Sibelco has made an investment of C$63m ($47.63m) in Avalon Advanced Materials to acquire a nearly 19.9% stake in Avalon
Sibelco invests C$63m in Avalon to acquire nearly 19.9% stake. (Credit: SIBELCO)
Avalon Advanced Materials and SCR-Sibelco have signed a binding term sheet to create a new joint venture (JV) partnership to advance the former’s lithium production and processing objectives in Canada.
In this regard, Sibelco has made an investment of C$63m ($47.63m) in Avalon Advanced Materials to acquire a nearly 19.9% stake in Avalon.
Under the terms of the term sheet, Avalon has issued about 109 million of its common shares to Sibelco for aggregate proceeds of C$10m ($7.56m) and a secured convertible debenture in the principal amount of C$3m ($2.27m).
The investment gives Avalon a first tranche of funding to further progress its lithium production and processing goals across the company’s portfolio of lithium mineral assets, which are led by the Separation Rapids lithium project in northwestern Ontario.
Avalon CEO Scott Monteith said: “This strategic partnership represents a significant step forward in scaling our business towards full vertical integration of our lithium production.
“Sibelco’s investment is a major vote of confidence in our vision, resources and capabilities by a respected and established international operator—and now partner.”
According to the companies, the new JV will expedite Avalon’s core business goal of building a mid-stream lithium refining facility in Ontario.
The initial participating interests of Sibelco and Avalon in the JV on the formation date will be 60% and 40%, respectively.
Sibelco will act as the operator of the JV and has agreed to invest €35m into it.
The parties expect to advance €5m from Sibelco’s investment in the JV to the Separation Rapids and Lilypad lithium projects along with contributions by Avalon.
Besides, an additional €30m will be provided in tranches to fund the development of the JV mineral projects, including facilities and related infrastructure.
Sibelco CEO Hilmar Rode said: “Our partnership with Avalon will focus both on the clean energy growth agenda and the technical glass and ceramics markets in which Sibelco has deep and time-tested expertise.
“This dual-market strategy combined with a cash-generative business plan will lay the foundation for accelerated growth, and ultimately the venture’s sustained success going forward.”
The JV aims to facilitate the purchase of industrial land for a lithium-hydroxide processing facility in Thunder Bay, Ontario.
The Separation Rapids project near Kenora, Ontario and Lilypad spodumene-caesium-tantalum project near Fort Hope, Ontario are currently being developed by Avalon.