EDITOR: | January 30th, 2013

Advanced Stage Player Avalon issues Progress Report and signs MOU for Offtake Agreement

| January 30, 2013 | No Comments
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imagesCATDKMPNAvalon Rare Metals Inc. (‘Avalon’, TOR:AVL; NYSE: AVL) has released a progress report for the Feasibility Study (FS) on the Nechalacho Rare Earth Elements Project at Thor Lake, Northwest Territories (NWT).  Avalon said that the FS (for Thor Lake, Pine Point) would be finalized in the second quarter of 2013. Last August, meanwhile, Avalon announced that it has chosen to build a USD$ 300 million rare earths separation facility in Geismar, Louisiana. The planned Geismar facility would add to the Company’s processing operations in the NWT. Rare earth concentrates would be shipped from the NWT deposits by rail to Geismar to be refined into high value finished products. According to a January 30 release from Avalon, the FS aspects that have already been completed are the underground Mine plan and development schedule; the Tailings Facility; the Paste Backfill Plant; the Nechalacho Flotation Plant designs; and the Geismar Separation Plant designs. Avalon notes that any engineering related cost estimates are also well on the way to completion.

Among the various rare earth element (‘REE’) projects that have been launched around the world, Avalon is one of the few that actually have reserves and that are at an advanced stage of development. The metallurgical work is where Avalon is concentrating much of its efforts, trying to obtain the best results while keeping processing costs low. The trial specifically targets the acid bake process, using sulphuric acid, used to produce a mixed REE concentrate containing most of the targeted Light REE and over 50% of the Heavy REE. The concentrate is then processed further at the separation plant, where the separated REE oxides are produced. The residue from the acid bake holds the remaining key elements such as niobium, tantalum and zircon along with other REE’s. The typical approach is known as cracking, which is costly. A low production cost is one of the key factors that will ultimately determine success in the REE sector and Avalon is looking for cracking alternatives to lower capital costs.

Avalon has also signed an MOU for an offtake agreement with an undisclosed Asian buyer its enriched zircon concentrate (EZC), which is made up by a combination of about 80% zirconium, tantalum, niobium and 20% of the rare earths. The MoU was signed after the buyer had an opportunity to sample the EZC product last summer. Avalon is also in talks to secure off-take agreements for the higher value separated rare earth oxides. Given the unusual mineralogy encountered at Thor Lake, the fact off-take agreement is especially significant, because it is a clear sign that the partner in question is satisfied with the results of Avalon’s pilot and product testing.

This makes Avalon an especially attractive company in the rare earths space; it has already passed the stages that have caused difficulties for juniors trying to raise financing. Avalon is moving well beyond the exploration stage and well on the way to development, which is an advantage over those companies that are still at the exploration stage. Indeed, Avalon said that the metallurgical tests have almost been completed, thanks to the Mintek SA in South Africa, to achieve the best possible refining and separation results. Avalon expects to issue an updated resource estimate in mid-June.

Apart from the ongoing technical and metallurgical advancements, Avalon has taken significant steps toward sustainability, reaching an agreement with the people of Fort Resolution NWT including the Deninu K’ue First Nation members, who have now been given an option to buy 3% of Avalon’s future mine in Thor Lake. Effectively, Avalon has made the community of Fort Resolution as a partner and a stakeholder in the project, which should go into production stage by 2016, such that the local community has a stake in the project and an interest in its success.


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