$5M boost for rare earth elements project at Thor Lake, N.W.T.

The Nechalacho rare earth elements project near Lutselk'e, N.W.T., has a vote of confidence from an Australian investment group.

Cheetah Resources Pty Ltd. has agreed to a $5 million investment in Avalon Advanced Materials Inc.'s Thor Lake project. Under terms of the agreement released on Jan. 30, Cheetah Resources will gain ownership of near surface resources on two areas of the property.

Once the deal closes, Avalon president and CEO Don Bubar expects Cheetah Resources to put together a budget for a 2019 work plan.

Avalon would continue to manage work programs at Thor Lake, located approximately 100 kilometres southeast of Yellowknife, roughly equidistant from Lutselk'e further east.

"In our model it could cost as little as $10 million to get this thing started," Bubar said. "When you compare that to what's typical in the mining industry — hundreds of millions or billions of dollars — it's a pretty modest capital requirement to initiate mineral development operation."

The plan is for small-scale blasting and milling at the property with ore processing done on site. The company describes it as a "pilot-scale development."

Essential for electric vehicles

The work, which could start as early as this summer, is meant to demonstrate the viability of processing the Thor Lake deposit for rare earth elements essential to the magnets market.

"High strength permanent magnets using rare earths — neodymium and praseodymium — are the key for making those electric motors for electric vehicles [that are] small size lightweight and high performance," Bubar said.

"It's a growing market but it's not that big yet," he added. "So ideally to serve that market you want to start as modest scale, get yourself established in that market as a reliable producer of it and then position yourself to grow the business over time."

The Nechalacho rare earth elements project at Thor Lake received federal approval in 2013, but a downturn in commodities markets forced Avalon to put the N.W.T. project on the back-burner in 2014.

Cheetah Resources Pty Ltd. is a private company that was registered with the Australian Securities and Investments Commission in September 2018. Commission records list Geoffrey Atkins and James Gilbert Henderson as directors, with Transocean Private Investments Pty Ltd. listed as the majority shareholder.

Avalon Advanced Materials was trading at $0.05 a share on the TSX Exchange on Monday. The Canadian company has 100 per cent interest in two other projects: the Separation Rapids Lithium Project in Kenora, Ont., and the East Kemptville tin-indium project in Yarmouth, Nova Scotia.

The agreement between Avalon Advanced Materials and Cheetah Resources is expected to close within 60 days.