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Industry and Information Bulletins

Industry Bulletin: China outlines future plan to ban all exports of the heavy rare earths dysprosium, terbium and yttrium

August 19, 2009

In our ongoing efforts to provide you with broader communications and industry information, we issue this Industry Bulletin reporting on Arafura Resources Limited's (ĎArafura') Media Announcement of August 18, 2009, that summarizes the key points in a draft report released recently by China's Ministry of Industry and Information Technology entitled "Rare Earths Industry Development Plan 2009-2015." Arafura believes China's plan highlights how their future needs for rare earths may not be met by current reserves. Arafura is the Australian, publicly traded, junior rare earth exploration and development company in which the state-backed East China Mineral Exploration & Development Bureau (ECE) recently acquired a 25% interest.

Of particular interest to Avalon shareholders was the comment that "China plans to further tighten mining quotas, further reduce exports for rare earths from the current export quota of 35,000 tonnes per annum, and potentially ban exports of heavy rare earths dysprosium (Dy), terbium (Tb) and yttrium (Y). Dysprosium and terbium are critical to the production of rare earth magnets required in green technology such as hybrid and electric cars and wind turbines. Yttrium is used in energy efficient lighting. In addition, China will consolidate and reduce the 100 rare earth separation and metal production facilities to just 20."  An export ban will obviously exacerbate developing global shortages of these critical technology metals, which are currently not produced in any significant quantities outside of China.

As disclosed in Avalon's news release of August 17th, the Lake Zone deposit at Thor Lake, NWT, contains exceptional enrichment in the heavy rare earths especially dysprosium, terbium and yttrium, relative to many other known resources. Newly-defined Indicated Resources in the high-grade Basal Zone, in the Long Lake area, total 4.4 million tonnes grading 1.97% total rare earth oxides ("TREO") of which 25.4% are comprised of the more valuable heavy rare earths ("HREO") such as dysprosium and terbium. Inferred Resources in the Basal Zone are presently estimated at 44.3 million tonnes grading 1.94% TREO, comprised of 21% HREO.

The Lake Zone deposit, because of its exceptional size and strong enrichment in the heavy rare earths such as dysprosium and terbium, is attracting increasing attention from major players both in North America and in Asia. Avalon continues its summer drilling program focusing on the southern part of the Lake Zone with the objective of defining additional Indicated Resources and securing more sample material of the Basal Zone mineralization for continuing metallurgical studies. The Company has retained Scott Wilson Roscoe Postle Associates to prepare a pre-feasibility study on the deposit, which is targeted for completion in early 2010.

The full Arafura Media Release can be found on:
http://us-cdn.creamermedia.co.za/assets/articles/attachments/22862_arafura.pdf.

If you have any comments or questions on any of the other rare metals, please do not hesitate to post them on the www.raremetalblog.com or feel free to contact Avalon directly at office@avalonraremetals.com.