Avalon Ridgeview Neerana ! 9555599099 Avalon Neemrana ! Avalon New Project Neemrana
Annual General Meeting - Avalon Advanced Materials:...
Transcript of Annual General Meeting - Avalon Advanced Materials:...
Annual General Meeting
February 24, 2015
Safety Moment Evacuation Routes in Case of Fire
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
3
Rare Metals Projects Avalon is not just about rare earths
4
All projects 100% owned
Avalon offers diversified exposure to a broad range of rare metals
2014 Corporate Highlights
● Activated East Kemptville Tin Project ● Signed Access agreement, completed confirmation drilling program
and produced 43-101 resource estimate ● Completed Conceptual Re-Development Study
● Concluded most Nechalacho work ● Signed Refining agreement with Solvay ● Completed hydromet process development work ● Collected 8 tonne bulk sample
● Advanced Separation Rapids Project ● Produced petalite product samples for customer approval ● Initiated lithium chemicals testwork ● Completed site clean-up work
● Raised over $8 million in equity financing ● Reduced program expenditures and overhead costs ● Published third Sustainability Report
2014 Expenditure Summary
2013 2014
Nechalacho $18.6 $8.5
Separation Rapids 0.3 0.5
East Kemptville 0.2 0.5
General and Administration 6.5 5.3
$25.6 $14.8
Working Capital at December 31 $7.6 $5.5
(1) From September 1, 2013 to August 31, 2014
(CAD $ Millions)
Fiscal 2015 Budget Summary
In CAD$ Millions
Nechalacho $1.5
Separation Rapids 0.5
East Kemptville (1) 1.2
General and Administration 4.8
$8.0
Expenditures to Jan. 31, 2015 $3.5 (1) Approximately $700k of flow-through funds are planned to be spent from Sept 1- Dec 31, 2015
Capital Structure
Canada - TSX: AVL
United States – NYSE MKT: AVL Frankfurt- OU5
Shares Outstanding 140,751,535 (as at Jan. 31, 2015)
Fully Diluted 159,196,627
Market Capitalization C$45 million (S/O @ $0.32)
Recent Price Range C$0.45 - $0.20
52 Week High / Low C$0.89 - $0.20
Cash Reserves C$5.5 million
Insider Share Position Approx. 4 million shares
Institutional Investors UBS, Empery, CPP, Global X, Carnegie, Hancock, DFA, Chilton & others
Analyst Coverage HCW, Cowen, Citi, Edison, Secutor
8
Management and Board of Directors
● Donald S. Bubar, P.Geo. President, CEO & Director
● Jim Andersen, CA, CPA V.P. Finance, CFO & Corporate Secretary
● David Marsh, FAusIMM (CP) Senior V.P. Metallurgy
● Bill Mercer, Ph.D., P.Geo. V.P. Exploration
● Pierre Neatby, BA Econ V.P. Sales and Marketing
● Mark Wiseman, B.Sc., MBA V.P. Sustainability
● Cindy Hu, CA, CPA, CGA Controller
● Gerry Liepert , P.Eng. Senior Project Manager
● Melanie Smith , LL.B Senior Legal Counsel
● Brian St. Louis, BA, Political Studies Manage, Government Affairs
● Ron Malashewski, P.Eng (AB) Manager, Investor Relations
9
BOARD OF DIRECTORS • Brian D. MacEachen, C.A.
Chairman and Audit Committee Chair
• Donald S. Bubar, P.Geo. CEO
• Alan Ferry, CFA Past Chairman
• Phil Fontaine, B.A., LL.D. Sustainability Advisory Committee Member
• Peter McCarter, B.A., LL.B., M.B.A. Governance/Compensation Committee Chair
• Kenneth Thomas, Ph.D., P. Eng.
