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

The mining leases have a 21-year life and each lease is renewable in 21-year increments.
Annual payments of $2.47/ha ($1.00 per acre) are required to keep the leases in good standing.
Avalon owns 100% of all of the leases subject to various legal agreements described below.
The mineral claims, with an anniversary date of October 24 th , are active pending approval of the
submitted airborne geophysics assessment <strong>report</strong>. Approval of the <strong>report</strong> would result in the
claims being valid to October 24, 2013. Should the <strong>report</strong> not be accepted, Avalon would have
the option of paying cash in lieu to maintain the claims. However, Avalon has no reason to
believe that the assessment <strong>report</strong> will not be accepted.
The Nechalacho deposit, including the mineral resources and reserves, is located wholly within
Mineral Lease 3178 (see also Figure 11-1). Another, smaller mineralized zone, not the subject
of this Report, the T Zone, is located within Mineral Lease 3179.
LEGAL AGREEMENTS, UNDERLYING ROYALTY INTERESTS
Two underlying royalty agreements exist on the Thor Lake property: the Murphy Royalty
Agreement and the Calabras/Lutoda Royalty Agreement, both of which originated with
Highwood Resources Ltd. (Highwood), the original developer of the property.
The Murphy Royalty Agreement, signed in 1977, entitles J. Daniel Murphy to a 2.5% Net
Smelter Return (NSR) payments. The Murphy Royalty Agreement applies to the entire Thor
Lake property and the royalty is capped at an escalating amount indexed to inflation. The
Calabras/Lutoda Royalty Agreement, signed in 1997, entitles Calabras (Canada) Ltd. to a 2%
NSR and Lutoda Holding Ltd. to a 1% NSR.
LEGAL SURVEY
The Thor Lake mineral leases have been legally surveyed and are recorded on a Plan of
Survey, Number 69408 M.C. in the Legal Surveys Division of the Federal Department of
Energy, Mines and Resources, Ottawa. The perimeter boundaries of the lease lots were
surveyed as part of the leasing requirements.
ENVIRONMENTAL LIABILITIES
Highwood held a land use permit that allowed for clean-up, maintenance and exploration on the
property. The permit expired on October 26, 2002. Under the Mackenzie Valley Land and
Water Resources Act and Regulations, the Mackenzie Valley Land and Water Board (MVLWB)
administers land use permits. The Mackenzie Valley Resource Management Act (MVRMA)
allows local and particularly aboriginal input into land and water use permitting. The MVRMA
establishes a three-part environmental assessment process:
Technical Report 43-101 – March 13, 2011 Page 4-3
Prepared by Avalon Rare Metals Inc.