2010 annual general meeting - avalon rare...

2010 2010 Annual General Meeting

January 14, 2010

…Advancing Green Technology

www.avalonraremetals.comTSX:AVL 1TSX:AVL OTCQX:AVARF

Safe Harbour StatementSafe Harbour Statement

Forward looking informationg

Certain statements contained in or incorporated by reference into thispresentation constitute forward-looking statements. Such statementsreflect the current views of Avalon Rare Metals Inc with respect toreflect the current views of Avalon Rare Metals Inc. with respect tofuture events and are subject to certain risks, uncertainties andassumptions. Many factors could cause the actual results, performanceor achievements of Avalon Rare Metals Inc. that may be expressed oror achievements of Avalon Rare Metals Inc. that may be expressed orimplied by such forward-looking statements to vary from thosedescribed herein should one or more of these risks or uncertaintiesmaterialize. Avalon Rare Metals Inc. does not intend, and does notassume any obligation, to update these forward-looking statements.

TSX:AVLOTCQX:AVARF www.avalonraremetals.com 2

2009 Corporate Highlights2009 Corporate Highlights

Successfully implemented name change and re-brandingLaunched new corporate website and raremetalblog.com

Achieved significantly higher market valuation and daily trading volumes

Commenced trading on OTCQX in New York

Secured $20 million in new equity financing

Completed 43-101 resource for Nechalacho REE deposit

Developed a process flowsheet for Nechalacho ore

Advanced Nechalacho pre feasibility studyAdvanced Nechalacho pre-feasibility studyOn track for completion in April, 2010

Raised our profile with the local NWT community


p yachieved recognition for our strong CSR performance

Capital Structureas at January 13, 2010

Canada - TSX: AVLCanada TSX: AVL

United States - OTCQX: AVARF SEC 12g3-2(b) # 82-4427

Shares Outstanding 78,710,448

Fully Diluted 87 483 198Fully Diluted 87,483,198

Market Capitalization C $236 million (S/O @ $3.00)

Recent Price Range C $2.70 - $3.30

52 Week High / Low C $4.24 - $0.40

Cash Reserves C $17.0 million

Insider Share Position 3.4 million shares (4.3%)( )

Institutional holdings (25%) CPP, TDAM, Front St., Excalibur, NatCan, MFC

Global, Faircourt, Cantara, Seamans, Fuchs Glbl

Balance Sheet Assets C $26 5 million (Aug 31/09)


Balance Sheet Assets C $26.5 million (Aug. 31/09)

One Year Price ChartOne Year Price Chart

CIBC Financing

CNBC / NY Times

The Dines Letterg

Prospectus cleared


Management, Directors& St t i Ad i& Strategic Advisors

Management DirectorsDonald S. Bubar, P.Geo, President, CEO & Director

Jim Andersen, C.A., C.P.A., V P Finance & CFO

Alan Ferry, CFANon-Executive Chairman

Brian D. MacEachen, C.A. Chair Audit CommitteeV.P. Finance & CFO

Bill Mercer, Ph.D., P.Geo., V.P. Exploration

David Swisher P Eng

Chair Audit Committee

Hari Panday, C.A.

Peter McCarter, B.A., LL.B., M.B.A. Chair Governance/Compensation ctteDavid Swisher, P.Eng

V.P. Operations

Charlotte May, Corporate Secretary

Ci d H CA CPA CGA C t ll

Chair Governance/Compensation ctte

Phil Fontaine, B.A., LL.D.

