A long-awaited rare earths project planned at Thor Lake is moving ahead after the main proponent of the mining effort announced a new private partner this week.
Avalon Advanced Minerals Inc., which has been seeking to develop a rare earths project about 100 kilometres southeast of Yellowknife near Great Slave Lake, announced Thursday that it signed a binding terms sheet with Australian firm Cheetah Resources Pty Ltd.
The agreement, which will be finalized within 60 days, is seen as a boost to the Nechalacho Project, which Avalon began to revitalize last year after about a four-year hiatus.
Don Bubar, president and CEO of Avalon, said having Cheetah on board allows the company to develop growing demand for rare metals in the global market.
“We are delighted to have attracted a like-minded partner in Cheetah to the rare earth opportunity at Thor Lake,” he said in a news release. “The agreement structure will allow Avalon to resume its long term development aspirations for the Nechalacho Project, and secure a source of non-dilutive working capital to continue to advance our other near term development aspirations for the East Kemptville Tin and Separation Rapids Lithium Projects.”
Bubar said having the new investor on board brings additional expertise to rare metal development and should shorten the period it takes to actual production.
A news release issued by Avalon stated that the new partnership will see Cheetah taking ownership of new surface resources in what are known as the “ T-Zone” and “Tariff Zone” of the area. This represents about a $5 million cash consideration for Cheetah, according to the news release.
The news release also notes that the companies will be involved in compilation work that will include a “scope of work and budget for a 2019 work program” on the T-Zone and Tardiff Zone areas of the property. The companies are expected to move equipment to the site, prepare a new block model from historical data for the T-Zone resources and begin testing work on ore-sorting technology on the site.
Bubar said in an interview this week that the project is projected to be a small, pilot-sized “micro-mining” project that can allow his company to build a business model and customer base.
The goal is to eventually move toward large-scale production but it is uncertain when that might be.
“That is our vision for it,” he said of the goal of growing the project. “For these emerging new specialty materials, the way to start the business is at a small scale and bringing new products to the global market. By starting small you can introduce the product, get a customer base established and then start to grow your business over time.
“It looks a lot like a manufacturing business rather than a traditional mining business because of that fundamental difference — introducing a product to get accepted by buying customers and then developing sales.”
Sub-surface minerals on the site include rare metals like lithium which is considered in global demand due to intensifying China-U.S. trade tensions and limits to security and an outside supply chain for rare metals over the last year.
China, Bubar noted, has been a major source of rare metal material to global markets. Because of the extraction and processing of the metal, lithium is considered a green energy source and is used in electric car batteries, Bubar added.