technical report on the nechalacho deposit, thor lake project ...

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MARKETS Avalon collected historical price information, supply/demand analysis, and forecasts for the future. The sources of price information include the websites of Metal-Pages TM and Asian Metal, <strong>report</strong>s by BCC Research (BCC) and Roskill, verbal communication with Kaz Machida, a metal trader in the Japanese market and private <strong>report</strong>s to Avalon by Industrial Minerals Company of Australia Pty Ltd (IMCOA), authored by Dudley Kingsnorth. A detailed presentation of rare metal markets was included in the previous NI 43-101 <strong>report</strong> (Scott Wilson RPA, 2010) and an introduction here discusses the changes that have occurred subsequent to that <strong>report</strong>. PRICE FORECAST In order to isolate the effect of the updated resource on the project economics, Avalon has decided not to update the price forecast contained in its NI 43-101 Technical Report dated July 29, 2010. The spot price FOB China for each rare earth element, and the market prices for niobium, tantalum and zirconium have increased significantly since July 2010 (see tables below) and therefore Avalon can conservatively state that the price forecast contained in the July 29, 2010 Technical Report remains valid. Avalon will update its price forecast for its bankable feasibility <strong>report</strong> due in 2012. Supply-demand fundamentals continue to support the price level forecasted in July 2010. SINCE JULY 2010 Rare Earths • China announced cut backs in export quotas for the first half of 2011 35% lower than the same period in 2010. • China is limiting the number of companies involved in the production of rare earths to exercise more control and reduce illegal mining. • China nationalized 11 rare earth mines in the South. • China announced the formation of a rare earth exchange centre at Baotou, to regulate prices in the marketplace by August 2011. • China set tough emission limits on miners producing rare earths to be met by 2014 • The European Union declared rare earths, niobium and tantalum “critical raw materials” • The US Department of Energy declared yttrium, neodymium, dysprosium, terbium and europium “critical materials” • Prices for rare earths have increased more than tenfold for elements such as lanthanum and cerium, and on average six times for the others - see following table. Technical Report 43-101 – March 13, 2011 Page 18-71 Prepared by Avalon Rare Metals Inc.
Rare Earth FOB China* FOB China** Percent Increase Avalon Forecast Oxide 21-Jul-10 01-Mar-11 between FOB China Prices AM - MP prices AM - MP prices July 21, 2010 and 2014 (US$/kg) (US$/kg) March 1, 2011 (US$/kg) La 2 O 3 $8.23 $93.03 1030% $4.06 Ce 2 O 3 $6.78 $96.03 1316% $2.08 Pr 2 O 3 $37.15 $139.38 275% $43.87 Nd 2 O 3 $38.25 $152.88 300% $46.06 Sm 2 O 3 $3.93 $93.03 2267% $5.58 Eu 2 O 3 $544.00 $782.50 44% $1,086.10 Gd 2 O 3 $10.35 $100.50 871% $13.70 Tb 2 O 3 $538.50 $787.50 46% $1,166.09 Dy 2 O 3 $275.50 $468.00 70% $254.59 Ho 2 O 3 - - - $66.35 Er 2 O 3 - $165.00 - $48.92 Lu 2 O 3 - - - $522.83 Y 2 O 3 $11.50 $110.50 861% $23.22 * Prices represent the midpoint of the AM and MP ranges averaged together except for Gd2O3 and Y2O3 which were not <strong>report</strong>ed by Asian Metal and represent only the Metal Pages prices. Prices for Ho, Er, and Lu were not <strong>report</strong>ed by either publication. ** Prices represent the midpoint of the AM and MP ranges averaged together except for Gd2O3 which was not <strong>report</strong>ed by Asian Metal and represents only the Metal Pages prices. The price for Er2O3 represents only the Asian Metal price. Prices for Ho and Lu were not <strong>report</strong>ed by either publication. Niobium • Demand for steels containing niobium has increased and prices have increased. • Current prices for Nb2O5, according to Asian Metal, are above Avalon’s forecast for 2014. Niobium Asian Metal Avalon (Nb2O5) Nb2O5 99.5% min Forecast FOB China (US$/kg) (US$/kg) July 2010 40.50 45.00 March 2011 46.50 45.00 Technical Report 43-101 – March 13, 2011 Page 18-72 Prepared by Avalon Rare Metals Inc.
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TECHNICAL REPORT ON THE NECHALACHO
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TABLE OF CONTENTS 1. SUMMARY ......
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QUALITY ASSURANCE / QUALITY CONTROL
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Warehouse..........................
