Avalon Rare Metals, led by Donald Bubar, is enthusiastic about its Nechalacho Rare Earth Element Deposit located at Thor Lake in the Northwest Territories of CanadaNechalacho was a new named provided by the Yellowknives Dene First Nation in a ceremony held in September, 2009 co-hosted by Chiefs Edward Sangris and CTed Tsetta.
With a high percentage of heavy rare earths, Avalon is positioning itself to take advantage of growing demand from clean technology and changes in Chinese policy that will affect the rare earth elements market.
Donald Bubar, President and CEO explains, “The most recent event [for Avalon] affecting our share price was the listing on the New York Stock Exchange, specifically, the AMEX , just before Christmas, and just in time to participate in all the investor interest that was created when China announced its new policy on reducing export quotas for the first half of 2011. That got a lot of media attention which translated into increasd investor interest.”
As the demand for rare earths continues to grow, supplies from China keep on shrinking because of growing internal demand and recent changes in their export policies. As a result, rare earth prices have been steadily increasing, helping Avalon to achieve a $7.50 per share stock price with a $700 million dollar market cap.
Currently, Avalon is focused on developing the Nechalacho deposit although it owns several other rare metals properties. Bubar said, “We're working on a bankable feasibility study on Nechalacho which we're planning on completing in 2012. The main input on that is the pilot plant work on our process flow sheets to prove those up to the requirements for a feasibility study and environmental impact assessment to allow us to secure our operating permits.” Nechalacho is a unique deposit because of its composition. According to Bubar, “[Nechalacho] is a very large deposit and it is unusual in its balance between the lights and the heavies. Over twenty percent of the total rare earths in the ore, are comprised of the heavies – that is its main distinguishing characteristic. The total rare earth content grades around 2% and, combined with the high proportion of heavies, we think that makes it an attractive looking resource.”
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Investors seem to agree that Nechalacho is an attractive resource. One of the most prominent features is its advanced stage. According to Bubar, “First and foremost, we are a relatively advanced project. Early mover advantage is very important to the business opportunity.” Avalon believes it can take advantage of it because Nechalacho is already at the bankable feasibility stage. Bubar says, “There is a market opening up for new suppliers but it isn't infinite in size. The market is available to the first players who are ready to serve it. So, being an advanced project positions us well to be one of the first to market to be able to supply customers outside of China.” Bubar adds, “The advanced stage of the project and the heavy rare earth component of the ore makes usthe only prospective large new producer of rare earth elements, that can supply a significant quantity of heavy rare earths to the market by 2015, when we are looking to initiate production.” With a deposit composition leaning toward heavy rare earths and the ability to get them to market more quickly than other companies, Avalon is well-positioned for growth.
Financially Prepared
Avalon has spent some time over the last year preparing financially to move the Nechalacho deposit into production. Bubar says, “We raised $40 million dollars in new equity financing last September. So, we have about $36 million in the treasury right now which means we are more than adequately funded to complete the bankable feasibility study by the target date of mid-2012.” Avalon completed a pre-feasibility study in 2010. Explains Bubar, “After we did the pre-feasibility study, which was very well received by the consumers who wanted to know that this is a viable development opportunity, it allowed us to start to engage with those consumers on a more serious level.” The pre-feasibility study offered Avalon the opportunity to discover that the Company needed to look more closely at the downstream refining part of the market. Bubar said, “The separation part of the refining process was something that we'd left undefined in our pre-feasibility study. The message we've been getting from our customers is that they would like to see a separation solution developed outside China for the heavy rare earths.” There is presently no large scale heavy rare earths separation capacity outside of China. Bubar explains, “There really is no separation capacity outside of China of any size to accommodate the volume of material that we'll be producing - that can do the heavy rare earths as well as the light rare earths. So, if we are going to do that, we're going to have to develop that capability ourselves.” And Avalon is prepared to do just that. Said Bubar, “We've done the scoping study to figure out what's involved in doing that in North America and, with that guidance, we are now starting to look at building it into our business model for the feasibility study and start looking for places where we might construct that plant.”
With the unique composition of the Nechalacho deposit, Avalon Rare Metals is in position to be one of the first to market with additional heavy rare earth resources that are becoming more and more in demand. Solid financing, customer enthusiasm and an extensive resource have Avalon well-positioned for the future.
For more information:
http://avalonraremetals.com
CORPORATE HEADQUARTERS:
Avalon Rare Metals Inc.
130 Adelaide St. W,
Suite #1901
Toronto, ON M5H 3P5
Tel: (416) 364-4938
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office@avalonraremetals.com
OPERATIONS OFFICE:
Avalon Rare Metals Inc.
Unit 330 - 6165 Hwy 17
Delta, BC V4K 5B8
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Ron Malashewski, Manager Investor Relations ir@avalonraremetals.com