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Avalon Rare Metals increases indicated resources at Nechalacho rare earth deposit

28th Jan 2011, 2:18 pm by Deborah Sterescu
Avalon Rare Metals increases indicated resources at Nechalacho rare earth deposit

Avalon Rare Metals (TSX: AVL)(NYSE Amex: AVL) announced Friday a significant increase to both the indicated and inferred mineral resources at its Nechalacho rare earth element deposit in Thor Lake, Northwest Territories.

The increase follows the inclusion of data from last year's summer definition drilling program  into the deposit block model.

Rare earth metals is a term used to refer to 17 metals including the 15 lathanides, yttrium and scandium.  The metals, which have a plethora of important magnetic, electrical, chemical, metallurgical and catalytic properties, are vital components in many new and environmentally friendly technologies. They are used in super-magnets, wind turbines, MRI scanners, LEDs, energy efficient light bulbs, glass, ceramics, super-alloys, aerospace and a whole host of consumer electronics such as Ipods, monitors, hard disk drives, laptops and cellphones.

China is the world's major supplier of these metals, but supply in the country is fragile and diminishing, with the country having recently introduced a host of measures to protect its resources. The Asian powerhouse also recently declared that it only has 15 years of heavy rare earth metals (refers to the elements europium to lutetium, plus yttrium that are considered more valuable) resources left. As such, the number of North American companies exploring for rare earths has rocketed recently as has the price of these metals.

Avalon's news is therefore more than welcome, as the company's flagship Nechalacho deposit is emerging as one of the largest undeveloped rare earth deposits in the world. The company said today that its updated NI 43-101 estimate for the key Basal zone part of the deposit has resulted in a boost to indicated resources to 57.40 million tonnes grading 1.56% TREO (total rare earth oxides), with 20.7% HREO (heavy rare earth oxides)/TREO, using the base case $260 net metallurgical return (NMR) cut-off.

This compares with the previous estimate of 20.45 million tonnes of indicated resources grading 1.75% TREO, with 23% HREO/TREO, reported in the Basal zone last September.

At the much higher $600 NMR cut-off, the proportion of indicated mineral resources estimated now totals 14.67 million tonnes at 2.19% TREO, with 24.68% HREO/TREO.

The company said the higher cut-off estimate confirms the Basal zone has high grade sub-zones of sufficient size to allow for mining at higher cut-off grades during early years of production. At the 2,000 tonnes per day production rate assumed in the prefeasibility study, the tonnage would be sufficient, once converted to mining reserves, to support an extended mine life of 20 years.

"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," said president and CEO Don Bubar.

"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."

Indeed, total inferred mineral resources for the Upper and Basal zones also grew to an estimated 226.88 million tonnes, grading 1.3% TREO, with 14.33% HREO/TREO. This is up from the September estimate of 182.56 million tonnes of inferred grading 1.4% TREO, with 15% HREO/TREO.

Avalon said two drill holes from the summer program were not included in the updated inferred resource estimate due to the distance from existing resources. Assuming continuity, these holes would have extended the limits of the Basal zone some 500 metres further north.

At Nechalacho, a 29,000 metre definition drill program is currently underway to further upgrade the resources at the Basal zone from the indicated to measured category.

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