UPDATE - Avalon Rare Metals

SPECIAL PULL-OUT SECTION ON GOLDVolume 8 Issue 4RAREEARTHEXPLORATIONUPDATEExamining BillC-300 p.28Natural gasin Québec p.53$5.95 CDN / USExploring Peru& DominicanRepublicPublications Mail AgreementNo.40845066www.resourceworld.comwww.resourceworldtv.comDon Bubar, President/CEO, Avalon Rare Metals Inc.INVESTOR KITSPage 60

The rare earth exploration sector is heating up as manyTSX Venture Exchange companies fan out across the globeacquiring prospects in the search for hi-tech metalsRare Earthexploration updateby Ellsworth DicksonAs could be witnessed at therecent Prospectors & DevelopersConference in Toronto, there wasa tremendous interest in rare earths onthe part of both explorers and investors.Speaking engagements by market analysts,following the rare earth sector, drewstanding room only crowds eager to gainvaluable knowledge as to how to play thisimportant and fast-developing sector.China controls about 95% of world rareearth production and is increasingly reluctantto sell rare earths to the rest of theworld. A shortage is likely to develop in thefuture unless other viable rare earth depositsare found and brought to production.In a related matter, in September 2009,China cancelled a $500 million investmentin Australia rare earth company LynasCorp. after not being able to satisfy therequirements imposed by Australia’s foreigninvestment regulator. Lynas owns theworld’s richest rare earth deposit at MountWeld in Western Australia. The Australiagovernment said China’s ownership mustbe less than 50% and Chinese directorsmust not take up more than half the board.Rare earths are critical for the manufactureof green-related products such ashybrid and electric cars, wind and tidalpower, flat screen displays and monitors,speaker magnets – the list goes on. In 2008,global demand was 124,000 tonnes TotalRare Earth Oxides (TREO) worth US $1.25billion. The forecast demand for 2014 is200,000 tonnes TREO valued at US $2-3billion, assuming a 10% per annum growthrate and not including demand from newtechnologies.Concerned about a secure supply of rareearths, the US Congress commissioned agovernment report on the subject whichis due out shortly. Below is a selectionof exploration and project updates for anumber of rare earth explorers and minedevelopers.Alkane Resources Ltd. [ALK-ASX], basedin Perth, Western Australia, is exploring theDubbo Zirconia Project in New South Wales,Australia. The project, which has goodinfrastructure, hosts measured resourcesdown to 55 metres of 35.7 million tonnesgrading 1.96% ZrO 2(zirconium), 0.46%Nb 2O 5(niobium), 0.03% Ta 2O 5(tantalum),0.14% Y 2O 3(yttrium), 0.75% Rare EarthOxides, 0.04% HfO 2(hafnium) and 0.014%U 3O 8(uranium). There is another 37.5 milliontonnes of inferred resources at similargrades. Although the mineralization is notclassified as a radioactive deposit, it contains23 million lbs. uranium. Production of uraniumis not allowed in New South Wales. Afeasibility study has been completed and a16 www.resourceworld.com APRIL 2010

LEFT: Michael Lafferty (Fort Resolution, campassistant), left, and Angus Lockhart (LutselK’e,camp assistant) in front of the Avalon RareMetals exploration camp at Thor Lake located100 kilometres southeast of Yellowknife,Northwest Territories. Photo courtesy AvalonRare Metals Inc.development commitment is expected latethis year.Artha Resources Corp. [AHC-TSXV]has staked over 60,000 hectares in Jujuyand Salta Provinces in northwest Argentinathat are prospective for a variety of lightand heavy rare earths elements, includingyttrium. Rare earth mineralizationobserved at the Susques property, whichcovers more than 20,000 hectares in southernJujuy Province, is hosted in stockworkveins with the host structures up to 10metres wide and over six kilometres instrike length. Exploration began in March.The Susques Project is near Artha’s silverprospects.Avalon Rare Metals Inc. [AVL-TSX; AVARF-OTCQX] is one of the moreadvanced players in developing rareearth mineral prospects. The companyrecently reported drill results from the2010 winter work program on its flagship,100%-owned, Nechalacho rare earthelements (REE) deposit, at Thor Lake,Northwest Territories. Drilling beganin January and a second drill rig wasmobilized in February. The rigs are testingexploration targets on the southernextension of the