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LIST OF TABLES Table 1-1 Summary of
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Table 18-9 Mine Ventilation Quantit
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Table 18-54 Table 18-55 Pine Point
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LIST OF APPENDICES APPENDIX A Block
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Table 1-1 Summary of Mineral Resour
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Royalties. The net revenue generate
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• The products will be shipped in
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• Income taxes and NWT mining roy
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2. INTRODUCTION This report
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Figure 2-2 Project Sites, Thor Lake
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Table 2-1 Rare Earth Element Data A
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LIST OF ABBREVIATIONS Units of meas
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4. PROPERTY DESCRIPTION AND LOCATIO
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The mining leases have a 21-year li
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5. ACCESSIBILITY, CLIMATE, LOCAL RE
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Fort Resolution is located on the s
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producing a tantalum concentrate, b
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Figure 7-2 Detailed Deposit Geology
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The nepheline-sodalite syenite host
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LATE TECTONIC FAULTS Faults are pre
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8. DEPOSIT TYPES The mineral deposi
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The Ore (Nechalacho) Nepheline Soda
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from section to section - this may
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Table 9-1 Average Percent of Ore Mi
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The Nechalacho deposit alteration s
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11. DRILLING Since 1977, diamond dr
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Foraco drill rig was added in Febru
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CORE LOGGING AND CORE RECOVERY The
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A high R 2 (and all regressions had
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12. SAMPLING METHOD AND APPROACH A
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such as Illimausaq in Greenland, a
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13. SAMPLE PREPARATION, ANALYSES AN
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limited set of elements; however, s
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CONCLUSIONS Avalon’s conclusions
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Tb and Dy) were routinely monitored
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As part of the QA/QC program, Avalo
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Table 14-4: Comparison of Niobium,
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shows more deviation, with ALS MS81
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16. MINERAL PROCESSING AND METALLUR
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In a typical test, for example CCr-
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17. MINERAL RESOURCE AND MINERAL RE
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9. TREO equivalent is estimated by
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Table 17-4 Sample Information Avalo
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Figure 17-1 Distribution of REO Com
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Assay Statistics for Upper Zone* *
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CUT-OFF GRADE A previous public res
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underneath for SG measurement purpo
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Figure 17-4 Density Measurements AL
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was equal to 60 m by 60 m by 30 m a
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Table 17-12 Detailed Resource Break
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Table 17-13 Indicated Mineral Resou
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Figure 17-7 Outline of Area of Indi
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The recoveries estimated for the fl
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grades were based upon the grades w
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Figure 18-1 Thor Lake Site Layout T
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Scott Wilson RPA recommends the use
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During discussions with the mine de
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Figure 18-4 Mine Layout Some of the
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Figure 18-5 Mine Development Schema
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Table 18-2 Development Tonnage Brea
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Until the crusher is in place and t
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Lateral Development The access decl
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Equipment will be selected based up
Page 135 and 136: Table 18-6 Estimated Electrical Loa
Page 137 and 138: VENTILATION The mine ventilation is
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Page 141 and 142: Mine Fan Horse Power Using the same
Page 143 and 144: Paste Fill System A paste fill syst
Page 145 and 146: Communications Mine communications
Page 147 and 148: completion of the 30 m to 50 m long
Page 149 and 150: HEALTH AND SAFETY All crew will be
Page 151 and 152: The crushing plant is designed for
Page 153 and 154: Table 18-12 (Cont’d) Principal Pr
Page 155 and 156: Figure 18-9 Hydrometallurgical Plan
Page 157 and 158: The Pine Point hydrometallurgical f
Page 159 and 160: Decant pipeworks have been included
Page 161 and 162: • Development of pre-feasibility
Page 163 and 164: Design Basis The pre-feasibility le
Page 165 and 166: non-woven geotextile) to prevent da
Page 167 and 168: divert surface drainage away from r
Page 169 and 170: A high pressure (200 psi) compresse
Page 171 and 172: Fuel deliveries are assumed to be s
Page 173 and 174: Mill Supplies The key mill supplies
Page 175 and 176: Table 18-15 Surface Equipment Fleet
Page 177 and 178: Figure 18-10 Thor Lake Temporary Ba
Page 179 and 180: • Together with the unloading log
Page 181 and 182: it will be necessary to upgrade the
Page 183 and 184: Table 18-16 Hydrometallurgical Plan
Page 185: Table 18-17 Surface Mobile Equipmen
Page 189 and 190: • loparite and eudialyte in alkal
Page 191 and 192: Table 18-18 Rare Earth supply - 200
Page 193 and 194: Table 18-20 Rare Earth Demand by Ap
Page 195 and 196: Table 18-22 Proposed New REO Projec
Page 197 and 198: in China. On this basis, Avalon is
Page 199 and 200: Determine Prices for Avalon’s Pro
Page 201 and 202: The balance of niobium supply is co
Page 203 and 204: epresenting about 18% of total zirc
Page 205 and 206: Table 18-25 Historic Chinese Export
Page 207 and 208: Figure 18-16 Tantalum Markets - 200
Page 209 and 210: the price for tantalum chemicals in
Page 211 and 212: Surface Hydrology The Thor Lake dra
Page 213 and 214: seven) have occurred more frequentl
Page 215 and 216: elative to uranium, the overall eff
Page 217 and 218: interviews conducted for the nearby
Page 219 and 220: Wildlife Early science-based wildli
Page 221 and 222: Other environmental permits/approva
Page 223 and 224: TAXES The NWT diesel tax has been i
Page 225 and 226: Table 18-31 Mine Capital Cost Estim
Page 227 and 228: Table 18-33 Surface Infrastructure
Page 229 and 230: Table 18-36 Indirect Cost Estimate
Page 231 and 232: Table 18-37 Contingency Allowance A
Page 233 and 234: Operating Cost Exclusions The opera
Page 235 and 236: Table 18-40 Underground Mine Cost S
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Table 18-41 Mine Cost Details Avalo
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Thor Lake Surface The Thor Lake sur
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Table 18-45 Sales and Marketing Cos
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Table 18-47 Rail Car Load Limits Av
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there will be no overhauls in the i
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Other supplies and freight will be
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Table 18-55 Hydrometallurgical Plan
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Table 18-56 Cash Flow Summary Techn
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The sensitivity of the base case 8%
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19. INTERPRETATION AND CONCLUSIONS
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• The Mineral Reserves, which hav
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20. RECOMMENDATIONS The authors of
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21. REFERENCES BCC Research (2009):
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MDN Inc (2010): News Release Melvil
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Wardrop Engineering Inc. (2009): Th
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23. CERTIFICATES OF QUALIFIED PERSO
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CERTIFICATE OF QUALIFIED PERSON I,
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CERTIFICATE OF QUALIFIED PERSON I,
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Section 416000 Section 416100 Secti
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Technical Report 43-101 - March 13,
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