AVL One Year Price Chart ($CAD)
10
Dysprosium price
Selected Rare Earth Prices Jan 2014 to Feb 17, 2015 (FOB China US$/kg)
Source: Asian Metal
Cerium ($/tonne) Neodymium
Dysprosium Terbium
REE Markets Update
● China has replaced export quotas with “tightly controlled export licenses” to try to comply with the WTO ruling
● The impact is expected to be a less transparent market and more uncertainty and price volatility for end users outside China
● At present, Nd, Dy, Tb oxide prices are rising while Ce prices remain relatively stable or lower due to adequate supply available outside China (Molycorp, Lynas)
● Global demand in 2020 is forecasted at 180-200 ktpa REO, compared with 120 ktpa in 2014
● Consumers have not yet felt the need to support supply chain development outside China for HREE (+Nd-Pr)
Nechalacho Current Work
● Updated Feasibility Study in progress. ● Investigating sites for Hydromet plant in western Canada
● Preparing for full-scale pilot plant trial of new process flow sheet
● Investigating alternatives for financing pilot plant
● Advancing permitting process steadily with completion anticipated in mid-2015
● Monitoring REE markets, maintaining dialogue with government, customers and Solvay
13
East Kemptville, Nova Scotia: North America’s Only Primary Tin Producer
14
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
15
East Kemptville Area Mineral Tenure
Avalon claims (purple boundary)
Avalon Special Licence (red boundary)
Rio Algom/BHPB Closure (blue area)
16
Special Licence Application 50462 Application Approved/Cabinet Pending
Closure area
(brown cross hatch
Pending Licence 50462
Pending Special Licence covering whole closure area
Avalon Claims
(light blue)
17
Growing Tin Demand for Lead-free solders in electronics
Source: Hallgarten & Co 14 02
18
Global Tin Demand: Approx. 335,000 mt
Tin supplies increasingly constrained Indonesian policy and exhaustion of resources
Source: Hallgarten & Co 14 02
19
$21,000
$21,500
$22,000
$22,500
$23,000
$23,500
$24,000
$24,500
$25,000
$25,500
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Pric
e (U
S$/
mt)
Year
World Bank Forecast Tin Price $US/mt
LME tin price trends
20
East Kemptville Project Evaluation
● Initial Special Licence acquired in 2005 ● Required access agreement with surface rights holder ● Conducted other surface exploration in the area ● Cumulative expenditures to date total $2.1 million
● Avalon completed an unreleased Desktop Study in 2010 with an independent engineering company ● Included resource estimation and preliminary metallurgical
test work utilizing archived core samples
● Feb. 2015 Conceptual Redevelopment Study (Hains Engineering) completed on NI 43-101 Resources utilizing new development model (incl. tin refinery) ● Access Agreement in 2014 with surface rights holder ● Confirmation drilling completed and NI 43-101 Resource
21
East Kemptville Conceptual Redevelopment Study Model
● Purpose: to confirm business case for re-development 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 new technology
● 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
22
Whittle Pit Mine Design Used for Economic Analysis
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 tonnes and grade
Notes:
• Mining rate:10,000 tpd; • Conventional truck and
shovel open pit mining operation
• Stripping ratio: 0.88:1
Lighter blue area is planned pit Dark blue is existing pit
Main Zone Baby Zone
Tailings Stockpiles
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.
Ore Crushing
Grinding
Tin Conc
Sulphide Flota7on Ro
Flash Flota7on
Tin Spiral Circuit
Tin Falcon Circuit
Tin Wilfley Table Circuit
Tails
Copper Flota7on
Zinc Flota7on
Tin Flota7on
Copper Conc
Zinc Conc
Conc
Conc
Sulphide Flota7on
Clnr
Tailings
Conc
Conc
Conc
Conc
Coarse
Fine
Proposed Mineral Processing Flowsheet (test work to confirm)
East Kemptville Initial Capex and Opex Estimates
CAPITAL COST $C millionsConstruction Capital Cost 157$
Predevelopment 8$ Sustaining capital 28$
TOTAL 193$
OPERATING COST C$/tonne oreMining 4.35$ Milling 9.40$
Tin refinery 1.25$ TOTAL 15.00$
At 3.5 million tpy annual Opex = C$53 million
East Kemptville Potential Revenues
Product Annual tonnes
Annual Revenue US$,000
Percent
Tin Concentrate 6,600 - - Zinc Concentrate* 7,300 $4,000 4% Copper Concentrate** 5,900 $9,400 10% Tin Ingot 3,400 $78,000 85% TOTAL =$91,400 * no credit for indium. **incl credits for Ag, Au (@0.85) C$107,500
Mining rate 3.50 million tonnes/year Mine life 14.00 years Metal prices Sn 23.50 $ US per kg
Zn 1.00 $ US per lb Cu 3.00 $ US per lb
Opportunities to Enhance Value
● By-product credits, particularly indium ● Indium is predicted to be 0.25% (2.5 kgs per tonne) in
zinc concentrates from microprobe analysis of sphalerite. Indium price is in range $500-700 / kg.
