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AvalongrantedlandusepermitforrareearthmineIndustryMiningIndustryMining9TuesdayMay62014AKLAVIKBEHCHOKOCOLVILLELAKEDELINEEAGLEPLAINSEKATIDIAMONDMINESENTERPRISEFORTGOODHOPEFORTLIARDFORTMCPHERSONFORTPROVIDENCEFORTRESOLUTIONFORTSIMPSONFORTSMITHGAMETIHAYRIVERINUVIKJEANMARIERIVERKAKISALUTSELKENAHANNIBUTTENORMANWELLS2011NationalAwardWinner2011BestAll-RoundinCanada2012TopThreeOverallinCanada2012BestEnvironmentalWriting2011CCNACANADIANCOMMUNITYNEWSPAPERAWARD2011CMCAAUDITEDYourSourceforNorthernNewsFindtheJournalinthesecommunitiesthroughouttheNorthPAULATUKSACHSHARBOURTROUTLAKETSIIGEHTCHICTUKTOYAKTUKTULITAULUKHAKTOKWEKWEETIWHATIWRIGLEYYELLOWKNIFEBytellingthestoriesofNorthernersweremakingourcommunitiesstrongerByMEAGANWOHLBERGToronto-basedKennadyDi-amondsishappilyadvancingwithexploratorydrillingworkatits100percent-ownedKen-nadyNorthdiamondprojectlocated280kmnortheastofYellowknife.Thecompanyannouncedlastweekthatover16tonnesofhighqualitykimberlitehadbeenrecoveredfromtheKelvinsitelocatedneartheGahchoKudiamondminecurrentlyunderdevelopmentbyDeBeersnorthofLutselKe.Wecontinuetomakeen-couragingprogresswiththelargerdiameterdrillingun-derwayattheKelvinkimber-liteandhavetodaterecoveredover16tonnesoftheplanned25tonnemini-bulksampleKennadyDiamondsCEOPat-rickEvanssaidinastatementlastweek.Whileunusuala4.3-tonnesamplerecoveredfromtheKelvinkimberlitein2013didreturnasamplegradeof5.38caratspertonnewhichisex-ceptionallyhighEvanssaid.EvanssaidthecompanyisparticularlyexcitedaboutByMEAGANWOHLBERGAvalonRareMetalsjumpedanotherregula-toryhurdlelastweekforitsNechalachorareearthele-mentsmineintheNWTbutmovingforwardisstillcontingentontheprojectre-ceivingsufcientnancing.ThecompanywasawardeditsClassAlandusepermitlastWednesdaytobeginpre-con-structionworkatitsproposedminesiteeastofYellowknifeatThorLakeonthenorthshoreofGreatSlaveLake.ThepermitissuedbytheMackenzieValleyLandandWaterBoardallowsAvalontostartphasinginlowim-pactactivitiesincludingsitepreparationsettingupacampandearlydevelopmentonthemineandinfrastruc-turesuchasroadspowerandwatertreatment.AvalonsCEOandpresi-dentsaidthepermitrepre-sentsanothermilestoneintheongoingdevelopmentoftheprojectthoughmuchstillhangsonthemineattractingthenecessaryinvestments.Thispermitallowsustoproceedwiththeworknec-essaryin2014tokeeptheprojectonscheduletoachievecommercialoperationsby20172018hesaid.Realizingthisgoalwillultimatelydependonwhenallprojectnancingisinplace.Certainlytimelyreceiptofallnecessarypermitsandlicenceshelpsmitigateperceivedinvestmentrisk.Capitalexpenditurestobuildtheprojectincludinghydrometallurgicalprocess-ingandreningcapacityareexpectedtoamounttoap-proximately1.575billion.Currentlythereare111.8millionoutstandingsharesfortheprojectwithamarketcapof70.4million.Sinceacquiringtheprop-ertyin2005Avalonhasin-vestedover95milliontofurtherexploreanddevelopNechalachochangingitsplansoverthelastcoupleofyearstomakeitmoreattrac-tivetoinvestors.WhiletheinitialplanforNechalachowastosetupahydrometallurgicalplantatthedefunctPinePointminesiteintheNWTthecom-panyannouncedlastyearitwouldbeshippingminedoredirectlysouthtoLouisianaforprocessing.Costswerereducedbyabout350millioninearlyMarchwhenthecompanyenteredintoa10-yearpartnershipwithFrenchrareearthreningcompanySolvaytoprocessthecompanysrareearthconcen-trateintopurerareearthoxides.Underthebindingagree-mentAvalonwillshipcon-centratefromitsplantinLou-isianatoLaRochelleFrancetoberenedandprovidingSolvaywithrstdibsonpur-chasingthemetals.ThosenotboughtbySolvaywillbesoldbyAvalonanddeliveredfromtheplantinFrance.BubarsaidtheagreementreducesthetechnicalriskandcostsassociatedwithbuildingcommissioningandoperatingadedicatedREErareearthelementsreneryfortheNechalachoprojectmakingthewholeprojectalessriskyandmoreattrac-tiveinvestmentopportunity.Thenewplanwillbein-corporatedintoanupdatedtechnicalreportinmid-2014.CompanyawaitswaterlicenceAvalonanticipatesaClassBwaterlicencetodrawwateranddisposeofwasteaspartofthelaterphasesoftheprojectwillbeissuedinthenearfutureandishopefulitwillsecurefullconstructionandoperationpermitsbyearly2015.Basedontheco-operativeapproachandresponsivenessexperiencedtodatewiththeMVLWBstaffwedonotan-ticipateanysignicantdelaysinachievingthisgoalsaidMarkWisemanAvalonsvice-presidentofsustainability.Acomprehensivefeasibil-itystudyafullenvironmentalassessmentandsubsequentfederalapprovalfortheminewerecompletedlastyear.Theexpectedminelifeoftheprojectissetat20yearsbasedon14.6milliontonnesofprovenandprobablemin-eralreservesmeasuredandindicatedatthesite.IfcompletedtheprojectwillbetherstlargeproducerofheavyrareearthelementsoutsideofChina.Rareearthelementsareusedinthemanufacturingofelec-tronicssuchascellphonescomputersandLEDlights.KennadyunearthinghighqualityNWTdiamondstheunusualrecoveryofasinglecolourlesstransparentdiamondmeasuring1mmindiameterfromthecoreoftheKelvinholeatadepthofap-proximately114metres.ThatsampleisbeingsenttoSaskatchewanforlabanaly-siswhereitwillbeweighedmeasuredandphotographed.Approximately5500metresofdrillinghavebeencompletedattheKelvinsitetodatere-sultinginover16tonnesofrecoveredkimberlitedespitehavingyettodiscovertherootofthekimberlitepipeknownasafeederdyke.Evanssaidtheresultsarequitepositive.TheKelvinlargerdiameterdrillingiscontinuingtorecoverwideinterceptsinverticalandnearverticalholeswhichisveryencouraginghesaid.Wearehopefulthatthever-ticaldrillingwillhelpidentifythefeederpipesystemoftheKelvinkimberlitewhichhasyettobediscovered.Moreencouraginganom-alieshavebeenidentifiedaboveasecondkimberlitecalledFaraday.Evanssaidthecompanyispleasedwithwhathasbeendiscoveredsofarandisaimingtoestablishcontinuityacrossthe1-kmstrikebymovingoneofitsdrillrigsfromKelvintotheFaradaycorridor.Basedonthedrillingcom-pletedtodateKennadyishopingtondbetween5and8milliontonnesofkimberliteintheKelvin-Faradaycorridoraswellasotherkimberlites.Adrillprogramconductedlastyearreturnedexceptionalgradesamplesaccordingtothecompanyreturningagradeof5.38caratspertonnefroma4.3tonnesampleofKelvinkimberlite.Asmaller116-kgsamplefromFaradayre-turnedagradeof11.23caratspertonne.ThethreelargestdiamondsrecoveredfromKelvinthusfarhavebeena2.48caratoff-whitetransparentoctahedrala1.06caratoff-whitebrokenaggre-gateanda0.90caratoff-whitetransparentirregular.Therecoveryofdiamondsofthissizeandqualityfroma4.3tonnesampleisveryen-couragingnotedthecompanyinitsstatement.PhotocoutesyofAvalonRareMetalsAnexplorationcamprestsatThorLakethesiteofAvalonsproposedNechalachorareearthelementsminesituatedapproximately280kmeastofYellowknife.Realizingthisgoalwillultimatelydependonwhenallprojectnancingisinplace.Certainlytimelyreceiptofallnecessarypermitsandlicenceshelpsmitigateper-ceivedinvestmentrisk.DonBubarAvalonRareMetals