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Nechalacho delayed

Miranda Scotland
Northern News Services
Published Friday, May 11, 2012

Avalon Rare Metals Inc.'s decision to change the projected production start date of its high profile Nechalacho project won't affect its business prospects, said Don Bubar, company president and chief executive officer.

"It doesn't impact the company in any material way right now," Bubar said. "In fact, it reduces some of the technical risk associated with the engineering of the project. If you try to do things on an accelerated timeline, then there is always some risk of overlooking something."

The company announced Monday that it will be moving the target date for production startup at the Nechalacho Rare Earth Element Project, located about 100 km southeast of Yellowknife, to late 2016. Previous project timelines had slated production to start up by 2015, with initial sales by 2016.

Bubar said delays in the metal extraction process are the main reason for the change.

"When you're dealing with a material like this where there simply was no kind of standard off-the-shelf recipe that we could apply to it, basically you're looking at a long-term chemistry experiment," he said. "It's hard to know exactly how long that's going to take ... Sometimes you might hit right off the bat, sometimes you have to try several times before you determine which is the most efficient method."

Still, Bubar said the company's initial target date was "pretty aggressive."

He added that everything would have had to have gone perfectly for the project to start in 2015 since the schedule didn't account for any unanticipated delays.

"The initial (schedule) I would characterize as optimistic. The current one I would characterize as realistic," he said, adding why the company chose to present an optimistic timeline.

"At the early stages, that's what your investors want to hear. They want to know when you think you can achieve production in the best-case scenario."

Shares of Toronto-based Avalon Rare Metals Inc. were trading at $1.62 on the Toronto Stock Exchange on Tuesday, down 25 per cent from the previous day's close at $2.16. Stocks rebounded slightly to $1.71 yesterday.

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