2018 annual general meeting - avalon rare...

CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE

TSX: AVL

OTCQX: AVLNF

2018 Annual General Meeting

February 27, 2018

Donald S. Bubar, President & CEO


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 metal 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 Don

Bubar P. Geo. (ONT) and President & CEO, Avalon Advanced Materials, qualified person for the purposes of National Instrument 43-101.

2

Safe Harbour Statement

http://www.sedar.com/






Create shareholder value and

potential for long term growth

by establishing a sustainable,

diversified technology metals

business, building initially on

our lithium and tin assets

3

Avalon’s Business Objective


• 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

4

A strategic approach to building new

lithium production through…


2017: Steady progress toward initial production

at Separation Rapids and East Kemptville

Separation Rapids Lithium Project

• Focused on metallurgical process development and defined appropriate

lithium product mix to best serve market opportunities

• Adopted the staged development approach to reduce risk and

evaluated several variants on Phase 1 initial production model

• Produced high purity “Super Petalite” product for glass applications and

identified additional market interest in China for lepidolite concentrates

• Drilled to expand resources and created mineralogical block model

East Kemptville Tin Project

• Largely completed environmental due diligence and created new “profitable site

rehabilitation concept” as part of small scale re-development model

• Presently preparing PEA and lease application to allow for transition of site

tenure to Avalon in 2018.

5


2017(1)

Expenditure Summary (CAD $ Millions)

2017 2016

Nechalacho & Other (NB)

0.3

0.3

Separation Rapids 2.0 1.8

East Kemptville 0.3 1.9

General and Administration 2.9 3.2

$5.5 $7.2 (1) From September 1, 2016 to August 31, 2017

6


Health and Safety Performance

• Avalon was lost-time accident free during the field work completed

in 2017 and so far in 2018

• One medical aid accident at Separation Rapids occurred when a

driller wrenched his neck

• Root cause analysis indicated a modification to the drill intended

to improve safety created an ergonomically difficult position

• The drilling company further modified the rig

• One “near miss” at Separation Rapids occurred when drillers’

truck slid on ice

• No injuries and no significant damage

• Road maintenance improvements to reduce this risk were

implemented

• Avalon received the AME-PDAC Bronze Award or higher for being

Lost Time accident free every year since 2013


Sustainability- A leader in best practices

• Among Corporate Knights’ Future 40 Responsible

Corporate Leaders in Canada (2015, 2016)

• Avalon’s 6th annual report released November 2017

• Aligns Avalon’s operating philosophy with its

Cleantech customers

• Reduces social licence risk to investors

• Market Cap: CAD$30M (214 million S/O @ $0.14)

• Fully diluted: 250 million

• Recent share price: $0.15 - 0.12

• 52 week High Low: $0.19 – 0.11

• Shareholders: Insiders (15%), Institutional (15%),

Retail (70%); Over 20,000 shareholders worldwide

8

Sustainability and Capital Structure


Specialty Metals and Minerals

Project Pipeline

9

Lithium Vital to the electric vehicle and

home energy storage industry

Tin, Indium Necessary for lead-free

solders in all electronics

Rare earths, metals Used in technology from wind turbines,

solar panels to electronics, medical

equipment and space exploration


MANAGEMENT

• Donald S. Bubar, P.Geo.

President & CEO

• 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

• Brian St. Louis, BA, G.Dip Public Policy

Manager, Government Affairs

• Melanie Smith, LLB

Senior Legal Counsel (on maternity leave)

• Ron Malashewski, P.Eng (AB)

Manager, Investor Relations

10

Experienced Management Team

and Board of Directors

BOARD OF DIRECTORS

• Brian D. MacEachen, C.A.

Chairman and Audit Committee Chair

• Donald S. Bubar, P.Geo. CEO

• Alan Ferry, CFA

Governance/Compensation Committee Chair

• Kenneth Thomas, Ph.D., P. Eng.

• Jane Pagel, M.Sc.

• Patricia Mohr, B.A., M.A.


