with 10% Rb2O ● Lepidolite not included in original petalite-based Li resource ● Lepidolite is the “ore mineral” for rubidium chemicals ● Lepidolite also contains some cesium. ● Both cesium and rubidium marketable as formate chemical products
    28. 28. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Potential Lithium Product Suite 28 Testwork has demonstrated that the resources at Separation Rapids offer multiple product lithium (and other) opportunities including: • Petalite concentrate for the glass-ceramics industry • Lithium hydroxide from petalite via Avalon’s hydromet process • Lithium carbonate from petalite via conventional technology • Lithium metal from petalite using a chlorination process • Lepidolite concentrate for production of lithium chemicals (by others) • Lithium carbonate from lepidolite using Australian process • Lithium chemicals from lepidolite using other processes, with by-product rubidium and cesium chemicals production Further testwork and economic analyses to be conducted over next 6 months to identify optimal product mix and demo plant design data
    29. 29. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Separation Rapids Production Scenarios 29
    30. 30. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Separation Rapids Project Future Milestones 2017-18 ● Identify customers for Li chemical products ● Piloting of lithium chemicals process ● Continue glass-ceramics market development ● Drilling to increase mineral resources ● Complete new Technical Report ● Establish 50,000 tpy demonstration plant to define products and markets and serve as interim small-scale production facility ● Complete engineering & Feasibility Study 2019-20: Production scale-up 2020-21: Begin full scale commercial operations 30 Please note that the projected timeline is reliant on a positive Feasibility Study as well as offtake commitments, project financing, and timely receipt of all permits and environmental approvals.
    31. 31. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE First Nations ● 2013: Renewed MOU with Wabaseemoong Independent Nations (WIN) ● Committed to maximizing opportunities for WIN and facilitating business partnerships ● Community members continue to have active involvement in the project 31 Original MOU signing in 1999
    32. 32. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Environment ● Ore body and waste rock will not generate acid and is anticipated to be inert ● Tailing assessment advanced to allow design of updated tailing management facility ● Waste rock management plan being developed ● Road access in place ● Abundant water supply ● Investigating options for power (diesel, run of river hydro electric, connections to grid, energy from waste wood) 32
    33. 33. TIN 33
    34. 34. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Growing Tin Demand Lead-free solders now account for over 50% of market and is growing with electronics demand 34 Source: Hallgarten & Co 14 02
    35. 35. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE LME Tin Prices (USD/Tonne) 35 10 years 1 year Demand for clean, conflict-free tin concentrates remains strong Traditional supply sources are declining, little investment in new production
    36. 36. EAST KEMPTVILLE TIN-INDIUM PROJECT 36 Yarmouth, Nova Scotia, Canada
    37. 37. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE East Kemptville, Nova Scotia: North America’s Only Primary Tin Producer 37 Produced from 1985-92, when it closed prematurely due to low tin prices. Significant resources left behind both in the ground and in surface stockpiles. 10,000 tpd mill subsequently removed and pit flooded. Operated as a closed mine site since 1992.
    38. 38. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE 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 with an independent engineering company. 2014: Access Agreement arranged with surface rights holder; confirmation drilling program completed; NI 43-101 compliant Mineral Resource prepared. 2015: Conceptual Redevelopment Study completed on 10,000 tpd production re-start scenario. 2016: Small-scale development concept created to utilize stockpiles initially to produce tin concentrates; gravity process flowsheet optimized; LOI signed toward agreement to acquire full tenure to the site. 38
    39. 39. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE East Kemptville Location and Regional Infrastructure 39 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
    40. 40. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE East Kemptville Site Layout and surface resources 40 Baby Zone “Indicated” Resource: 2.85 million tonnes @ 0.24% tin, 0.365% zinc Low-grade Stockpile “Inferred” Resource: 5.87 million tonnes @ 0.112% tin North Waste Pile: 1.29 million tonnes @ 0.089% tin Cautionary Note: The stockpile resources are considered “Inferred” under NI43-101 guidelines and should therefore not be relied upon
    41. 41. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Avalon Mineral Tenure East Kemptville Area Avalon claims (purple boundary) Special Licence Requires aggregate expenditures of $5.25 million over three years. Negotiating transfer of full tenure with surface rights holders. 41
    42. 42. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE 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” 42 Classification Sn Cut-off Grade T onnes (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
    43. 43. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Stockpiled Mineral Resources from Historic Operation 43 Tonnes (Mt) Grade (%) 5.87 Sn Zn Cu 0.112 0.100 0.061 Notes: 1. CIM Definition Standards for Mineral Resources, 10 May, 2014 were followed. 2. The Qualified Person for these mineral resource estimates is Donald Hains, P.Geo., of Hains Engineering Company Limited. 3. 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. 4. Resources were estimated by examination of historical Rio Algom Ltd. data and Avalon’s 2015 sampling of the Low Grade Stockpile.
    44. 44. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE East Kemptville Proposed Small Scale Development Model Proposed concept for small scale operation: ● Process low grade ore stockpile initially to recover a tin concentrate only (potential to feed new ore later) ● Keep operation as simple and cost effective as possible ● Crushing-Milling-Gravity Concentration for tin ● “Modular” type plant- equipment/sumps/pumps/structures etc. pre-assembled off site (containerized where possible) ● Pre-designed and fabricated building ● Use existing tailings facilities (may need expanding in latter years) and infrastructure ● Allows for future scalability 44
    45. 45. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE East Kemptville Small-Scale Plant Next Steps Current activities ● Concentrate “clean-up” to reduce impurities/penalties, increase tin grade ● Confirming crushing and mining contractor costs ● Updating mill sizing and costing Planned activities for 2017 ● Vendor design and costing modular gravity plant ● Drilling of stockpile to map internal grade distribution ● Update tailings management facility design ● Initiate permitting process and application for “Special Lease” ● Conclude arrangement on transition of tenure 45
    46. 46. NECHALACHO RARE EARTH ELEMENTS PROJECT Thor Lake, Northwest Territories, Canada 46
    47. 47. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE 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 47 ] ] 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
    48. 48. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Nechalacho Project: 2016 Activities Nechalacho remains a polymetallic rare metals project • Monitoring REE, zirconium, beryllium markets • Conducted sampling on S-Zone Lithium occurrences • Monitoring regulatory environment, planning to re-start permitting process Rare Earths: Demand likely to grow • Rare earth magnets needed in electric vehicles • New extraction technology likely to emerge to reduce production costs Zirconium: Looking at cost of processing Zr as a primary product Lithium: Encouraging initial results from sampling program • S-Zone chip samples assayed as high as 2.2%Li2O across 3m • Individual grabs of polylithionite (mica) assayed 4.8% Li2O 48
    49. 49. CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE Multiple Deposits with Multiple Commodities 2016: Avalon sampled the T Zone and S Zone to follow-up on historic lithium results S Zone 2.2% Li2O/3m T Zone 4.2% Li2O in four grab samples
    50. 50. Contact us: 130 Adelaide St. W., Suite 1901 Toronto, Ontario, Canada M5H 3P5 +1 (416) 364-4938 ir@AvalonAM.com www.AvalonAdvancedMaterials.com

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