Corporate Presentation July 14, 2011 - Avalon Rare...
Transcript of Corporate Presentation July 14, 2011 - Avalon Rare...
Corporate PresentationJuly 14, 2011
Don Bubar, President & CEO
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Safe Harbour Statement
Forward looking information
Certain statements contained in or incorporated by reference into thispresentation constitute forward-looking statements. Such statementsreflect the current views of Avalon Rare Metals Inc. with respect to futureevents and are subject to certain risks, uncertainties and assumptions.Many factors could cause the actual results, performance or achievementsof Avalon Rare Metals Inc. that may be expressed or implied by suchforward-looking statements to vary from those described herein shouldone or more of these risks or uncertainties materialize. Avalon Rare MetalsInc. does not intend, and does not assume any obligation, to update theseforward-looking statements.
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Capital StructureJuly 6, 2011
Canada - TSX: AVL
United States – NYSE Amex: AVL Frankfurt- OU5
Shares Outstanding 94,154,915
Fully Diluted 104,933,970
Market Capitalization US $635 million (S/O @ $6.75)
Recent Price Range US $6.00 - $7.50
52 Week High / Low US $10.11 – C $1.92
Cash Reserves C $30 million (No debt)
Insider Share Position 4.1 million shares (4.5%)
Institutional holdings John Hancock, TDAM, Global X, Manulife, AGF
(est. 30-40%) Encompass, Van Eck, Cantara, Sentry, Chilton
Employees 25 (including contract staff)
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1 Year Price Chart
CIBC Financing
PFS News
China reduces export quotasNYSE Amex Listing
Rising REE Prices
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Dysprosium, Neodymium, and Lanthanum: Inside China price trends
Updated June 7, 2011
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Rare Earth Element Prices
Source: Metal-Pages.com, July 12, 2011 (US$/kg)Prices are indicative and basis FOB China
Metal Oxide Principal Uses Current Prices Oct . 09 Prices
Light Rare EarthsLanthanum Oxide 99% min Re-chargeable Batteries 150.00 – 153.00 4.40 – 4.90
Cerium Oxide 99% min Catalyst, glass, polishing 157.00 – 159.00 3.50 – 4.00
Praseodymium Oxide 99% min Magnets, glass colorant 247.00 – 250.00 14.20 – 14.70
Neodymium Oxide 99% min Magnets, lasers, glass 315.00 – 320.00 14.70 – 15.20
Samarium Oxide 99% min Magnets, lighting, lasers 127.00 – 130.00 4.25 – 4.75
Heavy Rare EarthsEuropium Oxide 99% min TV colour phosphors: red 5860.00 – 5880.00 470.00 – 490.00
Terbium Oxide 99% min Phosphors: green, magnets 4400.00 – 4420.00 340.00 – 360.00
Dysprosium Oxide 99% min Magnets, lasers 2500.00 – 2520.00 105.00 – 110.00
Gadolinium Oxide 99%min Magnets, superconductors 200.00 – 205.00 5.00 – 5.50
Yttrium Oxide 99.999% min Phosphors, ceramics, lasers 175.00 – 180.00 10.00 – 10.50
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Management & Board of Directors
ManagementDonald S. Bubar, P.Geo, President, CEO & Director
Jim Andersen, C.A., C.P.A., V.P. Finance & CFO
Bill Mercer, Ph.D., P.Geo., V.P. Exploration
David Swisher, B.S. Min.Eng.,
V.P. Operations
Pierre Neatby, B.A. Econ, V.P. Sales & Mktg
Brian Chandler, P.Eng. Senior VP & COO (starting August 15)
Richard Pratt, V.P., General Counsel and Corporate Secretary (August)
DirectorsAlan Ferry, CFANon-Executive Chairman
David Connelly, CStJ, CD, MBA, B.Comm
Phil Fontaine, B.A., LL.D.
Brian D. MacEachen, C.A. Audit Committee Chair
Peter McCarter, B.A., LL.B., M.B.A. Chair Governance/Compensation ctte
Hari Panday, C.A.
