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PROJECT FACT SHEET Nechalacho, Thor Lake


Thor Lake Location Map

Project Overview
Avalon Rare Metals Nechalacho Rare Earth Elements (REE) Project at Thor Lake, NWT is now the most advanced, large heavy rare earth development project in the world. Nechalacho is also host to the second largest tantalum deposit and third largest niobium deposit in the world, and remains one of the few new REE projects to have a completed feasibility study. The financial analysis in the feasibility study shows robust economic returns with a pre-tax internal rate of return (IRR) of 22.5% and a net present value (NPV) at 10% discount rate of $1.351 billion. Project development work is progressing with basic engineering, and initial preparations for preconstruction work scheduled to begin in 2013 with the overall objective of achieving commercial operations by 2017, subject to securing operating permits and new project financing on a timely basis. This will allow the Project to become the first large producer of heavy rare earth elements (HREE) from outside of China.

Strategic Advantages
Sustainability Advisory Committee Jean Cinq-Mars Chief Phil Fontaine (Director) Denis Kemp Chief Glenn Nolan Technical Advisory Committee Ross MacFarlane Richard Morland (Director) John Goode Paul Schmidt Nechalacho deposit is exceptional among hard rock rare earth deposits for its large size and high proportion of heavy rare earths (greater than 20% of total rare earth oxides or TREO) Natural flat lying deposit geometry, very good rock mechanics and no groundwater issues make the Nechalacho deposit amenable to low-cost underground bulk mining methods Large size of the deposit offers the potential for creating a scalable, multi-generational business. Thor Lake is accessible by air transport, barge in the summer and ice roads in the winter, while the Hydrometallurgical Plant and the Hay River railhead are accessible year round by an all-season highway Refinery in Geismar, LA is accessible by road, rail and marine transportation Environmentally friendly project which significantly minimizes impacts to water, land and air Energy efficient mine and processing designs to minimize carbon footprint Products: Development stage: Production start-up: Capital investment: Rare earth elements with by-products of tantalum, niobium, and zirconium (all as oxides) Feasibility study completed 2016-17 Approximately $90 million to date Over 20 years based on 14.6 million tonnes of proven and probable mineral reserves contained within 65.83 million tonnes of measured and indicated mineral resources. $1.575 billion (including sustainable capital) for construction of 2000 t/d underground mine, concentrator, hydrometallurgical processing plant, and a rare earth refinery with a 10,000 t/a capacity of separated rare earth oxides $361/tonne mined $886/tonne mined


130 Adelaide Street West, Suite 1901 Toronto, ON Canada M5H 3P5 T: (416) 364-4938 F: (416) 364-5162

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FORWARD LOOKING INFORMATION Certain statements contained in or incorporated by reference into this document constitute forward-looking statements. Such statements reflect the current views of Avalon Rare Metals Inc. with respect to future events and are subject to certain risks, uncertainties, and assumptions. Many factors could cause the actual results, performance or achievements of Avalon Rare Metals Inc. that may be expressed or implied by such forward-looking statements to vary from those described herein should one or more of these risks or uncertainties materialize. Avalon Rare Metals Inc. does not intend, and does not assume any obligation, to update these forward-looking statements. Document updated April 16, 2013

Average Operating Cost Average Revenue

Project Development
Since 2005, Avalon has invested over $90 million to further explore and develop the Nechalacho REE deposit. This has included metallurgical, environmental, market studies and over 108,565 metres of diamond drilling in 502 holes resulting in substantial NI 43-101 compliant measured, indicated and inferred resources in a high grade sub-zone called the Basal Zone. Pilot plant work for both the flotation and hydrometallurgy plants have been completed. Studies are ongoing to optimize metallurgical recoveries and processes for both plants. An airstrip was constructed at the site in 2010 which will be extended to accommodate larger aircraft for 2013.

Project Location
Thor Lake is located approximately 100 km southeast of Yellowknife, Northwest Territories The property is directly accessible by barge in the summer, ice road in the winter, and year-round air transport. A hydrometallurgy plant is planned for Pine Point, NWT and a refinery is tentatively planned for Geismar, Louisiana, United States.

Environmental Studies and Permitting

The Environmental Assessment process was initiated on May 20, 2011 when Avalon filed its Developers Assessment Report, also known as an Environmental Impact Statement, with the Mackenzie Valley Environmental Impact Review Board. The process is nearing conclusion following the completion of public hearings and closing of the public registry, and is on schedule for completion in mid-2013, following which requisite land use permits can be issued.

The Hydrometallurgical Plant which will process the mineral concentrate produced at the Nechalacho site to produce a mixed rare earth precipitate and enriched zirconium concentrate (EZC) containing by-product tantalum and niobium. The EZC will be sold to an Asian company while the Rare earth precipitate will be shipped to a Refinery that Avalon proposes to build in Geismar, Louisiana. The feasibility study estimates combined production of 9,286 tpa TREO, 19,763 tpa zirconium oxide, 2230 tpa niobium oxide and 243 tpa tantalum oxide.

Project Schedule
Avalon has developed a critical path project schedule to estimate a possible start date for full capacity production. The schedule assumes that the issuance of permits, financing and delivery of equipment are the only external constraint that would modify the current schedule as planned.

Feasibility Study 2013: Financial Analysis

Covers mining, mineral concentration, hydrometallurgical processing, refining and all related infrastructure. Results of the discounted cash flow (DCF) analysis produced for the feasibility study summarized below yield positive results with a payback period of just 4.3 years. Operating costs average $264.5 million per year over the initial 20 year life of the operation used in the feasibility study, against average annual revenues of $645.8 million.

Measured and Indicated Resources in the Basal Zone as at November 26, 2012 Sustainability Performance
In April 2012 Avalon released its first annual Corporate Sustainability Report, which includes a self-assessment of sustainability performance in accordance to the Global Reporting Initiative (GRI) Level C and the Mining Association of Canadas (MAC) Towards Sustainable Mining (TSM) standards. Avalon reported on 27 GRI and 21 TSM indicators covering economic, environmental and social performance. The report can be downloaded from the Avalon website.
Basal Zone $320 NMR Cut-Off Measured Indicated $800 NMR Cut-Off Measured Indicated $1000 NMR Cut-Off Measured Indicated Tonnes (millions) 10.88 54.95 4.00 14.57 1.99 5.72 % TREO 1.67 1.54 2.23 2.18 2.52 2.52 % % HREO/ HREO TREO 0.38 0.33 0.59 0.56 0.70 0.67 22.91 21.63 26.51 25.57 27.67 26.58 % ZrO2 3.13 3.01 4.31 4.21 4.90 4.79 % NbO 0.41 0.40 0.54 0.53 0.61 0.60 % TaO 0.04 0.04 0.06 0.06 0.06 0.06

NOTES: For details on the mineral resource estimation procedures, the reader is referred to the NI 43-101 Technical Report, SEDAR filed on March 15, 2011. CIM definitions were followed for Mineral Resources. A cut-off NMR value of C$320 per tonne was used for the Base Case. NMR is defined as "Net Metal Return" or the in situ value of all payable metals, net of estimated metallurgical recoveries and off-site processing costs. HREO (Heavy Rare Earth Oxides) is the total concentration of: Y2O3, Eu2O3, Gd2O3, Tb2O3, Dy2O3, Ho2O3, Er2O3, Tm2O3, Yb2O3 and Lu2O3. TREO (Total Rare Earth Oxides) is HREO plus: La2O3, Ce2O3, Pr2O3, Nd2O3 and Sm2O3.