Another buy recommendation for AVL.
Avalon Ventures Ltd. Extracted from the March 2000 issue
In addition to its highly prospective platinum group metal (PGM) projects, Avalon has become a leader in the search for exotic minerals and metals. One of those metals ? tantalum ? is important in the production of electronic components for high-tech applications, and is in short supply. Avalon is managed by a very capable group of geologists that have worked in Ontario for many years. Until a couple of years ago, the focus of the company, like many others, was on gold. The company holds several gold projects with considerable merit, but they are overshadowed by the PGMs and exotic minerals. The focus began to change when the company found a large rare metals pegmatite, rich in exotic minerals and metals. Known as the Big Whopper, this pegmatite is one of the largest deposits of this type known. It is rich in a mineral called petalite ? a lithium silicate. Petalite is used in high temperature glass, like Corning Ware, and Ceran stove tops. Large, high quality deposits of this mineral are rare. Avalon has completed a pre-feasibility study for the development of the Big Whopper deposit that shows very attractive economics. The metallurgical work supporting that study confirmed that a high grade product can be produced. It also confirmed that several other valuable minerals can be recovered as by-products. Samples have been evaluated by Dow Corning, and discussions are underway towards a marketing arrangement. The next step is a do a bulk sample, and complete a full feasibility study. The projected net present value of the petalite project is more than twice the total market value of the company. Yet, the real excitement lies in its PGM and tantalum projects. By virtue of its long involvement in Ontario, Avalon was able to secure some extremely interesting PGM properties. One of these is located immediately southeast of North American Palladium?s Lac des Iles mine, one of only two primary producers of palladium in the world. Avalon?s property has the same basic geological nature as at the Lac des Iles Mine. In fact, it is likely that the Avalon property covers part of the broader geological structure that hosts the mine. At the Lac des Iles mine, a zone of brecciation developed at the margin during the emplacement of an intrusive. This brecciated zone became enriched in PGMs, as well as nickel and copper, during the evolution of the intrusive. Evidence at surface, including PGM values, together with a distinctive geophysical signature, suggests that the Avalon property may host a similar zone of brecciation enriched with PGMs. Avalon has several other very promising PGM properties, and will be continuing its acquisition and exploration program. Avalon?s foray into exotic metals that began with its Big Whopper project, has now turned up several promising tantalum projects. Avalon?s management were early to recognize the pending shortage of tantalum, and directed a program to search for this metal. That program has now located four prospects. Tantalum has quickly become an important metal in high technology electronics. It has unique properties that make it vital in certain applications. The on-going push for ever smaller and higher performance electronic, computing and telecommunications equipment has created a rapidly growing demand for tantalum. That demand now outstrips supply, meaning that manufacturers are restricting output because they are unable to secure enough of this rare metal. Electronic manufacturers such as Sony and Samsung are resorting to investing in exploration ventures in places like Zimbabwe in an effort to enhance their prospects for an assured source of supply. Avalon has recently located and secured four properties in Ontario and Manitoba that contain tantalum, and which have prospects for hosting substantial deposits of this exotic metal. At its current price level, Avalon is very attractive. Its market cap is fully supported by its advanced stage petalite project. Its PGM and tantalum projects give the company enormous upside potential. Avalon Ventures Ltd. (AVL-CDNX) Shares Price March 23: C$0.85 Shares Outstanding: 21.3 million Market Cap: C$18 million Contact: 416-364-4938 avalonventures.com
Resource Opportunities is dedicated to giving investors practical advise and specific recommendations on small and mid-sized companies with exceptional growth potential. It is published by Lawrence Roulston, a mining industry professional with 25 years of hands-on experience.
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