In this study, a novel approach is presented which can be utilized to enhance the thermal conductivity and densification of sintered AlN pellets. AlN pellets with a CaO additive were produced by spark plasma sintering. The influence of CaO powder properties such as particle size (micron-, submicron- and nano-scale), dispersion, flowability and structural characteristics, on the mixing behavior of AlN and CaO mixed powders, and on the porosity and thermal conductivity of AlN pellets, were investigated. Additionally, the influence of mixing conditions, including additive content and rotational speed in a novel high-shear mixer (Picomix), were studied and various mixing techniques were compared. The results indicate that when the CaO content of the AlN pellets is increased to 3 wt%, their thermal conductivity rises from 48.1 W/m·K to 112.9 W/m·K. This increase can be attributed to the formation of a liquid phase, and to a reduction in pellet porosity during sintering. Furthermore, when the rotational speed of the mixer is increased to 5000 rpm, the pellets’ thermal conductivity further rises to 126.2 W/m·K. This improvement is a result of the enhanced dispersion of CaO in the mixed powder. The shearing forces in the Picomix facilitate the coating of AlN particles with submicron- or nano-scale CaO particles, thereby improving the flowability of the mixed powder and narrowing the particle size distribution. This further improves the liquid phase distribution, thus enhancing the thermal conductivity of the AlN pellets (135.3 W/m·K). The novel high-shear mixer (Picomix) has demonstrated enhanced performance when compared with traditional mixing techniques (ball milling and manual mixing), since it involves a solvent-free process, is faster, has a lower energy consumption, causes less powder-oxidation and leads to a higher value of thermal conductivity, making it an excellent choice for the preparation of mixed powders for solar thermal applications.