"Patience is a Super Power" - "The Money is in the waiting"
Showing posts with label Lithium Americas. Show all posts
Showing posts with label Lithium Americas. Show all posts

Saturday, August 16, 2025

If North American consolidation in the REE/Li market is in the cards, AVL looks to be a consolidation lottery ticket!

 

 

Avalon Advanced Materials (TSX: AVL)

Consolidation Driver in the North American REE & Lithium Markets

(Some penny stocks shouldn't be overlooked. I believe AVL is one of those)


1. Strategic Position in REEs

  • Nechalacho Project (NWT, Canada):

    • One of the most advanced REE deposits in North America.

    • 2013 DFS gave an after-tax NPV of ~USD $900M (~C$1.2B).

    • Contains both light and heavy REEs critical for defense, communications, and EV motors.

    • Currently split with Vital Metals (North T Zone) → clear consolidation target for a single operator.

  • AVL’s Basal Zone holds the majority of resources, positioning the company as a natural consolidator or takeover target.


2. Strategic Position in Lithium

https://www.vmcdn.ca/f/files/nob/avalon-advanced-materials-thunder-bay-site-sign-2.png%3Bw%3D960https://www.vmcdn.ca/f/files/nob/avalon-thunder-bay-site-placement-map.png%3Bw%3D960
  • Thunder Bay Lithium Hydroxide Facility (Ontario):

    • 2024 PEA showed C$4.1B after-tax NPV and 48% IRR.

    • Only planned midstream processing hub linking Ontario/Northern lithium deposits with Southern Ontario EV/battery manufacturing.

    • A rare “ready-made” piece of infrastructure for OEMs or lithium miners seeking to capture IRA credits.

  • Lithium Deposits: Separation Rapids (Kenora), Snowbank, and Lilypad → resource pipeline for Thunder Bay facility.


3. Why Avalon is a Consolidation Prize

  • Few companies combine REE + lithium assets in one portfolio.

  • AVL offers both upstream resources (REEs, lithium deposits) and midstream processing (Thunder Bay).

  • Consolidating AVL allows a buyer to secure:

    • Long-life REE supply (Nechalacho).

    • A North American lithium hydroxide plant.

    • Eligibility for U.S./Canadian government incentives under the IRA and Canadian Critical Minerals Strategy.


4. Potential Suitors & Rationale

  • Critical Metals (CRML): Synergy with Tanbreez (Greenland); cross-Atlantic REE strategy.

  • Vital Metals (VML): Logical consolidator of Nechalacho (eliminate split ownership).

  • MP Materials (MP): U.S. REE giant; Avalon secures Canadian REE + lithium foothold.

  • Lynas Rare Earths (LYC): Expansion into North America to diversify from Australia.

  • Lithium Americas / Piedmont Lithium: Thunder Bay plant is the missing midstream link.

  • Tesla, GM, Ford: Direct EV/battery makers securing feedstock & processing capacity.


5. Buyout Valuation & Escalation Potential

  • Current Market Cap: ~C$22–25M (@ ~C$0.04/share).

  • Risk-adjusted strategic value: ~C$300–600M (C$0.50–0.85/share).

  • Likely opening bid: ~C$1/share (~C$637M).

  • If multiple suitors compete: Escalation toward C$1.75–2.10/share (~C$1.1–1.3B).

  • Extreme scenario (Tesla/MP with gov’t backing): Possible bid north of C$2/share if Thunder Bay DFS confirms economics + IRA/Defense contracts lock in demand.


6. Investment Thesis

  • Underappreciated value: Market assigns only ~C$25M to assets with multi-billion NPVs.

  • Strategic location: Canada = politically secure jurisdiction, aligned with U.S. supply-chain policies.

  • Consolidation catalyst: Split ownership at Nechalacho and fragmented lithium supply chain make AVL a natural acquisition target.

  • Bidding war potential: With REE + lithium both on the strategic critical list, more than one suitor is almost inevitable.


Conclusion

Avalon (AVL) is grossly undervalued relative to its assets. From a consolidation standpoint, it represents one of the few opportunities for REE and lithium players to secure a vertically integrated North American platform.

  • Entry today (~C$0.04/share) offers exposure to a potential 25×–50× re-rating if a takeover unfolds.

