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

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8. ZrO 2 refers to Zirconium Oxide, Nb 2 O 5 refers to Niobium Oxide, Ta 2 O 5 refers to Tantalum Oxide, Ga 2 O 3 refers to Gallium Oxide. 9. TREO equivalent is estimated by calculating a weighted average NMR per kg for the rare earths and rare metals (Zr, Nb, Ta) in an given interval, and re-estimating the interval assuming that all the value was in rare earths only. 10. The two main differences to previous estimates were that eight composites were used per block, versus 15 in the estimate released in July 19, 2010 and the Basal Zone was not flattened onto the lower contact prior to block estimation. All other parameters were similar. In the opinion of Avalon, the increased Indicated Mineral Resources justify a new estimation of the Mineral Reserves on the property, including development of a new mine plan. The Mineral Reserves that have been estimated previously are restricted to the Basal Zone of the Nechalacho deposit. PFS Conclusions In the opinion of Avalon the following conclusions from the PFS completed by Scott Wilson RPA remain valid. Positive economic results can be obtained for the Thor Lake Project, in a scenario that includes underground mining, preparation of a bulk concentrate at Thor Lake, and hydrometallurgical processing at a plant to be constructed at Pine Point. The final products will be a mied rare earth oxide concentrate, a zirconium oxide concentrate, a niobium oxide concentrate, and a tantalum oxide concentrate. Geology and Mineral Resources • An extensive diamond drilling program by Avalon has defined two layers of REE mineralization at the Nechalacho Deposit, known as the Upper and Basal Zones. The latter is preferentially enriched in heavy rare earth elements. This deposit is geneticallyrelated to a peralkaline intrusion called the Thor Lake Syenite and it displays features that reflect magmatic segregation and layering as well as hydrothermal/metasomatic overprinting. This deposit type is not common and Avalon has secured the services of people that are skilled at drilling, logging, sampling and modelling this type of deposit. • The Mineral Reserves have not been updated as a new mine plan is required. As a result, the portion of the Indicated Mineral Resources in the Basal Zone that form the basis of the Mineral Reserves were estimated by Scott Wilson RPA (2010) to be 14.5 million tonnes, at an average grade of 1.82% TREO including 0.40% HREO, 3.38% ZrO2, 0.44% Nb2O5 and 0.043% Ta2O5. • Avalon created an economic model using metal prices, the effects of payable percentages, flotation and hydrometallurgical recoveries, and any payable NSR Technical Report 43-101 – March 13, 2011 Page 1-3 Prepared by Avalon Rare Metals Inc.
Royalties. The net revenue generated by this model is termed the Net Metal Return (NMR). Operating cost estimates used in the latest PFS average C$260/tonnes (which is roughly 0.8% TREO), and this value has been applied as a break-even cut-off for the resource estimate. Included in the Resource calculation is the TREO equivalent which is based on metal prices and is similar to NMR. • Avalon has created a set of internal standards for use in assessing the accuracy of the assaying process. These standards, which have been certified as acceptable by an independent third party, are part of Avalon’s comprehensive QA/QC program involving blanks, standards and duplicates. A number of samples have been rejected and re-ran at the lab following the assessment of the values returned for the QA/QC samples and Avalon is of the opinion that the database is valid and suitable for use in resource estimation. Independent validation using assay certificates sent directly from the lab has shown that the database values are correct. • Scott Wilson RPA, for the recent PFS NI 43-101 <strong>report</strong>, and various other firms and independent consultants have reviewed the methods and procedures utilized by Avalon at the Nechalacho Deposit to gather geological, geo<strong>technical</strong>, and assaying information and found them reasonable and meeting generally accepted industry standards for a development project. • The mining, processing, infrastructure, economics and marketing information as previously described by Scott Wilson RPA has not changed and are repeated or summarized from the previous <strong>report</strong>. Mining • The Probable Mineral Reserves, have not been updated, and were previously estimated by Scott Wilson RPA (2010) to be 12.0 million tonnes with grades of 1.71% TREO, including 0.38% HREO, 3.16% ZrO 2 , 0.41% Nb 2 O 5 , and 0.041% Ta 2 O 5 . Mineral Reserves were estimated at a cut-off value based on a net metal value of C$260 per tonne. Mineral Reserves are based on an underground mine design and stope schedule. • The deposit is relatively flat-lying, and will be mined with a combination of long hole stoping and drift and fill stoping. The minimum thickness used in the development of the Mineral Reserve estimate was five metres. • The dilution is estimated to be 15%. This includes low grade, waste and inferred mineral resources within the planned stope outlines. Technical Report 43-101 – March 13, 2011 Page 1-4 Prepared by Avalon Rare Metals Inc.
Page 1 and 2: TECHNICAL REPORT ON THE NECHALACHO
Page 3 and 4: TABLE OF CONTENTS 1. SUMMARY ......
Page 5 and 6: QUALITY ASSURANCE / QUALITY CONTROL
Page 7 and 8: Warehouse..........................
