Avalon Rare Metals
Avalon Rare Metals Inc. is a leading mineral exploration and development company focused on rare metal deposits in Canada. Currently, its primary focus is on rare earth elements (REE), non-toxic elements that are an important part of green technology with a confirmed potential to contribute to a cleaner environment and reduced reliance on fossil fuels. While REEs are not particularly rare (they occur in the earth at about the same rate as nickel or tin), they are generally not concentrated in commercial ore deposits.
Avalon presently has five rare metals and minerals project holdings in Canada. Its top priority project is the Nechalacho Deposit at Thor Lake in the Northwest Territories of Canada. This deposit is one of the largest undeveloped REE resources in the world and is exceptionally rich in the more valuable heavy REEs, which are a key enabler of green energy technology and many other high-tech and medical applications.
As a company, Avalon is well funded and has no debt, and its work programs are progressing steadily. It continuously strives for best-in-sector performance in environmental and social responsibility while delivering above-market returns to its shareholders through its diversified portfolio of rare metal assets. Canada’s First Nations have considerable input in decisions concerning permanent production. By minimizing environmental damages during exploration and engaging the local community in its deliberations, Avalon has been proactive in ensuring local community support and concomitant benefits.
Currently 95% of the world’s REEs are produced in China, primarily in Inner Mongolia. Since China began reducing the amount of exported REEs in 2006, the need for additional sources has become more critical and Avalon is planning on stepping in to fill the need, especially for the heavy rare earths. In fact, the past year has seen a dramatic increase in attention to REEs. “Whereas trading volumes have occasionally gone as high as 100,000 per day in the past, recent trading volumes have averaged 500,000 a day,” says Avalon President Don Bubar. From December 2008 to 2009, Avalon’s low-high on the Toronto Stock Exchange was C$0.30-$4.24. In the last half of the year, Avalon commenced trading in the US on the OTCQX International market.
High strength permanent magnets made with rare earth elements, are increasingly being used in hybrid cars, wind turbines, and military hardware, and those made with heavy rare earths are especially good in high-temperature settings. In fact, says Mr. Bubar, “Our research shows that lots of emerging uses of these magnets are being held back from development because of uncertainty over reliable supplies of heavy rare earths.”
Avalon envisions that heavy rare earths will represent a relatively large portion of its market share (5-10+%) as there is not much competition in heavy REEs. And it is seeking investors, most particularly from Asia, who are experienced in the challenges and possibilities of REE mining. Says Mr. Bubar, “Production of individual rare earths is based on the relative proportions in the resource which are consistent throughout the deposit. One cannot selectively extract an individual rare earth element and one must produce the whole group in the proportions in which they occur in that deposit, which is a challenge for the economics of production. In most deposits, increasing production to attain a higher output of heavy rare earths will come at the expense of overproducing the light rare earths.”
A prefeasibility study should be completed this spring with environmental assessments and a bankable feasibility scheduled to be complete by 2012. Initial production could be achieved by 2014. This timing corresponds perfectly with the foreseen deficit in the REE market in 3-5 years if China continues to reduce its exports. Avalon is positioned to become the dominant player outside China in the production of heavy rare earths and is one of the few pure play investment opportunities in rare metals. Mr. Bubar, who has been in the rare metals business for the last 14 years, sees a vast growth opportunity here. “Demand is growing faster than supply, and we believe that providing a steady supply of these elements will stimulate even more demand in China and the rest of the world.”
130 Adelaide St. W, Suite #1901 Toronto, ON M5H 3P5 Tel: (416) 364-4938 Fax: (416) 364-5162 Virginia Morgan, Manager Investor Relations vmorgan@avalonraremetals.com www.avalonraremetals.com www.raremetalblog.com
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