11

A global Lithium supply-demand

imbalance is looming…

Demand growth is likely to exceed new supply

Source: Seeking Alpha. Commentary by

Livio Filice, Nov. 17, 2017

Demand in China alone may

exceed 340,000 tpa LCE by 2021


…creating upward pressure on lithium

chemical prices

$US/tonne

Lithium hydroxide attracts a premium to lithium carbonate.

Recent Lithium

Carbonate pricing

$15-17,000/t

Recent lithium hydroxide pricing $17-19,000/t

Recent prices as reported by Benchmark in January, 2018

Current Price in

China: $22-23,000/t


China is “driving” the way forward

• Shift to EVs driven by production quotas,

preferred licensing regulations & other

government policies

• >500k EVs sold so far in 2017, 2.4m by 2019

and 7m by 2025 (sold ~24m total cars in 2016)

• China planning to dominate the lithium battery

supply chain

• Internal demand for lithium forecast to reach 340

ktpa LCE by 2021, double 2016 global supply

• Lithium carbonate prices now exceed

$21,000/tonne and are expected to reach

$25,000/tonne by 2021 before supply demand

balance achieved

• China already accounts for >40% of global

lithium demand


39%

30%

8%

5%

5%

3% 10%

Batteries

Ceramics & Glass

Lubricating Greases

Casting Mold FluxPowders

Polymer Production

Air Treatment

Other (IncludingPharmaceuticals)

14 Lithium Demand by Application (2016):

Batteries now dominate, but ceramics and glass remain a

major market

Lithium demand for all applications in 2016: 170,00 tonnes LCE

Source: USGS Jan 2017


• Glass and Ceramics

• Lithium creates thermal shock resistance

Glass-ceramic stovetops

Corningware® Cookware

Fireplace Shields

• Lithium additions also strengthen glass and are being used to

develop innovative high strength glass products

• Lithium additions reduce the melting temperature and improve

strength of soda-lime (container) glass, reducing costs of production

& shipping, and reducing GHG emissions from furnace

• Petalite is well-suited for many glass formulations due to

very low impurity content (iron<100 ppm)

15

Lithium Minerals: enable innovation in

high strength glass products


16

Separation Rapids is located close to

transportation and power infrastructure


17 Separation Rapids

Mineral Tenure and

Regional targets

Regional trend of lithium pegmatites where exploration commenced in summer 2017 and several new targets developed Map includes new claims acquired in 2017 to the north and west of existing land holdings

Glitter, Wolf and Rattler pegmatites


• There are two main lithium ore minerals in

the Separation Rapids LCT pegmatite:

petalite & lepidolite.

• Petalite ore comprises 80% of the known

pegmatite deposit and lepidolite ore 20%

• Petalite (Li Al Si4O10) contains up to 4.9%

Li2O & no impurities

• Lepidolite (K(Li,Al,Rb)2(Al,Si)4O10(F,OH)2

contains up to 8% Li2O

• They can each be concentrated to make

separate saleable products

• Petalite can be used both as an industrial

mineral for glass and as a high purity feed

to make lithium hydroxide or carbonate

18

Lithium Minerals at Separation Rapids

Clear Crystalline Petalite

Purple Lepidolite


2017 Work program: Drilling and

Metallurgical Process Optimization Work

• Optimized flotation flowsheet to improve recoveries of lepidolite

concentrate to over 90% at a grade of 4.5% Li2O

• Added cleaner stage to petalite flowsheet to produce a high grade

(>4.5% Li2O) and very low impurity “Super Petalite” concentrate for

glass applications

• Produced trial quantities of petalite for glass marketing purposes

19

• Optimized hydromet process by

investigating alternative membrane

technologies to improve energy

efficiency & reduce costs (ongoing)

with support from NOHFC

• Diamond drilling in 4 holes to assist

with developing new mineralogy-based

resource block model


• Minimum $3-5 million program planned for 2018 to prepare for

construction of $50-60 million Phase 1 production facility in 2018-

19 to produce lithium mineral concentrates

20

2018 Work Program: Moving toward Phase 1 Production Facility

• 2018 program priorities:

