Avalon Advanced Materials (TSX:AVL) have released a new Preliminary Economic Assessment for their East Kemptville Tin Project in Nova Scotia, Canada. The study reveals a positive economic case for further development of the project, with optical ore sorting being considered to reduce costs further.
The company’s model is to produce ~700tpa of tin in a 55% concentrate from the 5.87 Mt stockpile of low grade (0.112% Sn) tin ore from historic mining at the site. This could be supplemented by limited mining of 9.2 Mt of near-surface higher grade tin resources. This re-development model is intended to result in full rehabilitation of the site while supporting the economic recovery of tin concentrates for at least 15 years. The initial capital cost of the project is calculated at CAD 31.5 million (~US$24 million) with production costs per tonne of tonne estimated at US$12,646, excluding capital costs, taxes and royalties.
The company has also revealed encouraging Optical Ore-Sorting Test Results showing the technology has the potential to reduce both capital and operating costs and to reduce the volume of tailings generated from the proposed operation. The company plans to investigate the benefits of the technology further by undertaking a detailed sampling campaign and extensive bulk testwork program over the next six months.
Our View: Avalon is pitching the East Kemptville tin project based on its green credentials, with environmental remediation of legacy mine issues a priority for the project. The timing is appropriate as ensuring responsible sourcing of tin is fast emerging as a critical issue for many tin consumers. The project is currently deemed viable at tin prices of above US$20,000, although plans to investigate integrating optical ore sorting into the design may result in further cost improvements.
