Friday 13th December 2019

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Posts tagged ‘Avalon Advanced Materials Inc (AVL)’

Northern challenge

November 8th, 2019

NWT prosperity depends on rebuilding investor confidence, miners warn

by Greg Klein

NWT prosperity depends on rebuilding investor confidence, miners warn

 

What happens when a mining-based economy runs out of mines? The Northwest Territories risks finding out the hard way but the reason won’t be a lack of mineral resources. For too long, investors have been discouraged from backing territorial exploration. That’s the message the NWT and Nunavut Chamber of Mines delivered to the legislative assembly in Yellowknife last month. Now the industry group awaits a response, one backed with action, as the newly elected government prepares for its four-year term.

The territory’s three mines, all diamond operations, have passed peak production, facing closures over the coming decade. The NWT hosts only a few advanced projects, none comparing in potential economic clout with the big three. The problem contrasts with the NWT’s two northern neighbours, where the industry continues to thrive.

Projections released in July by the Conference Board of Canada call for Nunavut to lead the country in annual economic expansion, with an average 4.6% up to 2025. “Mining will be the main driver of growth, as Agnico Eagle prepares to bring its Meliadine mine and Amaruq satellite deposit into operation, and Sabina works on its Back River project.”

More tepid growth in mining will have repercussions on other areas of the economy, with growth in services-based industries remaining flat for much of the forecast. In all, economic growth in the Northwest Territories is forecast to contract by an average annual pace of 1.6% between now and 2025.—Conference Board of Canada

Yukon “will also experience a boom, with growth of 4.6% this year and 6.2% in 2019,” again thanks to mining. But the NWT faces decline:

“Two new metal mines should help offset some of the losses for the mining sector, but not until after 2020,” the Board stated. “More tepid growth in mining will have repercussions on other areas of the economy, with growth in services-based industries remaining flat for much of the forecast. In all, economic growth in the Northwest Territories is forecast to contract by an average annual pace of 1.6% between now and 2025.”

A lack of exploration spending explains the lack of projects in the pipeline, according to the Chamber of Mines. “The NWT has basically been flat-lining for the last 12 years,” says executive director Tom Hoefer. “That’s a problem because that’s the very investment you need to come up with new mines.”

But it’s a problem industry can’t solve without government help, he emphasizes.

“The government goes to Roundup and other conferences with really good marketing tools and they’re putting out all the right messages, such as: ‘Come unlock our potential.’ But if it’s that easy, why hasn’t the industry picked up?” Hoefer asks.

“Well, it’s because these other things happen.”

His group outlined a number of causes in its presentation to the assembly: high cost of living, relative lack of infrastructure, regulatory uncertainty, unsettled land claims and additional expanses of land (over 30% of the territory) deemed off limits for exploration and development.

NWT prosperity depends on rebuilding investor confidence, miners warn

Benefiting from previously built infrastructure,
NorZinc hopes to begin zinc-lead-silver mining
at Prairie Creek by 2022. (Photo: NorZinc)

Hoefer also mentions “contortions” imposed on companies. As examples he cites some early-stage exploration projects that were sent to environmental assessment, “something that would never happen in southern Canada,” and two companies being required to collect data about lakes from which they might or might not draw water in small amounts for diamond drilling, “a totally new requirement, totally out of step with what happens in the rest of the country.

“What that says to investors is, ‘You’d better be careful when you come up to the NWT because there are these surprises coming out of the woodwork.’”

Convincing the territorial government calls for a different approach than in most of Canada. With no political parties, the Chamber deals with 19 individual MLAs tasked with working on consensus. They put together collective priorities, Hoefer explains, then create a mandate for their four-year term. His group looks forward to seeing the current mandate, expected to be released soon.

“Candidates don’t run on a platform but on a community-by-community basis, saying ‘this is what I would do for our community.’ So the challenge is pulling them all together to serve the entire NWT and try to keep them on that path over the next four years.”

