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

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4. Mineral Resources are estimated using price forecasts for 2014 for rare earth oxides prepared early in 2010. Some of these prices are higher and some are lower than current prices. The prices used are the same as in the June 14, 2010 disclosure. 5. Mineral Resources are undiluted. 6. A cut-off NMR grade of $260 Can was used for the base case. NMR is defined as "Net Metal Return" or the in situ value of all the payable rare metals in the ore net of estimated metallurgical recoveries and processing costs. 7. An exchange rate of 1.11 was used. 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. As the objective of the drilling was to increase the mineral resources, and identify higher grade areas, the program met its objectives. 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 mixed 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. Technical Report 43-101 – March 13, 2011 Page 19-2 Prepared by Avalon Rare Metals Inc.
• The Mineral Reserves, which have not been updated at this time, were estimated by Scott Wilson RPA (2010) to be 12 million tonnes, at an average grade of 1.7% TREO including 0.38% HREO, 3.16% ZrO 2 , 0.41% Nb 2 O 5 and 0.041% Ta 2 O 5 . These Mineral Reserves are based on the previously <strong>report</strong>ed Mineral Resources (Scott Wilson RPA, 2010). • To do this, Avalon created an economic model using metal prices, the effects of payable percentages, flotation and hydrometallurgical recoveries, and any payable NSR 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 and various other firms and independent consultants have previously 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. • Drill results from the most recent program (Winter 2009/2010), not yet incorporated into the Mineral Resource estimate, look promising, with potential to extend high-grade portions of the Basal Zone. Mining • There have been no further studies relating to mining subsequent to the Technical Report (September 21, 2010). • It is recommended that a new mine plan be developed based on the new resource estimate. Technical Report 43-101 – March 13, 2011 Page 19-3 Prepared by Avalon Rare Metals Inc.
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TECHNICAL REPORT ON THE NECHALACHO
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TABLE OF CONTENTS 1. SUMMARY ......
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QUALITY ASSURANCE / QUALITY CONTROL
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Warehouse..........................
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LIST OF TABLES Table 1-1 Summary of
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Table 18-9 Mine Ventilation Quantit
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Table 18-54 Table 18-55 Pine Point
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LIST OF APPENDICES APPENDIX A Block
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Table 1-1 Summary of Mineral Resour
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Royalties. The net revenue generate
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• The products will be shipped in
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• Income taxes and NWT mining roy
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2. INTRODUCTION This report
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Figure 2-2 Project Sites, Thor Lake
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Table 2-1 Rare Earth Element Data A
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LIST OF ABBREVIATIONS Units of meas
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4. PROPERTY DESCRIPTION AND LOCATIO
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The mining leases have a 21-year li
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5. ACCESSIBILITY, CLIMATE, LOCAL RE
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Fort Resolution is located on the s
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producing a tantalum concentrate, b
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Figure 7-2 Detailed Deposit Geology
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The nepheline-sodalite syenite host
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LATE TECTONIC FAULTS Faults are pre
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8. DEPOSIT TYPES The mineral deposi
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The Ore (Nechalacho) Nepheline Soda
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from section to section - this may
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Table 9-1 Average Percent of Ore Mi
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The Nechalacho deposit alteration s
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11. DRILLING Since 1977, diamond dr
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Foraco drill rig was added in Febru
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CORE LOGGING AND CORE RECOVERY The
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A high R 2 (and all regressions had
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12. SAMPLING METHOD AND APPROACH A
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such as Illimausaq in Greenland, a
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13. SAMPLE PREPARATION, ANALYSES AN
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limited set of elements; however, s
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CONCLUSIONS Avalon’s conclusions
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Tb and Dy) were routinely monitored
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As part of the QA/QC program, Avalo
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Table 14-4: Comparison of Niobium,
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shows more deviation, with ALS MS81
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16. MINERAL PROCESSING AND METALLUR
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In a typical test, for example CCr-
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17. MINERAL RESOURCE AND MINERAL RE
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9. TREO equivalent is estimated by
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Table 17-4 Sample Information Avalo
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Figure 17-1 Distribution of REO Com
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Assay Statistics for Upper Zone* *
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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
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Table 17-12 Detailed Resource Break
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Table 17-13 Indicated Mineral Resou
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Figure 17-7 Outline of Area of Indi
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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
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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
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Mine Fan Horse Power Using the same
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Paste Fill System A paste fill syst
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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
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The crushing plant is designed for
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Table 18-12 (Cont’d) Principal Pr
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Figure 18-9 Hydrometallurgical Plan
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The Pine Point hydrometallurgical f
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Decant pipeworks have been included
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• 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
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A high pressure (200 psi) compresse
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Fuel deliveries are assumed to be s
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Mill Supplies The key mill supplies
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Table 18-15 Surface Equipment Fleet
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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
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Table 18-17 Surface Mobile Equipmen
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Rare Earth FOB China* FOB China** P
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• loparite and eudialyte in alkal
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Table 18-18 Rare Earth supply - 200
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Table 18-20 Rare Earth Demand by Ap
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Table 18-22 Proposed New REO Projec
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in China. On this basis, Avalon is
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Determine Prices for Avalon’s Pro
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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
Page 213 and 214: 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
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: 19. INTERPRETATION AND CONCLUSIONS
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 279 and 280: Technical Report 43-101 - March 13,
Page 289: Technical Report 43-101 - March 13,
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