● Exploration potential ● In Main and Baby Zones: potential on strike and to depth ● Duck Pond Zone: mineralization in Meguma
metasediments intersected in drilling by Rio Algom
● South Grid Zone: mineralization intersected in two drill holes by Rio Algom, south of Baby Zone
Next steps in 2015
● Initiate work toward Pre-feasibility Study ● Begin Definition Drilling and test depth potential of Main
and Baby Zone deposits ● Exploration drilling on other targets ● Initiate metallurgical process testwork ● Environmental Baseline Studies
● Secure full surface and mineral tenure and resolve long term environmental liability management
28
Future Plans
● Feasibility study ($20 million?) to evaluate re-starting Sn-Cu-Zn–In production at East Kemptville (2015-17) ● Resource definition drilling, delineate new resources ● Mine and Process plant engineering
● Aboriginal Community Engagement, & Environmental Assessment (2015-17)
● Capital Investment in the order of $200 million required to start-up operations (2018?) ● Re-open mine, construct new mill, process low grade stockpiles ● Re-process tailings to recover tin and re-mediate site?
29
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 linerailwayroad
0 20
kilom etres
LakeWinnipeg
Winnipeg
covergreenstonesedimentsgranite
71
658596
525
MANITOBA ONTARIO
Lake ofthe Woods
C.N.R.
Separation Rapids Location Plan
30
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)
31
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
32
Separation Rapids Lithium Leaching
● Leaching Li from petalite presents opportunity to produce higher value Li products
● Various operations employing similar processes on Spodumene and other Li sources
● Have the potential to produce high grade Li Carbonate, Hydroxide and/or metal
● Initial tests at SRC have indicated 96.6% Li leach efficiency ● Low impurity levels in SR leach solution could counter
higher Li grades in other feed sources elsewhere ● Considering collaborative research initiatives
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.
34
Separation Rapids Market Development
● Potential customers are driving test work ● 2 letters of interest that can be used to
support possible government funding ● 2 European customers have visited SR and
Kenora and one Asian planning to in 2015. ● No formal agreement possible until batch
tests completed. (Goal for 2015) ● Potential to attract an Industrial Minerals
business partner
35
2014 Corporate Sustainability Report
● Published December 1, 2014 ● Avalon’s third annual report ● MAC TSM Self Assessment
and GRI Level G4, core level ● Aligns the Company’s operating
philosophy with its 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
36
2015 Objectives for Avalon
● East Kemptville ● Secure land tenure, initiate drilling and metallurgical testwork
● Proceed with environmental studies and Feasibility work
● Nechalacho Rare Earth Elements Project ● Continue working with Solvay to develop the market
● Select site for hydromet plant in Western Canada. Complete pilot plant work and produce updated FS
● Conclude permitting process with MVLWB
● Separation Rapids ● Collect 2000 tonne bulk sample and produce petalite product
samples for customers and lithium chemical production tests
● Manage our cash reserves carefully!
130 Adelaide St. W., Suite 1901 Toronto, Ontario, Canada M5H 3P5 +1 (416) 364-4938 [email protected] www.avalonraremetals.com