Should problems remain unresolved, however, the territory risks an unfortunate repeat of late 1990s history.

NWT prosperity depends on rebuilding investor confidence, miners warn

Considerable infrastructure remains at the former
Pine Point operation, where Osisko Metals upgrades
Canada’s “largest pit-constrained zinc deposit.”
(Photo: Osisko Metals)

“We were in a similar situation before the first diamond mine opened because the gold mines were winding down. At the same time Nunavut was created, and the new territory pulled a lot of funding away to create a parallel government. The Yellowknife economy really took a dive and housing prices went way down. At the time the government was actually offering $10,000 grants to encourage people to buy homes. We went through a lot of pain then, but I think a lot of people have forgotten that.”

Even Ekati seemed insufficient to buoy the economy. “But when Diavik got its approval the change was palpable. There was this big sigh of relief, money started to flow and the economy turned around.”

Now the challenge is to overturn 12 years of neglect that have made investors “gun shy about the NWT,” he says. “We have to rebuild that trust by showing that things are different now. It’s going to take all of us working together to help make it better.”

With no other industries ready to take mining’s place, “we have to encourage companies to come up here and bring their expertise to do what government can’t do, and that’s turn rock into opportunity.”

 

Current and potential mines: Comparing job numbers and durations

 

NWT prosperity depends on rebuilding investor confidence, miners warn

While updating indicated and inferred resources,
Vital Metals sees near-term potential for a short-lived
operation at its Nechalacho rare earths deposits.
(Photo: Avalon Advanced Materials)

Employment numbers reported by the Chamber for the NWT’s existing diamond mines in 2018 show 1,625 workers at Dominion Diamond Mines’ majority-held Ekati, 1,113 at Rio Tinto’s (NYSE:RIO)/Dominion’s Diavik and 527 at De Beers’/Mountain Province Diamonds’ (TSX:MPVD) Gahcho Kué.

Projections for the territory’s four likeliest potential mines show estimated average annual employment of 363 workers at Prairie Creek (for 15 years), 300 at Pine Point (13 years), 225 at NICO (21 years) and 30 at Nechalacho (four years).

The NWT’s next mine will be Prairie Creek, according to NorZinc TSX:NZC. Built to near-completion by 1982 but never operated, the zinc-lead-silver project reached feasibility in 2017. The company hopes to receive its final permit, for an all-season road, this month. Should financing fall in place, NorZinc plans to begin production in 2022.

Having operated from 1964 to 1987, the Pine Point zinc-lead camp retains infrastructure including an electrical substation and an all-season 96-kilometre link to Hay River, the head of Canada’s only industrial railway north of 60. A previous operator reached PEA in 2017 but current owner Osisko Metals TSX:OM has been drilling the property to upgrade a 2018 inferred resource of 38.4 million tonnes averaging 4.58% zinc and 1.85% lead, for 6.58% zinc-equivalent, Canada’s “largest pit-constrained zinc deposit.”

Fortune Minerals’ (TSX:FT) NICO cobalt-gold-bismuth-copper project reached feasibility in 2014 based on a mill production rate of 4,650 tpd for a combined open pit and underground operation. A further study considered but rejected a rate of 6,000 tpd. Fortune now has several other proposals under consideration to improve the project’s economics and “align the development schedule with the expected deficit in cobalt supply in 2022-23.”

The project sits about 50 kilometres north of Whati, which will have an all-season connection to Yellowknife via the Tlicho road now under construction.

Avalon Advanced Materials TSX:AVL brought its Nechalacho rare earths project to feasibility in 2013 but this year divided the property with another company, privately owned Cheetah Resources which was taken over by ASX-listed Vital Metals in October. Under a $5-million property acquisition that closed soon after the takeover, Vital gets two near-surface deposits while Avalon retains the ground below that. Now working on an update to the indicated and inferred resources, Vital says its deposits show near-term “potential for a start-up operation.”

See the Chamber’s PowerPoint presentation to the NWT government.