  • A realistic acquisition could settle around C$1–1.25/share, with upside to C$2/share in a competitive bidding war.


👉 In short: AVL is a textbook “strategic consolidation play” in the REE market, with built-in lithium upside. The mismatch between current valuation and strategic value makes it highly attractive for patient investors — and a natural spark for a bidding war.


The three most likely suitors (MP Materials, Lynas, and CRML) would gain by acquiring Avalon Advanced Materials (AVL), and that could push bidding toward the C$2/share mark.


Takeover Case Comparison: Who Benefits Most from Buying Avalon (AVL)?


1. MP Materials (NYSE: MP)

Profile: Largest U.S. REE producer (Mountain Pass, California), backed by U.S. defense and IRA policies.

What They Gain From AVL:

  • Nechalacho REE deposit: Adds a second North American REE source, diversifying away from Mountain Pass.

  • Thunder Bay lithium hydroxide facility: Midstream processing capacity in Canada → critical for EV battery OEM contracts.

  • Canadian footprint: Strengthens IRA eligibility and helps qualify U.S. automakers for mineral sourcing credits.

  • Geopolitical leverage: Control over both U.S. and Canadian REEs makes MP the undisputed North American champion.

Why They Might Pay Up:

  • MP has the balance sheet (US$5B+ market cap) and political support to pay C$1.50–2.00/share for AVL if it locks out Lynas or CRML and secures Canada as a “REE & lithium fortress.”


2. Lynas Rare Earths (ASX: LYC)

Profile: World’s largest REE producer outside China (Mount Weld mine, Australia), with Japanese government support.

What They Gain From AVL:

  • Nechalacho REE deposit: A second production center outside Australia → diversification + North America expansion.

  • Thunder Bay facility: Processing hub ties them into the EV battery value chain — an area where Lynas currently lacks direct presence.

  • Strategic partnerships: Japanese offtakers (Toyota, Sojitz, JOGMEC) could be extended into Canada.

  • Geopolitical insurance: A hedge against China disruptions and over-reliance on Australia/Malaysia operations.

Why They Might Pay Up:

  • Lynas is under pressure to expand capacity in Western-friendly jurisdictions.

  • Could justify C$1.25–1.75/share, possibly more if MP enters the bidding.


3. Critical Metals Corp. (NASDAQ: CRML)

Profile: Developer of the Tanbreez REE project in Greenland, currently advancing a Definitive Feasibility Study (DFS).

What They Gain From AVL:

  • Nechalacho REE deposit: Complements Tanbreez, giving CRML two of the world’s largest non-China REE resources.

  • Thunder Bay facility: Instant midstream processing — CRML’s missing piece for vertical integration.

  • Lithium exposure: Expands portfolio beyond REEs, adding lithium hydroxide production → higher relevance to EV/battery markets.

  • U.S./Canadian critical minerals politics: Strengthens case for DOE/DoD funding, partnerships, and offtake deals.

Why They Might Pay Up:

  • CRML is smaller than MP or Lynas, so financing a C$1–2/share bid would require partnerships or equity raises.

  • But the strategic synergy is enormous — owning both Tanbreez and Nechalacho could make CRML a takeover target itself later.

  • Likely to bid in the C$1.00–1.25/share range, but might stretch higher if MP/Lynas enter the fight.


Who Would Push the Bidding War Toward $2?

  • MP Materials: Most likely, because of financial capacity and U.S. strategic interest.

  • Tesla or GM/Ford (dark horses): If they step in for vertical integration and secure lithium hydroxide, they could shock the market with a C$2+ bid.

  • Lynas: Would bid aggressively if threatened by MP’s Canadian expansion.

  • CRML: May trigger the bidding, but less likely to win against giants without financial partners.


Investment Takeaway

  • AVL’s unique REE + lithium + midstream combo makes it the only Canadian consolidator play with immediate strategic relevance.

  • Base case: Takeover at C$1–1.25/share (C$637M–800M).

  • Bidding war case: Escalation to C$1.75–2.00/share (~C$1.1–1.3B).

  • Extreme upside: If OEMs or governments step in, C$2.50–3.00/share is possible, though less likely until DFS updates are complete.


