EDISON EQUITY RESEARCH - AVALON RARE METALS - STUDY SUPPORTS FURTHER INVESTMENT IN TIN

Avalon’s Conceptual Redevelopment Study (CRS) on its East Kemptville asset provides sufficient confidence to advance its understanding of this promising tin project, one of only a few available for development outside Asia. Capex has been initially set at c US$157m (excluding sustaining capex) and includes a small tin refinery to produce ingots, rather than lower-value concentrates. We see East Kemptville as the leading asset in Avalon’s five-strong project portfolio. However, we also note the potential for lithium chemicals to be generated from its Separation Rapid project to feed into the growing lithium battery story surrounding electrical vehicle manufacture. Subject to financing and further technical work, management expects both projects to provide Avalon’s first cash flows as early as 2018.

Avalon Rare Metals is focused on rare metal and minerals deposits in Canada, with three advanced-stage projects, including its 100%-owned Nechalacho Deposit, the Separation Rapids Lithium Minerals Project and the East Kemptville Tin-Indium Project.

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