Charlotte May, Assistant SecretaryCindy Hu, CA, CPA, CGA, ControllerRon Malashewski, P.Eng (AB), Manager, Investor Relations
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Each REE deposit has its ownunique, (constant) distribution
Avalon’s Nechalacho deposit is rich in HREE and a more sustainable alternative to the South China ionic clays
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Mt PassMolycorp
Baiyun Obo Baotou
Mt WeldLynas
NolansArafura
NechalachoAvalon
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Project LocationsNECHALACHOHeavy Rare EarthsTantalumNiobiumZirconiumHafniumGallium
NORTH T DEPOSITBerylliumLight Rare EarthsLithiumGalliumNiobium
All projects 100% owned
Avalon offers diversified exposure to a broad range of rare metals
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Key Applications of REE:Magnets for Electric Motors
REE (NdFeB) or “Neo” Magnets reduce electric motor/generator size and weight, and improve efficiencyMajor applications include:
Electronics (grams)Hybrid-electric cars (1-2 kg)Industrial air conditioners (500 kg)Wind turbines (0.6-1.0 tonne/MW)MRI machines (1-3 tonnes)
Trend toward larger volume applicationsREE magnets can reduce power consumption by 50% Approximately 30% of the magnet is Neodymium metal
HREE dysprosium and terbium additions are key to making “heat resistant” magnets vital to automotive and other applicationsHREE phosphors key to energy efficient lighting, display screens
100 Kw generator with neo magnets
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Forecast for Global Demand and Supply in 2015 (+/- 20%)
Demand (tonnes REO)
Excess / Shortage Supply (tonnes REO)
Based on total REO demand of 185,000 tonnes and an adjusted supply of 198,500 tonnes.
Data source: IMCOA, (Dudley Kingsnorth) February ,2011.
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Recent Developments in REE Markets
China increases second half 2011 quotas by 8.9% (from the first half 2011 quotas) for a total of 15,738 tonnes
In the past 4 months Individual REE oxide prices have risen dramatically outside China and inside China as well
Molycorp signs MOU with Sumitomo for $130 million debt / equity financing, and enters magnet alloy joint venture with Hitachi Metals
Lynas and Sojitz Corporation announce Strategic Alliance to supply Japanese market and $275 million financing facility to expand production to 22,000 tpa TREO by 2013
Molycorp announces expansion plans to 40,000 tpa TREO , the acquisition of AS SilmetREE plant in Estonia and Santoku America REE metal alloy plant in Arizona
Siemens and Lynas sign a letter of intent for future magnet production
Avalon signs MOU’s about off-take and investment with 3 Asian industrials
Frontier Resources and Korean Resources Corporation sign strategic partnership
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REE MiningFrom the ground to crushed ore
REE MillingGrinding and Beneficiation of REE minerals
REE Hydrometallurgy
Cracking the REE minerals to produce mixed REE oxides concentrate
REE SeparationSeparating and purifying the individual REE oxides
REE RefiningTo meet specific downstream technology applications
REE ProductsPermanent magnets, LED’s , consumer electronics
Rare Earth Element Supply Chain
Avalon’s contributions to the REE supply chain...Three large plants with a total CAPEX of > $1billion
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Thor Lake: Project Location
Flotation plant at Thor lake, shipping of concentrate by barge to hydromet plant at Pine Point.
Concentrates shipped by rail from Hay River to Separation Plant
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Nechalacho REE Deposit at Thor Lake: Key Facts
Positive pre-feasibility study completed in 2010. >C$30 million invested since 2005, incl. 59,000m of drilling in 266 holes$46 million Bankable feasibility underway, funded, complete in 2012Large resource amenable to low cost underground mining methodsRich in heavy rare earths (20-28%), High grade subzones definedExtractive process defined at bench scale. Pilot plant in progressProduct marketing: 3 MOU’s signed with potential strategic partnersBy-product revenues from zirconium, niobium and tantalum
Environmental assessment and permitting process in progress with First Nations supportPlanning for N. American HREE separation plant Start-up in 2015, sales in 2016C$1.0-1.2 billion estimated total capital cost
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West Long Lake Area
Tardiff Lakes Area
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Nechalacho REE Deposit Conceptual Development Plan
Barren Rock Dump
Tailings PondLong Lake
VentMine Portal
Underground Mining
Basal Zone
Upper Zone
Tailings Storage
Mining underground room & pillar/long-hole stoping2,000 tonnes per day (tpd), (lower rate during start-up)
Flotation processing to produce mineral concentrate Hydrometallurgical treatment of mineral con in plant south of GSLProduction of 10,000 tpa mixed REE oxides for separation elsewhereMarket capture less than 5% of est. 2014 TREO global demand Operating Costs: $267/mined tonne of ore inclusive mine, mill and hydromet or $6.50 -$7.00/kg REO after separation
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2011 Updated RPA Prefeasibility Study: Summary of Financial Analysis
Financial Analysis
Original PFS Updated PFS
Pre-Tax (CAD$) After-Tax (CAD$) Pre-Tax (CAD$) After-Tax
(CAD$)
Internal Rate of Return 14% 12% 39% 34%
Net Cash Flow $2.1 billion $1.5 billion $6.08 billion $4.48 billion
Net Present Value @ 8% $428 million $236 million $2.22 billion $1.61 billion
Net Present Value @ 10% $246 million $97 million $1.77 billion $1.27 billion
Based on Probable Mineral Reserves resources of 14,539,167 tonnes defined from January, 2011 updated resources ,including high-grade subzones.Expected revenues are based on the following price assumptions in USD per kilogram: TREO = $46.33, ZrO₂ = $3.77, Nb₂O₅ = $55.86, Ta₂O₅ = $255.63 20 Mine Life. 1 year ramp-up to full 2,000 tpd production rate.
