(TSX:,OTCQX:AVLNF) announced the following update on activities on the Nechalacho Rare Earth Elements Project (“Nechalacho Project”), Thor Lake, NWT. Project work in calendar 2015 consisted mainly of concluding the ongoing metallurgical research, disposal of process waste materials and storage of bulk samples for future use.
Rare Earths Markets
Markets for rare earth elements remain quiet with prices falling some 30-50% in 2015 despite a 7% increase in overall demand. Overall supply is estimated by IMCOA to have increased some 9% due mainly to increased illegal production in China. This market downturn has resulted in the bankruptcy of at least two potential new producers outside China and a dramatic decline in investor interest, which has significantly reduced the amount of capital available for new rare earths development projects like Nechalacho. Consequently, expenditures on Avalon’s Nechalacho Project will remain minimal in 2016 as the Company re-focuses its efforts on the Separation Rapids Lithium Project and East Kemptville Tin-Indium Project.
Potential for Production of Zirconium Chemicals
The Nechalacho deposit contains significant quantities of the zirconium mineral zircon, which the Company had planned to recover and process for its contained heavy rare earths. Recent metallurgical investigations have developed processes for recovering valuable zirconium chemicals from this mineral either as high quality zirconium basic sulphate (ZBS) or zirconium oxychloride (ZOC). These chemicals have numerous applications including paper coatings, anti-perspirants, paint dryers and fire proofing. Zirconium metal and metal alloys provide excellent corrosion resistance, particularly at high temperatures and have found many applications in nuclear reactors, military vessels and commercial power generation. Currently China is the primary source of all zirconium consumed in North America but the Nechalacho Project could satisfy the bulk of this demand once brought into production.
Avalon is planning to evaluate the economics of producing zirconium chemicals from the Nechalacho deposit as a primary product when funding becomes available.
Status of Nechalacho Project Permitting
Avalon is considering completing the permitting process under the Mackenzie Valley Resource Management Act, which was initiated in 2012 and has been advancing slowly since then. The Company is presently assessing the costs that will be associated with completing this process which it estimates could potentially be completed in nine months. The Company is also in discussions with senior officials of the newly elected Government of the Northwest Territories regarding the potential for implementation of significant improvements to the efficiency of the permitting process, that are presently being advocated by industry associations such as the NWT and Nunavut Chamber of Mines. Such improvements could significantly reduce the current high level of uncertainty around costs and timelines to complete the permitting process in the NWT.
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