Avalon Rare Metals Reports Metallurgical Process Optimization Work Results for Nechalacho Project

Avalon Rare Metals Inc. is pleased to report that metallurgical process optimization work on its Nechalacho Rare Earth Elements Project, Thor Lake, NWT is yielding improved flotation and hydrometallurgical recoveries, which are expected to beneficially impact project economics.

The combined test results of the updated flowsheets for both the Concentrator and Hydrometallurgical Plants indicate that the overall recoveries of heavy rare earth elements ("HREE") to the Refinery feed would now be in excess of 80% compared to approximately 42% in the April 2013 Feasibility Study (the "FS").

Although preliminary estimates of the capital and operating costs associated with these new processes are higher than those contained in the FS, it is anticipated that the increased revenues from the additional HREE production will still yield an overall improvement of project economics.

Process design criteria, plant designs and cost estimates for both the Concentrator and Hydrometallurgical Plant are currently being reworked along with revisions to the Mine Plan, and the results of this work will be used to produce an updated technical report in early 2014.

CONCENTRATOR

Over the past four months laboratory testwork and a pilot plant trial of an updated Concentrator flowsheet have been completed at SGS Minerals Services ("SGS"). This work has confirmed an overall improvement in REE flotation recoveries to approximately 89% (compared to approximately 78% in the FS) using a simpler and easier to operate flowsheet.

These results were achieved using a flowsheet without de-sliming ahead of flotation, with no gravity enrichment of final concentrate and with zero recycling of tailings from the four stages of cleaner flotation; all of which will reduce capital requirements and result in a simpler plant to operate. The principal change has been the introduction of a superior reagent suite together with an increase in the flotation mass pull from 18.0% to 21.4%. A trade-off study of the optimal mass pull for the Concentrator is currently underway.

The process design criteria and the Concentrator plant design were updated as test results became available. This exercise has also incorporated more energy-efficient crushing and grinding circuits in which the crushing has been reduced from a three stage circuit to a single stage and semi-autogenous grinding or "SAG" plus Vertical mills have replaced the original Rod/Ball mill configuration.

Environmental testing of the new tailings composition from the modified reagent suite has indicated no negative impacts on environmental performance. The simplified flowsheet is anticipated to improve environmental performance through reduced energy use, reduced carbon dioxide emissions and improvements in water treatment efficiencies.

HYDROMETALLURGICAL PLANT

The flowsheet optimization work for the Hydrometallurgical Plant has resulted in the development of an alkali cracking process to replace the sulphuric acid baking used to treat the flotation concentrate in the FS. Although optimization of this flowsheet continues, a pilot plant of the updated flowsheet has now been successfully completed at SGS.

The sulphuric acid baking process utilized in the FS resulted in approximately 47% of the HREE contained in the flotation concentrate (as well as the niobium and tantalum) remaining trapped in the Enriched Zirconium Concentrate ("EZC") specialty by-product. The alkali cracking process successfully alters (or "cracks") the zircon in the flotation concentrate which enables the contained HREE (and most of the zirconium) to be released into solution. Total HREE recoveries reporting to the Refinery will now be in excess of 90% of the HREE in the flotation concentrate, as opposed to the approximately 52% recovery contemplated in the FS. In addition, the alkali cracking process allows for the recovery of zirconium as zirconium basic sulphate, a product which, unlike EZC, already has established markets.

Light rare earth element ("LREE") leach recoveries are also generally improved with the new flowsheet (with the exception of cerium which becomes oxidised during the cracking process, making it less amenable to the acid leaching). The new processes do not result in any changes to environmental performance or waste stream quality.

Continuing work is focused on the early removal of lanthanum and cerium (two of the highest volume and lowest value oxides) which could greatly reduce the volume of the mixed rare earth precipitate to be transported to the Refinery, and upgrading the recovery process of niobium and tantalum to create separate salable products.

MINE PLAN OPTIMIZATION

A review of the Mine Plan used in the FS has also been carried out to determine the most appropriate mining method to be used and to optimize the grade of the ore recovered. Particular consideration was given to the mining cost, the undulating floor of the Basal Zone, the changing Basal Zone thickness, and the need to be able to maintain a relatively constant grade of the feed to the Concentrator. A hybrid mining method consisting of "drift and fill" primary stopes, and "up-hole" bulk mining (uppers for the secondary stopes) was selected.

A four-hole summer drilling program was completed at the Nechalacho Project site with the objective of better defining high grade mineralization previously intersected by wide-spaced drill holes close to the proposed location of the access ramp. This high grade ore would be accessible early in mine development and potentially for use as direct shipping ore for Hydrometallurgical Plant commissioning.

The program successfully confirmed the presence of high grade ore near the proposed access ramp location, with one hole intersecting 12.1 metres averaging an impressive 2.82% TREO and 29.9% HREO/TREO in the lower part of the Basal Zone. These results do not materially affect the overall resource estimate reported in the Company News Release dated August 15, 2013.

Source: http://www.avalonraremetals.com

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