Avalon Provides Progress Report on Metallurgical Testwork

Avalon Rare Metals Inc. AVL provides an update its progress on the Nechalacho deposit, Northwest Territories, Canada. Avalon is continuing to conduct metallurgical testwork toward proving its proposed process for concentration of the Nechalacho ore minerals. This process is designed to produce rare earths, niobium (Nb), tantalum (Ta), and zirconium (Zr) products from those minerals. The process begins with froth flotation in a Flotation Plant to concentrate the ore minerals. This is followed by a leaching process to chemically break down the ore minerals in a Hydrometallurgical Plant which brings the rare earths and by-product rare metals into solution. The final stage will be rare earth separation in a Separation Plant to produce refined individual rare earth oxides. Overall, the various metallurgical test programs to prove these processes are progressing steadily and close to original projected timelines, except that the hydrometallurgical pilot plant work is now forecast to take up to four months longer to complete than originally estimated, in order to achieve the highest level of confidence in the process design. The forecast completion date for the Bankable Feasibility Study (BFS) in mid 2012 could be delayed until the fourth quarter of 2012 if the time estimate to complete the hydrometallurgical pilot plant is accurate. Commented President Don Bubar, "We have been pleased with the progress achieved to date on our metallurgical test program and are now implementing measures to ensure that the hydrometallurgical pilot plant work does not significantly delay the completion of the bankable feasibility study." The additional time and complexity of the hydrometallurgical pilot plant work, in addition to more updated cost information for other areas of the BFS, have resulted in an increase in the BFS budget to $54 million, which is comprised of direct costs of $46 million and administrative and overhead costs of $8 million. This compares to the previous budget of $47 million, which was comprised of $40 million in direct costs and $7 million in administrative and overhead costs. Approximately $11 million of the BFS budget has been spent to date.