Separation Rapids Rare Metals Project, Kenora, Ontario, Canada

The Separation Rapids property, located approximately 60 km (37 miles) north of Kenora, Ontario, Canada, is host to one of the largest rare metal pegmatite deposits in the world. This pegmatite was named the Big Whopper by its discoverer, Dr. Fred Breaks of the Ontario Geological Survey, because of the exceptional length and width of the surface exposure. The property is readily accessible from a main, all-weather road via a network of secondary logging roads. The main line of the Canadian National Railway passes through the village of Redditt, just 40 km (24 miles) south of the property. The Big Whopper is one of the complex-type (petalite sub-type) class of rare metal pegmatites that are geochemically the most highly evolved in the spectrum of granitic pegmatites. Such deposits are economically important as resources for the rare metals lithium, tantalum, cesium, and rubidium. While complex-type pegmatites are found in many areas of the world, most are too small to be profitably mined, however, with an inferred resource in excess of 15 million metric tons (mt) (17 million short tons [st]), the Big Whopper is only the fourth deposit of its type in the world with the size required to be of major economic importance. The other three deposits, which are currently in production, are the Tanco mine in Manitoba, the Bikita mine in Zimbabwe, and the Greenbushes mine in Western Australia. The Big Whopper is situated in the eastern continuation of the Archean Bird River greenstone belt which also hosts the Tanco pegmatite, approximately 60 km (37 miles) to the west. The principal commodities identified in the portions of the Big Whopper pegmatite explored to date are petalite (LiAlSi4010) and rubidium-rich K-feldspar. These are industrial minerals with important applications in the glass and ceramics industries. The Big Whopper also contains substantial quantities of lepidolite, a lithium, rubidium-mica which is the principal ore mineral for rubidium metal. Tantalum and cesium occur in anomalous levels with the petalite mineralization, and the possibility of finding zones of high enrichment in these valuable high-tech metals elsewhere in the deposit is excellent. Such enriched zones are typical of pegmatites as highly evolved as the Big Whopper. To date, the geological mapping and diamond drilling work completed by Avalon have delineated the Big Whopper pegmatite system over a strike length exceeding 1.5 km (0.9 miles), over widths ranging from 10 m to 80 m (30 feet to 260 feet) in thickness, and to a vertical depth of close to 300 m (1,000 feet), where it remains open. The pegmatite system consists of a vertically oriented massive petalite pegmatite dyke striking 280 degrees that is flanked by amphibolites containing a swarm of narrower albite and petalite dykes which have all undergone intense deformation in a high strain zone resulting in folding and intense shearing. The Big Whopper exhibits a mineralogical zonation pattern which is complicated by the superimposed deformation that has both folded and stretched the deposit. Drilling has defined a dilute geological resource totaling 7.1 million mt (7.8 million st) grading 1.283 percent Li20, 0.346 percent Rb20, and .007 percent Ta205 over a strike length of 600 m (2,000 feet), and to a vertical depth of 250 m (820 feet), where it remains open. The petalite and rubidium-rich-K-feldspars contained in the Big Whopper all appear to be of superior quality. The grades are consistent with a petalite content averaging 25-30 percent and a rubidium-rich-K feldspar content averaging 15-20 percent. The remainder of the rock consists mainly of albite, several types of mica, and quartz. Accessory minerals include columbitetantalite, cassiterite, apatite, garnet, and gahnite. Market studies show that the deposit is located close enough to existing transportation infrastructure to access rapidly growing, major markets in the glass and ceramics industries, both in the northeastern U.S. and Europe. There are only three competing lithium minerals producers in the world with the Bikita mine in Zimbabwe being the only major producer of petalite. The other lithium deposits produce spodumene, a less desirable lithium mineral. Lakefield Research Limited has successfully designed a process to produce an ultra-pure petalite concentrate containing up to 4.65 percent lithium oxide, and as little as 0.014 percent iron oxide, low levels of soda and potash, and negligible amounts of other trace elements. With these specifications, Avalon will have an excellent quality product for glass-ceramics applications such as Corningware®, CERAN® stove tops, and other thermal shock-resistant products. Lakefield is presently designing the balance of the flowsheet to produce separate concentrates of rubidium-rich K-feldspar, albite, mica, tantalum, tin, and high-purity quartz. Initial test work indicates that the feldspar products will be of exceptional quality. The K-feldspar concentrates contain 11-12 percent K20 and 1 percent Rb20, while the sodaspar contains over 10 percent Na20, and both have very low iron (0.01 percent Fe203). A preliminary economic model shows that with an initial production rate of 90,000 mt (100,000 st) per year, expanding to 170,000 mt (190,000 st) per year over 5 years, the project is capable of generating over CDN $10 million per year in pre-tax cash flow by year 5 on a capital cost of approximately CDN $30 million.