PROJECT FACT SHEET Nechalacho, Thor Lake - Avalon Rare Metals
PROJECT FACT SHEET Nechalacho, Thor Lake - Avalon Rare Metals
PROJECT FACT SHEET Nechalacho, Thor Lake - Avalon Rare Metals
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<strong>PROJECT</strong> <strong>FACT</strong> <strong>SHEET</strong><br />
<strong>Nechalacho</strong>, <strong>Thor</strong> <strong>Lake</strong><br />
july 17, 2013<br />
MATERIALS FOR CLEAN TECHNOLOGY<br />
<strong>Thor</strong> <strong>Lake</strong> Location Map<br />
Sustainability Advisory Committee<br />
• Jean Cinq-Mars<br />
• Chief Phil Fontaine (Director)<br />
• Denis Kemp<br />
• Chief Glenn Nolan<br />
Technical Advisory Committee<br />
• Ross MacFarlane<br />
• Richard Morland (Director)<br />
• John Goode<br />
• Paul Schmidt<br />
Project Overview<br />
<strong>Avalon</strong> <strong>Rare</strong> <strong>Metals</strong>’ <strong>Nechalacho</strong> <strong>Rare</strong> Earth Elements (“REE”) Project at <strong>Thor</strong> <strong>Lake</strong>,<br />
NWT is now the most advanced, large heavy rare earth development project in the<br />
world. <strong>Nechalacho</strong> is also host to the second largest tantalum deposit and third largest<br />
niobium deposit in the world, and remains one of the few new REE projects to have a<br />
completed feasibility study. The financial analysis in the feasibility study shows robust<br />
economic returns with a pre-tax internal rate of return (“IRR”) of 22.5% and a net<br />
present value (“NPV”) at 10% discount rate of $1.351 billion. Project development work<br />
is progressing with basic engineering, and initial preparations for preconstruction work<br />
is scheduled to begin in late 2013. Subject to securing operating permits and new<br />
project financing on a timely basis, the overall objective is achieving commercial<br />
operations by 2017. This will allow the Project to become the first large producer of<br />
heavy rare earth elements (“HREE”) from outside of China.<br />
Strategic Advantages<br />
TSX & NYSE MKT: AVL<br />
<strong>Nechalacho</strong> deposit is exceptional among hard rock rare earth deposits for its large<br />
size and high proportion of heavy rare earths (greater than 20% of total rare earth<br />
oxides or “TREO”)<br />
Natural flat lying deposit geometry, very good rock mechanics and no groundwater<br />
issues make the <strong>Nechalacho</strong> deposit amenable to low-cost underground bulk mining<br />
methods<br />
Large size of the deposit offers the potential for creating a scalable, multigenerational<br />
business<br />
<strong>Thor</strong> <strong>Lake</strong> is accessible by air transport, barge in the summer and ice roads in the<br />
winter, while the Hydrometallurgical Plant and the Hay River railhead are accessible<br />
year round by an all-season highway<br />
Refinery in Geismar, LA is accessible by road, rail and marine transportation<br />
Environmentally friendly project which significantly minimizes impacts to water, land<br />
and air<br />
Energy efficient mine and processing designs to minimize carbon footprint<br />
Products:<br />
Development Stage:<br />
<strong>Rare</strong> earth elements with by-products of tantalum, niobium,<br />
and zirconium (all as oxides)<br />
Feasibility study completed<br />
Production Start-up: 2016-2017<br />
AVALON RARE METALS INC.<br />
130 Adelaide Street West, Suite 1901<br />
Toronto, ON Canada M5H 3P5<br />
T: (416) 364-4938 · F: (416) 364-5162<br />
office@avalonraremetals.com<br />
www.avalonraremetals.com<br />
FORWARD LOOKING INFORMATION<br />
Certain statements contained in or incorporated by reference into this document constitute<br />
forward-looking statements. Such statements reflect the current views of <strong>Avalon</strong> <strong>Rare</strong> <strong>Metals</strong><br />
Inc. with respect to future events and are subject to certain risks, uncertainties, and assumptions.<br />
Many factors could cause the actual results, performance or achievements of <strong>Avalon</strong><br />
<strong>Rare</strong> <strong>Metals</strong> Inc. that may be expressed or implied by such forward-looking statements to<br />
vary from those described herein should one or more of these risks or uncertainties materialize.<br />
<strong>Avalon</strong> <strong>Rare</strong> <strong>Metals</strong> Inc. does not intend, and does not assume any obligation, to update<br />
these forward-looking statements. Document updated April 16, 2013<br />
Capital Investment:<br />
Estimated Mine Life:<br />
Estimated Capital Cost:<br />
Average Operating Cost<br />
Average Revenue<br />
Approximately $90 million to date<br />
Over 20 years based on 14.6 million tonnes of proven and<br />
probable mineral reserves contained within 65.83 million<br />
tonnes of measured and indicated mineral resources.<br />
$1.575 billion (including sustainable capital) for construction<br />
of 2,000 tonnes per day underground mine, concentrator,<br />
hydrometallurgical processing plant, and a rare earth<br />
refinery with a 10,000 tonnes per annum capacity of<br />
separated rare earth oxides<br />
$361/tonne mined<br />
$886/tonne mined
Project Location<br />
<strong>Thor</strong> <strong>Lake</strong> is located approximately 100 km southeast of<br />