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Aboriginal Engagement
Final Pre-feasibility Report
File Permit Applications
Environmental Assessment
Ministerial Approval
Land Use/Water permits
Flotation Pilot Plant Testing
HydroMet Pilot Plant Testing
Bankable Feasibility Study
Final Designs & Financing
Project Construction
Project Start-up
Production & Sales
Market Development
Q1 Q2 Q3Q3 Q4 Q1Q1 Q2 Q3 Q4 Q1 Q2 Q42015
Q1 Q2 Q3 Q42016Thor Lake
Project Schedule2010 2011 2012 2013 2014
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q2 Q3 Q4
Schedule to Production in 2016
Bankable Feasibility Study BudgetSept. 1, 2010 to Aug 31. 2012= $46 million
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Environmental Concerns: Uranium & Thorium
All Rare earth deposits contain some Uranium (U) and Thorium (Th) but there are no other hazardous materials in the ore.
Nechalacho U & Th content is exceptionally low averaging 23ppm U (background levels) and 114ppm Th (mildly elevated) in high grade ore
Levels are safe for mining and processing activities and no water issues due to insolubility
Th is concentrated with the rare earths and does not go to mine tailings
Levels do not invoke additional permitting requirements from Canadian Nuclear Safety Commission or special transport regulations
Proposed Hydromet facility is on a brownfields mining site and will use historic open pits for waste disposal. Th will be diluted to safe levels
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ThO2 content comparison in various REE deposits
Nechalacho
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Competitive Advantages with other emerging REE producers
Relatively Advanced: At Feasibility Study stageAllows company to enter into discussions with customers about off-take
First Mover Advantage is KeyFirst to market will capture available market share
Only room for a handful of new producers “first come, first served”
Metallurgical Flowsheet DeterminedVery low Uranium and Thorium
Good recoveries confirmed (75%)
Pilot plant test work underway
Heavy Rare Earth Enrichment Marketing OpportunityNo other advanced projects have all the heavies to offer by 2015-16
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REE COMPARABLES: Market Capitalization Normalized to TREO Resources
Company Market cap US$ Millions
Million tonnes TREO*
US$/tonne TREO Stage
Molycorp $4,776 1.3950 $3,423 Production / expansion
Lynas Corporation $3,643 1.1640 $3,130 Construction
Rare Element Resources $450 0.55 $818 Prefeasibility
Arafura $277 0.84 $329 Feasibility
Quest Rare Minerals $341 0.976 $350 Prefeasibility
Avalon Rare Metals $608 4.298 $141 Feasibility
(Market data and FX as of July 13, 2011)* Based on published information/reports
Also, the market has yet to fully recognize the value of Avalon’s heavy rare earths
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Future Milestones and Value Drivers for Avalon in 2011
Completion of flotation pilot plant workCompleting definitive agreements with off-take/ strategic partnersDefining the HREE separation plant locationFinalizing Aboriginal Participation AgreementsUpdated resource estimates for 2011 drilling
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What are Rare Earth Elements?
