2010-03-29 10:27 ET - News Release

Mr. Don Bubar reports

AVALON ANNOUNCES HYDROMETALLURGICAL PROCESS SUCCESSFULLY DEVELOPED FOR ITS NECHALACHO REE DEPOSIT, THOR LAKE, NWT

Avalon Rare Metals Inc. is providing a progress report on metallurgical process development for the Nechalacho rare earth element (REE) deposit, Thor Lake, NWT.

Following the successful development of a flotation process for producing an REE mineral concentrate in 2009 (as described in the company's news in Stockwatch on July 20, 2009), recent work has focused on a hydrometallurgical process to further upgrade the REEs into a chemical concentrate, probably a mixed rare earth carbonate. Avalon has now successfully established a hydrometallurgical process methodology, proven numerous times in the laboratory, for extracting the REEs out of the mineral concentrates, bringing the them into solution so that they can be upgraded by solvent extraction and precipitated as a chemical (carbonate) concentrate.

The Basal zone layer of the Nechalacho deposit contains a high proportion of heavy rare earth elements (HREE, samarium to lutetium including yttrium) hosted in the minerals fergusonite and zircon along with light rare earth elements (LREE, lanthanum to neodymium) hosted in variable amounts of bastnaesite, synchisite, monazite and allanite. Approximately half of the HREEs are hosted in fergusonite and half are hosted in zircon. These minerals also contain significant amounts of the rare metals tantalum (Ta), niobium (Nb) and zirconium (Zr) which will also be recovered and converted into saleable products.

Avalon's metallurgical testwork, directed by expert consultant John Goode, PEng, has led to development of a flotation process at SGS Minerals Services (SGS) that successfully concentrates the zircon and fergusonite as well as the LREE mineral phases and associated columbite (a niobium tantalum oxide ore mineral). The flotation process flowsheet has been successfully reproduced by Xstrata Process Services (XPS) in Sudbury, Ont., and Avalon now considers this REE mineral concentration methodology to be firmly established. To date, the flotation mineral separation process results in a concentrate with an average REE, Nb, Ta and Zr recovery of about 80 per cent at a mass pull of 18 per cent. Optimization work will continue in order to refine the method and produce additional concentrates for hydrometallurgical testing. Pilot plant work on a five-tonne bulk sample of the ore is planned for this summer.

After mineral concentrate production, the next step is mineral cracking, which involves breaking down the rare metal-bearing minerals. Avalon has tested a number of methods and has settled on a two-stage process of sulphuric acid bake followed by caustic crack of the residue as the most technically and cost-effective methodology for this particular suite of REE-bearing minerals. This method results in approximately 90 to 95 per centof the rare metals being brought into solution. Avalon has completed numerous experiments at SGS that confirm that the route defined operates effectively and provides the basis for preliminary estimation of capital and operating costs. Further optimization of the process will continue over the balance of the year.

The process for upgrading the REE, Nb, Ta and Zr from solution will be conventional solvent extraction, similar to any other REE/rare metal hydrometallurgical plant. The model being prepared for the prefeasibility study presently contemplates production of a mixed REE carbonate containing all of the recovered LREE and HREE; however, Avalon will be continuing to investigate the merits of further separation to isolate the LREE, SEG (samarium, europium and gadolinium) and HREE separately as potential value-added products. The REE would all be produced as carbonates, the Zr as basic sulphate (ZBS), and the Nb and Ta as pentoxide, though other chemical forms are possible. Avalon is currently conducting its solvent extraction work at SGS.

The hydrometallurgical plant design work and estimation of capital and operating costs to be used in the prefeasibility study (PFS) are being prepared by Melis Engineering Ltd., Saskatoon, Sask. This is the main information needed to finalize the economic model in the PFS. Avalon is working closely with Scott Wilson Roscoe Postle Associates, its lead technical consultant, to finalize plant design cost estimates so that the PFS can be completed on schedule this spring.

The company's vice-president, operations, David Swisher, and vice-president, exploration, Dr. William Mercer, PhD, PGeo, are providing overall direction on the project. The qualified persons for the purposes of this news release are Dr. Mercer and Mr. Goode, PEng, consulting metallurgist.

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