PROJECT FACT SHEET Nechalacho, Thor Lake - Avalon Rare Metals

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.
Project Development
Since 2005, Avalon has invested over $90 million to further explore and develop the
Nechalacho rare earth 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
in 2013 to accommodate larger aircraft.
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.
Production
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 tonnes per annum (“tpa”) TREO, 19,763 tpa zirconium oxide, 2,230 tpa
niobium oxide and 243 tpa tantalum oxide.
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.
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.
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 Canada’s Towards Sustainable Mining (“TSM”)
standards. Avalon reported on 27 GRI and 21 TSM indicators
covering economic, environmental and social performance. In
June 2013, a summary brochure of the upcoming Rooted in
Sustainability 2012 Report was released. Both can be downloaded
from the website.
Measured and Indicated Resources in the Basal Zone
as at November 26, 2012
Basal Zone
Tonnes
(millions)
%
TREO
%
HREO
% HREO/
TREO
%
ZrO 2
%
Nb₂O₅
%
Ta₂O₅
$320 NMR Cut-Off
Measured 10.88 1.67 0.38 22.91 3.13 0.41 0.04
Indicated 54.95 1.54 0.33 21.63 3.01 0.40 0.04
$800 NMR Cut-Off
Measured 4.00 2.23 0.59 26.51 4.31 0.54 0.06
Indicated 14.57 2.18 0.56 25.57 4.21 0.53 0.06
$1000 NMR Cut-Off
Measured 1.99 2.52 0.70 27.67 4.90 0.61 0.06
Indicated 5.72 2.52 0.67 26.58 4.79 0.60 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: Y 2 O 3 , Eu 2 O 3 , Gd 2 O 3 , Tb 2 O 3 , Dy 2 O 3 , Ho 2 O 3 ,
Er 2 O 3 , Tm 2 O 3 , Yb 2 O 3 and Lu 2 O 3 . TREO (Total Rare Earth Oxides) is HREO plus: La 2 O 3 ,
Ce 2 O 3 , Pr 2 O 3 , Nd 2 O 3 and Sm 2 O 3 .