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  • Avalon Rare Metals, Inc. (AVL) Provides Investor Update Detailing Results Of Prefeasibility Study For A Separation Plant 0 comments
    Apr 12, 2012 2:06 PM | about stocks: AVL

    Today, Avalon Rare Metals, the mineral development company which has gained fame for their 100%-owned flagship Nechalacho Rare Earth Element Project located at Thor Lake, NW, Canada, announced results of an important prefeasibility study for a rare earth elements separation plant in the Gulf Coast region of the southern U.S.

    Close proximity to both chemical reagent suppliers and customers of the rare earth products, combined with the optimal logistical/transportation environment, is expected to resolve in a very economical, low-cost bulk transport backend for maximum throughput. This would be great news as currently 95% of global supply currently comes from China and these critical elements are fundamental prerequisites for advancing cutting edge green energy technologies and other high-tech applications.

    Marrying responsible environmental stewardship of the land to aggressive advancement of the North American rare earth's market has placed AVL on the hot sheet. From neodymium magnets and ceramic capacitors, to yttrium-aluminum garnet lasers and high-temp superconductors, the (seventeen basic) heavy rare earth elements are widely sought by the burgeoning tech and industrial sectors alike.

    The separation plant prefeasibility study was modeled on a comparable site in Louisiana and ongoing due diligence, and the necessary land acquisition efforts are underway, with two sites in negotiation phase and several others being looked at. The study was prepared by respected independent consulting firm SNC-Lavalin Inc., who estimated capital and operating costs at $302M (for a 10k tonnes per annum capacity installation, including infrastructure, utilities, ancillary services, indirect costs, and contingencies):

    • Primary Cost Factor is a solvent extraction circuit with 1,000 mixer-settlers, representing some 33% of total cost
    • Operating Cost is $5,634 per tonne of product (including all input costs from labor to maintenance)
    • Reagent Cost of $3,934 per tonne of product, with hydrochloric acid and sodium hydroxide representing the bulk at 70% of total reagents

    The site will be ideal for accommodating output from the company's Nechalacho project. Of the two hydrometallurgical units used to produce the chemical concentrate destined for the new facility, the cracking plant will likely be co-located with the separation plant in the Gulf Coast (since it also needs hydrochloric acid and caustic soda), while the sulphuric acid bake plant is to be located in the Northwest Territories. Collectively this production envelope will accelerate product output significantly, and it is understandable that AVL is raring to go ahead.

    President and CEO of AVL, Don Bubar, explained the attractive logistics of the Gulf Coast for this facility and that the separation plant design would now be merged into the development model for the Nechalacho project feasibility study (also tasked to SNC-Lavalin), anticipating an end 2012 completion date.

    The budget estimate has been increased to accommodate the feasibility study, bringing in the expanded scope of work, including the pilot plant expansion and definition drilling programs. Increased drilling is aimed at further defining the deposit as per rigorous due diligence related to the study and total cost is anticipated to be in the $64M area. This is a 39% increase from the previous budget estimate and of the total more than half remains to be spent in the next 8-10 months ($34M). AVL is well-positioned to achieve that which is within striking distance, with $50M in cash resources and ample funding to cover the study and overhead expense. The company will also look to raise additional capital in preparation for pre-production development expenses (like deposits on long lead equipment for the plant).

    The total estimated capital expenditures for Nechalacho, including the separation plant, are roughly $1.2B, adding in the previously announced (July 7, 2011) Roscoe Postle Associates cost estimate for all other areas of project development.

    AVL has devised an exceptional development model, has the funding, and is executing on due diligence, this spells great news for domestic rare earth consumers, as well as the company's investors.

    For more information on the Nechalacho project, the feasibility study, or to learn more about Avalon Rare Metals Inc., please visit the company's website at: www.AvalonRareMetals.com

    Please see disclaimer on the MissionIR website http://www.missionir.com/disclaimer.htm

    Stocks: AVL
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