12th Rare Earth Summit
May 27-28, 2021
Hangzhou, Zhejiang, China
11th Aluminum Raw Materials Summit
May 20-21, 2021
Hangzhou, Zhejiang, China
9th Magnesium Summit
April 15-16, 2021
Hangzhou, Zhejiang, China
13th World InBiGeGa Forum
March 25-26, 2021
Hangzhou, Zhejiang, China
7th World Antimony Forum
June 13-14, 2019
Changsha, Hunan, China
7th Refractory & Abrasive Materials Summit 2019
May 23-24, 2019
Qingdao, Shandong, China
10th Aluminum Raw Materials Summit
May 16-17, 2019
Zhengzhou, Henan, China
11th Rare Earth Summit
May 9-10, 2019
Qingdao, Shandong, China
8th Magnesium Summit
April 11-12, 2019
Zhuhai, Guangdong, China
12th World InBiGeGa Forum
March 14-15, 2019
Zhuhai, Guangdong, China
6th World Manganese & Selenium Forum
May 21-22, 2018
Hainan Sanya, China
Interview with Don Bubar, President and CEO of Avalon Rare Metals, and Pierre Neatby, Vice-President of Sales and Marketing
Avalon Rare Metals Inc. (TSX and NYSE AMEX: AVL) is a mineral development company focused on the rare metal deposits in Canada. Its flagship project, the 100%-owned Nechalacho Deposit, Thor Lake, Northwest Territories, is emerging as one of the largest undeveloped rare earth elements resources in the world. Its exceptional enrichment in the more valuable 'heavy' rare earth elements, key to enabling advances in green energy technology and other growing high-tech applications, is one of the few potential sources of these critical elements outside of China, currently the source of over 95% of the world supply. Avalon is well funded, has no debt and its work programs are progressing steadily. Social responsibility and environmental stewardship are corporate cornerstones.
Avalon Rare Metals: Advancing the Nechalacho Project at Thor Lake
----Interview with Don Bubar, President and CEO of Avalon Rare Metals, and Pierre Neatby, Vice-President of Sales and Marketing
Asian Metal: Good morning, gentlemen and thank you for participating in this interview with me.
There have been plenty of developments coming from Avalon in recent months. One in particular has been the recent prefeasibility study for a separation facility to be built in the southern US. Can you tell me more about these plans and your decision to investigate this region of the US?
Pierre Neatby: We have been looking at splitting the separation plant from the site in the Northwest Territories for the simple reason that the plant requires a significant amount of reagents, like caustic soda and hydrochloric acid. The costs are much greater to ship those reagents north than to ship our concentrate south. There are significant reagent producers in the southeast US, so that is the reason that we centered the investigation on that particular region. We also have some investigation with respect to potential eastern Canada sites, so we are investigating both locations: the southeastern US and eastern Canada, as possible locations.
Don Bubar: The other consideration is proximity to Canadian National (CN) railway. CN is the only railway to serve the Northwest Territories. Any areas that are serviced by the CN railway and meet our other criteria of availability of key reagents would be considered. An initial scoping study indicated that the delivered cost of reagents would be a major component of the overall operating costs for the separation plant.
Pierre Neatby: I think our consumption of reagents is approaching 400,000t, and the amount of concentrate is 140,000t, so the difference in freight is essentially three times.
Asian Metal: Rare earth elements are very unique in that they are not found in single deposits, but rather as a mix of multiple metals. What are the significant properties of the Nechalacho project and what makes it unique from other deposits?
Don Bubar: It is simply the relative enrichment in heavy rare earths, notably dysprosium. A quarter of the total rare earths in the deposit consists of heavy rare earths rare earths such as europium, terbium, yttrium and dysprosium – The heavy rare earths are in most demand.
Pierre Neatby: It has enrichment in heavy rare earths, which is very important, but also we have been blessed with by-product content of zirconium, niobium and tantalum. We generate 25-percent of revenue from by-product credits, which are possibly unique to our deposit. Also, the low uranium and thorium content is one of the three aspects that make our deposit special.
Asian Metal: How would you describe your experience working in a mining sector subjected to the changing market dynamics of very different downstream industries?
Don Bubar: It is pretty challenging for those reasons. The balance in the Rare earths in any deposit does not match demand in the market place, so you are faced with shortages of some and surpluses of others in any producing operation. That is the single biggest challenge. With the higher proportion of heavies, the balance that we have at Nechalacho is a bit closer to demand in the rare earth market on an individual rare earth basis.
Pierre Neatby: I think that if we had 100% heavy rare earths, we would be even happier, but I have not seen a deposit like that.