Page 9 and 10: LIST OF TABLES Table 1-1 Summary of
Page 11 and 12: Table 18-9 Mine Ventilation Quantit
Page 13 and 14: Table 18-54 Table 18-55 Pine Point
Page 15 and 16: LIST OF APPENDICES APPENDIX A Block
Page 17: Table 1-1 Summary of Mineral Resour
Page 21 and 22: • The products will be shipped in
Page 23 and 24: • Income taxes and NWT mining roy
Page 25 and 26: 2. INTRODUCTION This report
Page 27 and 28: Figure 2-2 Project Sites, Thor Lake
Page 29 and 30: Table 2-1 Rare Earth Element Data A
Page 31 and 32: LIST OF ABBREVIATIONS Units of meas
Page 33 and 34: 4. PROPERTY DESCRIPTION AND LOCATIO
Page 35 and 36: The mining leases have a 21-year li
Page 37 and 38: 5. ACCESSIBILITY, CLIMATE, LOCAL RE
Page 39 and 40: Fort Resolution is located on the s
Page 41 and 42: producing a tantalum concentrate, b
Page 43 and 44: Figure 7-2 Detailed Deposit Geology
Page 45 and 46: The nepheline-sodalite syenite host
Page 47 and 48: LATE TECTONIC FAULTS Faults are pre
Page 49 and 50: 8. DEPOSIT TYPES The mineral deposi
Page 51 and 52: The Ore (Nechalacho) Nepheline Soda
Page 53 and 54: from section to section - this may
Page 55 and 56: Table 9-1 Average Percent of Ore Mi
Page 57 and 58: The Nechalacho deposit alteration s
Page 59 and 60: 11. DRILLING Since 1977, diamond dr
Page 61 and 62: Foraco drill rig was added in Febru
Page 63 and 64: CORE LOGGING AND CORE RECOVERY The
Page 65 and 66: A high R 2 (and all regressions had
Page 67 and 68: 12. SAMPLING METHOD AND APPROACH A
Page 69 and 70:
such as Illimausaq in Greenland, a
Page 71 and 72:
13. SAMPLE PREPARATION, ANALYSES AN
Page 73 and 74:
limited set of elements; however, s
Page 75 and 76:
CONCLUSIONS Avalon’s conclusions
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Tb and Dy) were routinely monitored
Page 79 and 80:
As part of the QA/QC program, Avalo
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Table 14-4: Comparison of Niobium,
Page 83 and 84:
shows more deviation, with ALS MS81
Page 85 and 86:
16. MINERAL PROCESSING AND METALLUR
Page 87 and 88:
In a typical test, for example CCr-
Page 89 and 90:
17. MINERAL RESOURCE AND MINERAL RE
Page 91 and 92:
9. TREO equivalent is estimated by
Page 93 and 94:
Table 17-4 Sample Information Avalo
Page 95 and 96:
Figure 17-1 Distribution of REO Com
Page 97 and 98:
Assay Statistics for Upper Zone* *
Page 99 and 100:
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
Page 107 and 108:
Table 17-12 Detailed Resource Break
Page 109 and 110:
Table 17-13 Indicated Mineral Resou
Page 111 and 112:
Figure 17-7 Outline of Area of Indi
Page 113 and 114:
The recoveries estimated for the fl
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grades were based upon the grades w
Page 117 and 118:
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
Page 123 and 124:
Figure 18-4 Mine Layout Some of the
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Figure 18-5 Mine Development Schema
Page 127 and 128:
Table 18-2 Development Tonnage Brea
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Until the crusher is in place and t
Page 131 and 132:
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
Page 139 and 140:
for closing unused areas and for ch
Page 141 and 142:
Mine Fan Horse Power Using the same
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Paste Fill System A paste fill syst
Page 145 and 146:
Communications Mine communications
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completion of the 30 m to 50 m long
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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
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Design Basis The pre-feasibility le
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non-woven geotextile) to prevent da
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divert surface drainage away from r
Page 169 and 170:
A high pressure (200 psi) compresse
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Fuel deliveries are assumed to be s
Page 173 and 174:
Mill Supplies The key mill supplies
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Table 18-15 Surface Equipment Fleet
Page 177 and 178:
Figure 18-10 Thor Lake Temporary Ba
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• Together with the unloading log
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it will be necessary to upgrade the
Page 183 and 184:
Table 18-16 Hydrometallurgical Plan
Page 185 and 186:
Table 18-17 Surface Mobile Equipmen
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Rare Earth FOB China* FOB China** P
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
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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
Page 237 and 238:
Table 18-41 Mine Cost Details Avalo
Page 239 and 240:
Thor Lake Surface The Thor Lake sur
Page 241 and 242:
Table 18-45 Sales and Marketing Cos
Page 243 and 244:
Table 18-47 Rail Car Load Limits Av
Page 245 and 246:
there will be no overhauls in the i
Page 247 and 248:
Other supplies and freight will be
Page 249 and 250:
Table 18-55 Hydrometallurgical Plan
Page 251 and 252:
Table 18-56 Cash Flow Summary Techn
Page 253 and 254:
The sensitivity of the base case 8%
Page 255 and 256:
19. INTERPRETATION AND CONCLUSIONS
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• The Mineral Reserves, which hav
Page 259 and 260:
20. RECOMMENDATIONS The authors of
Page 261 and 262:
21. REFERENCES BCC Research (2009):
Page 263 and 264:
MDN Inc (2010): News Release Melvil
Page 265 and 266:
Wardrop Engineering Inc. (2009): Th
Page 267 and 268:
23. CERTIFICATES OF QUALIFIED PERSO
Page 269 and 270:
CERTIFICATE OF QUALIFIED PERSON I,
Page 271 and 272:
CERTIFICATE OF QUALIFIED PERSON I,
Page 273 and 274:
Section 416000 Section 416100 Secti
Page 275 and 276:
Page 277 and 278:
Page 279 and 280:
Technical Report 43-101 - March 13,
Page 281 and 282:
Page 283 and 284:
Page 285 and 286:
Page 287 and 288:
Page 289:
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