Strategic Advisors Cindy Hu, CA, CPA, CGA, Controller

Virginia Morgan, B.Com, Manager, Investor Relations

F. Dale Corman, P.Eng.

Gerald Prosalendis, Communications

David Connelly, Community Relations


y y

Joe Monteith, Business development

Investor Relations ProgramsInvestor Relations Programs

Expenditures in 2009: approximately $600,000

2010: Spent $228,000 in Q1 and will increase annual expenditures by 35% in FY2010

Strengthen messaging to promote the increasing value and importance of the rare metals in the Green Economy. Initiate a “blog” raremetalsblog.com

2010: Emphasize the value of heavy rare earths2010: Emphasize the value of heavy rare earths Create more web-based educational tools “Rare Earths University”

Seek more analyst coverage and media exposure

2010: Focus on analyst coverage from dealers2010: Focus on analyst coverage from dealers

Continue marketing to institutional investors mainly internationally… U.S. and Europe

2010: Expand marketing into Asia

Take advantage of the PFS in Q3 and Q4 to create more institutional interestg

Increase trading volumes and liquidity and maintain going forward

Continue to promote new brand and “green” socially responsible image

2010: Take advantage of PDAC E3 Award


2010: Take advantage of PDAC E3 Award

Rare Metals: Key to the Green E EEnergy Economy

Rare earth elements (“REE”) such as Neodymium, ( ) y ,Terbium and Dysprosium; & other rare metals such as Lithium, Gallium, Indium, Tantalum, Zirconium

C i i l h hi fil ( l ) d hi hCreating new materials such as thin films (solar) and high strength magnets, the key to energy-efficient electric motors

Renewable energy: solar power and wind turbines

LED lighting, rechargeable batteries, light weight alloys

Hybrid and electric cars (30 kg REE)


Key Application of REE:M t f El t i M tMagnets for Electric Motors

REE (Neo) Magnets reduce electric motor/generator size ( ) g gand weight, improve efficiency

Major new applications include:I d i l i di i (500 k )

100 Kw generator with neo magnets

Industrial air conditioners (500 kg)Hybrid-electric cars (30 kg)Wind turbines (0.75-1.0 t/Mw)MRI machines (1-3 tonnes)

Use of REE magnets in air conditioners can reduce power consumption by 50% with same performancepower consumption by 50% with same performance

HREE dysprosium is key to making “heat resistant” magnets vital to automotive and other applications


China Dominates Global REE P d tiProduction

China currently produces over 95% of global REE supply

China now imposing export gquotas and tariffs on REE

New non-Chinese supply sources needed to maintain

Mountain Pass era

balance

Supplies of key HREE from China (Y, Dy, Tb) will remain ( , y, )tight with potential for a complete export ban

Japan totally reliant on China

Yet, Chinese companies are actively trying to acquire additional REEresources around the world. Why?


p yfor supplies

Thor Lake: Project LocationThor Lake: Project Location

Proximity to yGreat Slave Lake provides access toaccess to railhead at Hay River by barge in summer and ice road in winter. Current access is fly-in


in.

Project Program - 2009Project Program 2009

Expenditures in FY 2009: $5.4 millionp $

Expenditures in Q1 2010: $2.9 million

Drilling for Indicated Mineral ResourcesDrilling for Indicated Mineral Resources

Environmental baseline studies

Metallurgical testingMetallurgical testing

Prefeasibility study

Community engagementCommunity engagement


Thor Lake Project:T h i l C lt t Technical Consultants

David Trueman, Ph.D., P.Geo, Rare Metals Geologist

Chris Pedersen, P.Geo, Rare Metals Geologist

Bruce Hudgins, P.Geo. Resource database management

John Goode P Eng Metallurgical ConsultantJohn Goode, P.Eng. Metallurgical Consultant

SGS Lakefield Research, Metallurgy & Mineralogy

Scott Wilson RPA Inc., Pre-Feasibility Study Independent Consultants

I M L d P E E d M k D l C lIan M. London, P. Eng. Energy and Market Development Consultant

Jacques Whitford Stantec, Permitting, Environmental Studies

Dudley Kingsnorth, IMCOA, REE Market Studies

Kaz Machida, KAY Investment, REE Market Dev. Asia

McGill University, Geological Research


Nechalacho Geological Model E l iEvolving

Grace Lake GraniteBiotiteGranodiorite

I d G

Model Section

Leucoferrodiorite

T-Zone

Thor Lake Syenite

Two-Mica

Granite

WhitemanLake Quartz

Syenite

Interpreted Geometryin Cross Section

CaribouLake

Gabbro

Thor Lake SyeniteGranite

Hearne Channeland Mad Lake

Granites


Nechalacho REE Deposit: Drill H l L ti MHole Location Map

cc KeyccE-WSection Line

Key Area


156156

Nechalacho REE Deposit Nechalacho REE Deposit

E-W Composite Section p(looking north, no vertical exaggeration)