Light REE:La = LanthanumCe = CeriumPr = PraseodymiumNd = NeodymiumSm = Samarium
Heavy REE:Eu = EuropiumGd = GadoliniumTb = TerbiumDy = DysprosiumHo = HolmiumEr = ErbiumTm = ThuliumYb = YtterbiumLu = LutetiumY = Yttrium
Neodymium, Dysprosium, Terbium and Europium in highest demand
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NECHALACHO METALLURGY
Metallurgical testing at SGS Minerals Lakefield Under supervision of John Goode, P.Eng, Consulting Metallurgist
Flotation bench scale testing completeConcentrate with REE, Nb, Ta, Zr at about 5X concentrationREE content approx. 10%, present recoveries: 80-85%Gangue minerals (silicates, etc.) ~40% of concentrate
Mini-pilot flotation plant (4-5 tonnes) trial in progress at XPS
Hydrometallurgical flowsheet defined (90% TREO recovery)“Cracking” of minerals completeSeparation procedure for REE, Zr, Nb, Ta designedMini-Pilot plant work to begin when flotation work complete
Feasibility Study Pilot Plant work on 30 tonne sample (H2 2011)
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Deslime (~8 µm)
Magnetics removal
Rougher flotation
Cleaner flotation
Gravity concentration
Grind to 37 µm Mill
Magnetic Separator
DeslimingCyclones
REE Mineral concentration
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Hydrometallurgy
REE SolutionResidue (zircon, columbite, gangue)
Precipitate bulk LREE+50% HREE
Combined REE product
Acid (H2SO4) bake (~200°C)
Acid (HCl) solution 50% HREE, Nb, Ta, Zr
Caustic (NaOH) crack (~600°C)
Separate HREE Nb -Ta Zr
Rare Earth Separation Plant Recoveries: 74% TREO, 80% Zr
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N-S Composite Section (looking west)
Upper LREE Zone
Basal HREE ZoneAverages 30 m thick, 2% TREO, 20% HREE
Hole 70: 1.90% TREO with 32.6% HREO
over 6.0 metres
Hole 154: 1.88% TREO with 20.5% HREO over 20.0 metres
170m
1590m
Drill Hole with Basal Zone Intercept
Tardiff Lakes Area Indicated resources
Nechalacho REE Deposit
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Nechalacho Deposit: NI 43-101Resources Updated Jan. 27, 2011
Prepared initially from 2009 data by Scott Wilson RPA for Technical Report filed July 29, 2010. Updated for 2010 drilling by Finley Bakker, P.Geo., Sr. Resource Geologist
Mineral Resources based on following price assumptions: US$21.94/kg TREO, US$3.76/kg ZrO2, US$130/kg Ta2O5, and US$45/kg/Nb2O5 and are estimated using a Net Metal Return cut-off value of CAN$260/tonne. (CAN:USD FX $1.11/$1.00)
Tonnes (millions)
%TREO
%HREO
%HREO/TREO
%ZrO2
%Nb₂O₅
ppmTa2O5
TREO equiv
Basal Zone
Indicated 57.49 1.56 0.33 20.72 2.99 0.40 396 2.01
Inferred 107.59 1.35 0.26 18.97 2.83 0.37 354 1.77
Upper Zone
Indicated 30.64 1.48 0.15 10.26 2.10 0.31 192 1.86
Inferred 119.29 1.26 0.13 10.15 2.41 0.35 209 1.66
Total Inferred 226.88 1.30 0.19 14.33 2.61 0.36 278 1.71
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Basal Zone Indicated Resources atVarious NMR Cut-offs (43-101 compliant)updated Jan. 27, 2011
Prepared from 2009 data by Scott Wilson RPA detailed in Technical Report filed July 29, 2010 and updated for 2010 drilling by Finley Bakker, P. Geo., Sr. Resource Geologist
Mineral Resources are estimated using price forecasts for 2014 for rare earth oxides prepared early in 2010. Some prices are higher and some are lower than current prices.
Mineral Resources NMR price assumptions (2010): US$21.94/kg TREO, US$3.76/kg ZrO2, US$130/kg Ta2O5, and US$45/kg/Nb2O5 .
NMR is defined as “Net Metal Return” or the gross in situ value of all the payable rare metals in the ore. $US FX rate: $1.11. The 2010 base case NMR is C$260/tonne.