deposit. The first holeintersected 43.0 metres of high-grade REEmineralization in the Basal Zone averaging1.89% TREO with 27.2% HREO.The heavy rare earth elements BasalZone hosts indicated resources of 9 milliontonnes grading 1.86% TREO with 23.1%being HREO. Inferred resources stand at60 million tonnes grading 1.96% TREO.A pre-feasibility study by Scott WilsonRPA is advancing and on track for spring2010 completion. The study is evaluatinga potential initial mining rate of 1,000tonnes per day and rising to 2,000 TPD. A1,600-metre decline (sloping tunnel) wouldaccess the ore body 200 metres belowsurface.Avalon holds other rare earth and raremetals projects, including the SeparationRapids Lithium Project, the Lilypad LakesTantalum Project and the Warren TownshipAnorthosite Project, all in Ontario. Thecompany also has the East Kempville tinindiumproject in Nova Scotia.At this year’s PDAC Convention, Avalonreceived the 2010 Environmental & SocialResponsibility Award in recognition of thecompany’s community engagement effortsduring the exploration of its Nechalachorare earth project. Avalon received theaward for being a leader in promotingresponsible exploration practices,emphasizing early engagement and opencommunication with communities aroundThor Lake. The company has encouragedskills training and employment opportunitiesfor aboriginal people and has offeredTREO, or total rare earth oxides, refer tothe elements lanthanum to lutetium, plusyttrium, expressed as oxides. See Avalon’swebsite for conversion factors from elementsto oxides. Heavy rare earth oxides(HREO) refer to the elements europium tolutetium, plus yttrium, expressed as oxidesas a percentage of the TREO. Light rareearths (LREO) refer to the elements lanthanumto samarium, expressed as oxides.joint business opportunities includingenvironmental remediation work related tohistorical exploration activities. Committedto the principles of environmental andsocial responsibility, Avalon was the firstjunior exploration company to formallyadopt PDAC’s e3 Plus principles and guidelinesas policy of the company.“Avalon is honoured to accept PDAC’sEnvironmental & Social ResponsibilityAward.” beamed Don Bubar, President/CEO during his remarks,“ I have beenactively advocating for greater participationby aboriginal peoples in our industryand greater co-operation between companiesand communities. Thor Lake hasprovided an opportunity to practice whatI have been preaching.”Azimut Exploration Inc. [AZM-TSXV]has farmed out a 65% interest in its Dianacopper-cobalt-rare earth property inNunavik, Québec to a numbered Ontariocompany. The 237 square kilometre propertyhas lake bottom sediments gradingup to 559 ppm copper, 191 ppm cobalt,Light REE:La = LanthanumCe = CeriumPr = PraseodymiumNd = NeodymiumSm = SamariumHeavey REE:Eu = EuropiumGd = GadoliniumTb = TerbiumDy = DysprosiumHo = HolmiumEr = ErbiumTm = ThuliumYb = YtterbiumLu = LutetiumY = YttriumAPRIL 2010 www.resourceworld.com 17

129 ppm yttrium, 260 ppm lanthanum,612 ppm cerium, 68 ppm samarium and11 ppm europium. A $700,000 program isplanned for the first year of work.Bolero Resources Corp. [BRU-TSXV]has an option to acquire a 100% interestin the Carbonatite Syndicate rare earthclaim group, surrounding private companySpectrum Mining Corp.’s recentlyreported Wicheeda rare earth discovery.The Carbonatite Syndicate claim group is80 kilometres northeast of Prince George,British Columbia, and comprises 43 mineralclaims covering approximately 16,072hectares. Highlights from Spectrum’s neighbouringproperty included a 48.64-metreinterval which averaged 3.55% REE, a72-metre interval that averaged 2.92% REE,and a 144-metre interval which averaged2.20% REE in three separate drill holes.Butler Resource Corp., now trading asQuantum Rare Earth DevelopmentsCorp. [QRE-TSXV], has acquired SilverMountain Mines Corp., a private Nevadacorporation that has signed a Letter ofIntent to acquire North East Minerals Pty.Ltd., a private Australian company, thatowns a 100% interest in West AustralianTenement E29/679 (fully granted), knownas the Jungle Well Project, and a 100%interest in West Australian TenementE38/2374 (pending grant), known as theLaverton Project. Both projects are consideredprospective for rare earth elementsand are located in the same mineral fieldwhere Lynas Corporation Ltd.’s [LYC-ASX] Mt. Weld