Asian Metal: What has been your largest challenge in developing your deposit and what measures have you taken to mitigate risk?
Don Bubar: The biggest challenge is related to the metallurgical extraction process to concentrate, crack and liberate the rare earths. Deposits like ours, enriched in heavy rare earths, tend to have more complex mineralogy than light deposits, which tend to be simpler. We are faced with developing our own process and technology to crack the heavy rare earth bearing minerals. We have done that at the bench scale, but there is more work to be done to demonstrate that on a larger scale. The biggest technical risk the project faces is the metallurgy and extraction process.
Asian Metal: Your company has undertaken several different drill campaigns at the project. What are your objectives moving forward, and what is the importance of additional investigation at the site?
Don Bubar: There are two purposes of the drilling. Firstly, we are doing definition drilling to tighten up hole spacing. Right now, the holes that define the resource are fairly widely spaced at 50m. On a scale of a mine stope, that is fairly wide. You need to be very confident about deposit continuity before initiating mining. We plan to tighten up the holes to 25m-or-less to improve confidence on continuity. There are always complexities once inside the deposit. You cannot have too many holes in order to ensure that the initial mining is planned where you have the best grade ore.
Secondly, we have recovered a bulk sample for the pilot plant. We do not have an opening that would allow us to extract a bulk sample by mining, therefore we have been using a wider diameter drill core to extract enough ore to create a bulk sample to feed the pilot plant. We continue to drill as it would be in our best interest to have a surplus of ore, in case additional test work is required.
We processed an initial 40t sample in our flotation pilot plant, and we can see where there are opportunities to further optimize the process. There will be follow-up work in August to optimize that process. The 40t sample also produces 6t of concentrate and this provided us with enough material to do a pilot plant trial for the hydrometallurgical process and test our sulfuric acid bake flowsheet.
Asian Metal: From a recent press release, Avalon has entered into four different non-binding memorandums of understanding for off-take agreements, investment or technology partners. How would you evaluate the importance of these types of agreements and their role in developing rare earth projects outside of China?
Pierre Neatby: I think they are quite important because most companies developing rare earth projects are developing them on their own. We do not see the same dynamics as in the base metals industry. If a junior gets to developing a deposit at a certain level, they can be bought out. Rare earth companies are going to be doing these projects with companies and other industrial customers. I think the memorandums of understanding are quite important.
Asian Metal: In the same press release, Avalon also addressed the importance of mitigating risk with the Nechalacho project, and in turn, has addressed its timeline accordingly. What were the thoughts and motivation behind this decision?
Don Bubar: The most significant bit of information that we provided is new guidance on the project schedule, and we informed the market that metallurgical studies are going to take more time than we initially forecasted. The longer it takes to do that work, the longer it will take to finalize the feasibility study. The target is now Q2, 2013 whereas originally it was by the end of 2012. When we came to that realization, it motivated us to review the project schedule, and we concluded that our original target date for initial production of late 2015 was too optimistic.
Our operation team feels that date is still achievable, but there is considerable risk that rushing the metallurgical process development could result in a technical failure. Extending the timeline reduces the overall technical risk and provides us with more certainty in an expected delivery schedule of products to our customers. At the end of the day, what we have done is to take our schedule and revise it to make it more realistic with the new production target date of late 2016.
Asian Metal: Thank you both for your time, and I look forward to additional company developments.
There have been plenty of developments coming from Avalon in recent months. One in particular has been the recent prefeasibility study for a separation facility to be built in the southern US. Can you tell me more about these plans and your decision to investigate this region of the US?
Pierre Neatby: We have been looking at splitting the separation plant from the site in the Northwest Territories for the simple reason that the plant requires a significant amount of reagents, like caustic soda and hydrochloric acid. The costs are much greater to ship those reagents north than to ship our concentrate south. There are significant reagent producers in the southeast US, so that is the reason that we centered the investigation on that particular region. We also have some investigation with respect to potential eastern Canada sites, so we are investigating both locations: the southeastern US and eastern Canada, as possible locations.
Don Bubar: The other consideration is proximity to Canadian National (CN) railway. CN is the only railway to serve the Northwest Territories. Any areas that are serviced by the CN railway and meet our other criteria of availability of key reagents would be considered. An initial scoping study indicated that the delivered cost of reagents would be a major component of the overall operating costs for the separation plant.
Pierre Neatby: I think our consumption of reagents is approaching 400,000t, and the amount of concentrate is 140,000t, so the difference in freight is essentially three times.
