Avalon Secures $11 Million Funding Pact for Lithium Processing Plant
Avalon Secures $11 Million Funding Pact for Lithium Processing Plant

Avalon Secures $11 Million Funding Pact for Lithium Processing Plant

  • 19-Mar-2024 12:23 PM
  • Journalist: Jacob Kutchner

Avalon Advanced Materials (TSX: AVL) disclosed on Monday its agreement to secure a C$15 million ($11m) funding arrangement with Lind Global Fund II, a long-standing creditor managed by The Lind Partners, an institutional fund manager headquartered in New York. The initial drawdown of C$2.75 million is anticipated to conclude within the next fortnight, with Avalon, the Canadian lithium developer, highlighting that these funds will be allocated towards expediting activities at its proposed lithium processing facility situated in Thunder Bay, Ontario.

In July 2023, Avalon unveiled its collaboration with Finnish mining technology firm Metso, aimed at constructing what would mark the inaugural battery-grade lithium facility in the province. As part of this collaboration, Avalon would gain access to Metso's technologies for licensing purposes, enabling the production of lithium hydroxide cathode materials tailored for the global electric vehicle (EV) market. Preceding this announcement by a month, Avalon finalized the acquisition of a 383-acre industrial site boasting strategic access to vital infrastructure elements such as a deep-water port, rail connections, and roadway access, intended to serve as the host location for the proposed lithium processing facility.

Expressing satisfaction with the continued partnership, Lind Partners underscored their enduring relationship with Avalon, which dates back to their initial investment collaboration in 2017. Their latest investment initiative underscores Lind's confidence in Avalon's Thunder Bay-based processing facility strategy, identifying Avalon's potential to emerge as a significant player within the lithium supply chain, particularly catering to EV battery manufacturers in Ontario.

The entirety of the financing arrangement is structured in the form of a convertible security. The security associated with the initial drawdown will span a two-year term and will accumulate a simple interest rate obligation of 10% annually, which is prepaid and attributed to the face value upon issuance, resulting in a face value of C$3.3 million. Lind will retain the option to convert the face value amount over a 24-month period at a conversion price equivalent to 85% of the five-day trailing volume weighted average price of Avalon's common shares preceding the conversion date.

The Lind Partners oversees institutional funds renowned for offering growth capital to small- and mid-cap companies listed on public exchanges in the US, Canada, Australia, and the UK. Through its multi-strategy funds, Lind engages in direct investments ranging from US$1 to US$30 million, participates in syndicated equity placements, and selectively acquires securities on the open market. With a track record encompassing over 200 direct investments amounting to a cumulative transaction value exceeding US$2 billion, Lind's funds have consistently served as adaptable and supportive financial allies for investee companies since 2011.

Avalon Advanced Materials Inc. is a Canadian company specializing in advanced manufacturing, with a primary focus on establishing vertical integration within Ontario's lithium supply chain. The company, in collaboration with SCR-Sibelco NV, is presently engaged in the development of its Separation Rapids lithium deposit near Kenora, ON. Simultaneously, Avalon is advancing projects such as Snowbank lithium and Lilypad lithium-caesium. Additionally, Avalon is dedicated to the development of its Nechalacho rare earths and zirconium project situated in the Northwest Territories, which hosts critical minerals essential for various industries, including communications and defense.

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