NORTHWEST TERRITORIES
Mineral development company Avalon Rare Metals (TSX:AVL) recently announced its public offering closed at $4 million, not the $5 million it initially hoped for.

Don Bubar, president and CEO of Avalon Rare Earth Metals, speaks at the NWT Chamber of Commerce's conference and annual general meeting in Yellowknife on April 16. Avalon raised $4 million in their latest public offering, 20 per cent less than what the organization had hoped to make. - Karen K. Ho/NNSL photo

"Four or five years ago that would have been out the door in a day, oversubscribed, cutting people back," president and CEO Don Bubar said with a laugh. "It took us over a month to close it and we closed it for less than the upper limit we set."

In April, Bubar told News/North that Avalon chose to do a public offering on the Toronto Stock Exchange and the New York Stock Exchange instead of a private placement because it would be easier to market the deal and give the company flexibility in the marketplace. However, the offering closed on May 27, more than two weeks after the expected date of May 12. The mineral development company issued 6.4 million shares priced at $0.39 each and 4.4 million units priced at $0.34 per unit. However, when the company first announced this public offering on April 29, their offering was comprised of up to 6.4 million shares at a price of $0.39 per share, and up to 7.3 million units at a price of $0.34 per unit, almost 3 million more units than was finally sold.

In April, Bubar also said that the funding announcement was made so the company could top up its treasury and provide enough capital to fund work planned for this year, including its Nechalacho project at Thor Lake.

But in his interview during a visit to Yellowknife for the inaugural meeting of the GNWT's Mineral Industry Advisory Board, Bubar said most of the funds are now being focused on its East Kemptville Tin-Indium project in Nova Scotia and the Separation Rapids Lithium project in Ontario instead. Bubar said this is because demand for tin and lithium in electronics and batteries is much higher and more economically viable compared to the significant slump in demand for Nechalacho's rare earths. The latter is often used for the high-strength permanent magnets in electric motors and wind turbines in renewable energy systems.

Bubar stressed that the company wasn't doing any physical activity at Nechalacho, but was doing other work in the background, including looking at new technology that would increase efficiency during the extraction process. "We don't have any choice but (to) wait for demand in rare earths to come back up," he said.

"It could change in a few months or a few years."

At its peak in April 2011, shares of Avalon Rare Earth Metals hit a price of $9.25 per share.

At press time on June 4, shares of Avalon closed at 28 cents on the Toronto Stock Exchange, down one cent or 3.45 per cent.

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