rare earth deposit is beingdeveloped. The Mt. Weld Project is a worldclass deposit with a reported resource of7.7 million tonnes grading 12% for 917,000tonnes of rare earth oxides.Through the acquisition of SilverMountain, Quantum has an option toearn a 100% interest in several rare earthprospects in the Thunder Bay MiningDivision of Ontario. The company alsoowns the Archie Lake REE propertylocated 50 kilometres east of Uranium City,Saskatchewan and 50 kilometres south ofthe Great Western Minerals Hoidas LakeREE deposit. Historic exploration andresults at Archie Lake returned significantconcentrations of REEs.Cache Exploration Inc. [CAY-TSXV] isearning an 80% interest in three rare earthprospects in eastern Canada: the WelsfordProject, located 20 kilometres north ofSaint John, New Brunswick, and the CrossHills and Louil Hills prospects, both inNewfoundland. All three properties hostrare earth mineralization which have beensampled and assayed with encouragingresults. Cache has planned detailed groundand airborne exploration for spring/summer2010.Canadian International MineralsInc. [CIN-TSXV] can earn a 75% inthe Carbo property, located about 80kilometres northeast of Prince George,British Columbia, that hosts a series ofniobium and rare earth element-bearingcarbonatite and alkaline intrusions. CINhas been granted a 5,000-hectare MineralExploration Licence in the Knee Lakeregion in central Manitoba that is prospectivefor rare earths. The company also has a100% option on the Deadhorse Creek REEproperty about 25 kilometres northwest ofMarathon, Ontario.Commerce Resources Corp. [CCE-TSXV]is an exploration and development companyfocusing on tantalum, niobium and raremetal deposits with a potential for economicgrades and large tonnages. The company isspecifically focused on the development ofits Upper Fir tantalum and niobium depositnorth of Kamloops, eastern British Columbia.Commerce farmed out a 75% interest in theCarbo Project to Canadian InternationalMinerals (see above).Dacha Capital Inc. [DAC-TSX;DCHAF-OTCQX] is controlled by Forbes& Manhattan, a private merchant bank,whose business plan is to acquire, stockpileand export heavy rare earth elementsoutside of China. Dacha will also be asource of capital to purchase excess inventory,reducing volatility.Fieldex Exploration Inc. [FLX-TSXV] is exploring the Delbreuil Cantonand Lac Sairs properties in the Abitibi-Temiscamingue region of northwest Québecas well as the Case property located about80 kilometres east of Cochrane, northeastOntario.Forum Uranium Corp. [FDC-TSXV;FDCFF-OTC] discovered rare earth mineralizationin intrusive rock outcroppings overa 10 by 10 kilometre area 13 kilometressoutheast of Areva’s Kiggavik uraniumdeposit in the Thelon Basin of Nunavut.Called the Nutaaq area, the ground is100% owned by Forum, subject to a 2%NSR royalty to Nunavut Tunngavik Inc.Twenty-nine samples graded over 0.1%total TREO, with a peak of 2.7% TREO.Gold Canyon Resources Inc. [GCU-TSXV] and Japan Oil, Gas and MetalsNational Corp. have signed a joint explorationagreement with a view to identifyREE resources. The partners have an optionto evaluate and lease tailings from minedumps from iron oxide-copper-gold-REEdeposits at Iron Mountain, Missouri andBenson Mines, New York. The JV is alsoevaluating REE prospects in Scandinavia.Great Western Minerals Group Ltd.[GWG-TSXV; GWMGF-OTCQX] is aSaskatchewan-based junior explorationand development company. With a mineto-marketbusiness model, the companyacquires and develops rare earth mineralproperties in North America and SouthAfrica. The 100%-owned Hoidas Lake RareEarth Project in Saskatchewan is one ofNorth America’s most significant primaryREE properties currently being developedwith high values in neodymium. In January2009, the company signed an option agreementwith Rare Earth Extraction Co. Ltd.of Stellenbosch, South Africa, to refurbish,re-commission, and operate the currentlyabandoned Steenkampskraal Mine, SouthAfrica. The agreement allows GWG theright to acquire exclusive access to 100%of the rare earth elements mined there.GWG subsidiary Great WesternTechnologies Inc. has a production facilityin Troy, Michigan for extractive metallurgy,mineral processing, and specialtyalloys manufacturing. It processes specialtymetal alloys and powder products, includingmaterials that utilize REEs.GWG subsidiary, Less Common MetalsLtd., near Liverpool, UK, is a world leaderin the manufacture and supply of rareearth based alloys and high purity metalsfocused on the permanent magnet industry.With considerable experience in the pro-18 www.resourceworld.com APRIL 2010

