Corporate Presentation - Avalon Rare Metals
Corporate Presentation - Avalon Rare Metals
Corporate Presentation - Avalon Rare Metals
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<strong>Corporate</strong> <strong>Presentation</strong><br />
Don S. Bubar, P.Geo.<br />
President & CEO<br />
October 19, 2009<br />
TSX:AVL<br />
OTCQX:AVARF<br />
…Advancing Green Technology<br />
TSX:AVL www.avalonraremetals.com<br />
1
Safe Harbour Statement<br />
Forward looking information<br />
Certain statements contained in or incorporated by reference into this<br />
presentation constitute forward-looking statements. Such statements<br />
reflect the current views of <strong>Avalon</strong> <strong>Rare</strong> <strong>Metals</strong> Inc. with respect to<br />
future events and are subject to certain risks, uncertainties and<br />
assumptions. Many factors could cause the actual results, performance<br />
or achievements of <strong>Avalon</strong> <strong>Rare</strong> <strong>Metals</strong> Inc. that may be expressed or<br />
implied by such forward-looking statements to vary from those<br />
described herein should one or more of these risks or uncertainties<br />
materialize. <strong>Avalon</strong> <strong>Rare</strong> <strong>Metals</strong> Inc. does not intend, and does not<br />
assume any obligation, to update these forward-looking statements.<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 2
<strong>Rare</strong> <strong>Metals</strong>: Key to the Green<br />
Energy Economy<br />
<strong>Rare</strong> earth elements (“REE”) such as Neodymium,<br />
Terbium and Dysprosium; & other rare metals such as<br />
Lithium, Gallium, Indium, Tantalum, Zirconium<br />
Creating new materials such as thin films (solar) and high<br />
strength magnets, the key to energy-efficient electric motors<br />
Renewable energy: solar power and wind turbines<br />
LED lighting, rechargeable batteries, light weight alloys<br />
Hybrid and electric cars (30 kg REE)<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 3
Project Locations<br />
<strong>Avalon</strong> offers<br />
diversified<br />
exposure to a<br />
broad range<br />
of rare metals<br />
THOR LAKE<br />
<strong>Rare</strong> Earths<br />
Tantalum<br />
Niobium<br />
Zirconium<br />
Beryllium<br />
Gallium<br />
Lithium<br />
Hafnium<br />
Thorium<br />
All projects 100% owned<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 4
What are <strong>Rare</strong> Earth Elements<br />
Light REE:<br />
La = Lanthanum<br />
Ce = Cerium<br />
Pr = Praseodymium<br />
Nd = Neodymium<br />
Sm = Samarium<br />
Heavy REE:<br />
Eu = Europium<br />
Gd = Gadolinium<br />
Tb = Terbium<br />
Dy = Dysprosium<br />
Ho = Holmium<br />
Er = Erbium<br />
Tm = Thulium<br />
Yb = Ytterbium<br />
Lu = Lutetium<br />
Y = Yttrium<br />
Neodymium, Dysprosium, Terbium and Europium in highest demand<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 5
<strong>Rare</strong> Earth Economics:<br />
A Question of Balance<br />
Only occur altogether as a group and recovered as a group<br />
and must be sequentially separated at additional cost<br />
In most deposits, the balance is tipped toward the light rare<br />
earths (“LREE”) which comprise 97-99% of resource<br />
Deposits having an unusual balance with a high proportion of<br />
heavy rare earths (“HREE”) are very rare<br />
Consequently, HREE are much more valuable<br />
US$450.00/kg for europium vs. US$4.50/kg for cerium<br />
Basal Zone of Nechalacho deposit is exceptional among hard<br />
rock REE deposits for its high proportion of HREE ( >20%)<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 6
<strong>Rare</strong> Earth Element Prices<br />
Source: Metal-Pages.com, October 13, 2009<br />
Prices are indicative and basis FOB China<br />
Metal Oxide Principal Uses Price US$/kg<br />
Lanthanum Oxide 99% min Re-chargeable Batteries 4.40 – 4.90<br />
Cerium Oxide 99% min Catalyst, glass, polishing 3.50 – 4.00<br />
Praseodymium Oxide 99% min Magnets, glass colourant 14.20 – 14.70<br />
