Avalon Rare Metals Inc. (TSX:AVL)(NYSE Amex:AVL)
("Avalon" or the "Company") is pleased to provide an
update on development work on the Nechalacho
Rare Earth Elements ("REE") deposit, Thor Lake, NWT. In
particular, all the data from the 2010 summer definition drilling program
has now been compiled into the deposit block model and the 43-101
compliant resource estimates have been updated accordingly (Tables 1a and
b). As expected, this resulted in a significant increase in the proportion
of Mineral Resources in the Nechalacho deposit
that can be classified as Indicated.
The updated resource estimate for the key Basal
Zone part of the deposit has resulted in an increase in Indicated Mineral
Resources to 57.49 million tonnes grading 1.56%
TREO1 with 20.72% HREO/TREO using the base case $260 Net
Metallurgical Return (NMR) cut-off. This compares with the Indicated
Resources of 20.45 million tonnes grading 1.75%
TREO with 23% HREO/TREO reported for the Basal Zone in the September 2010
update (for the Tardiff Lakes and West Long
Lake areas combined). It should be noted that this increase will not
necessarily influence the decision on production rate, which will
ultimately be determined by sales volumes estimates rather than resource
size.
More significantly, the proportion of Indicated
Mineral Resources estimated at the much higher $600 NMR cut-off, now
total 14.67 million tonnes at 2.19% TREO and
24.68% HREO/TREO. This tonnage is similar to the total Indicated Mineral
Resources estimated for the prefeasibility study at the $260 NMR but with
a 20% higher TREO grade and a 35% higher HREO content. This confirms, as
predicted, that the Basal Zone resource contains high grade sub-zones of
sufficient size and continuity to allow for selective mining at higher
cut-off grades during the early years of production. At the 2,000 tonnes per day production rate contemplated in the
prefeasibility study, this would be sufficient tonnage, once converted to
mining reserves, to support a mine life of 20 years.
1 Total Rare Earth Oxides (TREO) refers to the
elements lanthanum to lutetium, plus yttrium, expressed as oxides. See
Avalon's website for conversion factors from elements to oxides. Heavy
Rare Earth Oxides (HREO) refers to the elements europium to lutetium,
plus yttrium, expressed as oxides. Light rare earths (LREO) refers to the
elements lanthanum to samarium, expressed as oxides. HREO/TREO refers to
the proportion of heavy rare earth oxides as a percentage of the total
rare earth oxide content of the rock.
Don Bubar, President
and CEO, stated "The definition of high grade sub-zones for
selective mining will certainly have a beneficial effect on the project
economics by increasing revenues during the early years of production. In
addition, the increase in total Indicated Mineral Resources in the Basal
Zone will extend the mine life used in the prefeasibility study financial
model." Further, "The results also confirm the high rate of
conversion of inferred resources to indicated resources, and the excellent
internal continuity of the Basal Zone mineralization."
Total Inferred Mineral Resources for the Upper
and Basal Zones combined now stands at an estimated 226.88 million tonnes grading 1.30% TREO with 14.33% HREO/TREO
compared with 182.56 million tonnes grading
1.40% TREO with 15% HREO/TREO in the September 2010 resource estimate
(Table 1b). This increase in inferred resources is mainly due to the
inclusion of extensions of the deposit identified from exploration holes
located to the southwest of Long Lake and to the reinterpretation of the
upper limit of the Basal Zone. Avalon's mine plan is concentrated on the
Basal Zone, as this portion of the deposit is generally of higher overall
grade, but also has higher levels of the more valuable heavy rare earths.
Table 1 includes (for comparative purposes) a
column for "TREO equivalent %" which essentially treats the
zirconium, niobium and tantalum as if they were also rare earth elements.
TREO equivalent is estimated by calculating a weighted average NMR per
kilogram for the rare earths and the rare metals (Zr,
Nb, Ta) in a given interval, and re-estimating
the interval assuming that all the value was in the rare earths only. The
NMR includes the value attributable to ZrO2, Nb2O5,
and Ta2O5 in the rock after metallurgical
recoveries.
