Avalon Completes Separation Rapids Joint Venture Reorganization, Becomes Debt-Free and Eliminates Potential Dilution
Rhea-AI Summary
Avalon (OTCQB: AVLNF) completed a reorganization with Sibelco on April 2, 2026, exiting its 40% interest in Separation Rapids Ltd and regaining 100% ownership of the Lilypad cesium project. The transaction fully extinguished an outstanding convertible debenture (~$7.5M) and eliminates an estimated ~15% potential share dilution, leaving Avalon debt-free and with a simplified corporate structure to focus on rare earths and spodumene-based lithium strategy.
Positive
- $7.5M of debt and accrued interest fully extinguished
- Eliminates an estimated ~15% potential shareholder dilution
- Regains 100% ownership of the Lilypad cesium project
- Simplified corporate structure and sharper focus on spodumene and rare earths
Negative
- Avalon exits the Separation Rapids petalite asset, reducing portfolio diversification
- Transaction was a related-party deal (Sibelco holds >10% of shares), raising governance scrutiny
- No cash consideration exchanged; material change report not filed >21 days before closing
News Market Reaction – AVLNF
On the day this news was published, AVLNF gained 28.57%, reflecting a significant positive market reaction.
Data tracked by StockTitan Argus on the day of publication.
Simplifies corporate structure, sharpens lithium strategy, and retains Lilypad cesium project for potential monetization
Toronto, Ontario--(Newsfile Corp. - April 2, 2026) - Avalon Advanced Materials Inc. (TSX: AVL) (OTCQB: AVLNF) ("Avalon" or the "Company") announced today that it has completed the strategic reorganization of its Separation Rapids joint venture with SCR-Sibelco NV ("Sibelco"), pursuant to which Avalon has exited its
Transaction Highlights
Strengthens Balance Sheet and Eliminates ~
15% Potential Shareholder DilutionEliminates approximately
$7.5 million of debt and accrued interest in a non-cash manner by transferring Avalon's40% interest in SRL to Sibelco, while recovering its100% interest in the Lilypad cesium project.Fully extinguishes the convertible debenture without issuing shares or using cash.
Removes the risk of issuing ~
15% more shares to repay the debt, as the debenture allowed Sibelco to convert the amount owing, including accrued interest, into Avalon shares at maturity. The transaction eliminates this risk by fully extinguishing the debenture.Avoids dilution and strengthens the Company's financial position.
Sharpens Strategic Focus
Exits Separation Rapids, a petalite-based lithium asset not aligned with Avalon's current spodumene-based lithium refinery feedstock strategy
Aligns portfolio with the Company's focus on establishing a fully scaled critical minerals platform focused on rare earth and lithium.
Obtains
100% Ownership of Lilypad Cesium ProjectPositions Avalon to pursue near-term monetization opportunities given the project's exposure to cesium, a critical mineral characterized by limited global supply and increasing demand across industrial and advanced technology applications.
Enhances flexibility to generate value through strategic transactions
Transaction Overview
Under the terms of the agreement:
Avalon will receive full ownership of the Lilypad cesium project
The outstanding convertible debenture has been fully satisfied and extinguished
Sibelco will increase its ownership of SRL from
60% to100% and retain the Separation Rapids projectNo cash consideration will be exchanged between the parties
As a holder of more than
The Company did not file a material change report more than 21 days before the expected closing date of the Transaction, which it considers reasonable in the circumstances, as the terms of the transaction were not settled until shortly prior to the closing and the Company wished to close the transaction on an expedited basis for sound business reasons.
Strategic Rationale
Sharpens Avalon's strategic focus on its core rare earth and lithium assets and simplifies its capital structure.
Avalon becomes debt-free and removes a significant source of potential shareholder dilution - estimated at approximately
15% to otherwise satisfy the debt, strengthening its balance sheet.Enables Avalon to exit an asset that does not align with its lithium refinery strategy focused on building spodumene-based North American midstream processing capacity, while recovering full ownership of the Lilypad cesium project, which provides a clear path to near-term value realization through potential strategic transactions.
Management Commentary
"This is an important step in sharpening Avalon's strategic focus," said Scott Monteith, President and Chief Executive Officer. "We are eliminating a significant source of potential shareholder dilution, simplifying our corporate structure, and aligning our asset base with our long-term strategy. While Separation Rapids is a high-quality asset, our current strategy is focused on optimizing the portfolio around spodumene-based feedstock for our lithium refinery. Importantly, we regain
"Importantly, Avalon emerges debt-free, eliminating approximately
"This transaction aligns well with Sibelco's strategy to focus on industrial minerals solutions for ceramics, glass, and specialty applications," said Nick Traber, Executive Vice President and Executive Committee member of Sibelco. "By consolidating ownership of Separation Rapids, we are strengthening our ability to advance a high-quality petalite resource that fits directly within our core markets. We also welcome Avalon's continued progress in building a focused lithium and rare earth platform."
About Avalon Advanced Materials Inc.
Avalon Advanced Materials Inc. is a Canadian critical minerals company focused on advancing lithium and rare earth elements — two of the fastest-growing segments of the global energy transition. The Company is developing strategic assets to participate in high-growth markets and support the build-out of secure North American supply chains. Avalon is advancing the Nechalacho Rare Earth Elements and Zirconium Project in the Northwest Territories, which contains all light and heavy rare earth elements, as well as yttrium, zirconium, tantalum, and niobium-critical minerals used in advanced technologies across the communications, defense, advanced technologies, and energy sectors. The Company is also focused on vertically integrating the Ontario lithium supply chain through the development of Lake Superior Lithium Inc., Ontario's first midstream lithium hydroxide processing facility, located in Thunder Bay. This facility will serve as a cornerstone of North America's integrated battery materials supply chain, transforming northern Ontario lithium into essential inputs for transportation, grid storage, and advanced manufacturing.
For further information regarding Avalon Advanced Materials Inc., please visit www.avalonadvancedmaterials.com, email ir@avalonam.com, or call 416-364-4938.
Cautionary Statement Regarding Forward-Looking Information
This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "add" or "additional", "advancing", "anticipates" or "does not anticipate", "appears", "believes", "can be", "conceptual", "confidence", "continue", "convert" or "conversion", "deliver", "demonstrating", "estimates", "encouraging", "expand" or "expanding" or "expansion", "expect" or "expectations", "forecasts", "forward", "goal", "improves", "increase", "intends", "justification", "plans", "potential" or "potentially", "promise", "prospective", "prioritize", "reflects", "robust", "scheduled", "suggesting", "support", "top-tier", "updating", "upside", "will be" or "will consider", "work towards", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved".
Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including those risk factors discussed or referred to in the annual information form of the Company dated November 26, 2025 (the "AIF") under the heading "Description of the Business - Risk Factors". Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Although the Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/290982