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

the price for tantalum chemicals in 2014. Scott Wilson RPA (2010) regarded this price as a
conservative estimate of future prices.
Scott Wilson RPA did not have any independent estimates of future pricing of tantalum
products. However, MDN-Crevier, the developer of the proposed Crevier niobium-tantalum mine
in Quebec, have indicated that for the purposes of their prefeasibility study they are assuming
US$150/kg for Ta 2 O 5 . This suggests considerable upside in the market, and it is recommended
that:
• Further investigation be completed in order to verify future price predictions.
• Clearer definition be completed of the Thor Lake Ta products and
• That the pricing of Ta intermediate products be investigated.
It is the conclusion of Avalon that the recommended estimates by Scott Wilson RPA for price
prediction for tantalum should continue to be utilized at present.
MARKETING CONCLUSIONS
Scott Wilson RPA noted that the prices used in the PFS were higher than 2010 prices. The
prices were based on independent, third-party forecasts for 2014, based on supply and demand
projections from 2009 to 2014. Unlike forecasts for more common metals, which tend to decline
to a long-term value below current prices, the forecasts for the rare metals produced by the
Project end up higher than current prices. Since the Project schedules production commencing
in 2014, Scott Wilson RPA was of the opinion that these long-term price forecasts were a
reasonable basis for estimation of Mineral Reserves. Subsequent to the previous <strong>technical</strong>
<strong>report</strong> (Scott Wilson, 2010) as noted above, prices of many rare earths have increased, and as
a result, current prices in many cases are higher than those predicted for 2014.
CONTRACTS
At this time Avalon has not entered into any long term agreements for the provision of materials,
supplies or labour for the Project. Avalon has entered into an agreement with Deton Cho
Corporation, a Yellowknives Dene First Nation participating in business for the construction of
an airstrip at Thor Lake in the summer of 2010. Avalon has worked with the local First Nation
groups to date and plans to negotiate a Memorandum of Understanding with the local First
Nation groups as part of the negotiation of Impact and Benefits Agreements.
The construction and operations will require negotiation and execution of a number of contracts
for the supply of materials, services and supplies.
Technical Report 43-101 – March 13, 2011 Page 18-94
Prepared by Avalon Rare Metals Inc.