Neodymium Oxide 99% min Magnets, lasers, glass 14.70 – 15.20<br />
Samarium Oxide 99% min Magnets, lighting, lasers 4.25 – 4.75<br />
Heavy <strong>Rare</strong> Earths<br />
Europium Oxide 99% min TV colour phosphors: red 470.00 – 490.00<br />
Terbium Oxide 99% min Phosphors: green, magnets 340.00 – 360.00<br />
Dysprosium Oxide 99% min Magnets, lasers 105.00 – 110.00<br />
Gadolinium Oxide 99%min Magnets, superconductors 5.00 – 5.50<br />
Yttrium Oxide 99.999% min Phosphors, ceramics, lasers 10.00 – 10.50<br />
TSX:AVL<br />
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Price Trends:<br />
Europium & Yttrium Oxide<br />
Source: Metal-Pages.com basis FOB China<br />
Eu Current Price:<br />
US$495/kg<br />
Y Current Price:<br />
US$10.50/kg<br />
TSX:AVL<br />
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China Dominates REE<br />
Production<br />
China currently produces<br />
over 95% of global REE<br />
supply<br />
China now imposing export<br />
quotas and tariffs on REE<br />
New non-Chinese supply<br />
sources needed to maintain<br />
balance<br />
Supplies of key HREE (Y,<br />
Dy, Tb) will remain tight<br />
Japan totally reliant on China<br />
for supplies<br />
Source: USGS<br />
Question: Is the USA willing to<br />
substitute its reliance on foreign<br />
sources of oil for a reliance on a<br />
single foreign source of REE<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 9
Global <strong>Rare</strong> Earths Market<br />
Demand tpa ‐ REO<br />
IMCOA 2009 updated market forecast<br />
250,000<br />
200,000<br />
150,000<br />
100,000<br />
50,000<br />
0<br />
2004<br />
2005<br />
2006<br />
2007<br />
2008<br />
2009f<br />
2010f<br />
2011f<br />
2012f<br />
2013f<br />
2014f<br />
China Supply ROW Supply Adjusted Global Demand China Demand<br />
ROW = rest of world supply (yet to come on stream)<br />
REO = <strong>Rare</strong> Earth Oxides<br />
Global demand in 2008<br />
124,000 tonnes TREO valued<br />
at US$1.25 billion<br />
Forecast demand in 2014<br />
200,000 tonnes TREO valued<br />
at US$2-3 billion, assuming<br />
10% per annum growth rate in<br />
demand from existing<br />
technology only<br />
Does not factor in demand<br />
from new technology<br />
Estimated that 25% of all new<br />
technologies rely on REE<br />
TSX:AVL<br />
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Comparison of some Significant<br />
<strong>Rare</strong> Earth Deposits I<br />
Source: IMCOA 2009<br />
Deposit<br />
Resource<br />
(million<br />
tonnes)<br />
Grade<br />
(% TREO)<br />
TREO<br />
(million<br />
tonnes)<br />
HREE<br />
Content<br />
(% TREO)<br />
Cut-off Grade<br />
Bayan Obo, China 1,460 3.9% 56 2% n/a<br />
Kvanefjeld, Greenland 215 1.0% 2.6 14% 0.015% U 3<br />
O 8<br />
Mountain Pass, USA 20 9.2% 1.8 1% 5% REO<br />
Nechalacho, Canada 65 2.1% 1.3 20% 1.6% REO<br />
Mt Weld, Australia 12 9.7% 1.2 3% 2.5% REO<br />
Nolans, Australia 30 2.8% 0.9 4% 1.2% REO<br />
Dong Pao, Vietnam 11 6.9% 0.8 n/a 6.9% REO<br />
Bear Lodge, USA 9 4.1% 0.4 n/a 1.5% REO<br />
Hoidas Lake, Canada 1.5 2.6% 0.04 7% 1.5% REO<br />
Note: each company publishes their resources/reserves differently to comply with local rules; accordingly, these figures need to be reviewed with care as they do not<br />
necessarily make allowances for the varying recovering associated with each reserve/resource.<br />
TSX:AVL<br />
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Comparison of some Significant<br />
<strong>Rare</strong> Earth Deposits II<br />
Source: IMCOA 2009<br />
n/a<br />
n/a<br />
*Not shown on chart for scaling purposes<br />
Note: each company publishes their resources/reserves differently to comply with local rules; accordingly, these figures need to be reviewed with care as<br />
they do not necessarily make allowances for the varying recovering associated with each reserve/resource.<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 12
Recent Developments in REE<br />
Markets<br />