Related:

Caution steadies the hand for Canada’s top miners: PwC

March 1st, 2018

by Greg Klein | March 1, 2018

Last year saw “few eye-popping deals and only limited financing activity” as TSX-listed mining companies responded cautiously to improved markets, according to a new PricewaterhouseCoopers report. Like many of their peers internationally, the big board’s top 25 miners focused on “paying down debt, improving balance sheets and judiciously investing in capital projects as commodity prices largely stabilized.”

The findings come from Preparing for Growth: Capitalizing on a Period of Progress and Stability, released March 1.

Gold, the raison d’être for most of the miners, fell 3% during the year ending September 30. During that period the 225 TSX-listed miners (down from 230 the previous year) lost 4% of their aggregate value, compared with a 10% combined improvement for other sectors. Miners slipped to a 9% share of the entire TSX market, compared with 11% the previous year, holding ninth place among industries on the exchange. (Financial services came in first.)

Barrick Gold TSX:ABX, still the world’s top gold producer despite Newmont Mining’s (NYSE:NEM) challenge, held top place among TSX mining market caps as of September 30. The top stock was Kirkland Lake Gold TSX:KL, with a 175% price increase over the full year, following its billion-dollar takeout of Newmarket Gold. The acquisition represented part of a trend of “mid-market, intermediate gold companies looking to build scale and gain efficiencies through consolidation,” said John Matheson of PwC Canada.

Two since-merged companies, Potash Corp of Saskatchewan and Agrium, followed Barrick with second and third place among TSX mining valuations. Currently at about $41 billion, the potash combination Nutrien Ltd TSX:NTR has far surpassed Barrick’s $16.8-billion market cap.

Nearly half of the 225 companies had valuations of $150 million or less. But the category between $150 million and $1 billion boasted 74 companies, compared with 59 the previous year.

Nineteen of the top 25 had exposure to gold, 10 to copper, seven to zinc, six to silver and four to nickel, PwC stated. The report noted increasingly bullish sentiment for copper, zinc, cobalt and lithium. The latter mineral did especially well for five companies, with an approximately 39% total increase in valuations over nine months to September 30 for Orocobre TSX:ORL, Lithium Americas TSX:LAC, Nemaska Lithium TSX:NMX, Avalon Advanced Materials TSX:AVL and Globex Mining Enterprises TSX:GMX.

But overall, TSX miners “raised only half the equity capital in 2017 that they did the previous year. And for the second consecutive year, there were no mining initial public offerings on the TSX.”

That contrasts with a more buoyant, although still cautious mood among Venture-listed junior miners reported in November by PwC, which found a substantial increase in market caps, financings, M&A and IPOs for TSXV explorers.

Download Preparing for Growth: Capitalizing on a Period of Progress and Stability.

“It’s a new NWT”

October 7th, 2014

Miners welcome the Northwest Territories’ plans to encourage investment

by Greg Klein

Next Page 1 | 2

His tone sounded taunting, if only slightly so. While attending a meeting of resource politicos in Sudbury last August, Northwest Territories minister of Industry, Tourism and Investment David Ramsay told the Globe and Mail that the NWT’s “Ring of Ice” has resources to rival Ontario’s Ring of Fire. The huge difference, of course, is that the Ring of Fire remains all but inaccessible while the NWT’s riches have already been opened up. Now the territory has taken specific measures to emphasize it’s open for business.

That came through in the first annual implementation plan of the NWT’s Mineral Development Strategy. And the plan drew praise in an October 6 announcement from the NWT and Nunavut Chamber of Mines. The organization sees last April’s devolution of federal responsibilities for land, water and resources to the territory as a turning point for the industry. “The legislature has said mining development has big consequences for our government now,” chamber executive director Tom Hoefer tells ResourceClips.com. “So it’s saying we’re going to be more nimble on our feet, we’re going to encourage economic development.”

Miners welcome the Northwest Territories’ plans to encourage investment

The NWT has done so by setting ambitious goals, some with established budgets and target dates, on a number of fronts including energy, transportation and a “new leading edge Mineral Resources Act.” That marks a major departure from past practice, according to Hoefer.

