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Industry and Information Bulletins

Information Bulletin: Akaitcho Territory Interim Land Withdrawal and Thor Lake

November 27, 2007

On November 21, 2007, the Government of Canada announced that large land areas north, east and south of Great Slave Lake were being withdrawn from industrial development. Media reports on the announcement, including some commentary from conservation organizations, leave the impression that these withdrawals immediately created new conservation or protected areas where mineral exploration and development will no longer be permitted. This is not the case. In the Akaitcho territory, where Avalon´s Thor Lake mining leases are located, current stakeholders´ rights are not affected by the withdrawal.

Further, the withdrawal itself is an interim measure to be in effect for five years, which was planned and agreed to in November, 2005 under a protocol signed by the Government of Canada with the four Dene Nation communities that are party to the Akaitcho Territory Interim Measures Agreement ("IMA"), signed on June 28, 2001. Following the terms of the IMA, an Order-in-Council was signed on November 1, 2007 by the Governor General for an Interim Land Withdrawal ("ILW") in the Akaitcho territory.

Simply stated, the ILW is not a new initiative, rather it is another step in an on-going land claim negotiation process. However, the recent announcement has led to some questions from the Company´s shareholders as to the impact of the ILW.  The Company is providing this Information Bulletin to address these queries and is intended for general information purposes.

The government has implemented the ILW to prevent new interests from being created while a land use planning initiative is undertaken as a prelude to a land selection process to be negotiated by the government with the Akaitcho Dene Nations. Geological mapping of mineral potential carried out by government agencies is normally used to guide the land use planning process so that areas with a high probability of hosting valuable mineral deposits are not inadvertently designated as protected areas.

At the conclusion of this process, some lands will be protected and other lands will be designated open for mineral exploration and development. Any pre-existing interest in the land will be respected and continue.  Lands held in fee simple, rights-of-way; easements; licenses; permits; recorded mineral claims and leases will not be affected.

At the end of the 5 year withdrawal period, it is expected that the Akaitcho Dene Nations will enter into a comprehensive land claim agreement similar to those negotiated in other parts of the Northwest Territories. These agreements typically bring greater certainty of process to developers and result in increased capacity for First Nations to directly participate in new mineral development projects to the benefit of all parties. In anticipation of such an outcome, Avalon is actively consulting with the four Akaitcho Dene Nations with a view toward implementing a co-operative development approach for the Thor Lake Project.

The ILW will not affect the planned drilling program at Thor Lake in 2008, for which the company already has the necessary land use permits. In addition, the ILW is not expected to have a material impact on the Company´s development plan for the duration of the ILW. For the duration of its work programs, Avalon will continue to work with all of the Aboriginal peoples of the area to maximize employment opportunities for local people and business opportunities for local service providers, as it continues to conduct its work programs in an environmentally sound and safe manner.

The map below shows the extent of the ILW around Great Slave Lake in blue and the proposed East Arm National Park in brown. Note that the Thor Lake project is not included in either area.

Further information on the withdrawn lands can be accessed at the following weblinks:
http://www.ec.gc.ca/default.asp?lang=En&n=714D9AAE-1&news=73BDC06C-DA04-4E53-9FE2-A42C7D887EF1 
Indian and Northern Affairs Announcement
http://www.ainc-inac.gc.ca/ai/mr/spch/2007/nov2107-ailw-eng.asp