Two drill holes from the summer program are not
included in the inferred mineral resources due to the distance from the
existing resources. Drill holes L10-310 and L10-311 are about 500 metres north of the present northern limit of the
Inferred Mineral Resources. Hole L10-310 intercepted Basal Zone style
mineralization averaging1.09% TREO and 25.3% HREO/TREO over 22 metres and L10- 311 intercepted Basal Zone style
mineralization averaging 1.40% TREO and 25% HREO/TREO over 24.75 metres. Assuming continuity, these holes will have
extended the known limits of the Basal Zone some 500 metres
further north.
The detailed results and plan for individual
drill holes can be viewed on the Company's website at http://www.avalonraremetals.com/projects/thor_lake/thor_lake_intro/.
The mineral resource estimates were prepared by
Finley Bakker, P. Geo., Senior Resource Geologist. Drilling operations
are being performed by Foraco Drilling Ltd. of
Yellowknife, NWT under the supervision of J.C. Pedersen, P.Geo. The Company's Vice-President, Exploration,
William Mercer, Ph.D., P.Geo. (Ont), P. Geol (NWT) is providing overall direction on
the project and monitors the QA/QC on the laboratory analyses. The
qualified persons for the purposes of this news release are Finley
Bakker, William Mercer and D.S. Bubar, P. Geo.,
President.
The resource estimation procedure employed by
Mr. Bakker was similar to that of Scott Wilson Roscoe Postle
Associates for the NI 43-101 compliant resource disclosed in the
Company's News Release dated June 14, 2010. The base case cut-off grade
and metal price assumptions were unchanged while the composite
methodology, estimation method (Inverse Distance Squared), block size,
domains and estimation parameters were essentially the same. Minor
differences in estimation methodology are noted in the footnotes to the
tables below. Readers are referred to the Company's current NI 43-101
technical report entitled "Technical Report on the Thor Lake
Project, Northwest Territories, Canada" dated July 29, 2010, as
amended September 21, 2010, which is available on Sedar
at www.sedar.com.
Winter Drilling Program Begins
The 2011 winter drill program commenced during
the week of January 10th with mobilization of crews for both drill rigs, one producing HQ and the second
producing very large size PQ core. The PQ drilling is designed to provide
additional bulk sample material for the upcoming metallurgical pilot
plant program, with the objective of collecting a total of 30 tonnes of Basal Zone ore. An estimated 29,000 metres of definition drilling will be required to
achieve this objective. This drilling will also serve to further upgrade
the confidence level of the Basal Zone resources, including converting a
portion of the Indicated Resources to the "Measured" level of
confidence.
Permitting and Community Engagement Progress
The permitting process is progressing steadily
and by the end of October, 2010, scoping sessions related to the
environmental assessment had been completed in the communities of
Yellowknife, Dettah, Lutsel
K'e, Fort Resolution and Hay River. On November
26, 2010, the Mackenzie Valley Environmental Impact Review Board
("MVEIRB") submitted its Draft Terms of Reference ("ToR") with the comment period extended through
January 7, 2011. Avalon is now awaiting MVIERB's Final ToR which will serve as the basis for the Developers
Assessment Report required for the environmental assessment process.
Since the signing of the Negotiation Agreement
with the Yellowknives Dene
First Nation, as disclosed in the Company's News Release dated December
8, 2010, discussions continue toward the completion of an accommodation
agreement (similar to an "Impacts and Benefits" agreement) this
year. Avalon is also in discussions with the other participating
aboriginal communities towards signing similar agreements. Avalon remains
committed to maximizing potential partnership and participation
opportunities for the local First Nations communities through project
development and throughout future operations.
Metallurgical Testing Program Progess
The metallurgical testing program continues with
both flotation and hydrometallurgical testwork
underway under the supervision of consulting metallurgist, John R. Goode,
P. Eng. Two pilot plant trials of the flotation flowsheet
have been completed at Xstrata Process Support (XPS) in Sudbury, Ontario,
and the data generated are still being analysed
to determine next steps. Additional bench scale flotation testwork and mineralogical studies are underway both
to further optimize the process and map mineralogical variability across
the Basal Zone part of the deposit. Further flotation pilot plant tests
are planned once the data from the first two pilot plant runs and bench testwork have been completely evaluated. Bench scale
hydrometallurgical testwork is continuing at
SGS Minerals in Lakefield, Ontario.