Undiluted grades
INDICATEDNMR CUTOFF
Tonnes(Millions)
TREO%
HREO/TREO%
%ZrO2
%Nb₂O₅
ppmTa2O5
TREO equiv
≥$260 57.49 1.56 20.72 2.99 0.40 396 2.01
≥$400 39.79 1.77 22.15 3.41 0.45 448 2.28
≥$600 14.67 2.19 24.68 4.22 0.53 552 2.80
≥$700 7.26 2.43 25.97 4.64 0.58 621 3.10
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Senior Staff and Technical Consultants
David Trueman, Ph.D., P.Geo, Rare Metals Consulting Geologist
Ian M. London, P. Eng. Energy and Market Development Consultant
John Goode, P.Eng. Senior Metallurgical Consultant
Hoe Teh, P.Eng., Metallurgical Consultant
Chris Pedersen, P.Geo, Senior Geologist, Camp Manager
Martin Heiligmann, Ph.D., Project Geologist
Finley Bakker, P.Geo. Senior Resource Geologist
Brian Delany, P.Eng., Senior Project Manager
Rob Prasad, Senior Human Resources Coordinator
Dezhi Qi, P.Eng. Process Engineer
Stanley Chan, P.Eng. Mine Engineer
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External Consultants
SGS Lakefield Research, Metallurgy & MineralogyRoscoe Postle Associates Inc., Independent Engineering and Resource ConsultantsSNC Lavalin Inc., Separation Plant EngineeringKaz Machida, REE Market Development AsiaMcGill University, (Dr. A.E. Williams-Jones) Geological ResearchEBA Engineering, Permitting and Environmental ConsultantsFL Smidth, Engineering and Design, Flotation PlantXstrata Process Support, Metallurgical Testwork Support
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Vision Statement
To be the leading integrated supplier of technology metals and minerals for a more sustainable world.
Mission Statement
Maximize shareholder value by being the first to market with a new supply of heavy rare earths, by providing superior customer service and by being a leader in socially responsible mineral production.
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First Nations Community Engagement & CSR
Community information sessions and site visitsAboriginal Training
First Aid, Driller Helper
Employment at site40% Aboriginal
Business developmentMajor contractors with Aboriginal ownershipIce road haulage, airstrip Wind power evaluationHelped start a new core box business with Deninu Kue
Signed MOUs (Negotiation Agreement) with three FN’s
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Rare Metals: Key Enablers of Clean Technology
Rare earth elements (“REE”) such as Neodymium, Terbium and Dysprosium; & other rare metals such as Lithium, Gallium, Indium (+Tin), Niobium, Tantalum, Zirconium
Creating new materials such as thin films (solar) and high strength magnets, the key to energy-efficient electric motorsRenewable energy: solar power, wind turbines, nuclear powerLED lighting, rechargeable batteries, light weight aerospace alloysHybrid and electric cars (30 kg REE in aggregate)
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Key Facts About Rare Earth Elements or “REE” … 1
Widely dispersed, but rarely concentrated; only found as a group, often with uranium & thorium. Deposits are not rare.
Typically concentrated in alkaline intrusive rocks (carbonatites) or peralkaline granites (Thor Lake)
Many different ore minerals: bastnaesite, allanite, monazite. xenotime, eudialyte, fergusonite, zircon
In most deposits, light rare earths “LREE” are far more abundant than heavy rare earths “HREE”; LREE typically comprise 98-99% of resource...HREE far more valuable
REE must be recovered as a group and sequentially separated; HREE cannot be selectively extracted
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China Dominates Global REE Production
China currently produces over 95% of global REE supplyChina now imposing export quotas and tariffs on REE New non-Chinese supply sources needed to maintain balanceSupplies of key HREE from China (Y, Dy, Tb) will remain tight with potential for a complete export banJapan totally reliant on China for supplies
REE supplies in China are tightening and Chinese companies are actively trying to acquire additional REE resources around the world.