Chinese interests trying to acquire REE resources outside<br />
China in Australia (and elsewhere)<br />
China Non-Ferrous Mining blocked from acquiring 51% interest<br />
in Lynas Corporation by FIRB (Mount Weld)<br />
East China Exploration acquires 25% interest in Arafura<br />
Resources (Nolan’s Bore)<br />
Chevron sells Molycorp (Mountain Pass Mine) to U.S. private<br />
equity led by Resource Capital Funds and Goldman Sachs<br />
China announces further reductions in REE export quotas and<br />
announces a potential ban on future exports of unprocessed<br />
HREE: notably dysprosium and terbium<br />
TSX:AVL<br />
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Key Application of REE:<br />
Magnets for Electric Motors<br />
REE (Neo) Magnets reduce electric motor/generator size<br />
and weight, improve efficiency<br />
Major new applications include:<br />
Industrial air conditioners (500 kg)<br />
Hybrid-electric cars (30 kg)<br />
Wind turbines (0.75-1.0 t/Mw)<br />
MRI machines (1-3 tonnes)<br />
Use of REE magnets in air conditioners can reduce<br />
power consumption by 50% with same performance<br />
HREE dysprosium is key to making “heat resistant”<br />
magnets vital to automotive and other applications<br />
100 Kw generator<br />
with neo magnets<br />
TSX:AVL<br />
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REE Magnets in Automotive<br />
Technology<br />
TSX:AVL<br />
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Thor Lake: Project Location<br />
Proximity to<br />
Great Slave<br />
Lake provides<br />
access to<br />
railhead at<br />
Hay River by<br />
barge in<br />
summer and<br />
ice road in<br />
winter. Current<br />
access is flyin.<br />
TSX:AVL<br />
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Thor Lake: Mineral Tenure<br />
Blachford<br />
Lake<br />
Lease 3178<br />
(Lot 1001)<br />
Lease 3179<br />
(Lot 1000)<br />
Grace<br />
Lake<br />
T Zone<br />
Acquired in 2005 for 2.5 million shares<br />
Previously explored in 1980’s by Highwood<br />
Five 21-year renewable mining<br />
leases covering 10,500 acres<br />
Lease 3265<br />
(Lot 1005)<br />
New<br />
Claims<br />
Road<br />
Thor<br />
Lake Lease 3266<br />
Lake (Lot 1006)<br />
Zone<br />
(Now called “Nechalacho”)<br />
Lease 3267<br />
(Lot 1007)<br />
Hearne Channel<br />
<br />
kilometres<br />
100% owned, subject to 5.5%<br />
NSR-type royalty interests<br />
LAND STATUS MAP<br />
TSX:AVL<br />
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Nechalacho REE Deposit:<br />
Current Work Program<br />
2007: Scoping study and $16 million financing<br />
2008: Delineation drilling programs 16,640 metres, 85 holes<br />
2009: Definition drilling 10,000 metres, 45 holes (in progress)<br />
Metallurgical, environmental and market studies<br />
New 43-101 resource estimate in January 2009<br />
Accumulating data required to complete PFS by Spring 2010<br />
2009: $4-5 million budget<br />
Updated resource<br />
Metallurgical process<br />
flowsheet defined<br />
Community engagement<br />
$17.5 million financing<br />
TSX:AVL<br />
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Nechalacho REE deposit: Drill<br />
Hole Location Map<br />
E-W<br />
Section Line<br />
Key<br />
Area<br />
156<br />
TSX:AVL<br />
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Nechalacho REE Deposit<br />
E-W Composite Section<br />
(looking north, no vertical exaggeration)<br />
114<br />
132 131 63 62 113 53<br />
250m<br />
97 56A 80-12 118<br />
Upper LREE Zone<br />
Basal HREE Zone<br />
Typically 20m thick, +2% TREO, 20% HREE<br />
1500m<br />
Drill Hole with<br />
Basal Zone<br />
Intercept<br />
Hole 118: 2.71% TREO with 34% HREO<br />
over 17.4 metres<br />
TSX:AVL<br />
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Nechalacho 43-101 Resources<br />
Inferred REE resources at 1.60% TREO cut-off-grade<br />
initially prepared by Wardrop Engineering, updated by<br />
Hudgtec and reviewed by SWRPA in August<br />
Total Inferred Resources (Upper and Basal Zones):<br />