duction of materials to tight compositionaltolerances and controlled microstructures,LCM offers an innovative and highly flexibleapproach to a wide range of materialrequirements.Greenland Minerals and Energy Ltd.[GGG-ASX; Pink Sheets] has acquiredan exploration license over the northernIlimaussaq Intrusive Complex, southernGreenland, a geological entity with potentialfor specialty metals, particularly rareearth elements. Since acquiring the projectin mid-2007, exploration has confirmed thepotential, and the Kvanefjeld Project is nowrecognized as one of the world’s largest undevelopedresources of rare earth elements anduranium. The ores are also strongly enrichedin zinc and sodium fluoride.Hinterland Metals Inc. [HMI-TSXV]has acquired two REE projects in Québec:the LuLa Project, 200 kilometres northeastof Schefferville in Labrador, and theKipawa property, 20 kilometres northeast ofTemiskaming, northwest Québec. For 2010,airborne geophysics followed by surfaceprospecting and sampling is planned forLuLa, which is adjacent to Quest Uranium’sStrange Lake REE property. Soil samplingat Kipawa will test several areas where totalREE values reached 1,091 ppm.Hudson Resources Inc. [HUD-TSXV] isadvancing its 100%-controlled Sarfartoqrare earth project in Greenland where ithas identified three REE prospects all coincidentwith large radiometric anomalies. Atotal of 25% of 168 rock samples, collectedin 2009, assayed between 1% and 9.8%TREO. In 2009, 1,400 metres of drillingwas completed.First phase drilling is planned to startin April and will focus on expanding therare earth zones at ST1 and ST40, whichreturned good RRE values in last year’sdrilling. This season’s work includes geophysicalsurveys, environmental baselinestudies, a minimum 3,000-metre drillingprogram and metallurgical studies.International Montoro Resources Inc.[IMT-TSXV] recently completed the acquisitionof 100% interests in five claim blockstotaling 2,268 hectares of rare earth prospectsnortheast of Prince George, BritishColumbia. The Chuchinka claims adjoinSpectrum Mining’s Wicheeda reported rareearth discovery. Int’l Montoro will be commissioninga geological report and startinga work program in the near future as soonas the property is accessibleMatamec Explorations Inc. [MAT-TSXV] has received some assay results forits November-December 2009 diamonddrilling program on the central part ofthe Kipawa rare-earth-elements-yttriumzirconiumdeposit located within theZeus property, Temiscamingue, Québec.Best results are 0.976% TREO over 17.55metres in hole 09-KM-56 and 1.05% TREOover 10.31 metres in hole 09-KM-60. Theintersections average 30-36% heavy rareearth oxides and Y 2O 3of the TREO. Everyhole for which analysis has been receivedintersected a mineralized zone. Many holescontain rare-earth-elements-yttrium-zirconiumintersections in multiple horizons.Midland Exploration Inc. [MD-TSXV]has agreed to Japan Oil, Gas and MetalsNational Corp. earning a 50% interestin its 679 square kilometre Ytterby REEproject located between 200 and 230kilometres east and northeast of Schefferville,Québec. The Ytterby main claim block issituated five kilometres south of the StrangeLake REE deposit and the B Zone REE discoveryannounced by Quest Uranium in 2009.Midland controls, almost entirely, the NapeuKainiut pluton which hosts the Strange Lakeperalkakine complex.Neo Material Technologies Inc. [NEM-TSX] is a producer, processor and developerof neodymium-iron-boron magnetic powders,rare earths and zirconium-basedengineered materials and applications.Based in Toronto, Ontario, the companyhas about 1,375 employees in 19 locationsin 10 countries.Quest Uranium Corp. [QUC-TSXV] isadvancing several high-potential projectsin Canada’s premier exploration areas: theStrange Lake area of northeast Québec,the Kenora area of northwest Ontario andthe Plaster Rock area of northwest NewBrunswick. At Strange Lake, assay resultsfrom the B-Zone REE deposit have confirmedthe significant resource potential of the zone.Drilling returned strong REE assays over aminimum strike of 1.1 kilometres. Widths