Asian Metal: Rare earth elements are very unique in that they are not found in single deposits, but rather as a mix of multiple metals. What are the significant properties of the Nechalacho project and what makes it unique from other deposits?
Don Bubar: It is simply the relative enrichment in heavy rare earths, notably dysprosium. A quarter of the total rare earths in the deposit consists of heavy rare earths rare earths such as europium, terbium, yttrium and dysprosium – The heavy rare earths are in most demand.
Pierre Neatby: It has enrichment in heavy rare earths, which is very important, but also we have been blessed with by-product content of zirconium, niobium and tantalum. We generate 25-percent of revenue from by-product credits, which are possibly unique to our deposit. Also, the low uranium and thorium content is one of the three aspects that make our deposit special.
Asian Metal: How would you describe your experience working in a mining sector subjected to the changing market dynamics of very different downstream industries?
Don Bubar: It is pretty challenging for those reasons. The balance in the Rare earths in any deposit does not match demand in the market place, so you are faced with shortages of some and surpluses of others in any producing operation. That is the single biggest challenge. With the higher proportion of heavies, the balance that we have at Nechalacho is a bit closer to demand in the rare earth market on an individual rare earth basis.
Pierre Neatby: I think that if we had 100% heavy rare earths, we would be even happier, but I have not seen a deposit like that.
Asian Metal: What has been your largest challenge in developing your deposit and what measures have you taken to mitigate risk?
Don Bubar: The biggest challenge is related to the metallurgical extraction process to concentrate, crack and liberate the rare earths. Deposits like ours, enriched in heavy rare earths, tend to have more complex mineralogy than light deposits, which tend to be simpler. We are faced with developing our own process and technology to crack the heavy rare earth bearing minerals. We have done that at the bench scale, but there is more work to be done to demonstrate that on a larger scale. The biggest technical risk the project faces is the metallurgy and extraction process.
Asian Metal: Your company has undertaken several different drill campaigns at the project. What are your objectives moving forward, and what is the importance of additional investigation at the site?
Don Bubar: There are two purposes of the drilling. Firstly, we are doing definition drilling to tighten up hole spacing. Right now, the holes that define the resource are fairly widely spaced at 50m. On a scale of a mine stope, that is fairly wide. You need to be very confident about deposit continuity before initiating mining. We plan to tighten up the holes to 25m-or-less to improve confidence on continuity. There are always complexities once inside the deposit. You cannot have too many holes in order to ensure that the initial mining is planned where you have the best grade ore.
Secondly, we have recovered a bulk sample for the pilot plant. We do not have an opening that would allow us to extract a bulk sample by mining, therefore we have been using a wider diameter drill core to extract enough ore to create a bulk sample to feed the pilot plant. We continue to drill as it would be in our best interest to have a surplus of ore, in case additional test work is required.
We processed an initial 40t sample in our flotation pilot plant, and we can see where there are opportunities to further optimize the process. There will be follow-up work in August to optimize that process. The 40t sample also produces 6t of concentrate and this provided us with enough material to do a pilot plant trial for the hydrometallurgical process and test our sulfuric acid bake flowsheet.
Asian Metal: From a recent press release, Avalon has entered into four different non-binding memorandums of understanding for off-take agreements, investment or technology partners. How would you evaluate the importance of these types of agreements and their role in developing rare earth projects outside of China?
Pierre Neatby: I think they are quite important because most companies developing rare earth projects are developing them on their own. We do not see the same dynamics as in the base metals industry. If a junior gets to developing a deposit at a certain level, they can be bought out. Rare earth companies are going to be doing these projects with companies and other industrial customers. I think the memorandums of understanding are quite important.
Asian Metal: In the same press release, Avalon also addressed the importance of mitigating risk with the Nechalacho project, and in turn, has addressed its timeline accordingly. What were the thoughts and motivation behind this decision?
Don Bubar: The most significant bit of information that we provided is new guidance on the project schedule, and we informed the market that metallurgical studies are going to take more time than we initially forecasted. The longer it takes to do that work, the longer it will take to finalize the feasibility study. The target is now Q2, 2013 whereas originally it was by the end of 2012. When we came to that realization, it motivated us to review the project schedule, and we concluded that our original target date for initial production of late 2015 was too optimistic.
Our operation team feels that date is still achievable, but there is considerable risk that rushing the metallurgical process development could result in a technical failure. Extending the timeline reduces the overall technical risk and provides us with more certainty in an expected delivery schedule of products to our customers. At the end of the day, what we have done is to take our schedule and revise it to make it more realistic with the new production target date of late 2016.
Asian Metal: Thank you both for your time, and I look forward to additional company developments.