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

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• The use of diesel generators to supplement the grid power is planned for times when hydroelectric power availability is limited at the expanded production rate. Environment • Baseline studies have been completed for the Project locations. • Avalon has prepared and submitted a project description <strong>report</strong>, completed preliminary screening and commenced the Environmental Assessment process necessary for the permit application process in the NWT. • Rock characterization studies indicate that the rock is not an acid producer. • Nechalacho mineralization has uranium levels that are higher than average naturally occurring granite, but below levels typically experienced in other rare earth deposits. The thorium levels in the Nechalacho deposit are anomalous, but given the lower radioactivity equivalency of thorium relative to uranium, the overall effect of typical Nechalacho mineralization as a rock mass is predicted to be very low. The rare earth concentration process planned at the Flotation Plant will concentrate the rare earths, including the low levels of thorium in the rock minerals. The overall radiation level in the concentrate is expected to be below Canadian TDGR regulations, and will not require special handling as Dangerous Goods. Economics • The metal prices used in this study are the same as those utilized in the PFS. At the time Scott Wilson RPA noted that the prices were higher than current prices of the time. Subsequent to this, current prices have increased, and in many cases are higher than those utilized in the PFS. The prices are based on independent, third-party forecasts for 2014, based on supply and demand projections from 2009 to 2014. Since the Project schedules production commencing in 2014, and given that current prices are, in many cases, higher than those utilized, Avalon is of the opinion that these long-term price forecasts utilized by Scott Wilson RPA are a reasonable basis for estimation of Mineral Reserves. • Production rates selected for the Project were market-driven, with consideration for limiting production to a portion of forecast demand growth for rare earths, to avoid disturbing the current market balance. Given the extent of the Nechalacho deposit resources, a significantly higher production rate would be reasonable, absent this market constraint. Scott Wilson RPA expects that significant improvements in Project economics could be realized in a higher production rate scenario. Technical Report 43-101 – March 13, 2011 Page 1-7 Prepared by Avalon Rare Metals Inc.
• Income taxes and NWT mining royalties on the Project are dependent on the selected method of depreciation of capital, and may also be reduced by application of credits accumulated by Avalon. • A work-in-process capital allowance has been included in the Project cash flow, representing delays in realization of revenue from Project products. This delay has been assumed to average two months. As the Project is advanced, and commercial terms established, this assumption may change, with a corresponding effect on Project economics. CURRENT PROJECT STATUS The Nechalacho deposit is located on the Thor Lake property, in Canada’s Northwest Territories, 100 km southeast of the capital city of Yellowknife within the Mackenzie Mining District. The property consists of five contiguous mineral leases and three claims all of which are in good standing. Presently Avalon is exploring and developing the Nechalacho Rare Earth and Rare Metal deposit on the property by, among other activities: • conducting on-going drill programs with two drills at site both for resource definition and collection of metallurgical samples, • contracting metallurgical testwork at the bench scale and pilot plant scale, • commencing a feasibility study, including engineering work, and • undertaking the environmental permitting process for a mine at the location and a hydrometallurgical plant in the Pine Point area. RECOMMENDATIONS The authors of the <strong>report</strong> recommend that Avalon advance the Thor Lake Project to the Feasibility Study stage and continue the NWT permitting process. Specific recommendations by area are as follows. Geology and Mineral Resources The authors make the following recommendations: • Continue exploration drilling at the Nechalacho Deposit to define the new areas of mineralization. • Continue in-fill drilling to upgrade Indicated Resources to Measured Resources and upgrade Inferred Resources to Indicated Resources. Technical Report 43-101 – March 13, 2011 Page 1-8 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 and 18: Table 1-1 Summary of Mineral Resour
Page 19 and 20: Royalties. The net revenue generate
Page 21: • The products will be shipped in
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
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16. MINERAL PROCESSING AND METALLUR
Page 87 and 88:
In a typical test, for example CCr-
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17. MINERAL RESOURCE AND MINERAL RE
Page 91 and 92:
9. TREO equivalent is estimated by
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Table 17-4 Sample Information Avalo
Page 95 and 96:
Figure 17-1 Distribution of REO Com
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Assay Statistics for Upper Zone* *
Page 99 and 100:
CUT-OFF GRADE A previous public res
Page 101 and 102:
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
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Figure 18-1 Thor Lake Site Layout T
Page 119 and 120:
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
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Table 18-6 Estimated Electrical Loa
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VENTILATION The mine ventilation is
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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
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Figure 18-9 Hydrometallurgical Plan
Page 157 and 158:
The Pine Point hydrometallurgical f
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Decant pipeworks have been included
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• Development of pre-feasibility
Page 163 and 164:
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
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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
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• Together with the unloading log
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it will be necessary to upgrade the
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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
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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
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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
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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
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
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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
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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
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:
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