132 131 63 62 113 53114

97 56A 80-12 11862 53 56A

250m

Upper LREE Zone

1500m

Basal HREE ZoneAverages 30 m thick, 2% TREO, 20% HREE

Drill Hole with Basal Zone Intercept

1500m

Hole 118: 2.71% TREO with 34% HREO over 17 4 metres


Intercept over 17.4 metres

Nechalacho REE Deposit ModelNechalacho REE Deposit Model

Basal Zone

Upper Zone (High TREO)

Basal Zone (HREO <0.5%)

(High TREO)


Nechalacho 43-101 ResourcesNechalacho 43 101 Resources

Inferred REE resources at 1.60% TREO cut-off-grade i iti ll d b W d E i i d t d binitially prepared by Wardrop Engineering, updated by Hudgtec and reviewed by SWRPA in August 2009

Total Inferred Resources (Upper and Basal Zones):Total Inferred Resources (Upper and Basal Zones):64.2 million tonnes at 1.96% TREO (16.8% HREO)

Basal Zone Only:y44.3 million tonnes Inferred at 1.96% TREO (21% HREO)

4.4 million tonnes Indicated at 1.96% TREO (25.4% HREO)

2.2 million tonnes Indicated at 2.14% TREO (20% HREO)

Note: Defining Indicated Resources is a function of drill hole spacing being

reduced to an average of 50 metres. TREO = total rare earth oxides,


gHREO = heavy rare earth oxides (europium to lutetium + yttrium)

2009 Summer Drill Program14 575 t i 70 d ill h l14,575 metres in 70 drill holes

NN

New deep Basal Z i t tZone intercepts

-162

-161 -143

-159 -157

-160 -155 -158

-142 -153

-176 -175

Approx. area of existing Indicated

Mineral Resources


142-154

Nechalacho REE DepositIndicated Resources IncreasedIndicated Resources IncreasedNews Release of January 14, 2010

Summer drilling results have successfully increased IndicatedSummer drilling results have successfully increased Indicated Resources in southern part of Basal Zone to:

9 million tonnes at 1.86% TREO and 0.43% HREO (23% HREO/TREO)

Sufficient to support PFS. Good continuity confirmed.

Potential for additional high grade resources identifiedIndicated Mineral Resources at 1.60% TREO cut-off-grade updated by Hudgtec from original estimate by Wardrop Engineering Ltd (A Tetratech Company)

Note: Defining Indicated Resources is a function of drill hole spacing being reduced to an average of 50 metres.

TREO = total rare earth oxides, HREO = heavy rare earth oxides (europium to lutetium + yttrium)


HREO = heavy rare earth oxides (europium to lutetium + yttrium)

Geological Model, Nechalacho REE D it

Basal Zone (HREO <0.5%)

Deposit

Upper Zone (High TREO)

Interpreted geometryp g yin block diagram


Nechalacho Drill Program 2010Nechalacho Drill Program 2010

First drill to start January 17th:yObjective: increase Indicated Mineral Resources with high grade potentialpotential

Second drill to start February 3rd: First objective: test for deep highFirst objective: test for deep high grade to south under cover rock.Second objective: condemnation d illi f d tdrilling of proposed ramp route, plant site, airstrip location and tailings area


Nechalacho C it E tCommunity Engagement

Renaming ceremonyg y

Community meetings

Site visitsSite visits

First Nations Training First Aid Driller Helper

Employment at site

Business developmentMajor contractors with Aboriginal ownership40% of individuals

employed at site of Aboriginal origin

ownership

Contracts for ice road haulage, airstrip


Wind power evaluation with YKDFN

Health and SafetyHealth and Safety

Thor LakeThor LakeLost time incident: Back injury moving fuel barrels Lost time incident: Severe hand cut with a box cutter while removed tape from core boxesp

East Kemptville

Geophysical contractor: technician carryingGeophysical contractor: technician carrying transmitter tripped on old barbed wire in bush. Required stitches. No lost time.