“We’ve suffered a loss of reputation over probably the last seven years. If you look at our exploration figures during that period you can see our investment just flatlined. We saw Yukon, Nunavut and the rest of the world getting huge investment. We languished.”

Indeed, last year’s Fraser Institute Policy Perception Index placed the NWT nearly halfway down a list of 112 jurisdictions globally and sixth on a list of 12 Canadian jurisdictions.

“A big piece of this was the regulatory front,” Hoefer explains. “It was getting very complex, in part because we had a number of different land claim groups and that created a number of different regulatory boards. So the federal government launched a northern regulatory improvement initiative in 2009 and that culminated in amendments to the Mackenzie Valley Resource Management Act.” That was completed shortly before last April’s devolution milestone.

The NWT considers those amendments a starting point for a new regulatory environment. But the government’s not promising rapid reform. Calling this a “time of transition and learning,” the territory has come up with the slogan “devolve then evolve.” Still, it’s stated intentions to provide clear, concise documentation and to guide companies through regulatory processes and aboriginal engagement.

The territory already leads Canada in at least one respect, Hoefer maintains. “I’d say we’re probably a leader in the country for settling land claims. That helps provide more certainty.”

Devolution also brings the territory 50% of the royalties that once went solely to the feds. Aboriginal groups that signed onto the devolution agreement get 25% of the territory’s share, Hoefer says.

With grants announced just last week, a new mining incentive program has awarded a total of $396,000 to two prospectors and six exploration companies.

“A new and easier-to-use web portal for discovery and dissemination of geoscience information” will get $1.3 million over two years.

But that’s small change compared to price tags for infrastructure. Although money hasn’t been allocated yet, the NWT’s talking about a three-year, $31-million energy program and a 10-year, $200-million transportation plan.

None of the territory’s four existing mines connect to the grid. Only North American Tungsten’s (TSXV:NTC) CanTung operation has year-round road access—and that links to the Yukon.

Next Page 1 | 2

Territorial ambitions

July 31st, 2013

Four Northwest Territories projects reach regulatory milestones

by Greg Klein

It might be called a blip, a surge, a spike or a spurt but it more likely resulted from long periods of painstaking work. Just recently four Northwest Territories projects moved closer to development thanks to regulatory advancements. Fortune Minerals TSX:FT, De Beers Canada/Mountain Province Diamonds TSX:MPV, Avalon Rare Metals TSX:AVL and Canadian Zinc Corp TSX:CZN all reported significant progress over a three-week period.

On July 19 Fortune announced its proposed NICO gold-cobalt-bismuth-copper mine and mill received federal, territorial and native approval. By accepting the positive environmental assessment released by the Mackenzie Valley Review Board in January, three levels of government have allowed NICO to move towards water licensing, as well as land use and construction permitting. Given further approvals, not to mention financing, Fortune hopes to start construction next year on an open pit/underground operation 160 kilometres north of Yellowknife that could last nearly 20 years.

Four Northwest Territories projects reach regulatory milestones

Although surrounded by a wildlife reserve, Canadian Zinc’s development
has progressed through the NWT’s regulatory regimen.

Also recommended for approval by the Mackenzie Valley Environmental Impact Review Board was Gahcho Kué, described by its proponents as “the world’s largest and richest new diamond mine development.” Located 280 kilometres northeast of Yellowknife, it’s a 51%/49% joint venture of De Beers Canada and Mountain Province. The board’s recommendation, however, comes with conditions to prevent potentially adverse environmental effects. The federal minister of Aboriginal Affairs and Northern Development makes the final decision. In a statement accompanying the JV’s July 22 news release, De Beers COO Glen Koropchuk said his company’s reviewing the measures and follow-up programs recommended by the board. “We look forward to proceeding to the next stages in the regulatory approval process,” he added.

