Separation Rapids

The Separation Rapids Project

The Separation Rapids property is host to one of the largest rare metal pegmatite deposits in the world. Known as the "Big Whopper Pegmatite" ("BWP"), it is only the fourth example in the world of a rare metal pegmatite with the size required to be of major economic importance and only the second to be enriched in the rare lithium mineral called petalite. The deposit is a potential source of lithium minerals for use in the glass and ceramics industry and specialty composite materials, and is also a potential source of lithium chemicals for the growing rechargeable battery market. There is aadditional potential for production of by-product tantalum and rubidium minerals and a pure form of sodium feldspar.

The Separation Rapids property consists of ten mineral claims totalling 90 claim units, covering approximately 3600 acres (155 ha) in the Paterson Lake Area, Kenora Mining Division, Ontario. These claims are owned 100% by Avalon. The original vendors retain a 2.0% Net Smelter Return ("NSR") royalty interest in the property, of which 1.0% can be bought back at any time for $1,000,000.

The Separation Rapids property is situated approximately 70 km by road north of Kenora, Ontario and is directly accessible via a private road. The main line of the Canadian National Railway passes through the village of Redditt, just 50 km by road south of the Separation Rapids property. The property lies within the traditional land use area of the Wabaseemoong Independent Nations of Whitedog, Ontario, an aboriginal community located approximately 35 km southwest of the property.

Complex-type pegmatites are found in many areas of the world and are economically important as resources for the rare metals, including lithium, tantalum, cesium and rubidium.  Except for the producing Tanco (Manitoba), Bikita (Zimbabwe) and Greenbushes (Western Australia) mines, most complex-type pegmatites are too small to be profitably mined. 

The geological mapping and diamond drilling work done by Avalon have delineated the Big Whopper pegmatite system over a strikelength exceeding 1.5 km, with widths ranging from 10 m to 80 m and to a vertical depth of close to 300 m, where it remains open. 

The 1997-98 drilling program delineated a 43-101 compliant indicated petalite resource of 8.9 million tonnes and an inferred petalite resource of 2.7 million tonnes both grading 1.34% Li2O, 0.007% Ta2O5 and 0.30% Rb2O.  These resources are delineated over a strikelength of 600 m, to a maximum vertical depth of 250 m and remain open for expansion both to depth and along strike. The lithium and rubidium grades are consistent with a petalite content averaging 25±5% and an Rb-K-feldspar content averaging 10 to 15%,

The mineralized zone is well exposed at surface in a low dome-shaped hill, where it averages 55 m in width over a 400 m strikelength. This part of the deposit will be readily amenable to mining by low-cost quarrying methods.  A conceptual open pit designed for the pre-feasibility study by Micon International contains a probable reserve of 7.72 million tonnes grading 1.4% Li2O, (NI 43-101 audited) which is the reserve used for present planning purposes.

Water for mineral processing and other needs is available in abundance in the project area.  The nearest hydroelectric power generating station is located at Whitedog Falls.  The transmission line comes within 30 km of the Separation Rapids property.

Project History

Since acquiring the property in October 1996, Avalon has expended over $4.0 million million on exploration and development work primarily focused on the lithium minerals potential. This involved geological mapping, trenching, ground magnetic surveys, mineralogical studies and diamond drilling totalling 10,152 m in 69 holes. This work culminated in 1999 with the completion of a comprehensive pre-feasibility study on the viability of producing petalite with by-product feldspars, by independent consultant Micon International Inc. The business model at the time involved production of high purity concentrates of petalite for sale to glass-ceramics manufacturers such as Corning, however Corning soon thereafter shutdown its U.S. Corningware manufacturing facility in 2001.

In 2000-2001, during a period of increased demand for tantalum, the Company completed follow-up work including additional exploration drilling and metallurgical testwork for tantalum, follow-up market studies and a plant design/costing studies The tantalum grades in the deposit however did not justify development as a tantalum producer on a stand-alone basis.

In 2002-2003, Avalon completed a Scoping Study to evaluate an alternative project development concept that would produce a diluted petalite product called "high-lithium feldspar". The concept involved a simple dry processing technique to remove the iron and tantalum-bearing minerals by magnetic separation and aggregating the feldspar and quartz with the petalite into a material to be marketed as a low-cost, lithium-enriched glass sand. Subsequent process testwork on a six tonne bulk sample and crucible melt studies demonstrated that an acceptable quality product could be produced which would have the advantage of lowering the melting temperature of the glass batch, thereby reducing the manufacturers' energy costs and emissions of greenhouse gases. Further development work will require large volume test samples and the suitably-equipped custom milling facilities.