• Drill to expand resources and finalize mine plan

• Optimize flotation and hydrometallurgical process flowsheets

• Complete PFS-level cost estimates and project engineering

• Complete environmental assessments and project permitting

• Secure off-take agreements and arrange project financing

• Phase 1 Plant will allow ongoing profitable production of lithium mineral

concentrates for sale to glass companies or lithium processors and piloting of

lithium hydroxide hydrometallurgical process

• Phase 2 will initiate battery materials production & scale-up during Phase 3


Separation Rapids Mineral Resources using 0.6% Li2O Cut-off Grade (November 15, 2017)

21

Footnotes:

1. CIM definitions were followed for Mineral Resources.

2. The Qualified Person for this Mineral Resource estimate is William Mercer, PhD, P.Geo. (ON)

3. The resource estimate is based on 74 drill holes totalling 11,644 metres drilled between 1997 and 2017 by Avalon.

4. Drill data was organised in Maxwell DataShed and for estimation purposes was transferred to the Geovia GEMS 6.8 software, wherein the block model was developed.

5. The geological units were modeled as outlined by drill core logs.

6. Resources were estimated by interpolating composites within a block model of 10 x 10 x 3 metre blocks.

7. Grade interpolation used the Ordinary Kriging method combined with variograms and search ellipses modeled for each rock unit.

8. Measured material was defined as blocks using composites from ≥ 4 drill holes and a distance ≤ 25 m to the nearest composite and additional blocks with excellent geological and grade

continuity, while indicated material includes blocks using ≥ 3 drill holes and a distance ≤ 35 m to the nearest composite and blocks with geological and grade continuity, and inferred material

was defined as blocks with composites from ≥ 2 drill holes and interpolated geological continuity up to 40 m below diamond drill holes.

9. Two metre composites were used and no capping was necessary.

10. The mean density of 2.65 t/m3 was used for unit 6ABC and 2.62 t/m3 for unit 6D.

11. The cut-off grade reported in this resource estimate, 0.6% Li2O, is consistent with the previously published resource estimate by Avalon (Preliminary Economic Assessment, 2016).

12. 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

Petalite Zone Lepidolite-Petalite Zone Total

Tonnes

(Mt)

Li2O

(%)

Rb2O

(%)

Tonnes

(Mt)

Li2O

(%)

Rb2O

(%)

Tonnes

(Mt)

Li2O

(%)

Rb2O

(%)

Measured 2.86 1.39 0.313 1.18 1.38 0.467 4.04 1.39 0.358

Indicated 3.42 1.36 0.338 0.67 1.40 0.484 4.09 1.37 0.362

Measured + Indicated 6.28 1.37 0.327 1.85 1.38 0.473 8.12 1.37 0.360

Inferred 0.94 1.30 0.321 0.26 1.42 0.505 1.20 1.33 0.361


22

Separation Rapids Lithium Resource

Geological Model (as at November 2017)

Lepidolite-rich Unit 6d highlighted in purple, petalite in yellow

Open to depth below 200m


23

Separation Rapids

Resource Block Model

measured

indicated

inferred


24

Hole SR18-80 drill core:

45 metres of mainly

lepidolite-rich lithium

mineralization (6D)

6D

6A


25

Geological Cross-Section (looking west)

Hole SR 18-79

North South

200 metres

Holes 79 and 80 extended

lepidolite-petalite resources to depth below 200 m level


26

Separation Rapids Project Milestones

Q2-2015 Produced 1 tonne of petalite concentrate, meeting customers’ specs

Q3-2016 Created a new process to produce lithium hydroxide from petalite

Q3-2016 Released positive PEA (lithium hydroxide from petalite)

