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

Determine Prices for Avalon’s Product
Metallurgical tests have shown that the rare earth elements can be precipitated as a bulk oxide
concentrate. This product requires further processing to match the pricing basis of separated,
99% pure REOs. Pay factors for individual REOs contained in a mixed concentrate are highly
variable and dependent largely on supply and demand at the time of separation, and sales
contracts for the particular separator involved. Scott Wilson RPA reviewed Avalon’s
assumptions for the various pay factors for the HREOs and LREOs and determined that they
were reasonable and consistent with current industry norms in China. Further, Scott Wilson
RPA (2010) suggested that there was no reason to believe there will be significant changes to
the factors in the future.
A final price for Avalon’s proposed rare earth oxide product is then determined by multiplying
the average concentration of the individual rare earth oxides in the rare earth carbonate
concentrate by the individual rare earth oxide prices and the payable factors as detailed above.
This results in an average price for the rare earth carbonate product in 2014 of US$21.94/kg.
This price has been used in preparing the financial analysis detailed in the <strong>report</strong>.
Avalon understands that separation of the REE into multiple fractions will attract higher prices.
However, at this time it is not possible to estimate this increase, as no data is available on the
differential between unseparated and partially separated REE. Consequently, for the purposes
of the pre-feasibility study, the base case has been a single REO concentrate. Research into
the pricing of separated REE is also recommended to determine the factors suitable for two
products and three product situations, which are assumed to attract higher factors.
NIOBIUM
Niobium Market
Niobium is a refractory metal closely associated with tantalum. Niobium is produced as a
primary concentrate from pyrochlore ore, and as a co-product in the production of tantalum
concentrates. Niobium finds its primary uses as an alloying agent in the production of high
strength low alloy steels (HSLA), in selected aerospace alloys and in stainless steels. In these
applications, the primary product form is as FeNb, TiNb and ZrNb. FeNb has a typical analysis
of 66% Nb. FeNb and related alloy products account for over 90% of total niobium consumption.
Niobium is also used in electronic and optical applications, in superconducting magnets, fine
ceramics, and as a corrosion resistant metal for chemical process equipment. Niobium for these
applications is consumed in the form of niobium powder as Nb 2 O 5 , as pure niobium metal and
as niobium salts, primarily as the potassium salt K 2 NbF 7 or its derivatives.
Reported world production of niobium is detailed in Table 18-24:
Technical Report 43-101 – March 13, 2011 Page 18-84
Prepared by Avalon Rare Metals Inc.