Avalon is also evaluating the results from a
series of tests relating to flotation plant tailings disposal. These were
done to further assess environmental impacts and study how the tailings
can be utilized as paste backfill in the mine.
About Avalon Rare Metals Inc. (TSX:AVL)(NYSE
Amex:AVL)
Avalon Rare Metals Inc. is a mineral exploration
and development company focused on rare metals deposits in Canada. Its
flagship project, the 100%-owned Nechalacho
Deposit, Thor Lake, NWT, is emerging as one of the largest undeveloped
rare earth elements resources in the world. Its exceptional enrichment in
the more valuable 'heavy' rare earth elements, which are key to enabling
advances in green energy technology and other growing high-tech
applications, is one of the few potential sources of these critical
elements outside of China, currently the source of 95% of world supply.
Avalon is well funded, has no debt and its work programs are progressing
steadily. Social responsibility and environmental stewardship are
corporate cornerstones. Avalon's performance on community engagement in
the north earned it the 2010 PDAC Environmental and Social Responsibility
Award.
To find out more about Avalon Rare Metals Inc.,
please visit our website at www.avalonraremetals.com. For questions and feedback,
please e-mail the Company at ir@avalonraremetals.com or phone William Mercer, Ph.D., P.Geo.,
VP Exploration, at 416-364-4938.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING
STATEMENTS:
This news release contains "forward looking statements" within
the meaning of the United States Private Securities Litigation Reform Act
of 1995 and applicable Canadian securities legislation. Statements that
are not historical fact are forward-looking statements that involve risks
and uncertainties that could cause actual events or results to differ
materially from estimated or anticipated events or results reflected in
the forward-looking statements. Readers can identify forward-looking
statements by the use of words such as "believe",
"expects", "will", "intends",
"projects", "anticipates", "estimates",
"continues" or similar words or the negative thereof. All
forward-looking statements contained herein reflect management's plans,
estimates, projections and views only as of the date hereof. Such
forward-looking statements include, among other things, statements
regarding targets, estimates and/or assumptions in respect of resources
and potential reserves, and are or may be based on assumptions and/or
estimates related to future economic, market and other conditions. Many
factors could cause the Company's actual results, performance or
achievements to be materially different from any future results,
performance, or achievements that may be expressed or implied by such
forward-looking statements, including, among others:
- the
estimation or realization of mineral resources;
-
- recovery
rates and production costs of the rare metals;
-
- the timing
and amount of estimated future production;
-
- requirements for additional capital;
-
- future prices
of rare metals and minerals;
-
- market demand
for rare metals and minerals;
-
- the
reliability of plant operations at production scale;
-
- energy costs;
-
- availability
of required skilled labour, contractors
and other human resources;
-
- accidents, labour disputes and other risks of the mining
industry;
-
- delays in
obtaining governmental approvals, permits or financing or in the
completion of development or construction activities;
-
- currency exchange
rate fluctuations;
-
- title
disputes or claims limitations on insurance coverage and the timing
and possible outcome of pending litigation; and
-
- the other
factors described in the Company's annual Management's Discussion
and Analysis and Annual Information Form filed with the applicable
securities regulatory authorities in Canada and available at www.sedar.com.
-
Although the Company has attempted to identify
important factors that could cause actual actions, events or results to
differ materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results not to
be as anticipated, estimated or intended. There can be no assurance that
the plans, intentions or expectations upon which these forward-looking
statements are based will occur. Most of such factors are beyond the
Company's control. The forward-looking statements contained herein are
qualified in their entirety by this cautionary statement. Readers should
not place undue reliance on the forward-looking statements. The forward
looking statements contained herein are presented for the purpose of
assisting investors in understanding the Company's plans and expectations
regarding operations and performance and may not be appropriate for other
purposes.