64.2 million tonnes at 1.96% TREO (16.8% HREO)<br />
Basal Zone Only:<br />
44.3 million tonnes Inferred at 1.96% TREO (21% HREO)<br />
4.4 million tonnes Indicated at 1.96% TREO (25.4% HREO)<br />
2.2 million tonnes Indicated at 2.14% TREO (20% HREO)<br />
Note: Defining Indicated Resources is a function of drill hole spacing being<br />
reduced to an average of 50 metres. TREO = total rare earth oxides,<br />
HREO = heavy rare earth oxides (europium to lutetium + yttrium)<br />
TSX:AVL<br />
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South Part of Nechalacho:<br />
Indicated REE Resources<br />
Wardrop 2.2 MT Indicated<br />
Resource (2.14% TREO,<br />
20% HREO)<br />
Cross section<br />
Area of current in-fill<br />
drilling<br />
New 4.4 MT Indicated<br />
Resource (1.96% TREO,<br />
25.4% HREO)<br />
TSX:AVL<br />
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REE Distribution in the Basal<br />
Zone Ore Compared with Other<br />
REE Deposits<br />
100%<br />
90%<br />
80%<br />
70%<br />
60%<br />
50%<br />
40%<br />
30%<br />
20%<br />
10%<br />
0%<br />
Mt Pass Baotou SichuanMtWeld NolansThorLake<br />
Value 9.9 11.4 10.5 13.6 14.2 22.1 US$/kg<br />
Based on fall, 2008 prices from metal-pages.com and criteria defined by Arafura Resources Limited<br />
SEGYT<br />
SmEuGdYTb<br />
Nd,Pr, Dy<br />
Ce,La<br />
TSX:AVL<br />
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Nechalacho REE Deposit<br />
Conceptual Mine Plan<br />
Mine Portal<br />
Vent<br />
Barren Rock Dump<br />
Long Lake<br />
Tailings Pond<br />
Underground Mining<br />
Upper Zone<br />
Tailings Storage<br />
Basal Zone<br />
Initial mine production rate: 1,000-2,000 t/day of ore through the mill.<br />
To produce approx. 5,000-10,000 tpy TREO in chemical concentrates…<br />
equivalent to just 2-5% of est. 2014 market (5-10% of HREO demand).<br />
Current forecast on operating costs: $200/tonne (mining & processing)<br />
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20μm<br />
Zircon<br />
Basal Zone HREE Mineralization<br />
in Zircon and Fergusonite:<br />
Metallurgical Recovery Process<br />
Fergusonite<br />
REE distribution in fergusonite:<br />
82-85% REE Recovery in on-site plant<br />
Fine-grinding (40 micron)<br />
Froth Flotation<br />
Hydrometallurgical plant located off-site<br />
Caustic cracking of REE con followed by<br />
acid leaching (HCl or H2SO4) will put<br />
90% of REE plus Zr and Nb into solution<br />
Solvent extraction then precipitation of<br />
two mixed REE carbonates (one mainly<br />
LREE, second mainly HREE)<br />
Separation of REE oxides (Japan)<br />
REE Y La Ce Pr Nd Sm Eu Gd Tb Dy Ho Er Tm Yb Lu<br />
Oxide % 29.0 0.30 4.40 1.70 15.6 10.4 1.60 14.3 1.80 9.80 1.20 4.10 0.70 4.40 0.70<br />
TSX:AVL<br />
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Thor Lake Project:<br />
Technical Consultants<br />
David Trueman, Ph.D., P.Geo, <strong>Rare</strong> <strong>Metals</strong> Geologist<br />
Chris Pedersen, P.Geo, <strong>Rare</strong> <strong>Metals</strong> Geologist<br />
Bruce Hudgins, P.Geo. Resource database management<br />
John Goode, P.Eng. Metallurgical Consultant<br />
SGS Lakefield Research, Metallurgy & Mineralogy<br />
Scott Wilson RPA Inc., Pre-Feasibility Study Independent Consultants<br />
Wardrop Engineering, Independent resource consultants<br />
Jacques Whitford Stantec, Permitting, Environmental Studies<br />
Dudley Kingsnorth, IMCOA, REE Market Studies<br />
Kaz Machida, KAY Investment, REE Market Dev. Asia<br />
McGill University, Geological Research<br />
Community, Environment, Health and Safety Advisory Committee:<br />
Chief Glenn Nolan, Denis Kemp, Jean Cinq-Mars (Chair: Bill Mercer)<br />
TSX.AVL<br />
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Nechalacho REE Deposit:<br />
Development Timeline<br />
VALUE<br />
2005: $700,000<br />
• Acquisition<br />
• Compilation<br />
2013: $300-400 million<br />
2007-2008: $7.5 million<br />
• Production<br />
• Delineation drilling<br />
