RARE EARTH STUDY: Nechalacho deposit boasts positive economics

NORTHWEST TERRITORIES - Avalon Rare Metals of Toronto has released a positive pre-feasibility study (PFS) for its Nechalacho rare earth elements (REE) deposit at Thor Lake, 100 km southeast of Yellowknife. A mine could generate an after-tax internal rate of return (IRR) of 12% and a net cash flow of $1.5 billion. Total capital costs would be $899.7 million, including a 22% contingency.

Plans call for ramp development to access underground ore at an initial rate of 1,000 t/d, doubling in the fourth year. Approximately 12 million tonnes of probable reserves will be mined over a period of 18 years. A conventional flotation mill will produce a concentrate that will be barged to a proposed hydrometallurgical plant off site. Rare earth, zirconium, niobium and tantalum will be recovered in their oxide forms. Tailings from the hydromet plant will be stored at the existing facility at the historic Pine Point lead-zinc mine.

Avalon wants to begin construction in 2013 for production that would begin two years later. The critical path project schedule is posted at www.AvalonRareMetals.com/projects/thor_lake/prefeasibility_study/.

A project description report filed in connection with the project permitting process can be found on the Mackenzie Valley Land and Water Board's public registry site at www.MVLWB.com.