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING
ESTIMATES OF MEASURED, INDICATED AND INFERRED MINERAL RESOURCES: This news release uses the terms
"Measured", "Indicated" and "Inferred"
Mineral Resources. United States investors are advised that while such
terms are recognized and required by Canadian regulations, the United
States Securities and Exchange Commission does not recognize them.
"Inferred Mineral Resources" have a great amount of uncertainty
as to their existence, and as to their economic and legal feasibility. It
cannot be assumed that all or any part of an Inferred Mineral Resource
will ever be upgraded to a higher category. Under Canadian rules,
estimates of Inferred Mineral Resources may not form the basis of feasibility
or other economic studies. United States investors are cautioned not to
assume that all or any part of Measured or Indicated Mineral Resources
will ever be converted into Mineral Reserves. United States investors are
also cautioned not to assume that all or any part of an Inferred Mineral
Resource exists, or is economically or legally mineable.
Table 1a: Nechalacho
Indicated and Inferred Mineral Resources for Basal and Upper Zones by Net
Metal Return ("NMR") Cut-off Value. $260 is the base case NMR
INDICATED
|
|
ZONE
|
NMR
|
Tonnes
|
TREO
|
HREO
|
HREO/TREO
|
ZrO2
|
Nb2O5
|
Ta2O5
|
TREO
|
|
CUTOFF
|
(millions)
|
%
|
%
|
%
|
%
|
%
|
ppm
|
equiv
|
BASAL
|
≥ $260
|
57.49
|
1.56
|
0.33
|
20.72
|
2.99
|
0.40
|
396
|
2.01
|
BASAL
|
≥ $400
|
39.79
|
1.77
|
0.39
|
22.15
|
3.41
|
0.45
|
448
|
2.28
|
BASAL
|
≥ $600
|
14.67
|
2.19
|
0.54
|
24.68
|
4.22
|
0.53
|
552
|
2.80
|
BASAL
|
≥ $700
|
7.26
|
2.43
|
0.62
|
25.97
|
4.64
|
0.58
|
621
|
3.10
|
|
|
|
|
|
|
-
|
-
|
|
|
UPPER
|
≥ $260
|
30.64
|
1.48
|
0.15
|
10.26
|
2.10
|
0.31
|
192
|
1.86
|
UPPER
|
≥ $400
|
6.25
|
2.20
|
0.21
|
10.38
|
2.95
|
0.40
|
243
|
2.73
|
UPPER
|
≥ $600
|
0.61
|
4.31
|
0.36
|
9.47
|
3.87
|
0.51
|
286
|
5.06
|
UPPER
|
≥ $700
|
0.27
|
6.11
|
0.45
|
8.06
|
3.93
|
0.52
|
260
|
6.92
|
|
|
|
|
|
|
-
|
-
|
|
|
TOTAL
|
≥ $260
|
88.13
|
1.53
|
0.26
|
17.08
|
2.68
|
0.37
|
325
|
1.96
|
TOTAL
|
≥ $400
|
46.04
|
1.83
|
0.37
|
20.55
|
3.34
|
0.44
|
420
|
2.34
|
TOTAL
|
≥ $600
|
15.28
|
2.27
|
0.53
|
24.07
|
4.21
|
0.53
|
541
|
2.34
|
TOTAL
|
≥ $700
|
7.52
|
2.56
|
0.62
|
25.33
|
4.61
|
0.58
|
608
|
3.24
|
|
INFERRED
|
|
|
|
|
|
|
|
|
|
|
ZONE
|
NMR
|
Tonnes
|
TREO
|
HREO
|
HREO/TREO
|
ZrO2
|
Nb2O5
|
Ta2O5
|
TREO
|
|
CUTOFF
|
(millions)
|
%
|
%
|
%
|
%
|
%
|
ppm
|
equiv
|
BASAL
|
≥ $260
|
107.59
|
1.35
|
0.26
|
18.97
|
2.83
|
0.37
|
354
|
1.77
|
BASAL
|
≥ $400
|
62.31
|
1.55
|
0.32
|
20.65
|
3.23
|
0.42
|
404
|
2.03
|
BASAL
|
≥ $600
|
9.30
|
2.16
|
0.54
|
24.76
|
4.53
|
0.55
|
564
|
