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

TAXES
The NWT diesel tax has been included in the operating and capital cost estimates. The NWT
2% payroll tax has been applied as 1.8% of the gross payroll for the capital and operating
phases of the project. The payroll tax is applicable to all wages and bonuses but is not applied
to pension contributions and certain benefits.
There is a NWT mining royalty payable on the “value” of mineral production in the NWT. The
royalty is based upon the operating cash flow less a development allowance, depreciation and a
processing allowance. The value of output thus calculated is subject to a royalty of the lesser of
13% of the value or the sum as shown in Table 18-29.
Table 18-29 NWT Mining Royalty
Avalon Rare Metals Inc. – Thor Lake Project
Range Rate (%)
On the first $10,000 0
In excess of $10,000 but less than $5,000,000 5
In excess of $5,000,000 but less than $10,000,000 6
In excess of $10,000,000 but less than $15,000,000 7
In excess of $15,000,000 but less than $20,000,000 8
In excess of $20,000,000 but less than $25,000,000 9
In excess of $25,000,000 but less than $30,000,000 10
In excess of $30,000,000 but less than $35,000,000 11
In excess of $35,000,000 but less than $40,000,000 12
In excess of $40,000,000 but less than $45,000,000 13
In excess of $45,000,000 14
The project income will be subject to federal and NWT income tax. The federal income tax rate
is 15% and the NWT tax rate is 11.5%.
CAPITAL COST ESTIMATE
A capital cost estimate has been compiled for all phases of the project. The estimate was
compiled from work by Melis (mill costs and hydrometallurgical plant costs) and Scott Wilson
RPA. The capital estimate in Table 18-30 covers the life of the project and includes: initial
capital costs; expansion capital costs; and, C$39 million in recovery of capital invested in initial
fills for reagents, fuel and cement and in spare parts.
Technical Report 43-101 – March 13, 2011 Page 18-108
Prepared by Avalon Rare Metals Inc.