Environmental ComplianceEnvironmental Compliance

Thor Lake

Land use inspections proceeded as normal at Thor Lake

No special comments from Indian and Northern AffairsNo special comments from Indian and Northern Affairs Canada inspector

Commendation for cleaning up old trailer from siteg p

East KemptvilleEast Kemptville

Field work completed with no issues


Project OutlookProject Outlook

2010 ActivitiesPotential Project FootprintPrefeasibility Study (“PFS”)Metallurgical ProgressPermitting ProcessFeasibility StudyFeasibility StudyEstimated Schedule

Estimated expenditures for balance of FY 2010Estimated expenditures for balance of FY 2010 (including winter drilling): $7.0 million


Potential Project FootprintPotential Project Footprint


Nechalacho REE Deposit C t l D l t PlConceptual Development Plan

Barren Rock D mp

VentMine Portal

Barren Rock Dump

Tailings PondLong Lake

Underground MiningUpper Zone

g g

Basal Zone

Tailings Storage

Mining Underground Room & Pillar/long-hole stopingMining Underground Room & Pillar/long hole stoping1,000 tonnes per day (tpd) years 1 to 4, ramping to 2,000 tpd by year 8

Flotation Processing to produce upgraded Concentrate Concentrate shipped to Hydrometallurgical plant south of GSLpp y g p

Production of 5,000 to 10,000 tpy TREO in chemical concentrateMixed REE carbonates shipped to third party for separation

Market Infusion only 2 to 5% (est. 2014), 5 to 10% of HREO demandO i C $200/ ( / 25%) i l i i ill & h d


Operating Costs: $200/tonne (+/- 25%) inclusive mine, mill & hydromet

Prefeasibility StudyPrefeasibility Study

Scott Wilson original completion schedule June 2010g p

Excellent Progress:Resource Developmentp

Transportation Logistics

Metallurgy

Project/Mine Design CriteriaProject/Mine Design Criteria

Estimated completion of Draft PFS is end of Jan. 2010

Targeting March 2010 for Final ReportTargeting March 2010 for Final Report

We expect a positive outcome


Metallurgical ProgressMetallurgical Progress

Mine Site Flotation Process Testwork CompleteFlowsheet Developed

Confirmation testing in progress with Xstrata Process Control

Hydrometallurgical Testwork Ongoingy g g gExcellent progress to deliver 4-5 products

HREE carbonate

LREE carbonate

Niobium Pentoxide

Zirconium Oxychloride

Gallium (possibly)

2010 Pl2010 PlansUtilize existing 5 metric tonnes of core stored in Yellowknife for Minipilot

Minipilot Plant at XPS to produce 600 kg concentrate

20 f 30


HydroMet Pilot Run using 20 kg per day for 30 days

Permitting ProcessPermitting Process

Upon completion of PFS, Avalon will generate a project description report to submit to the Mackenzie Valley Land and Water Board (MVLWB) for a Type A Land Use Permit (LUP) & Type A Water License

45 day pre-screening process

2.0 year Environmental Assessment (EA) Process conducted by the Mackenzie Valley Environmental Impact Review Boardy y p

3 to 6 month Federal Ministerial review & approval

1.0 year MVLWB process to finalize LUP & Water License and determine conditions for eachdetermine conditions for each

Posting Environmental Bond

Begin Construction


Begin Construction

Feasibility StudyFeasibility Study

Conducted concurrently with EA ProcessyAvalon to hire support staff

Avalon will conduct in-house to increase shareholder value and control costs

Feasibility Study to be overwritten by independent third t lt t (S tt Wil ?)party consultant (Scott Wilson?)