• Metallurgical studies<br />
2010-2012: $20-30 million<br />
• Preliminary engineering<br />
• Bulk sample & feasibility<br />
• Environmental studies<br />
• Permitting & MOU<br />
• Off-take arrangements<br />
2006 - 2007: $750,000<br />
• Mine development<br />
• Scoping study<br />
2009-2010: $4-5 million<br />
• Definition drilling<br />
• Metallurgy & market studies<br />
• Pre-feasibility study<br />
• Environmental studies<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 27
Capital Structure<br />
as at October 14, 2009<br />
Canada - TSX: AVL<br />
United States - OTCQX: AVARF SEC 12g3-2(b) # 82-4427<br />
Shares Outstanding 78,404,448<br />
Fully Diluted 86,983,698<br />
Market Capitalization C $274 million (S/O @ $3.50)<br />
Recent Price Range C $3.00 - $3.80<br />
52 Week High / Low C $4.24 - $0.30<br />
Cash Reserves<br />
C $20.0 million<br />
Insider Share Position 4.0 million shares (5.0%)<br />
Institutional holdings (25%) CPP, TDAM, Front St., Excalibur, NatCan, MFC<br />
Faircourt, Cantara, Seamans, Fuchs Global<br />
Balance Sheet Assets C $26.5 million (Aug. 31/09)<br />
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Five Year Price Chart<br />
Thor Lake<br />
Acquisition<br />
Recognition of<br />
Lake Zone HREE<br />
Scoping Study<br />
The Dines Letter<br />
Mkt. Meltdown<br />
$1.55 Financing<br />
TSX:AVL<br />
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Key Value Drivers<br />
Thor Lake (Nechalacho) a globally strategic REE resource<br />
Very large size, geologically-unique deposit<br />
Exceptional enrichment in scarce HREE and could become the<br />
dominant global supply source<br />
Located in a politically-stable jurisdiction<br />
Potentially highly profitable<br />
Ore value >2x operating costs just for REE<br />
Potential by-product credits (gallium, tantalum, niobium, zirconium)<br />
Relatively small initial capital requirements<br />
Interest from customers as potential strategic partners<br />
Growing recognition in the marketplace of importance of REE<br />
Coverage from industry analysts & media commentators<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 30
Management, Directors<br />
& Strategic Advisors<br />
Management<br />
Donald S. Bubar, P.Geo,<br />
President, CEO & Director<br />
Jim Andersen, C.A., C.P.A.,<br />
V.P. Finance & CFO<br />
Bill Mercer, Ph.D., P.Geo.,<br />
V.P. Exploration<br />
Ian M. London, P. Eng., MBA.,<br />
V.P. Market Development<br />
David Swisher, B.Sc.,<br />
V.P. Operations<br />
Cindy Hu, CA, CPA, CGA, Controller<br />
Virginia Morgan, B.Com,<br />
Manager, Investor Relations<br />
Directors<br />
Alan Ferry, CFA<br />
Non-Executive Chairman<br />
Brian D. MacEachen, C.A.<br />
Audit Committee Chair<br />
Joseph Monteith<br />
Peter McCarter, B.A., LL.B., M.B.A.<br />
Phil Fontaine, B.A., LL.D.<br />
Strategic Advisors<br />
F. Dale Corman, P.Eng.<br />
Gerald Prosalendis, Communications<br />
David Connelly, Community Relations<br />
TSX:AVL<br />
OTCQX:AVARF www.avalonraremetals.com 31
Good Practice = Good Business<br />
Reducing the risk of delays in receiving operating<br />
permits by:<br />
Operating in an environmentally and socially responsible manner<br />
Implementing a proactive community engagement philosophy to<br />
secure local community support for project development<br />
Leveraging the role of REE in new technology related to the<br />
Green Energy Economy to attract a broader range of investors<br />
TSX:AVL<br />
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<strong>Corporate</strong> Information<br />
<strong>Avalon</strong> <strong>Rare</strong> <strong>Metals</strong> Inc.<br />
130 Adelaide St. W, Suite 1902<br />
Toronto, ON Canada M5H 3P5<br />
T: (416) 364-4938 ۰ F: (416) 364-5162<br />
www.avalonraremetals.com<br />
www.raremetalblog.com<br />
office@avalonraremetals.com<br />
Investor Relations:<br />
Pro-Edge Consultants, Toronto<br />
tracy@avalonraremetals.com<br />
TSX:AVL<br />
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