Rich & Rare

Photo Report by Northern Correspondent Bill Braden

On a cold evening early last month, after a meal of freshly baked lasagne and crisp caesar salad, the talk around the cozy cook shack at Avalon Rare Metals’ Nechalacho camp turns to what makes its rare earth deposit at Thor Lake in the Northwest Territories so remarkable.

“Two fundamental things,” says Chris Pedersen, Avalon’s affable geologist whose connection with the property goes back some 25 years. “The first one is its size and the second is that it’s enriched in the heavy rare earth elements.”

Those two factors, and the anticipated doubling of world demand to 200,000 tonnes by 2015, have thrust this deposit near the rocky north shore of Great Slave Lake into the world’s strategic metal spotlight almost overnight. Plus China, source of 95 per cent of today’s world primary supply, exports only 40 per cent, and wants to keep even more for itself.

Outside the cook shack, the muffled drone of a Foraco diamond drill cuts through the still, -33 C air from across Thor Lake, a 10-minute snowmobile ride away.

It’s pulling HQ core from about 200 meters down, tracing a 25-meter-thick zone that’s saturated with all 17 of the periodic table’s rare-earth chemical elements and metals including scandium, yttrium and the 15 lanthanoids.

Most aren’t really “rare” -some of the light rare earths are as common in the earth’s crust as nickel or tin -but usually too diluted to mine. The new hunger is for the Heavy Rare Earth Elements (HREEs).

“We have a very high ratio of these very scarce, heavy rare earth elements, more valuable and more sought after by end users,” says Don Bubar, Avalon’s President and CEO.

A January 2010 release from Avalon announced the indicated mineral resource in the southern part of the Basal Zone is now pegged at 9.00 million tonnes, doubling the estimate of 4.4 million tonnes stated just last August.

Avalon says the Total Rare Earth Oxide (TREO) content is 1.86 per cent of the zone, and of that, 23.1 per cent is HREEs.

That’s stellar, when most deposits log under three per cent HREEs, said the UK’s Proactive Investor April 2009 newsletter, predicting it could be “one of the largest and richest undeveloped deposits” in the world.

The 2010 drilling program targets up to 10,000 metres of new core, and will see a second larger drill brought in across Great Slave Lake sometime this month.

What’s exposed geologically now is just a half-acre of a total claim block of 10,499 acres.

“It is mineralized from top to bottom, particularly enriched in one continuous layer an average of 20 meters thick … that’s open in all directions (about 200 meters below surface),” says Pedersen.

“We don’t know the size of this deposit. We only know its minimum and that’s huge.”

From Avalon’s well-stocked web pages ( www.avalonraremetals.com),

and a look at related sites, it’s plain to see REEs are transforming the new, green technologies Pedersen mentions next.

Consider this: An Apple iPhone uses nine REEs. The generator in a big wind turbine needs a half-tonne of neodymium. A hybrid car needs about 30 kilograms of REE. In permanent magnets for electric motors, tiny amounts of dysprosium can cut their mass by as much as 90 per cent.

The New York Times, in December 2009, described it as one of “the miracle ingredients of green energy products,” adding as well terbium, which can slash energy for lights by 80 per cent.

But while prices of these two have surged four to seven times since 2003, the supply chain for REES, which are not exchange-traded, is far from conventional.

China’s virtual monopoly, and the closure of the principle American producer in 2003, have stirred fears that the Western World’s security and green revolution may be choked back. A worried US Congress has ordered a review of the US reliance on REEs and a proposal for a bill called RESTART (Rare Earths Supply- Chain Technology and Resources Transformation Act 2009) would allocate US$1.25 billion to jumpstart the industry.

Avalon writes the book on community, aboriginal relations.

While Nechalacho holds world-class potential, it is not yet a mine, and that’s the gap that Don Bubar is trying to bridge.

“Building a new mine is as much an exercise in public relations as it is in making it technically and financially successful,” he says, citing lessons learned in planning Avalon’s Separation Rapids property in 2000. “We made a lot of mistakes in not getting a dialogue going with the local First Nations at the earliest stages of the project. I also know that the NWT is not an easy jurisdiction to work in, and we are determined to not repeat the same mistakes.”

So after taking over the dormant Nechalacho property from Beta Minerals in 2005, and before engaging the NWT’s notoriously cumbersome permitting process, Bubar invested time in simply meeting with people in five different communities.

One outcome was in the fall of 2009, when Avalon flew dozens of leaders, elders and media out to Thor Lake, 100 km southeast of Yellowknife, to formally rename the property Nechalacho (net-chell- AT-cho). In the Weledeh Dene language, it refers to a specific stretch of the north shore of Great Slave Lake near the deposit. The name is on loan to Avalon.

Avalon and other industry partners are also investing in training programs through the NWT Mine Training Society.

Anticipating the need to negotiate with impacted communities, Avalon has offered “to come to the table and talk about what an Impact and Benefit Agreement might look like, and what a participation (equity) agreement could look like,” says David Connelly, Avalon’s community relations advisor.

“Avalon has uniquely defined itself in aboriginal and community engagement,” says Connelly.

For Yellowknives Dene N’dilo Chief Ted Tsetta, Avalon’s doing things better than many explorers “to a point” and he won’t comment on their offers until his Council and their 1400 members have a chance to consider them.

He is absolutely firm in his conviction that the project is on Yellowknives traditional lands, is subject to Treaty rights, and that his people have to get “first priority” before any other region or community in benefits

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