👉 This is why AVL at ~C$0.04 today looks like a consolidation lottery ticket



the downside is limited, but the upside is multiples higher if a bidding war ignites

Ed Note: Disclosure: We've been acquiring shares in AVL UCU CRML

Related Articles:

REEs are critical to all cutting edge technologies now and early investors should be rewarded! We just took a small position in our 4th REE stock-CRML


Wednesday, December 12, 2012

Lithium Americas gets final approval for worlds third largest Lithium deposit



Ed Note:  Lithium Americas (LAC-TSE) was spun off by Latin American Minerals (TSE-LAT) which still owns almost 30% of LAC.

TORONTO, Canada, December 12, 2012 - Lithium Americas Corp. (TSX: LAC) (OTCQX: LHMAF) (“Lithium Americas” or the “Company”) is pleased to announce that it has received final project approval for the construction of its Cauchari-Olaroz lithium/potash project.
Upon the recommendation of the Committee of Experts, the Jujuy Government has executed the final decree, through the joint resolution of the Production Minister and Secretary to the Government, which approved the development of Lithium Americas’ Cauchari-Olaroz project.  Such approval includes water use permitting, confirmation of mining licences in good standing, environmental approval for lithium and potash production, and all other permits required to start project construction.
 “Lithium Americas is very proud of advancing the Cauchari-Olaroz project from discovery and exploration, through development, to fully permitted in just short of 4 years,”  stated   Dr. Waldo Perez, President and CEO of Lithium Americas. "We continue to receive an enormous level of support from multiple constituencies in Argentina. We have worked extremely hard to garner this support, which has served to accelerate the permitting and development of Cauchari-Olaroz, as well as further de-risk the project. With the permitting process concluded, our next milestone is securing project financing and off take agreements, which will allow us to initiate project construction in 2013.”
About the Company
Lithium Americas is developing one of the world’s largest and lowest cost lithium operations.   The Company has defined the world’s third largest lithium brine resource, and a completed definitive Feasibility Study identified that Lithium Americas’ operating cost per tonne of lithium carbonate is expected to be one of the lowest in the industry.  Mitsubishi Corporation and Magna International are shareholders in the Company, in addition to both companies having off-take arrangements with Lithium Americas.

For more information please contact:

Mike Cosic, Chief Financial Officer
mcosic@lithiumamericas.com
416-360-1921

Cautionary Note and Forward-Looking Statements
This press release contains forward looking statements, which can be identified by the use of statements that include words such as "plan", “developing”, “estimate”, "could", "potential", "believe", "expect", "anticipate", "intend", "likely", "will" or other similar words or phrases. Forward-looking statements express, as at the date of this press release, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results. Forward-looking statements are based on certain assumptions, including the key assumptions and parameters on which such estimates are based, involve risks and uncertainties and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. Factors that could cause results or events to differ materially from current expectations expressed or implied by the forward-looking statements, include, but are not limited to, possible variations in mineral resource and reserve estimates, grade/concentration or recovery rates, lithium or potash prices, operating or capital costs; availability of sufficient financing to fund planned or further required work in a timely manner and on acceptable terms; changes in project parameters as plans continue to be refined; failure of equipment or processes to operate as anticipated or other unanticipated difficulties or interruptions; political, community relations, regulatory, environmental and other risks of the mining industry and other risks more fully described in the Company’s Annual Information Form dated May 28, 2012 and its most recent management’s discussion and analysis available on SEDAR. The Cauchari-Olaroz project has no operating history upon which to base estimates of future cash flow. The capital expenditures and time required to develop any new project is considerable and changes in capital and/or operating costs or construction schedules can affect project economics. It is possible that actual capital and/or operating costs may increase significantly and economic returns may differ materially from the Company’s estimates or that prices of lithium and/or potash may decrease significantly or that the Company could fail to obtain or maintain governmental approvals necessary for the operation of its project or obtain project financing on acceptable terms and conditions or at all, in which case, the project may not proceed either on its original timing or at all. It is not unusual in the mining industry for new mining operations to experience unexpected problems during the start-up phase, resulting in delays and requiring more capital than anticipated. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward looking statements, there may be other factors that cause results to be materially different from those planned, estimated, forecasted, projected or expected. The Company does not intend, and does not assume any obligations, to update forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by applicable securities laws. Readers should not place undue reliance on forward looking statements.
  
Lithium Americas
357 Bay Street, Suite 602
Toronto Ontario M5H2T7
Canada

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