Q1-2017 99.88% pure lithium carbonate product produced from lepidolite

Q2-2017 Lithium ion battery cathode material produced at NRC

Q4-2017 Updated Resource Block Model for Lithium Mineralogy

2017-18 Continue process optimization, environmental, community engagement work

2018 Drilling to expand lithium resources, pilot lithium production processes, define

product mix, complete engineering and arrange financing for Phase 1 plant

2018-19 Phase 1 plant construction and commissioning

2019-21 Phase 1 plant operation and market development

2021-22 Scale-up production in Phase 2 & 3 once products are defined and accepted

Timeline is illustrative: dependant on factors such as

financing, offtake agreements and market conditions


East Kemptville

Tin Production &

Site Remediation

Project


Profitable rehabilitation

of a closed mine site


28

LME Tin Price Trends

Current price:

US$21,600/tonne

1 Year Chart 10 Year Chart

Tin prices have been quite stable since mid 2016 reflecting a relatively balanced market


Sources of refined tin production vs.

consumption to 2021 (‘000/tonnes refined tin)

Source: ITRI

April 2017


East Kemptville Location and

Regional Infrastructure

30

Power lines

69kV

138kV

● On paved highway

● Grid power on site

● Yarmouth (55 km) & other

communities within

commuting distance

● Ample water

● Skilled labour available

locally

East Kemptville

location, 270 km

west of Halifax


31

East Kemptville Site Layout and

Mineral Resources

Baby Zone Pit

Low-grade Ore Stockpile

Inferred Resource:

5.87M tonnes @ 0.112% tin

North Waste Pile:

1.29M tonnes @ 0.089% tin`

Main Zone Pit

Existing Tailings Dam

with spare capacity

In-ground resources:

Indicated:18.5Mt @ 0.176% tin

Inferred:17Mt @ 0.148% tin (Resources as of October 31, 2014 (NR 14-13) Don Hains (P.Geo) is QP under NI 43-10)

`

*The stockpile resources are considered Inferred under NI43-101 guidelines and should therefore not be relied upon


Low Grade Ore Stockpile

32

Two Composite Views of Low Grade Ore Stockpile at East Kemptville


Drill plan for stockpile to

confirm internal grade

distribution for process plant

scheduling

• Use Reverse circulation

type drill

• 10 drill holes each to a

depth of about 25 metres

• Drill holes locations based

on ease of access

• Sample every metre

33

Drill Plan for Low Grade Ore Stockpile

Possible drill sites


Near-Surface Resources utilized in small scale development model:

• 5.87Mt Low Grade Ore Stockpile (@0.112% tin)

• 1.1Mt Baby Zone Pit* (@0.292% tin)

• 0.6Mt in Main Zone Pit North* (@0.192% tin)

• 2.4Mt in Main Zone Pit South* (@0.192% tin)

* Subzones identified from Micon “High Grade” Mining Analysis of 2014 NI 43-101 resource block model

Other Potential Resources (not included in model)##:

• “North” Waste Stockpile (1.29Mt @ 0.089% tin)**

• “South” Waste Stockpile (2.82Mt @ 0.046% tin)**

• Stacked tailings may also contain recoverable tin

**Potential to upgrade material ahead of processing

##Resources in italics and bold are historic resources and not prepared under NI 43-101. They have not been verified by a

Qualified Person and should not be relied upon.

34

East Kemptville Tin Project

Near-Surface Mineral Resources


• Process low grade ore stockpile and near-

surface, higher grade ore zones in existing pits at

rate of 2,400 tpd for tin recovery only

• Crushing-Milling-Gravity Concentration to recover

cassiterite concentrates grading 55% tin

• Produce ave.1300 tpy tin concentrate for 13 yrs

• Keep operation as simple and cost effective as

possible with low CAPEX of approx. $30 million

• “Modular” type plant:

equipment/sumps/pumps/structures etc. pre-

assembled off site (containerized where possible)