One week later Avalon announced it too received the MVEIRB’s recommendation, again subject to certain conditions “to mitigate the predicted impacts so that they are no longer significant.” In April the company’s Nechalacho rare earth elements project, about 100 kilometres southeast of Yellowknife, achieved the “first feasibility-level study to be completed on a major heavy rare earth project outside of China,” the company stated. Avalon maintained its resources might support 90 years of production “if the mining rate is unchanged and mineral resources are converted to mineral reserves at the same conversion rate experienced” in the feasibility. Applications for a water licence and land use permits continue, as do “efforts to finalize its aboriginal agreements, secure product off-take agreements, identify strategic partners and secure project financing.”

On July 8 Canadian Zinc announced the Mackenzie Valley Land and Water Board had recommended approval of a Type A water licence, “the key regulatory permit needed for the construction, development and operation” of its Prairie Creek zinc-lead-silver mine. Located about 500 kilometres west of Yellowknife, the project has been surrounded by the Nahanni National Park Reserve since the park’s six-fold expansion in 2009. Prairie Creek received environmental approval in June 2012. Already in place are a 1,000-tonne-per-day mill, five kilometres of underground workings, a surface fleet and an airstrip.

The four announcements were welcomed by the NWT & Nunavut Chamber of Mines. In a July 27 statement chamber president and De Beers director of external and corporate affairs Cathie Bolstad said, “While the minerals industry is currently facing significant financial and commodity price challenges globally, the continued advancement of these and other significant northern projects helps invite investment to the Northwest Territories and Nunavut. This will help sustain and grow our industry, which is a significant provider of economic opportunities and benefits to northern residents and Canada.”

Effective April 2014, responsibility for NWT onshore resource development will shift from the federal to the territorial government. Public land ownership will also be transferred, while resource royalties will be shared. At last count the territory’s population stood at 43,407.

A Pleasant Surprise

March 26th, 2012

Zenyatta Finds Graphite while Exploring Ontario for Nickel-Copper

By Greg Klein

On completing its December 2010 IPO of $9.9 million, Zenyatta Ventures TSXV:ZEN began 2011 with big ambitions. The company set out to explore its Albany Project in northern Ontario, which may sit on a structure related to the Mid-Continent Rift, home of a number of significant deposits around Lake Superior. Zenyatta hoped for a nickel-copper-polymetallic deposit comparable to the Norilsk Nickel mine in Siberia, Vale‘s Voisey’s Bay operation in Labrador or Rio Tinto‘s Eagle deposit in Michigan. So far, that goal has proved elusive. But what the Albany Project (aka Arc of Fire) drill results do show, says President/CEO Aubrey Eveleigh, might be equally compelling—the possibility of an exceptionally large deposit containing the exceptionally unusual occurrence of vein-type graphite.

Vein (or lump) graphite is the rarest, hence most expensive, type of natural graphite. At the other end of the scale, amorphous graphite is the type most commonly found and is widely used for steelmaking, auto parts, sports equipment and other applications. Flake graphite is essential to the emerging markets that include solar panels, fuel cells, pebble-bed nuclear reactors and the lithium-ion batteries that are becoming standard for electronic devices and electric vehicles. But little is spoken of vein graphite—likely because there’s so little to speak of.

Zenyatta Finds Graphite while Exploring Ontario for Nickel-Copper

Currently the world’s supply depends on Sri Lanka, whose mines contain exceptionally pure graphite, often grading over 90%. The product transmits heat and electricity more efficiently than other graphite types and is easier to mould. As a result, it’s in high demand for specialized uses such as the electric brushes used in motors and generators and in powder metallurgy used to manufacture parts for industries that include the automotive, aerospace, energy and medical/dental sectors.

