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Gold/Mining/Energy : AVL.V - AVALON VENTURES

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From: freedom456	6/30/2009 12:57:25 AM
	of 1474

Avalon Ventures Ltd owns 100% of the Thor Lake project east of Yellowknife in the Northwest Territories of Canada. Thor Lake is a unique and world class syenite system that hosts a variety of specialty metals including beryllium, rare earth elements, tantalum, niobium, and gallium which was first discovered during the late seventies. The footprint of the Lake Zone implies a mineralized resource in excess of 500 million tonnes which contains tantalum and niobium, metals that were the initial focus of early exploration but which lost importance when the metallurgical recovery problems posed by the fine grained nature of the host mineralization became apparent. A small peripheral high grade beryllium deposit known as the T-Zone became the focus of exploration during the eighties, but lost importance when Hecla concluded that it could not break the monopoly Brush Wellman had on global beryllium supply. The current rare earth focus emerged when Avalon acquired Thor Lake from the owner in 2005, a time when new applications were boosting the profile of rare earth elements. The key to taking the Lake Zone seriously once again was the realization based on metallurgical studies done by Navigator on the tantalum in the Lake Zone that the hitherto ignored rare earth elements were showing up in the concentrate. Within the Lake Zone resource is a smaller "Basal Zone" that is dominated by the mineral fergusonite which not only has a higher grade of TREO (total rare earth oxides including the 14 rare earth elements of the Lathanide series plus yttrium) in the range 2%-4%, but the proportion of the heavy rare earth elements (HREE = europium through lutetium) is running 15%-30% of TREO in the Basal Zone compared to the 3% norm for other rare earth deposits. The prices for the HREE are substantially higher than those for the lighter rare earth elements; however, the current global market for these elements is small and adequately supplied by China from its clay deposits. If Thor Lake went into production its potential supply would overwhelm existing demand. But this need not be a development obstacle because the demand currently comes from niche scale applications that are price insensitive because the heavy rare earth contribution is incremental, and because the existence of an assured large scale supply outside of China would justify large scale commercialization of products such as hybrid cars which utilize rare earth based technology. With this sort of dynamic it is possible to bring on stream a major new supply of a specialty metal without creating a price bust. It is thus reasonable to talk about the $20 billion plus in situ gross metal value of Thor Lake, with the caveat that failure to mobilize Thor Lake supply on a timely basis would result in the abandonment of technologies dependent on rare earth elements.

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