ofthe mineralized envelope increased to at least500 metres and the mineralized envelope is atleast 135.2 metres in vertical thickness. Labresults for holes BZ-09-015 to 019 returnedmultiple, high-grade TREO intersectionsof between 1.03% and 3.74% over verticalthicknesses of 3.0 to 38.5 metres. HREErepresents between 28.8% and 71.0% ofthe TREO content intersected in the newdrilling.Rare Earth Metals Inc. [RA-TSXV]has resumed drilling on the Clay-HowellsProject in Northern Ontario following talkswith local First Nations and the provincialgovernment. The current drill program isfocused on redefining the historic Clay-Howells magnetite deposit and establishingthe grade of rare earth elements, niobiumand iron in the deposit. An assay of3.46% TREO over 7.6 metres, including4.71% over 4.6 metres were obtained fromrecently assayed historic drilling. The company’sLackner Lake Carbonatite is a 30square kilometre circular alkalic complexwith historic niobium and iron resourceslocated 20 kilometres east of Chapleau,northern Ontario, where a new REE discoveryat Pole Lake returned values up to7.49% TREE over a minimum of 3 metresof width. Rare Metals’ first drill hole cut a144.5 metres of 0.45% TREO.Rare Element Resources Ltd. [RES-TSXV]was created to develop the Bear Lodge goldand REE deposits in northeast Wyoming.A recently completed NI 43-101-compliantinferred resource estimate indicates a REEdeposit containing 9.8 million tons averaging4.07% rare earth oxides (REO), including 4.5million tons of oxides averaging 4.3% REO.Initial metallurgical testing of the oxidematerial demonstrated a 70% recovery. Drillhole RES09-8 returned an estimated aggregatetrue thickness of 213.4 feet averaging5.54% REO.Newmont Mining Corp. [NWM-TSX;NEM-NYSE] can earn a 65% workinginterest in Rare Element Resources’ property,excluding any rights to the rare earthelements but including rights to gold andother metals, by spending US $5 million onexploration over five years.Stans Energy Corp. [RUU-TSXV] ownsfive mineral properties in Kyrgyzstan, ofAPRIL 2010 www.resourceworld.com 19

Camp safety meeting. Camp supervisor Randy O’Keefe demonstrates the correct use of a fireextinguisher at Avalon Rare Metals’ Nechalacho exploration camp. Left to right: Randy O’Keefe,Diane Tucker (cook), Clifford Larkin (camp assistant), Tracy Riley (cook helper) and LawrenceGoulet (camp assistant). Photo courtesy of Avalon Rare Metals Inc.which Kutessay II is most advanced. Theproperty previously produced 80% of theformer Soviet Union’s REEs from 1960-1991in an open-pit mine. There is good infrastructure,a rail line 43 kilometres away, electricalpower on site, and the mine is located 140kilometres by paved road from Kyrgyzstan’scapital city of Bishkek. The deposit containsall 15 REEs and formerly produced everyREE at purities up to 99.99%.Tasman Metals Ltd. [TSM-TSXV] hasreported assays from the first five drill holestesting its 100%-owned Norra Karr REEzirconiumproject in Sweden. Four of thefive drill holes intersected wide intervalsof REE-Zr mineralization from surface tothe depth of drilling, with two of the fivedrill holes terminating within mineralization.Results include 108.1 metres of 0.74%TREO, 2.1% ZrO 2(zirconium oxide) with52% of the TREO being HREOs. This firstdrill program discovered multiple intervalsof REE and Zr mineralization, with gradesranging up to 1.21% TREO and 3.5% ZrO2and mineralized thicknesses range up to149.3 metres.TNR Gold Corp. [TNR-TSXV] hasacquired, by staking, the Big Beaverhousecarbonatite complex located 450 kilometresnorth of Thunder Bay, northwest Ontario.The Big Beaverhouse is one of the largestcarbonatite complexes in Ontario, measuringsix kilometres in diameter with asurface area of about 16 square kilometres.Partial REE analyses conducted by theOntario Geological Survey on historicaldrill holes on the property in the 1980sreturned up to 3,200 ppm La+Ce+Nd.Ucore Uranium Inc. [UCU-TSXV] hasreleased an update on detailed mineralogicalstudies on surface and drill-coresamples from its Bokan Mountain REEproject. The 100%-owned Bokan-DotsonRidge Project is located on Prince of WalesIsland, southeast Alaska. A wide variety ofrare earth element-bearing minerals wereidentified in the study. Ucore holds otherproperties in Nunavut, Ontario, Labradorand Newfoundland. n20 www.resourceworld.com APRIL 2010