In 2005, a potential new market for the petalite ore was identified as an ingredient in a new non-combustible composite material with various potential construction applications. Untreated crushed petalite ore could be used directly in the manufacturing process for this material. In 2006, a 300 tonne bulk sample of the ore was extracted and crushed. Deliveries of this material began in early 2007 but have since been discontinued, while the customer, a development stage company, attempted to raise additional capital.

The bulk sampling and site development work was done under an Advanced Exploration permit originally granted by the Ministry of Northern Development and Mines in 2000 and re-activated in 2006.

Initiated in 2007 and completed in September 2008, Avalon successfully completed metallurgical process research work to develop a modified petalite process flowsheet, with the objective of finding an alternative reagent scheme to replace hydrofluoric acid, a hazardous reagent that was employed in the original process flowsheet.  This work was carried out at SGS Lakefield Research ("SGS") who also developed the original flowsheet. 

In 2008, Avalon initiated the process to secure a Mining Lease for the Big Whopper Petalite Deposit and neighbouring lands that may be needed for development work. The The Company is awaiting formal approvals having submitted all the required filings in July 2009.

Marketing

With volatile energy prices and concerns about climate change and greenhouse gas emissions, interest in lithium additions to glass formulations is increasing, creating new opportunities for lithium minerals producers. The Company is continuing to investigate these opportunities through an on-going marketing campaign and periodically produces small test samples for laboratory evaluation by potential customers.

The Big Whopper is unusual in its enrichment in petalite as the dominant lithium mineral in the ore and in the degree of structural deformation that it has undergone. This resulted in homogenization of the original mineralogical zoning characteristics of the pegmatite into a relatively uniform chemical composition, a circumstance that appears to be unique in the world. Under the original development scenario, this characteristic presented a challenge in processing the ore to produce a high quality petalite concentrate, a challenge that was eventually overcome with the development of an efficient froth flotation process at Lakefield Research Limited.

The high-lithium feldspar development concept took advantage of the inherent homogeneity of the ore to produce a blended product using a low-cost dry milling process and potential markets for this potential product are still being investigated. The project is well-situated in terms of proximity to major railway lines providing ready access into the main target markets in the glass and ceramics industry which are located in the midwestern and southwestern U.S.

Avalon has engaged the services of Amalgamet Canada ("Amalgamet") as its sales and marketing agent since 2002. Amalgamet is experienced in the marketing of similar products to the glass and ceramics industries, including lithium minerals.  Amalgamet continues to believe that lithium use by North American glass manufacturers will eventually increase because of the benefits it offers with regard to reducing glass furnace energy requirements and greenhouse gas emissions,

Environmental and Permitting

The project benefits enjoys the benefits of minimal environmental issues as the ore is environmentally benign, containing no toxic, radioactive, or acid-generating minerals. Avalon completed environmental baseline studies in the project area in 1999, ensuring that local environmental sensitivities were identified at an early stage. This study was updated in 2006-7.

Avalon has been proactive in establishing a dialogue with the First Nations of the area, and in August 1999 signed a Memorandum of Understanding with the Wabaseemoong Independent Nations of Whitedog, Ontario to address community concerns regarding new resource development in their traditional land use area, access to employment opportunities and other benefits. Whitedog is situated just 35 km southwest of the Separation Rapids property and is the closest community to the project site. Avalon fully intends to develop the project in co-operation with Wabaseemoong and continues to keep the community leadership well-informed on new developments.

Current Work and Future Plans

Next steps will involve updating the 1999 pre-feasibility study to reflect the costs associated with the new process flowsheet and developments in the market.

The Company continues to implement a pro-active market development program with the glass and ceramics industry to demonstrate the energy-savings and environmental benefits associated with the use of lithium in its batch formulations. This has involved presentations both in-house and at glass industry conferences, with growing interest along with public pressure for the industry to reduce its greenhouse gas emissions. Test quantities of petalite concentrate are available for market development work as several companies have recently expressed interest in testing the material for potential application in glass and ceramic formulations.

In late 2007, Avalon initiated a research project at SGS Lakefield Research to investigate the potential application of hydrometallurgical extraction technology to recover a lithium product suitable for the rapidly growing lithium ion battery market, while continuing to investigate other potential lithium minerals markets. This work has not yet been. Such technology has been successfully applied to other lithium minerals and initial literature research indicates that this technology should be effective with the petalite that is the dominant lithium mineral at Separation Rapids. A positive result could lead to a preliminary economic assessment of developing the project as a lithium chemicals producer.