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Environmental sustainability while maintaining profitability and shareholder value are the hallmarks of any modern, forward-thinking company. This is especially the case in the critical minerals space.
Avalon Advanced Materials Inc. (
TSX.AVL,
OTC: AVLNF,
Forum) is a Canadian mineral development company focused on metals and minerals for use in clean energy and new technology. Avalon’s extensive experience with critical minerals and commitment to sustainability puts the company in a unique position to utilize its resources and expertise in extraction techniques to establish new critical minerals supply chains in North America. Avalon has three projects in advanced stages of development providing investors with exposure to lithium, cesium, tantalum, indium, tin, and the rare earth elements.
In this exclusive video podcast, Stockhouse Media’s Dave Jackson met up with Avalon’s President and CEO Don Bubar to discuss a myriad of timely and topical news about the Company and the future of clean energy resources moving forward.
SH: To start off, can you update our investor audience and your AVL shareholders on any new company developments, especially in the wake of the COVID-19 pandemic?
DB: Mainly we have been trying to move forward with our lithium project for obvious reasons. That's where a lot of the interest is right now. The COVID-19 pandemic has meant we haven't been able to do as much work on the ground as we might've wanted to a year ago, but we've been moving forward with laboratory work in terms of defining our process flow sheet and preparing to recover the bulk sample that we had planned to do last year. The purpose of that program is to prove up our flow sheet and start making samples of the lithium mineral products for the customers that have already expressed interest, and start to move forward with other markets for the lithium. So that's been our main focus and we should have more developments to report on that before too long.
SH: We understand you’ve been spending a lot of time educating the public and government on how different a business producing these non-traditional commodities is compared to traditional mining. Can you elaborate on why this is important?
DB: Well, it all started two years ago, when the governments of Canada and the US agreed to work together on creating these new critical minerals supply chains in North America and reduce our reliance on China. Governments have been thinking about what they need to do to create needed policy initiatives to enable that to happen. And they've needed some help with that. There's not a lot of expertise or experience in that area in government circles. So, people like me that do have that experience have been pulled into the conversation quite frequently to provide some guidance and support on what needs to be done to enable these supply chains to be created. They definitely need to realize that this is not like traditional mining of exchange traded commodities. It's a very different business in terms of the challenges in getting started. Like I just described, you've got to start taking bulk samples, producing product samples and get your product accepted in the market before you can prove you've got an opportunity to develop a larger scale operation.
SH: The company is expecting an environmental, social, and governance rating announcement in late January. Can explain the significance of that, Don?
DB: That's something that we've factored into our strategy for a long time. I always believed that if you're going to produce materials for clean technology, it doesn't make any sense to do it in an unclean way. And now that a lot of the consumers of these materials in clean technologies audit their supply chains back to the original sources of supply, to make sure they are produced in sustainable ways, it makes sense to develop a sustainable development strategy. This didn't get appreciated at first, but over the last couple of years, there's been the realization that this clean green world, where we're no longer relying on fossil fuels, won't happen without mining of the critical minerals needed to create these new renewable energy technologies, electric vehicles or battery technologies. Now, there’s a whole new opportunity for the ESG investment community to find companies that meet their criteria in that space and invest. That door is wide open for us now with that new risk rating, when we get that in place.
SH: You noted in your recent President’s Letter that according to a 2020 World Bank Group Report – Minerals for Climate Action production of battery materials – most notably lithium – will have to increase by nearly 500 percent by 2050 to meet the growing demand for clean energy technologies. How is Avalon leveraging itself to meet those needs?
DB: The battery materials space is one that's starting to get a lot of traction here in Canada, and the Ontario government wants to build capacity for battery manufacturing along with electric vehicle manufacturing capacity. So, the time has come to create that upstream supply chain! There's a huge opportunity in both Quebec and Ontario to do that - because there are lots of lithium resources in the ground. Companies like us have needed a lithium refinery to ship the concentrate to, where it can be turned into the battery material product lithium hydroxide or lithium carbonate. So, we've agreed to collaborate with another aspiring producer in Ontario, Rock Tech Lithium, to get such a refinery established in a central location, Thunder Bay – a city with good transportation infrastructure, to help get that whole supply chain started here in Ontario. This should be able to grow over time by accepting concentrates from other aspiring new producers in Ontario and elsewhere in Canada.
SH: Can you walk us through and update us on the LOI with Rock Tech Lithium to develop a lithium refinery? Sounds exciting!
DB: Yes, it is a fairly expensive proposition to build a refinery like that. You're looking at several hundred million dollars in capital requirements. We’ll be able to share the costs, so that helps. And then there are different markets that can be served. Rock Tech have good developing relationships in the downstream marketplace in Europe to serve, while we can serve North American markets. We see lots of opportunity to share ownership in developing the markets internationally and domestically for battery materials. We will want to keep it flexible in terms of what products will be produced down the road, because battery technology continues to evolve and the needs of the marketplace are going to change over time. We want to be able to adapt to change going forward.
SH: Avalon has really been ahead of the game when it comes to relationships and partnerships with First Nations. How have you created this win-win scenario here?
DB: I think this lithium development opportunity is a good example of where the future can be. We've been trying to inspire First Nations to get more actively involved in mineral development in northern Canada as a way to increase participation in the economy generally. These new critical minerals supply chains are a very good opportunity in that, in many cases, it doesn't require the huge amounts of capital that are typically associated with a large base metal or gold mining operation. Often the environmental footprint can be quite a bit smaller. So being able to start development, through their own Indigenous businesses, is very feasible now. We hope to be able to inspire that in Ontario by getting this refinery going, so that future producers of lithium minerals in the Indigenous communities can start to supply its needs.
SH: It would be remiss of me not to mention your stock has had a very nice bump over the last six months…nearly tripling in value since early August. What can you tell our investor audience regarding the current valuation of your stock and why you think it’s still a good buy right now?
DB: It's been getting some traction because of the interest generally in the whole critical minerals space, especially rare earths and lithium. Because we've been in this space for 25 years now, believe it or not, we're well-known as one of the main players in this space. And even though we haven't had a lot of news flow, people are anticipating news before long. I think it's a good time for investors to look at our company because a lot of our peers in the lithium space now have achieved higher valuations than where we're standing right now, including our friends at Rock Tech, who have seen their stock’s value climb quite dramatically in the last little while - up to over $300 million, with Avalon sitting at a little over $50 million. So, we've got quite a bit of upside still to be realized, I think.
SH: For company shareholders and potential investors, what kind of development can we expect moving through 2021 on your properties?
DB: We’re really focused on getting our lithium project up and running. That's our most advanced project right now, but we haven't forgotten about rare earths. We see other opportunities now to bring new rare earths supply to the marketplace, by looking at situations where they occur in historic mine wastes. We can look at those sites as opportunities to extract value from the wastes and remediate some of the existing long-term environmental liabilities. We're looking at a really interesting one right now in that space. That's another priority for us - to be able to participate in another rare earths development opportunity.
SH: Thanks again, Don, for taking the time to speak with us today at Stockhouse. Is there anything further to you would like to add?
DB: While I've mentioned lithium and rare earths, those are not the only critical minerals we're looking at. We are seeing really good opportunities with cesium and tantalum, both in very short supply now. We've got a project we've had for 20 years in northern Ontario, Lilypad, that has a very attractive resource with high enrichment in both cesium and tantalum. We think its time has come and I'm hoping to accelerate development there in 2021 as well.
For more information, please visit
avalonadvancedmaterials.com
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.