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Avalon: Separation Rapids PEA defines posttax NPV of C$228M

A preliminary economic assessment for Avalon Advanced Materials Inc.'s wholly owned Separation Rapids lithium project in Ontario has estimated an after-tax net present value of C$228 million, using an 8% discount rate and a 16% internal rate of return.

Total CapEx, including C$86 million in contingencies, were pegged at C$514 million, according to a Sept. 27 release.

Measured and indicated mineral resources, as currently delineated, total 8.0 million tonnes grading 1.29% lithium oxide and 38% feldspar. Inferred resources contribute an additional 1.6 million tonnes at 1.42% lithium oxide.

At an average annual mining rate of 950,000 tonnes, the mine would yield average annual production of 14,600 tonnes of lithium hydroxide for 10 years and 100,000 tonnes per year of feldspar mineral concentrate for 20 years, as it would continue to be recovered from previously processed material for an additional 10 years after the initial 10-year mine life.

The company noted that if additional drilling on untested extensions of the deposit were to increase the resource and extend the initial 10-year lithium production period, each additional year of production could add C$200 million in revenues annually as well as significantly increase the NPV of the project.

The company will gather all the technical information needed for the completion of feasibility study in 2017. In addition, Avalon intends to secure sufficient product offtake commitments to support project financing and receive all requisite operating permits and approvals.

The company anticipates to start commercial operations by 2020.