Mountain Pass era
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Demand Growth to 2015 (Source Jacob Securities Jan. 2011)
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0
200
400
600
800
1,000
1,200
1,400
1,600
0
10
20
30
40
50
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Va
lue
(US
$ m
illio
ns)
Vo
lum
e (0
00's
tonn
es)
Gross volume versus value of exports from 1990 to 2011EGross Volume Gross Value
Chinese Rare Earth exports from 1990 to 2011 (Estimate)
*Source: Research in China, China Research and Intelligence, Laurentian Bank Securities
1990 2000 2010
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South China Ionic Clays: World’s Primary Source of HREE
Low grade, but relatively easy to recover by in situ or vat leaching
Uncontrolled, primitive methods causing environmental destruction
Government now curtailing production for cleanup
50% of mines unlicensed, Government crackdown initiated Spring 2010
In 2008, one-third of total volume exported was reportedly illegally smuggled out of China
Estimated to be less than 15 years of reserve life
This abandoned mine in Guyun Village in China exhausted the local deposit of heavy rare-earth
elements in three years. Source: NY Times
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Comparison of Anticipated Production for Major REE Deposits
Nechalacho Mt Weld Mountain PassAvalon
(10,000 tpa)Lynas
(11,000 tpa)Molycorp
(20,000 tpa)Europium Eu 49 48 24Gadolinium Gd 371 107 34Terbium Tb 54 8 -Dysprosium Dy 271 13 -Holmium Ho 48 - -Erbium Er 126 - -Thulium Tm 17 - -Ytterbium Yb 101 - -Yttrium Y 1,169 41 20Lutetium Lu 14 - -
Total Heavies 22.20% 1.98% 0.39%
Lanthanum La 1,583 2,805 6,640Cerium Ce 3,572 5,141 9,820Praseodymium Pr 451 585 868Neodymium Nd 1,783 2,035 2,400Samarium Sm 391 250 160
Total Lights 77.80% 98.33% 99.44%
REE OXIDE
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Nechalacho REE Deposit:Recent Project History
2005: Acquisition of 100% interest for $300,000 in shares2006: Compilation work, mineralogy begin community consultation, recognition of heavy rare earth potential2007: Scoping study, exploration drilling and $16 million equity financing (Research Capital)2008: Delineation drilling and 43-101 resource estimate, community engagement and begin metallurgical studies and work on PFS2009: Definition drilling, hydrometallurgical testwork environment, market studies $17.5 million financing (CIBC)2010: Definition drilling, begin EIA processJune, 2010: Completion of Prefeasibility StudyJuly, 2011: Update of Prefeasibility Study economics and mineral reserve estimateExpenditures to date: over $38.0 million
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Nechalacho REE Deposit:Recent Project History
2005: Acquisition of 100% interest for $300,000 in shares
2006: Compilation work, mineralogy begin community consultation, recognition of heavy rare earth potential
2007: Scoping study, exploration drilling and $16 million equity financing (Research Capital)
2008: Delineation drilling and 43-101 resource estimate, community engagement and begin metallurgical studies and work on PFS
2009: Definition drilling, hydrometallurgical testwork environment, market studies $17.5 million financing (CIBC)
2010: Definition drilling, begin EIA process
June, 2010: Completion of Prefeasibility Study
Expenditures to date: over $27.0 million
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Niobium Production
Giant Araxa deposit in Brazil (CBMM) produces 80% of world supply (150,000 tpy Nb2O5)
Nechalacho is now the 3rd largest deposit in the world and will produce 1,700 tpa Nb2O5 as by-product
Demand increasing for main use in High strength low alloy (HSLA) steels as use of HSLA steels is expected to double in next few years
Traditional markets in architecture, ships, bridges.
Increasing use in automotive... Reduces the weight of the vehicle and improves fuel efficiency.
$9 of Nb = 100kg less weight = 1 litre of fuel savings per 100km
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Zirconium Production
Primary zirconium production mainly from zircon sands in Australia and South Africa (1.5 million tpa zircon)
China imports zircon sands and is the only global producer of Zirconium Oxychloride (ZoC) the basic chemical feedstock for producing Zr metal and other chemicals
China increasing ZoC consumption, applying export taxes
Zr Metal critical for nuclear reactors as fuel cladding
Many emerging uses:Hemodialysis treatment (zirconium phosphate)Solid Oxide Fuel Cells (yttrium stabilized zirconia)
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Zirconium Use in Dialysis
Zirconium Phosphate can be used for home dialysis treatment.
The benefits of home dialysis:No time-consuming trips to hospitalMore frequent treatments possible, to mimic natural kidney function.More mobility possible for patientsLess costly for government
Individual consumption of ZrO2 equivalent is 1lb per treatment, with 3 treatments per week or potential demand of 7,000 tonnes per year ZrO2 to treat 100,000 patients
Nechalacho will produce 18,000 tpy ZrO2
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Estimated Total Project Construction Capital Costs
ActivityTotal Capital Cost
Estimates(CAD $ 000’s)
Nechalacho Mine 99,607
Thor Lake Process Facility 173,165
HydroMetallurgical Plant 316,602
Primary Project Component Cost 589,374
Project Engineering, Procurement, Construction and Management 80,657
Contingency @ 22% 144,503
Sustaining Capital 73,000
Reclamation & Miscellaneous 12,200
Total Project Capital Costs 899,734
Operating costs over the 18 year life of the project are estimated to average CAN $267 per tonne of ore mined or $5.93 per kilogram of productBased on Diluted Probable Mineral Reserves of 12.0 million tonnes of 1.71% TREO, 3.18% (ZrO₂), 0.42% (Nb₂O₅) and 0.042% (Ta₂O₅)Probable Reserves will increase with continued drilling, also extending the mine life.