• Pre-designed and fabricated building

• Use existing tailings facilities and infrastructure

• Removes current sources of acid mine drainage -

reducing liability and creating a progressive site

remediation model

35

Proposed Small Scale Re-Development

Model utilizing a modular gravity plant


• Utilize existing on-site

infrastructure

• Remove or isolate historical

sources of acid mine drainage

• Eliminate long term

environmental liabilities

• Utilize proven technologies

• Minimize closure and financial

assurance costs

• No new environmental

impacts

36

East Kemptville Site Rehabilitation

Concept

Canola grown on paper mill bio-

solids on tailing, Sudbury, Ontario


The problem is oxidation of sulphide minerals in waste

MS + 3O2 + 2H2O 2H2SO4 + M ̄

metal sulfide rock + oxygen + water makes sulfuric acid + dissolved metals

• All East Kemptville tailing and waste rock is acid generating

• Preventing acid mine drainage involves:

• Eliminating contact of sulphides with oxygen or

water or both

• Oxidation Process

can then be reversed

Present Environmental Liability:

AMD (Acid Mine Drainage)


• Move from perpetual treatment (+40 years) of existing

AMD to full closure using standard technologies including:

• Processing and elimination of low grade ore stockpile

• Place all potentially AMD-producing waste rock and tailing sub

aqueously in existing tailing management area (TMA) and pits

• Produce a low permeability desulfurized tailing to cover and isolate

the historical tailing & revegetate

• Place any remaining AMD sources under water in pit, if required

• Sell, recycle and demolish facilities,

revegetate and close site permanently

Eliminates long term financial assurance

38

Site Rehabilitation Strategy

e.g. Caribou Mine


Examples of Innovative Application of

Proven Technologies in Tailing Reclamation

Sunflowers

on clean

Strathcona

Tailing,

Sudbury,

Ontario

Wetland

Treatment,

Falconbridge

Ontario


• Eliminates the historical environmental

liability

• Minimizes financial assurance costs

• Minimizes waste management operating

and capital costs

• Minimizes GHG production

• No new disturbance area

• Has support of the local

communities

• Potential beneficial use of

tailing area post closure

• Has easier and timely permitting

• Generates profits from tin

concentrate sales

40

East Kemptville Development Concept as

currently designed:

East Kemptville site ca.1985


• Arrange project financing and off-take agreements

• Prepare new resource block model, mine plan and closure plan

• Prepare and submit application for mining lease and transfer of surface

tenure

• Complete PEA on small re-development model

• Detailed design and costing of modular gravity plant

• Drilling of stockpile to map internal grade distribution

• Finalize tailings management operating philosophy and design

• Complete environmental studies and permitting process

2018-19: Construction and initial production within 16 months of arranging

project financing

41

East Kemptville Project

Next Steps for 2018


• Both the Main and Baby Zone resources

are open to depth - potential for future

underground mining operation

• A flotation circuit can be added to

recover copper and zinc concentrates

from in-ground ore

• Zinc concentrates are highly enriched in

indium (0.25%) from which an indium

product could be derived

• The wall rocks contain potentially

recoverable lithium

• Model for extracting value from old mine

sites can be likely be applied elsewhere

42

Future Expansion Potential at East

Kemptville

• Production capacity can be increased if future tin demand and prices

justify additional capital investment in mine expansion


Outlook for Avalon in 2018

Focus on getting small scale initial production facilities

established at both advanced projects

• Separation Rapids Lithium Project: Phase 1 production

facility to produce 50,000 - 70,000 tpy of petalite

concentrate for sale to glass customers and to feed lithium

hydroxide battery material demonstration plant

Produce lepidolite by-product for Lepidico’s L-Max pilot plant in

Sudbury and potentially other customers in China

• East Kemptville Tin Project: On-site 2,400 tpd gravity

concentrator to produce average of 1,300 tpy of tin

concentrate as part of site rehabilitation concept

43


Contact us: 1901-130 Adelaide St. W.

Toronto, Ontario, Canada

M5H 3P5

+1 (416) 364-4938

[email protected]

www.AvalonAdvancedMaterials.com

TSX: AVL

OTCQX: AVLNF

2018 annual general meeting - avalon rare...

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