THOR LAKE
Mineral development company Avalon Rare Metals has recently received notice from the New York Stock Exchange the low selling price of its shares means it could be de-listed.

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 recently received notice it could be exiting the New York Stock Exchange if its low share prices continue. - NNSL file photo

The company received a notice of non-compliance concerning listings standards on July 30. This notice meant that if Avalon wanted to continue to be listing on the exchange, its stock price had to sufficiently rise back up or it would have to reduce the total number of existing shares by a specified number through a share consolidation.

This would mean the value of shares would go up, because each individual share would represent a larger portion of the company. But historically, this status would only be temporary, as the stock price often falls afterwards.

President and chief executive office Don Bubar told News/North that the notice wasn't a surprise. "They had already give us some indication that unless the stock price had started to trend up at some point and time that we would likely receive such a notice," he said on the phone from Muskoka, Ont.

According to information on Google Finance, the company's stock hasn't been trading more than USD $1 for more than two years. It fell below that amount in April 2013.

The company is behind the Nechalacho project at Thor Lake. In an earlier interview with News/North, Bubar stressed that the company wasn't performing any physical activity at the site due to its focus on its other tin and lithium projects in Ontario and Nova Scotia.

"We don't have any choice but (to) wait for demand in rare earths to come back up," he said in early June. "It could change in a few months or a few years."

In his latest interview, Bubar said in the short term, nothing about Avalon will change as a result of the notice from the major American stock exchange, especially in regard to the company's listing in Toronto.

"It's not a big deal really, as far as I'm concerned," he said. "Business goes on."

Any decisions on what to do next would need the engagement of the board of directors and approval from its shareholders. The board would need to make a recommendation that would be voted on by shareholders at its next annual general meeting. Avalon's next board meeting takes place in late September and its next annual general meeting doesn't take place until February.

"It's a way out there, for sure," he said.

Bubar also said from the perspective of a shareholder, the option of reducing the total number of shares by a specified number through a share consolidation, isn't an attractive solution. And even if Avalon was taken out of the NYSE, that wouldn't mean shares could no longer be traded.

"If you don't meet the requirements, you would trade on the over the counter market, simple as that," he said, citing the example of rare earth company Molycorp, which filed for Chapter 11 bankruptcy protection earlier this year. "They'll still be a market for them in the United States. The main difference is that being listed opens more doors such as access to capital with institutional investors."

However, Bubar pointed out that many institutional investors, such as major banks, have certain requirements for potential investment Avalon was "already well below of."

On Aug. 6, shares on the New York Stock Exchange closed at USD 15.6 cents, down 0.1 cent or 0.7 per cent.

On the Toronto Stock Exchange, shares of Avalon closed at 21 cents, a drop of 0.5 cents or 2.33 per cent.

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