Avalon Advanced Materials Inc. [AVL-TSX; AVLNF-OTCQB], as part of its strategic transformation to become a leading North American vertically integrated lithium producer, has signed a binding term sheet to create a new joint venture with SCR-Sibelco NV, a global leader in materials solutions.
Avalon has issued to Sibelco, on a non-brokered private placement basis, 109,692,764 common shares of Avalon for aggregate proceeds of $10-million and a secured convertible debenture in the principal amount of $3-million.
The $63-million transaction results in Antwerp-based Sibelco owning approximately 19.9% of the issued and outstanding common shares, and provides Avalon with a first tranche of financing to advance the company’s lithium production and processing goals across its suite of lithium mineral assets, led by Separation Rapids in Northwestern Ontario. This new joint venture is expected to accelerate Avalon’s core business objective of building a mid-stream lithium-hydroxide processing facility in Ontario.
“This strategic partnership represents a significant step forward in scaling our business towards full vertical integration of our lithium production,” said Scott Monteith, CEO. “Sibelco’s investment is a major vote of confidence in our vision, resources and capabilities by a respected and established international operator — and now partner.”
“Our partnership with Avalon will focus both on the clean energy growth agenda and the technical glass and ceramics markets in which Sibelco has deep and time-tested expertise,” said Hilmar Rode, Sibelco CEO. “This dual-market strategy combined with a cash-generative business plan will lay the foundation for accelerated growth, and ultimately the venture’s sustained success going forward.”
The proceeds from the private placement will be used by Avalon to finance the acquisition of industrial land for a lithium-hydroxide processing facility in Thunder Bay, Ont., and repayment of up to $1.9-million of existing debt, and for working capital and general corporate purposes.
Avalon’s new strategic goals are focused on both organic growth of its lithium portfolio, consisting of a suite of critical-mineral mining projects across Canada, as well as developing new related opportunities. The company’s mission is to vertically integrate lithium processing in Ontario, positioning the province as an integral part of a North American supply chain for electric vehicle batteries.
“We are thrilled to execute on a plan to reliably produce a key resource required for North America’s clean-energy transition — and, in so doing, deepen ties between Canada and the European Union in this geo-politically sensitive sector,” noted Zeeshan Syed, president of Avalon. “We are keenly attuned to the strategic imperative among G7 economies to build domestic critical-mineral processing capacity, and we intend to do just that.”
The joint venture will facilitate phase 1 of Avalon’s new strategic growth plan, which includes the purchase of industrial land for a lithium-hydroxide processing facility in Thunder Bay, financing to advance upstream lithium production operations across Avalon’s various projects, led by the Separation Rapids and Lilypad sites, as well as further the development of the promising Snowbank discovery and enabling the Avalon-Sibelco joint venture to execute on a dual-market strategy targeting significant growth in both the glass and ceramics market and the EV clean energy market.
“Avalon’s vision for an integrated lithium play is exciting and will enable Sibelco to play an important role in this business segment,” Ian Sedgman, Sibelco chief strategy and business development officer, said. “We see a tremendous opportunity to complement our core business by partnering with a proven lithium asset holder led by an experienced management team.”
Avalon Advanced Materials is a Canadian mineral development company aimed at vertically integrating North America’s lithium supply chain. The company is currently focusing on developing its Separation Rapids lithium project near Kenora, Ontario, while continuing to advance other projects, including its 100%-owned Lilypad spodumene-cesium-tantalum project located near Fort Hope, Ontario.
