Avalon upgrades Thor Lake

Avalon Rare Metals (AVL-T) has outlined enough resources to warrant going ahead with a prefeasibility study on its Thor Lake rare metals project 100 km southeast of Yellowknife, N.W.T, the company reports today.

Avalon has been drilling to upgrade its inferred resources to the indicated category and has converted a total of 4.4 million tonnes grading 1.97% total rare earth oxides TREO (25.4% heavy rare earth oxides), using a cut-off grade of 1.6% TREO, from the high grade Basal zone.

This new zone of indicated resources is in addition to a previously defined 2.186 million tonnes grading 2.14% TREO (20% HREO) in the central part of the Basal zone that was announced in February.

Though it was mostly infill drilling, the company also tested a few new areas and was able to increase inferred resources at the same time, if only slightly. Inferred resources now stand at 64.2 million tonnes grading 1.96 TREO (16.8% HREO) from the Upper and the Basal zones, which are close together, up from 61 million tonnes.

Avalon president Don Bubar says that although the company will continue infill drilling to upgrade the resource, the next big step will be completing the prefeasibility study.

“The prefeasibility study needs to be based on indicated resources,” Bubar says. “We’ve got enough outlined now to support moving forward … and we’ve got every reason to believe that we’ll find more as we do more infill drilling.”

Reclassifying resources from inferred to the indicated category requires the company to tighten up the drill hole spacing to every 50 metres. Right now, most drilling has been done every 100-150 metres. Avalon will keep drilling through September.

The company is spending about $4 million this year – about $2 million on drilling, $1 million on metallurgy tests and $1 million on the prefeasibility study. The completion goal for that has been extended from the fourth quarter of 2009 to the end of the first quarter 2010.

Bubar says the company is also making inroads on the community relations side of things.

Management had carried out several community meetings including with the Dene National Assembly in Lutsel K’e, where the company was the corporate sponsor.

“It’s often pointed out to us that it’s a risk factor so we want to demonstrate to people that we are taking concrete steps to mitigate that risk,” Bubar says.

Bubar says the company is well financed and can complete the feasibility study without raising anymore money, though he noted that some investment bankers have shown their interest in Avalon. “We’ll be doing some listening,” Bubar says.
As markets around the world plunged today, Avalon shares were down nearly 8%, or 15¢, to $1.75 apiece on a trading volume of 392,000 shares.