So how did Zenyatta’s aspirations turn from a Voisey’s Bay to a Sri Lankan-type target? “We flew our property with an airborne survey and got a very large conductor that measures 1,400 metres by 800 metres,” explains Eveleigh. “That’s a whopping conductor. We thought it was copper-and-nickel massive sulphides. It’s covered with swamp so we had to drill blindly. But we started to get this graphite-rich breccia zone. Basically, from top to bottom we were getting all this graphite. So it’s pretty large and pretty unique because it’s a hydrothermal graphite deposit unlike what anybody is promoting in North America right now. There is one in Sri Lanka that’s similar to it, and that’s a vein-type graphite.”

Results announced January 19 from one hole show eight separate breccia zones, the first starting at 79.8 metres and the last ending at 522 metres. The following assays were released.

  • 4.6% carbon over 9.9 metres
  • 4.2% over 67.5 metres
  • 3.3% over 7.9 metres
  • 2.5% over 48.2 metres
  • 3% over 26.4 metres
  • 4.2% over 5.5 metres
  • 2.1% over 7.5 metres
  • 3% over 16 metres

A mineralogical study at Lakehead University found graphite ranging from fine (-270 mesh) to coarse (+40 mesh). The next step is bench-scale testing to better determine the deposit’s purity, flake-size distribution and recoverability. Results from SGS Canada are expected within two to four months.

“This could be exceptional; it could be very valuable; and certainly the market is bullish on graphite right now,” says Eveleigh.

Meanwhile, drilling will resume presently. “We need to determine the size of it. If we judge by the airborne conductor, it looks pretty big, but you still have to prove that. So we’re stepping out quite a ways, like 200-metre step-outs. If it’s still there, we can extrapolate in between and say this looks like a pretty big deposit. If it’s as big as the conductor suggests, it will be one of the biggest graphite deposits in the world.”

If it’s as big as the conductor suggests, it will be one of the biggest graphite deposits in the world —Aubrey Eveleigh

About 4,000 metres of drilling is planned. And the company’s still looking for that big nickel-copper find in its 121,000-hectare Albany Project. “We have 28 different claim blocks,” Eveleigh points out. “We found the graphite on one block and we’re advancing that, but we’re also exploring the other 27 blocks.”

The graphite deposit has “good access and good infrastructure,” he adds. It sits four kilometres from an all-weather logging road, 30 from the Trans-Canada Highway and 70 from a rail line.

As a geologist, Eveleigh’s career began with Noranda and includes a seven-year stint as a partner in a consulting firm that worked for around 50 juniors and majors. He also held a highly successful position with Wolfden Resources and is currently president of Eveleigh Geological Consulting, which has provided expertise for companies including Rio Tinto, Goldcorp TSX:G, Agnico-Eagle TSX:AEM, Diavik Diamond Mines and BHP Billiton.

Zenyatta’s team includes Barry Allan, an exploration geologist turned Senior Mining Analyst for Mackie Research Capital, and Cliff Davis, who boasts over 40 years’ experience in open-pit and underground mining. Brian Davey, a member of the Moose Cree First Nation, has 28 years’ experience in issues mostly related to First Nations economic development. Some other management and advisory staff include Don Bubar, president of Avalon Rare Metals TSX:AVL and Roland Butler, co-founder of Altius Minerals TSX:ALS, which holds a 10% interest in a 3% Voisey’s Bay net smelter royalty.

The company has an 80% earn-in option with Cliffs Natural Resources CLF, which calls for $10 million of spending over four years. Zenyatta has already earned 25% by completing its airborne survey. Cliffs holds 11.8% of Zenyatta’s shares.

Cliffs also helps with technical support, so we’re moving this along together,” Eveleigh says. “They obviously like these projects, and they’re very supportive of us.”

Insiders hold 23.5% of Zenyatta shares while another 35% is institutional. At press time Zenyatta had 39.6 million shares trading at $0.15 for a market cap of $5.9 million.

Eveleigh will make a presentation at OnPage Media’s May 2 Graphite Express-Conference at Toronto’s Sheraton Hotel. Click here for free registration.

Disclaimer: Zenyatta Ventures Ltd is a client of OnPage Media, and the principals of OnPage media may hold shares in Zenyatta.