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Planning for HREE Separation Plant in North America
No large scale heavy REE separation capability outside China at present. Customers want an outside China separation solution
Scoping Study by SNC Lavalin assuming S. Ontario location
CAPEX estimated at C$345 million (+/- 35%) for 25,000 tpaHREE separation plant
Sized to accommodate additional supply from other producers
Delivered cost of reagents accounts for 90% of OPEXLocate plant near sources of HCL and caustic soda
Review of potential sites in progressConsider partnership opportunities
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Key Application of REE Magnets in Wind Turbines
New GE 4 MW wind turbine uses a 90-ton generator with 2-3 tons of NdFeB permanent magnets to eliminate the need for a gearbox, reducing breakage and energy loss
Permanent magnet generator (PMGs) make the whole assembly (nacelle) lighter weight allowing higher tower
Already planning to build 10 MW size turbines
Red stickman (approx. 6’ tall) shown to demonstrate scale. The wind turbine blades on this 4MW model are 176 foot long. Photo: Popular Science / GE
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Project Development phase(+ expected production level and capex)Source: Ernst & Young April 2011
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Nechalacho Geological Model Evolving
Model Section
Leucoferrodiorite
CaribouLake
Gabbro
Grace Lake Granite
T-Zone
Thor Lake Syenite
Two-Mica
Granite
WhitemanLake Quartz
Syenite
BiotiteGranodiorite
Hearne Channeland Mad Lake
Granites
Interpreted Geometryin Cross Section
Blachford Lake PeralkalineIntrusive Complex, NWT
A unique example of a layered Peralkaline intrusive complex, with the upper, rare metal-richpart of the system readily accessible for mining.
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Nechalacho Deposit Basal Zone REE Mineralogy
Heavy REE MineralsFergusonite Y, HREE (Nb,Ta) O4
Zircon Zr (HREE) SiO4
Light REE Minerals
Bastnaesite (LREE) F CO3
Allanite (LREE,Ca,Y)2 (Al,Fe)3 (SiO4)4 OH
Synchisite Ca (LREE) (CO3)2 F
Monazite (LREE) PO4
REE Y La Ce Pr Nd Sm Eu Gd Tb Dy Ho Er Tm Yb Lu
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
20μm
Fergusonite
REE distribution in fergusonite:
Zircon
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Avalon’s CSR culture
Rare metals products contribute to a more sustainable world
We should produce these materials in a sustainable manner:By being an ethical companyWhich operates with environmental responsibilityWith a concern for and commitment to health and safetyWhile contributing to community development and well-being
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Underground Mine (2,000 tpd)
Much smaller environmental footprint than open pit with less waste rock removal and less disturbance of water courses
Tailings will be used for paste back-fill, waste rock for construction
Tailings Disposal Facility
Environmental Impacts
Tailings benign consisting largely of common rock forming minerals quartz feldspar, mica and magnetite (no sulphides)Natural basin identified containing
two small ponds with no fish habitatIdeal drainage and discharge
design, inert water chemistry
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Proposed Mine and Flotation Plant Site
Area of Tailings = 115 ha
Area of Airstrip = 3 ha
Area of Mine = 20 ha
Area
Location of resource, flat-lying, 200 metres below surface accessed By ramp from the west.
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RESTART Act introduced into U.S. House of Representatives
Expedite the permitting process in order to increase the exploration and development of domestic REE sources,
Setting up a Defense Logistics Agency (DLA) REE inventory --where DLA enters into long-term supply contracts and then makes the supplies available for purchase to federal government contractors -- to generate a domestic market and facilitate the domestic sourcing of rare earth alloys and magnets;
Making government-backed loans available to start REE production should lending from capital markets not be available;
Requiring cabinet Secretaries to appoint REE Executive Agents
Establishing a REE program at the U.S. Geological Survey