Avalon Rare Metals’ Investors find Value in
www.avalonraremetals.com
Advanced Stage Nechalacho REE Deposit
Donald S. Bubar
President & CEO
Avalon Rare Metals’ (TSX:AVL,
OTCQX:AVARF) primary asset is its
100% owned, advanced stage Necha-
lacho Rare Earth Deposit located in
the Northwest Territories of Canada.
Not more than a year ago rare earth
elements (REE) were on the radar of just
a few analysts. Rare earth companies
like Avalon worked tirelessly to com-
municate the coming global shortage
of REEs. Today, the REE market is on fire,
and Avalon believes that Nechalacho is
one of the highest quality, undeveloped
REE deposits in the world, unique in its
exceptional enrichment in the heavy
rare earths.
R
esource Intelligence: The last time we talked,
a year ago, your main deposit had been es-
tablished and it was one of the biggest rare
earth deposits known in the world with a large
portion of the more valuable heavy rare earths.
You announced a new resource estimate in Janu-
ary for the Nechalacho deposit based on your
2009 summer drilling. Can you talk a bit about
the size of the upgrade, where you were and
where you are now?
Don Bubar: Yes, in January we disclosed the re-
sults of definition drilling from 2009 and how
much of that large inferred resource could now
be classified as indicated. We actually increased
the indicated resources in the Nechalacho Basal
Zone by 102% to nine million tonnes grading
1.86% TREO. Of course, it didn’t increase the
total resources, but it was a big step forward in
84
Booth # 2303
416.364.4938
that we now know we have more than enough specifically rare earth phosphors that are used
tonnage to support the prefeasibility study. So, to create the colours in any display screen such
now the engineers can start to do the mine de- as TVs and computer monitors. The Blackberry
velopment planning and engineering for this also relies on rare earth phosphors. There is no
study. substitute for them.
It was very encouraging that we had very few The other important use is in certain types of
misses in that infill drilling, so we’re proving rare earth magnets. The neodymium-iron-
up excellent continuity in the resource there. boron magnet has become the high strength
We’re also more confident now that further in- magnet of choice in a lot of electric motors
fill drilling elsewhere will have similar success insuch as those in the hybrid car. In high heat
turning those inferred resources into indicated environments magnets are subject to demagnet-
resources. ization, which can
RI: What’s the near- be a problem with
hybrid vehicles, for
term goal for your “We think [the rock value]
Nechalacho de- example, where you
posit? will be somewhere in the have a combustion
engine under the
DB: To complete a $400 to $500 per tonne hood throwing off
prefeasibility study range depending on where a lot of heat. The
and our target heavy rare earths
for that is Spring, the prices for the individual can be added to
2010. that magnet for-
metals end up.”
RI: What is the
mulation to cre-
ate a heat resistant
geometry of the de-
~ President & CEO Donald S. Bubar
magnet. So with
posit like? changing technol-
DB: If you look at ogy, heavy rare
the overall geometry of the resource, it’s kind earths are now vital to many new applications
of a flat-lying layer cake with layers of varying in increasing quantities.
grades. The Upper Zone is a broad lower-grade RI: So let’s talk a bit about the deposit. We know
zone and the Basal Zone is proving to be the it is rich in heavy rare earths, we know they are
high-grade “sweet spot”. It’s the layer near the more valuable than the light rare earths, we
bottom of the package with a relatively high en- know that new technologies demand HREEs.
richment of the more valuable heavy rare earths. Do we have any sense of the target value of
RI: Is the Basal Zone your main focus for de- Nechalacho?
velopment?
DB: Yes. The heavy rare earths are really the story
here and that’s what you want to find in a rare
earth deposit to have a reasonable chance of
having an economically feasible deposit. Heavy
rare earths really juice up the value of the ore
and they are the rare earths with real supply
concerns going forward. Light rare earths are
really not that rare. That’s important because
you can’t selectively extract heavy rare earths
from the light rare earths. You produce all fif-
teen or so rare earths as a group in whatever pro-
portion they occur and then you separate them
afterwards. So in a light rare earth deposit with
a low proportion of heavy rare earths you can’t
produce more heavies -you’re stuck producing
predominantly the light, less valuable REEs.
RI: Can you give some examples of what heavy
rare earths might be used for today as opposed
to a light rare earth?
DB: A couple of the really key applications that Photo: Corduroy drill roads to minimize environmental
are sustaining strong demand are in electronics, impacts and facilitate vegetation regeneration.
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Avalon Rare Metals Booth # 2303
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- Continued 416.364.4938

DB: Yes. Although the prices are not as accessible RI: What would operating costs for a deposit like way to get exposure to the rare earths. There has
as gold and base metals, there are services that Nechalacho add up to? been a lot of subsequent publicity in the main-
track them. Once you know the distribution of stream media and further commentary by ana-
lights vs. heavies, it tends to remain constant DB: Right now we think it will be around $200- lysts out there that have continued to raise the
throughout that deposit, so you can then take $250 a tonne. That is to mine it, mill it to a profile of rare earths with the investing public.
the individual prices and individual grades for mineral concentrate and then do a second step
each of the rare earths and work out an average called hydrometallurgy, which will extract the RI: How do the local Thor Lake people see the
value per kilo for your particular distribution. rare earths into solution and then take them out potential of a mine here?
In our case, that higher proportion of heavy rare into a mixed rare earth carbonate product that
still requires further processing after that. DB: There is a lot of interest in this project
earths makes for a higher value of that basket on among the local communities for a few reasons:
a dollars per kilo basis. So whereas a lot of light
RI: And you have nine million tonnes just in the It’s different from what they’re used to, which is
rare earths deposits are looking at $10 to $14 per
one indicated category, so it sounds like even primarily gold and diamonds and the elements
kilo, we’re looking at around $20 per kilo and at this stage of drilling you have a clear idea of are important in green technology. Also, the
up, roughly speaking. value prior to the feasibility stage. Judging by resource is large and offers the potential for a
RI: Can we translate that into a value per tonne your share price there is a lot of investor interest long life operation, which resonates well with
of ore? in Avalon right now. Why do you think that is? any community. We’re also getting quite a bit of
interest because of the potential for other value-
DB: Yes, based on a 2.0% TREO average grade, DB: There was a lot of interest this year initially added, spin-off type industries. The Northwest
we think it will be somewhere in the $400 to awakened by the Dines Letter back in May when Territories has generally been a jurisdiction
$500 per tonne range depending on where the it produced that piece on rare earths. Avalon was where the mines have been developed and the
prices for the individual metals end up. identified there as one of the stocks to buy as a product just leaves without any further value-
added industries. Rare earths offer excellent
possibilities in that regard.

RI: What lies between today and a mine at Thor

Lake and Nechalacho?

DB: A bankable feasibility study is the next big

task. Two major components to that are market
development and identifying customers and,
secondly, doing the environmental impact as-
sessment that is integral to securing operating
permits. It’s a challenging process in the NWT.
We are off and running on it already, but it is
going to take some time. We think we are look-
ing at a four year process from here to get to the
finish line, on a feasibility study.

Milestones:
• Winter drilling completed
• Complete prefeasibility
study by Q2 2010
• Production by 2014

Photo: Drill core from the Basal Zone HREE mineralization.

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