AVL:TSX …the way to play the surging demand for….. Rare Metals Research Capital Rare Metals Conference, April 30, 2008 www.avalonventures.com 1
Rare Metals Project Locations Thor Lake Rare Earths Tantalum-Cesium Tantalum Lithium Niobium Zirconium Beryllium Gallium Lithium Hafnium All 100% owned Thorium Tin-Indium 2
Investment Highlights � Rare Metals key to many emerging technologies related to energy efficiency and a cleaner environment � Growing popularity of hybrid and electric cars � Creating a surge in demand for Rare Earths (REE) & Lithium � Thor Lake Project a globally strategic REE asset � Very large size, high grade sub-zones � Exceptional enrichment in Neodymium & Heavy REE � Already attracting interest from global players � Key milestones being achieved in 2008-2009 � Well-financed, experienced management 3
Rare Metals: Key to materials science innovation • Rare Earth Elements, Lithium, Beryllium, Gallium, Indium, Tantalum, Zirconium, Hafnium � Creating new materials which are smaller, lighter, stronger, faster � Renewable energy: solar power � Energy efficiency: Hybrid and electric cars, LED Lighting, batteries � Electronics: Flat screens, handhelds � Aerospace: light weight alloys 4
What are Rare Earth Elements? (“REE”) Light REE’s: La= Lanthanum AMALGAMET CANADA Ce= Cerium Other rare metals Pr= Marketing Agents Praseodymium Nd=Neodymium Sm= Samarium Heavy REE’s: Eu= Europium Gd= Gadolinium Tb=Terbium Dy= Dysprosium Ho= Holmium Er= Erbium Tm= Thulium Rare Earth Yb= Ytterbium Elements Lu= Lutetium Y= Yttrium Heavy Rare Earths Neodymium, Dysprosium, Terbium and Europium in highest demand 5
Key facts about Rare Earths � Widely dispersed, but rarely concentrated � Only found as a group, not found individually � In most deposits, light rare earths “LREE” are far more abundant than heavy rare earths “HREE” � LREE typically comprise 98-99% of resource � Consequently, Heavy rare earths far more valuable � US$740/kg for Terbium vs US$3.50/kg for Cerium � REE must be recovered as a group and sequentially separated � HREE cannot be selectively extracted � Key current application in super magnets (Nd, Dy, Tb) � Need for Nd + HREE rich deposits, which are rare 6
Major Rare Earth Applications: Hybrid Cars REE super magnets using Nd, Pr, Dy, Tb are key to the electric motor technology. Toyota’s global Hybrid sales forecast to grow Toyota Prius to 1 million per 30kg (65lb) of REE year by 2011. 7
National Post April 25, 2008 Rising fuel costs will be the new big demand driver for hybrids C$2.25/liter = US$ 7/gal !! 8
China Dominates REE Production Roskill 2007 supply/demand forecast Global REE Production by Region Source: USGS • China produces over 95% of Global REE Supply • Global REE market now in deficit • Chinese demand will exceed Chinese supply by 2012 • New non-Chinese supply sources sought by Japan & U.S. 9
RARE EARTH ELEMENT PRICES Source: Metal-Pages.com March 27, 2008 Prices are indicative, and basis FOB China Metal Oxide Principal Uses Price US$/kg Lanthanum Oxide 99% min Re-chargeable Batteries 7.50 – 8.00 Cerium Oxide 99% min Catalyts, glass, polishing 3.75 – 3.85 Praseodymium Oxide 99% min Magnets, glass colourant 33.80 – 34.30 Neodymium Oxide 99% min Magnets, lasers, glass 34.50 – 35.00 Samarium Oxide 99% min Magnets, lighting, lasers 4.25 – 4.75 Europium Oxide 99% min TV colour phosphors: red 465 - 485 Terbium Oxide 99% min Phosphors: green, magnets 720 - 740 Dysprosium Oxide 99% min Magnets, lasers 116 - 121 Gadolinium Oxide 99%min Magnets, superconductors 10.00 - 10.50 Yttrium Oxide 99.999% min Phosphors, ceramics, lasers 16.00 – 16.50 10
REE PRICE TRENDS Source: Metal-Pages.com basis FOB China Dysprosium 120 Current Price: US$120/kg 80 $/Kg 40 0 2004 2007 2008 2001 Date Range 40 Neodymium Current Price: US$35/kg $/Kg 20 0 2001 2004 2007 2008 11 Date Range
THOR LAKE, NWT A World Class Rare Metals resource whose time has arrived “When first discovered in the 1800’s, Sudbury was a large sulphur deposit, enriched in a rare metal called nickel for which a large volume market did not emerge until materials science innovation created Stainless Steel . Similarly, Thor Lake was merely a geological curiosity in the 1970’s, until recent materials science innovation created Rare Earth magnets and their use in electric motors created value for the resource in the ground.” 12
Thor Lake Project Location Lutsel’ke Proximity to Great Slave Lake provides access to railhead at Hay River by barge in summer and ice road in winter. Current access is fly-in. 13