Development of Finance Package


Estimated ScheduleEstimated Schedule

Thor Lake Project Schedule2014

Qtr.1 Qtr.2 Qtr.3 Qtr.4

2013

Qtr.1 Qtr.2 Qtr.3 Qtr.4Qtr.4 Qtr.1 Qtr.2

2010 2011

Qtr.3 Qtr.4

2012

Qtr.1 Qtr.2 Qtr.3 Qtr.4Qtr.1 Qtr.2 Qtr.3

Pre-feasibility Draft Document

Draft Hydrometallurgical Flowsheet

Final Pre-feasibility Report

Project Description Report

MVLWB Prescreening Process

MVEIRB EA Process

Ministerial Approval

MVLWB LUP/Water Licensing

Bankable Feasibility

Final Design & Contracts

Project Construction

Project Start-up


Aboriginal MOU's

Other ProjectsOther Projects

Separation Rapids

2009 expenditures: $143,000

Continued marketing lithium minerals to glass industry

Secured Mining lease over Big Whopper depositSecured Mining lease over Big Whopper deposit

Site clean-up work completed

2010 Plans

Continue lithium product marketing

Consider strategic options to take advantage of investor interest in lithium related to rechargeable battery demand growth

Warren TownshipInactive. Permitting issue unresolved Product demand has not yet recovered


Product demand has not yet recovered

East Kemptville Tin-IndiumEast Kemptville Tin Indium

Preliminary Economic Assessment in progressy p gExpenditures in 2009: $318,000New resource block model developed from historical dataMetallurgical testing completedMetallurgical testing completed 90% recoveries of tin achievable using new technologyAttractive economics at current tin pricesP t ti l f ti i f ld t iliPotential for tin recoveries from old tailings

2010 PlansNegotiate site access for confirmation drilling & tailings samplingego a e s e access o co a o d g & a gs sa p gComplete PEA and attempt to secure surface rights$500,000 regional exploration program in progressDrilling of three high priority targets planned for January


Drilling of three high priority targets planned for January

Regional Targets - MagneticsProtected Area

Duck Pond Deposit~9mt @ 0 11% Sn + Zn&Cu~9mt @ 0.11% Sn + Zn&Cu

Main and Baby Zone


East Kemptville – Exploration T tTarget Magnetic target: 1.2 kms long

IP target: over 800m coincident with magPrevious drilling (approx location)Drill intercepts incl 2 00m @ 0 20% Sn/2m;Drill intercepts incl. 2.00m @ 0.20% Sn/2m; up to 0.16% Sn, 14gpt Ag, 0.68% Cu

Line 102E


2010 Corporate Priorities2010 Corporate Priorities

Complete Nechalacho PFS by April p y pBegin feasibility study work and project permitting

Develop First Nations partnerships

Accelerate REE product marketingRecruit rare metals marketing expertise

Consider strategic partnershipsConsider strategic partnerships

Evaluate strategic alternatives for Separation Rapids

Complete East Kemptville PEA secure surface andComplete East Kemptville PEA, secure surface and advance to final feasibility


Investment HighlightsInvestment Highlights

Unique exposure to an emerging world class resource of the REEand other valuable rare metalsand other valuable rare metals

Exceptional enrichment in the more scarce and very valuable heavy rare earths

Growing demand and public awareness of critical importance of rare metals to the green energy economymetals to the green energy economy

Resulting in growing institutional investor interest

Relatively advanced REE project (4 to 5 years to production) compared to many new early-stage projects looking at 10 yearsp y y g p j g y

First new producers will capture the available markets outside China

Well-financed ($17 million) to advance the project through prefeasibility and initiate feasibility and permitting process

Growing political support in NWT and amongst First Nations

Unrealized shareholder value in other assets (East Kempville and Separation Rapids)


Corporate Information

Avalon Rare Metals Inc. 130 Adelaide St. W, Suite 1901Toronto, ON Canada M5H 3P5

T: (416) 364-4938 ۰ F: (416) 364-5162T: (416) 364 4938 F: (416) 364 5162www.avalonraremetals.com

www.raremetalblog.comoffice@avalonraremetals [email protected]

Investor Relations: P Ed C lt t T tPro-Edge Consultants, Toronto

[email protected]


2010 annual general meeting - avalon rare...

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