Donald S. Bubar, President and CEO and John Hyslop, Investor Relations of Avalon Rare Metals Inc. with a hybrid vehicle which contains 30 kilograms of rare earth elements at the Calgary Resource & Clean Energy Investment Conference April 2009
Metalsnews.com interviewed Don Bubar in Calgary. He has a very strong background in geological exploration and has assembled an excellent team of employees, management, board and consultants to explore and develop one of the largest and richest potential new sources of rare earth elements in the world.
Rare Metals and Minerals are Gaining in Popularity
Boasting a variety of applications – from magnetic and electronic to automotive and even refrigeration – rare metals and minerals are garnering more attention as they experience a surge in demand, according to Donald S. Bubar, President and CEO of Avalon Rare Metals Inc. “We've been doing rare metals for the last ten years, and [during that time,] the rare metals have been niche market commodities; not well known in the investment community, but all of a sudden new technologies, including personal electronics and green energy technology, are relying on the rare metals in a very significant way. And as the only TSX listed company that is a pure play on the rare metals, Avalon is in a unique position.
Four of Avalon’s five rare metals and minerals projects are currently at an advanced stage of development: Separation Rapids lithium minerals project, the Warren Township calcium feldspar project, the East Kemptville tin-indium-gallium-germanium projects, and the company’s flagship property, the Thor Lake REE project.
There are five distinct deposits of rare metal mineralization which have been identified so far at the Thor Lake property, but according to Bubar, a large area called the Lake Zone is generating the most excitement. Significant yttrium, tantalum, niobium, gallium and zirconium mineralization have been found at the Lake Zone, as well as HREEs, including europium, terbium and dysprosium, and LREEs, including lanthanum and cerium.
REEs, LREEs and HREEs
Approximately 95 percent of the world’s rare earth elements (REEs) are currently produced in China, he noted, but Avalon plans on giving them some much-needed competition. “The Chinese are steadily consuming more of their own domestic production for their own purposes, so there's a considerable amount of anxiety around the world amongst consumers in the automotive sector -- particularly in North America and Japan -- about reliable supply sources for the rare earths going forward. The whole world would love to see some other non-Chinese supply sources emerge, so that's the opportunity that Avalon presents,” Bubar said, explaining that the Thor Lake deposit can be that alternate source of supply of REEs for the markets
around the world. “Thor Lake is a very large, very rich rare earth deposit with other rare metals located in the Northwest Territories of Canada. “
The REEs are represented at the bottom of the Periodic Table of the Elements, consisting of the 15 lanthanide metals, and possess a unique set of physical and chemical properties. In addition, the metals yttrium and scandium share those properties and have recently been labeled rare earth as well. REEs are not commonly found concentrated in commercial ore deposits, but when they do become concentrated, REE deposits fall into one of two groups: deposits that are dominantly enriched in the light rare earth elements (LREEs), which include lanthanum, cerium, praseodymium, neodymium, and samarium; and deposits which also contain significant quantities of the heavy rare earth elements (HREEs), which include europium, gadolinium, terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium. The HREEs are the more valuable because they are not enriched in most producing deposits and accordingly are much less readily available.
In the automotive industry, LREEs are used in the processing of fuel and the manufacturing of key parts, including piston rings and catalytic converters. Lanthanum, for instance, is an important component in rechargeable batteries and, the electric motors used in hybrid cars rely largely on neodymium-boron-iron magnets. The REEs in magnets make up nearly half of the need for rare earths and are essential in the production of a variety of common products, including medical equipment, computers, cell phones and even aerospace technology.
Partnerships on the horizon
“Right now we're at the stage of doing a prefeasibility study on the Lake Zone,” said Bubar, noting that Avalon is currently involved in definition drilling. “We have a 43-101 resource now. It needs some additional in-fill drilling to reclassify more of the resource from the inferred to the indicated category, and we're doing the metallurgical process test work now to define a process flow sheet. The cost associated with processing the ore, plus market studies and other related environmental studies will provide the necessary inputs for that prefeasibility study, which we think will get done over the second half of 2009.” This should be ready for disclosure by the end of the year.
“We have about $8 million in the treasury at the present time,” said Bubar, adding, “Between now and the end of the year, we'll spend about half of that to complete the prefeasibility
study, so we'll still have $4 million in the treasury going into 2010 to sustain the company for however long it takes to secure the next major project financing for Thor Lake. Obviously, we see the prefeasibility study as being the catalyst for securing that financing. The next stage will be a major bulk-sampling program, pilot plant work and a bankable feasibility study. That could cost in the $20 to $30 million range, so we'll be looking at sources of financing to move forward with that in 2010.”
Bubar was excited about the project’s funding potential. “Because of the growing demand and reduced potential supply sources out there, we’re optimistic that some of the consumers of these commodities will be willing to act as strategic partners to assist us in securing the financing to move the project forward. We're already getting strong overtures from end users in Japan and other parts of the world, so we feel pretty confident that with a positive prefeasibility study, we will be able to access the capital to move the project forward.”
A rare opportunity
A Consulting Geologist with more than 30 years of experience in mineral exploration, Bubar has been President of the Toronto-based junior mineral exploration and development company since 1995. He is backed by a strong Board of Directors, including Non-executive Chairman Alan Ferry, a veteran mining analyst; Director, Chairman of Audit Committee Brian D. MacEachen, who has 15 years experience in mining finance and accounting; Director Joseph G. Monteith, a Chemical Engineering Technologist; and Director Peter McCarter, a lawyer with extensive experience in the mineral exploration industry.
“If you like the rare metals as a commodity group that you'd like to have exposure to, then there are very few public companies that offer equity investment opportunities. In fact, Avalon is the only TSX listed company that represents a pure play on the rare metals. ”said Bubar. He pointed to the size of Thor Lake’s deposit, which underscores its true worth. “Thor Lake is a really large, rich deposit. We have yet to define just how valuable it is, but it's pretty clear that we will demonstrate a value that is many multiples higher than our current market capitalization that suffered along with everyone else in the market in 2008.
“And what's really unique about it is that it's enriched in a group of rare earth elements known as the heavy rare earths of which most deposits are only in trace amounts. At Thor Lake they represent around 20 percent of the total rare earths there, and because they're very scarce, they're much more valuable. So, that makes the ore there much more valuable and potentially a much more profitable operation.” Bubar added, “Also there should be more interest from the market, because there are no other potential suppliers out there. “
Bubar said that Thor Lake has the potential to become a resource that could dominate and control the market in the heavy rare earths. “There is no other resource out there like it.”
For more information: http://www.avalonraremetals.com
Contact
INVESTOR RELATIONS:
You can E-mail us directly at office@avalonraremetals.com to request a full information package and to have your address placed on our mailing list for future news releases.
Additional contact information is as follows:
130 Adelaide St. W,
Suite #1901
Toronto, ON M5H 3P5
Tel: (416) 364-4938
Fax: (416) 364-5162
Don Bubar, President
dsbubar@avalonraremetals.com