Avalon Ventures Ltd. - Tantalum Joint Venture Agreement Finalized - Tantalum Prices Continue to Rise
Due to Soaring Electronics Demand
Toronto, Ontario --
Avalon Ventures Ltd. ("Avalon" or "the Company") is pleased to
announce that it has finalized a joint venture agreement with
Global Canada Company ("Global"), a private Nova Scotia company
controlled by BSAV, Inc. ("BSAV"), a private Delaware company,
whereby Global will have the right to earn up to a 75% interest
in any of three of Avalon's Canadian tantalum exploration
projects (Lilypad Lakes, Raleigh Lake, East Braintree), by
providing financing for exploration and development work to
production. All of the financial obligations of Global under
this agreement are guaranteed by U.S. investors familiar with
tantalum markets.
Under the agreement, Global will have the right to earn an
initial 50% interest in any of the three subject tantalum
properties by providing $5.0 million in exploration and
development funding before Dec. 31, 2002 or upon delivery of a
feasibility study. Global can increase its interest to 75% in
any one property by arranging financing to bring a tantalum mine
into production. The initial firm commitment is for Global to
provide $1.0 million in financing to fund work programs on the
three properties totalling $750,000, to be completed by December
31, 2000, and $250,000 in working capital. Avalon will be the
operator of the exploration programs, and Global can elect to
nominate the operator upon making a production commitment.
Global will also have the right to participate in any other
tantalum exploration properties acquired by Avalon in Canada.
The current world market for tantalum is estimated to be between
4.0 and 4.5 million lbs. Ta2O5 (tantalum oxide) per annum, which
some observers forecast will double over the next five years.
The world's largest primary producer, Sons of Gwalia
Ltd.(SGW:ASX) of Perth, Australia, now supplies approximately 25%
of the world market and recently announced plans to expand
production to 2.3 million lbs. per annum over three years at an
estimated cost of A$100 million. Prices for tantalum mineral
concentrates are rising rapidly as a recent sale of 181,190 lbs.
of Ta2O5 from the U.S. National Defense Stockpile by the Defense
Logistics Agency (DLA) was effected at a price of approximately
US$150 per lb contained Ta2O5, a 72% increase over the price of
a similar sale completed in June, 2000 and a 147% increase over
the November, 1999 DLA sale price.
Tantalum is a high-technology metal used in the production of
miniature high-efficiency electronic capacitors and in a variety
of specialty metal alloys used in the chemical and aerospace
industries where its high capacitance per unit volume, strength
and resistance to corrosion make it especially valuable.
Tantalum capacitors are presently in particularly high demand,
accounting for 60% of the world tantalum market, because they are
now an essential component of cellular phones and pagers. These
products are experiencing explosive growth in popularity
worldwide and new sources of supply of tantalum will be required
to meet anticipated future demand for this strategic metal.
In further consideration for Avalon agreeing to enter into the
joint venture, BSAV has agreed to subscribe for, at a price of
$100.00, and Avalon has agreed (subject to regulatory approval)
to issue to BSAV, 2,000,000 non-transferable share purchase
warrants (the "Warrants") exercisable in four equal tranches of
500,000 warrants, into common shares of the Company at an
exercise price of $1.00. The Warrants will be exercisable by
BSAV on or before July 31, 2005, on the following basis:
a) After July 31, 2000: 500,000 warrants.
b) After January 10, 2001, 500,000 warrants, provided that
Global elects to fund an additional $1,250,000 in
exploration work on the properties before August 31, 2001.
c) After September 10, 2001, 500,000 warrants, provided that
Global elects to fund a minimum $1,500,000 work program
towards achieving an aggregate minimum of $5,000,000 on at
least one of the three properties by December 31, 2002.
d) After April 10, 2003, 500,000 warrants, only if Global makes
a production commitment in respect of any one of the three
properties.
Work programs involving grid construction, geological mapping,
lithogeochemical sampling and gravity surveys to define drill
targets were initiated on each of the Lilypad Lakes, East
Braintree and Raleigh Lake properties in September, 2000. The
top-priority property, with a program budget of $580,000, is
Lilypad Lakes located near Pickle Lake, Ontario where a
preliminary diamond drilling program completed in April, 2000
intersected tantalum mineralization in three separate occurrences
averaging 0.05% Ta2O5 (tantalum oxide) across 11.5 metres, 0.036%
Ta2O5 across 24.0 metres and 0.076% Ta2O5 across 7.0 metres
(estimated true widths). A grade of 0.045% Ta2O5 is equivalent
to approximately 1 lb./tonne and worth up to US$150/tonne in situ
at current spot prices. A minimum 1100 metre follow-up diamond
drilling program is scheduled to begin on the Lilypad Lakes
property after freeze-up in November.
Avalon Ventures Ltd. is a Canadian junior mineral exploration and
development company with a focus on the "Metals of the Future",
specifically the high-technology metals tantalum, lithium,
cesium, rubidium, platinum, and palladium. For further
information contact Donald S. Bubar at (416) 364-4938 or Blair
Naughty, Manager, Investor Relations at (416) 536-7281.
Corporate Information may also be accessed on the internet at
www.avalonventures.com
ON BEHALF OF THE BOARD
"Donald S. Bubar"
Donald S. Bubar, President
* The Canadian Venture Exchange has not reviewed and does not
accept responsibility for the adequacy or accuracy of this news
release*
Shares Outstanding: 21,627,231
Symbol: AVL:CDNX SEC 12g3-2(b): 82-4427
111 Richmond St. W., Suite 1116 Toronto, Ontario M5H 2G4
Tel: (416) 364-4938 Fax: (416 ) 364-5162
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