2.79
|
BASAL
|
≥ $700
|
4.37
|
2.50
|
0.68
|
27.09
|
5.22
|
0.61
|
658
|
3.20
|
|
|
|
|
|
|
-
|
-
|
|
|
UPPER
|
≥ $260
|
115.99
|
1.27
|
0.12
|
9.57
|
2.37
|
0.34
|
196
|
1.67
|
UPPER
|
≥ $400
|
18.96
|
1.71
|
0.16
|
9.40
|
3.21
|
0.46
|
259
|
2.24
|
UPPER
|
≥ $600
|
0.93
|
2.48
|
0.24
|
9.85
|
4.62
|
0.65
|
447
|
3.26
|
UPPER
|
≥ $700
|
0.07
|
3.48
|
0.29
|
8.60
|
4.88
|
0.69
|
472
|
4.38
|
|
|
|
|
|
|
-
|
-
|
|
|
TOTAL
|
≥ $260
|
223.57
|
1.31
|
0.19
|
14.10
|
2.59
|
0.36
|
272
|
1.72
|
TOTAL
|
≥ $400
|
81.27
|
1.59
|
0.28
|
18.02
|
3.22
|
0.43
|
370
|
2.08
|
TOTAL
|
≥ $600
|
10.22
|
2.19
|
0.51
|
23.40
|
4.54
|
0.56
|
553
|
2.83
|
TOTAL
|
≥ $700
|
4.44
|
2.51
|
0.67
|
26.80
|
5.22
|
0.61
|
655
|
3.22
|
Table 1b. Total Combined Upper and Basal Zones
Indicated and Inferred Mineral Resources at the $260 base case NMR
Cut-off value
AREA
|
Tonnes
|
TREO
|
HREO
|
HREO/TREO
|
ZrO2
|
Nb2O5
|
Ta2O5
|
TREO
|
|
(millions)
|
%
|
%
|
%
|
%
|
%
|
ppm
|
equiv
|
TOTAL COMBINED INDICATED
|
UPPER
AND BASAL
|
88.13
|
1.53
|
0.26
|
17.08
|
2.68
|
0.37
|
325
|
1.96
|
TOTAL COMBINED INFERRED
|
UPPER
AND BASAL
|
226.88
|
1.30
|
0.19
|
14.33
|
2.61
|
0.36
|
278
|
1.71
|
Notes:
- CIM definitions were followed for Mineral Resources.
-
- HREO (Heavy Rare Earth Oxides) is the total concentration of:
Y203, Eu203, Gd203,
Tb203, Dy203, Ho2O3,
Er203, Tm203, Yb203
and Lu203.
-
- TREO (Total Rare Earth Oxides) is HREO plus: La203,
Ce203, Pr6011, Nd203and
Sm203.
-
- Mineral Resources are estimated using price forecasts for
2014 for rare earth oxides prepared early in 2010. Some of these
prices are higher and some are lower than current prices. The prices
used are the same as in the June 14, 2010 disclosure.
-
- Mineral Resources are undiluted.
-
- A cut-off NMR grade of $260 Can was used for the base case.
NMR is defined as "Net Metal Return" or the in situ value of
all the payable rare metals in the ore net of estimated
metallurgical recoveries and processing costs.
-
- An exchange rate of 1.11 was used.
-
- ZrO2 refers to Zirconium Oxide, Nb2O5
refers to Niobium Oxide, Ta2O5 refers to
Tantalum Oxide, Ga2O3
refers to Gallium Oxide.
-
- TREO equivalent is estimated by calculating a weighted
average NMR per kg for the rare earths and rare metals (Zr, Nb, Ta) in an
given interval, and re-estimating the interval assuming that all the
value was in rare earths only.
-
- The two main differences to previous estimates were that 8
composites were used per block, versus 15 in the estimate released
in July 19th, 2010 and the Basal Zone was not flattened
onto the lower contact prior to block estimation. All other
parameters were similar.
-
Shares Outstanding: 93,288,523. Cash resources:
approximately $37 million.
|