Thor Lake Mineral Tenure Grace Acquired in 2005 for 2.5 million shares Blachford Lake Previously explored in 1980’s by Highwood Lake Lease 3179 (Lot 1000) Five 21-year renewable mining leases covering 10,500 acres T Zone Lease 3265 Lease 3178 (Lot 1005) (Lot 1001) Thor Lake Lease 3266 Lake (Lot 1006) Zone 0 1 2 3 Lease 3267 kilometres d (Lot 1007) a o R 100% owned, subject to 5.5% NSR-type royalty interests Hearne Channel LAND STATUS MAP 14
Thor Lake Rare Metal Zones and resources Den T-Zone Lake North Ring S Lake Beryllium Zone T-Zone South Lake Zone REE-Ta Deposit Cressy R 43-101 Inferred mineral resources Zone Lake Lake Trailer Camp Zone Wardrop Eng., Jan. 07 Tent Camp Thor & Core Megan Cut-off Tonnes %TREO %Ta2O5 Lake Fred Lake Lake %Y +Y2O3 Thor Lake Thorne 0.10 14,005,000 1.23 0.025 Syenite Lake 0.05 83,224,000 0.99 0.025 Long 0.01 375,410,000 0.41 0.014 Lake Previous TREO = Total Rare Earth Oxides Drilling Y2O3 = Yttrium oxide Ta2O5 = Tantalum oxide 0 500 1000 Elbow Lake metres 15
2008 Phase 2 drilling program •$5.0 million budget, 10,000 metres •Target: define 10-30 MT hi-grade indicated resource of +2%TREO and complete pre-feasibility study by February, 2009 •Metallurgical studies. Preliminary Engineering, permitting 16
Lake Zone 2008 Drilling Program E-W Section line 17
E-W Section Basal HREE Zone Basal REE Zone: Flat-lying zone 150 -200 metres deep. Amenable to low-cost u/g mining by decline 2.58%/20m 1.48%/14m 1.17%/28m 19% HREO 19% HREO 14% HREO 2.19%/23m 1.8% 13% HREO /16m 31% HREO %TREO / width metres %HREO = proportion of heavy RE oxides 18
Fergusonite: a Neodymium and HREE mineral uniquely enriched at Thor Lake REE distribution in Thor Lake Fergusonite: REE Y La Ce Pr Nd Sm Eu Gd Tb Dy Ho Er Tm Yb Lu Oxide 29.0 0.30 4.40 1.70 15.6 10.4 1.60 14.3 1.80 9.80 1.20 4.10 0.70 4.40 0.70 % Compared with a typical light rare earth ore mineral: Bastnaesite from Mountain Pass, CA REE Y La Ce Pr Nd Sm Eu Gd Tb Dy Ho Er Tm Yb Lu Oxide 0.1 33.2 49.1 4.3 12.0 0.80 0.12 0.17 0.02 0.03 .005 .004 tr tr tr % Fergusonite is a rare yttrium-niobium oxide mineral containing unusually high proportions of the high value heavy REE plus neodymium � A major mineral constituent of Lake Zone deposit � Will produce a high value concentrate: est. $50,000/tonne � No associated thorium = low radioactivity � No current competing producers 19 � Valuable by-products: Tantalum and Niobium
Fergusonite HREE mineralization: Abundant, coarse grained in Basal Zone 20µm Fergusonite 200µm Zircon 20 DDH L07-55, 120-122m, 2.5% TREO, 0.65% HREO
Global REE Deposit Comparison Main Chinese Producing Districts Deposit Name Tonnes(T) or Grade % TREO TPY TREO Comments tons(t) (mm) Production Bayan Obo 600 t 5.00% 46,000 LREE, Bastnaesite By-product of iron (10% rec. = 0.5%) S. China Ionic clays Very large 0.10% 7,000 HREE , environmental Issues (major) Sichuan, Mianning 17 T 3.00% 31,000 LREE, Bastnaesite Potential New Non-Chinese Producers Deposit Name Tonnes(T) or Grade % TREO TPY TREO Comments tons(t) (mm) Production Thor Lake 375 T 0.41% 4,000 to HREE + LREE, fergusonite Lake Zone 83.2 T 0.99% 5,000 (?) Allanite, high-grade 14 T 1.23% Sub-zones present Mtn. Pass, CA 20 t 9.30% 5,000 LREE, Bastnaesite Mt. Weld, Lynas 7.7 T 12.00% 10,000 LREE, monazite Nolan’s Bore 18.6 T 3.10% 10,000 LREE, apatite Alkane 35.7 T 0.75% 1,200 LREE, by-product Hoidas Lake (GWG) 1.52 T 2.80% 3,000 LREE, allanite, apatite Thor Lake is the only potential significant new non-Chinese producer of HREE 21
Lake Zone Development Timeline 2008-2009: Definition drilling 2012: Metallurgical studies Production Preliminary engineering Pre-feasibility study 2010 - 2012: • Permitting • Mine development VALUE 2006 - 2007: 2009 - 2010: Scoping study • Bulk sampling program • Feasibility 2005: study Acquisition • Advance strategic discussions 2005 2006 2007 2008 2009 2010 2011 2012 22
Thor Lake REE Project Timelines to Prefeasibility Completion 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Phase II (winter) assays New resource est. Lake Zone Met drilling Flotation testing Hydromet testing Phase II (summer) assays Updated resource Prefeasibility complete 23
Potential Strategic Partners: Visitors from Japan in 2007 24
3 Year Price Chart Scoping Study Scoping Study Completed Thor Lake $16.8 million Acquistion Thor Lake Financing Acquisition Completed 25 Source: TSX Group
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