The mineral deposits at Thor Lake site include the Nechalacho deposit, and the separate and distinct R, S and T Zones, with the Nechalacho deposit bearing many of the attributes of an apogranite originating as an apical or domal facies of the parental syenite and granite. The deposits are extensively metasomatized with pronounced magmatic layering and cyclic ore mineral deposition.

The Nechalacho deposit essentially forms part of a layered, igneous, peralkaline intrusion. According to Richardson and Birkett (1995) other comparable rare metal deposits associated with peralkaline rocks include:

1. Strange Lake, Canada (zircon, yttrium, beryllium, niobium, rare earth elements).

2. Mann, Canada (beryllium, niobium).

3. Illimausaq, Greenland (zircon, yttrium, REE, niobium, uranium, beryllium).

4. Motzfeldt, Greenland (niobium, tantalum, zircon).

5. Lovozero, Russia (niobium, zircon, tantalum, REE).

6. Brockman, Australia (zircon, yttrium, niobium, tantalum).

The main chemical features of the Nechalacho deposit that contrast to those overall features are that the rare earth levels are higher than typical, uranium is not particularly high, with anomalous but modest levels of thorium, and the lack of beryllium mineralization. Beryllium is present in the North T deposit, a separate smaller deposit to the north with dissimilar geology. The R, S and T Zones are small separate pegmatitic bodies to the north and northeast of the Nechalacho deposit.

The preferred genetic model is that of igneous differentiation within a closed-system with rare earth element concentration within a residual magma, aided by depression of the freezing temperature of the magma by fluorine and possibly carbon dioxide.

Nechalacho mineralization is hosted in nepheline syenite that has been extensively hydrothermally altered in areas of mineralization. The payable elements of the Nechalacho deposit are typically hosted in a number of minerals, summarized as follows:

-LREEs dominantly occur in bastnaesite, synchisite, monazite and allanite.

-HREEs dominantly occur in zircon, fergusonite and rare xenotime.

-Zirconium (Zr), along with HREE, niobium and tantalum occurs in zircon and other zircono-silicates (eudialyte).

-Niobium and tantalum occur in columbite and ferrocolumbite, fergusonite and zircon.

Underground mining of the Measured and Indicated mineral resource of the Basal Zone was investigated for the feasibility study. The majority of the mineral resource of the Basal Zone lies directly beneath and to the north of Long Lake, approximately 200 m below surface. Thus, the deposit is to be mined using underground mining methods.

The mine production rate is 2,000 t/d (730,000 t/y) of ore and the mine life is 20 years.

Geotechnical information for the mine design was based on geotechnical data collection completed in conjunction with Avalon’s on-going exploration drill program. The stope dimensioning and crown pillar stability analysis was performed by KPL.

The analysis indicated that excavations 15 m wide, 5 m high and 100 m in length will be stable with the proper installation of ground support and mitigation strategies.

The deposit at the Nechalacho project is relatively flat lying and will be mined with a combination of longhole stoping, and cut and fill methods. The mine will be accessed through a mine portal located near the concentrator. The dimensions of the 1,600 m main ramp will accommodate the overhead conveyor system and access for men and equipment.

Zones less than 10 m thick will be mined by cut and fill methods in a primary and secondary mining sequence. Zones over 10 m thick will be mined with longhole stoping. Secondary stopes will be mined after the adjoining primary stopes have been filled. The mining of the secondary stopes will be the same as the mining of the primary stope.

Blasted material will be mucked and transported by rubber tyred equipment to the crusher station. The crushed ore will be transported to the surface by conveyor.

Paste backfill will be used to improve the overall mine stability, reduce the surface footprint for the Nechalacho TMF, and enable the extraction of secondary stopes for increased mining recovery.

The Nechalacho production schedule is designed to extract high grade material located closest to the underground crusher station in the initial mining years to maximize present value. Steady production at an average rate of 2,000 t/d ore is anticipated by the sixth month of operation.

Ore will be fed to the primary crusher from the underground ROM storage pocket and fine crushed ore product will be delivered by conveyor to a surface fine ore bin which will feed the grinding circuit. The crushing circuit has been designed to accommodate an expanded capacity of 4,000 t/d.

The grinding circuit will be a conventional rod mill/ball mill operation. The rod mill will be operated in open circuit, and the ball mill in closed circuit with classifying hydrocyclones. The cyclone overflow will gravitate to two stages of magnetic separation, followed by a desliming circuit. The magnetics from the magnetic separation circuit and the fines from desliming will be routed to tailings. The deslimed slurry will feed the flotation circuit.

The processing facilities comprise three separate plants, the concentrator located at the Nechalacho site, the hydrometallurgical plant at the Pine Point site and the rare earth refinery at the Geismar site.

The cyclone overflow will gravitate to two stages of magnetic separation, followed by a
desliming circuit. The design of the desliming circuit was based on MetSim™ simulations
performed by FLS. The circuit involved three stages of classification using hydrocyclones.
The magnetics from the magnetic separation circuit and the fines from desliming will be
routed to tailings. The deslimed slurry will feed the flotation circuit.

The flotation circuit design comprises three stages of bulk flotation, four stages of cleaner flotation and a single cleaner scavenger stage. Flotation concentrate will be pumped to a gravity separation circuit for further enrichment before being thickened and filtered to final product concentrate. The light material ( ........