Yellowknife, Northwest Territories The property is directly<br />
accessible by barge in the summer, ice road in the winter, and<br />
year-round air transport. A hydrometallurgy plant is planned for<br />
Pine Point, NWT and a refinery is tentatively planned for<br />
Geismar, Louisiana, United States.<br />
Project Development<br />
Since 2005, <strong>Avalon</strong> has invested over $90 million to further explore and develop the<br />
<strong>Nechalacho</strong> rare earth deposit. This has included metallurgical, environmental, market<br />
studies and over 108,565 metres of diamond drilling in 502 holes resulting in substantial NI<br />
43-101 compliant measured, indicated and inferred resources in a high grade sub-zone<br />
called the Basal Zone. Pilot plant work for both the flotation and hydrometallurgy plants<br />
have been completed. Studies are ongoing to optimize metallurgical recoveries and<br />
processes for both plants. An airstrip was constructed at the site in 2010 which will be extended<br />
in 2013 to accommodate larger aircraft.<br />
Environmental Studies and Permitting<br />
The Environmental Assessment process was initiated on May 20, 2011 when <strong>Avalon</strong> filed<br />
its Developers Assessment Report, also known as an Environmental Impact Statement,<br />
with the Mackenzie Valley Environmental Impact Review Board. The process is nearing<br />
conclusion following the completion of public hearings and closing of the public registry,<br />
and is on schedule for completion in mid-2013, following which requisite land use permits<br />
can be issued.<br />
Production<br />
The Hydrometallurgical Plant which will process the mineral concentrate produced at the<br />
<strong>Nechalacho</strong> site to produce a mixed rare earth precipitate and enriched zirconium<br />
concentrate (“EZC”) containing by-product tantalum and niobium. The EZC will be sold to<br />
an Asian company while the rare earth precipitate will be shipped to a Refinery that <strong>Avalon</strong><br />
proposes to build in Geismar, Louisiana. The feasibility study estimates combined<br />
production of 9,286 tonnes per annum (“tpa”) TREO, 19,763 tpa zirconium oxide, 2,230 tpa<br />
niobium oxide and 243 tpa tantalum oxide.<br />
Feasibility Study 2013:<br />
Financial Analysis<br />
Covers mining, mineral concentration, hydrometallurgical<br />
processing, refining and all related infrastructure.<br />
Results of the discounted cash flow (“DCF”) analysis<br />
produced for the feasibility study summarized below yield<br />
positive results with a payback period of just 4.3 years.<br />
Operating costs average $264.5 million per year over the<br />
initial 20 year life of the operation used in the feasibility<br />
study, against average annual revenues of $645.8 million.<br />
Project Schedule<br />
<strong>Avalon</strong> has developed a critical path project schedule to estimate a possible start date for<br />
full capacity production. The schedule assumes that the issuance of permits,<br />
financing and delivery of equipment are the only external constraint that would modify the<br />
current schedule as planned.<br />
Sustainability Performance<br />
In April 2012, <strong>Avalon</strong> released its first annual Corporate<br />
Sustainability Report, which includes a self-assessment of<br />
sustainability performance in accordance to the Global<br />
Reporting Initiative (“GRI”) Level C and the Mining<br />
Association of Canada’s Towards Sustainable Mining (“TSM”)<br />
standards. <strong>Avalon</strong> reported on 27 GRI and 21 TSM indicators<br />
covering economic, environmental and social performance. In<br />
June 2013, a summary brochure of the upcoming Rooted in<br />
Sustainability 2012 Report was released. Both can be downloaded<br />
from the website.<br />
Measured and Indicated Resources in the Basal Zone<br />
as at November 26, 2012<br />
Basal Zone<br />
Tonnes<br />
(millions)<br />
%<br />
TREO<br />
%<br />
HREO<br />
% HREO/<br />
TREO<br />
%<br />
ZrO 2<br />
%<br />
Nb₂O₅<br />
%<br />
Ta₂O₅<br />
$320 NMR Cut-Off<br />
Measured 10.88 1.67 0.38 22.91 3.13 0.41 0.04<br />
Indicated 54.95 1.54 0.33 21.63 3.01 0.40 0.04<br />
$800 NMR Cut-Off<br />
Measured 4.00 2.23 0.59 26.51 4.31 0.54 0.06<br />
Indicated 14.57 2.18 0.56 25.57 4.21 0.53 0.06<br />
$1000 NMR Cut-Off<br />
Measured 1.99 2.52 0.70 27.67 4.90 0.61 0.06<br />
Indicated 5.72 2.52 0.67 26.58 4.79 0.60 0.06<br />
NOTES: For details on the mineral resource estimation procedures, the reader is referred to<br />
the NI 43-101 Technical Report, SEDAR filed on March 15, 2011. CIM definitions were<br />
followed for Mineral Resources. A cut-off NMR value of C$320 per tonne was used for the<br />
Base Case. NMR is defined as "Net Metal Return" or the in situ value of all payable metals,<br />
net of estimated metallurgical recoveries and off-site processing costs. HREO (Heavy <strong>Rare</strong><br />
Earth Oxides) is the total concentration of: Y 2 O 3 , Eu 2 O 3 , Gd 2 O 3 , Tb 2 O 3 , Dy 2 O 3 , Ho 2 O 3 ,<br />
Er 2 O 3 , Tm 2 O 3 , Yb 2 O 3 and Lu 2 O 3 . TREO (Total <strong>Rare</strong> Earth Oxides) is HREO plus: La 2 O 3 ,<br />
Ce 2 O 3 , Pr 2 O 3 , Nd 2 O 3 and Sm 2 O 3 .