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NORTHWEST TERRITORIES
A recently identified omission in previous land and water permits for Avalon Rare Metal Inc.'s rare earth elements deposit at Thor Lake has resulted in an eleventh-hour renewal of the company's existing permit.

Pictured above is a map of Tlicho harvesting land boundaries. Avalon's Thor Lake properties are within Tlicho harvesting-land boundaries but the Tlicho only recently became engaged in the company's Nechalacho project. - photo from Tlicho Agreement

The mineral exploration and development company was thrown for a loop when the Mackenzie Valley Land and Water Board refused to grant a renewal of its current permit, which expires July 4, until proof of community involvement with the Tlicho Government was presented.

"There was some additional requests made around community consultation that were a bit surprising," Avalon president Don Bubar said. "Yet this was not a new permit application – we are renewing an existing application with no real change in scope."

Avalon has been permitted to conduct its Nechalacho exploration drilling program at Thor Lake since 2007, after establishing relationships with groups directly impacted by the development, with memorandums of understanding drawn up with the Yellowknives Dene First Nation, the Deninu Ku'e First Nation, and most recently the Lutsel K'e Dene First Nation. Engagement of the Tlicho was not requested when the land and water board granted the company's land and water permit in 2007, or for the two-year extension of the permit in 2009.

"That may have been missed in the past," said Zabey Nevitt, Mackenzie Valley Land and Water board executive director, noting engagement with the Tlicho was always a requirement despite it not being raised until Avalon's most recent permit renewal application.

"Many parties are involved in determining who should be talked to and when those discussions should happen," Nevitt added, noting the lapse was shared by the company, developer, the board, and the government themselves.

Tlicho Government senior advisor John B. Zoe admits the Tlicho were not prepared to become involved with the development due to lack of resources and re-organization of the government.

"At the beginning we were still setting up governance," Zoe said. "We are getting a little bit more serious now but anytime you get involved it costs you money."

Despite the distance between the Tlicho communities and Avalon's Thor Lake properties, the project is within boundaries where the Tlicho have harvesting rights. The Tlicho Government requires "substantive consultation and engagement with Avalon" to ensure the area's shared resources, including the caribou and water, are protected, Tlicho executive officer Laura Duncan said in a letter to Avalon dated May 18.

Avalon has since met with Tlicho officials to get them up to speed with the development, Zoe said, including a meeting last Friday in the Yellowknife area.

"We have received confirmation from (the Tlicho) that they are happy with the level of engagement that has happened," Nevitt said, adding the board was scheduled to review Avalon's permit renewal last Thursday.

Avalon has gotten every indication that they have worked through all the board's requests, Bubar said, and they are confident that their permit will be renewed prior to its expiration.

However, the company is concerned that despite its best efforts, "unreasonable delays" with the bureaucratic process could compromise Nechalacho's position as one of the most advanced rare earth element projects outside China, Bubar said.

"We got a pretty big head start on exploration companies attracted to the rare earth world in the last two years so we are in a good position to take advantage," he said. "But that could be compromised if permits are not issued on a normal time line."

Shares of Toronto, Ontario-based Avalon closed at C$6.49 on Tuesday on the Toronto Stock Exchange.

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