THOR LAKE RARE EARTH METALS BASELINE PROJECT Environmental Baseline Report: Volume 4 – Terrain, Soils and Permafrost FINAL INTERIM REPORT Prepared for: Avalon Rare Metals Inc. 130 Adelaide Street Suite 1901 Toronto, ON M5H 3P5 Prepared by: Stantec 4370 Dominion Street, Suite 500 Burnaby, BC V5G 4L7 Tel: (604) 436-3014 Fax: (604) 436-3752 and Stantec P.O. Box 1680, 5021 - 49 Street Yellowknife, NT X1A 2N4 Tel: (867) 920-2216 Fax: (867) 920-2278 Project No.: 123510050 and 123510051 January 15, 2010 Thor Lake Rare Earth Metals Baseline Project Environmental Baseline Report: Volume 4 – Terrain, Soils and Permafrost Final Interim Report Authorship AUTHORSHIP Christiane Brouwer, B.Sc., P.Ag. .................................................................................................... Soils Olivier Piraux, M.Sc. .................................................................................................................... Terrain Daniel Fortier, Ph.D. ..............................................................................................................Permafrost Dennis O’Leary, BA ......................................................................................................... Senior Review January 15, 2010 i Proposal No. 123510050 and 123510051 Thor Lake Rare Earth Metals Baseline Project Environmental Baseline Report: Volume 4 – Terrain, Soils and Permafrost Final Interim Report Executive Summary EXECUTIVE SUMMARY Avalon Rare Metals Inc (Avalon) is currently undertaking a Prefeasibility Study (PFS) for the development of the Nechalacho Deposit, located on mineral leases it holds at its’ Thor Lake site in the Northwest Territories. The deposit is located approximately 100 km southeast of Yellowknife and 4 km north of the Hearne Channel of Great Slave Lake. The Thor Lake site is within the Taiga Shield ecozone, characterized by Precambrian bedrock outcrops with many lakes and wetlands in glacially carved depressions. The site is located within the Akaitcho Territory, an area currently under negotiation of a comprehensive land claim between the federal government and the Akaitcho First Nations, representing First Nations in LutselK’e, Fort Resolution, Ndilo and Dettah. Thor Lake lies within the Mackenzie Valley region of the NWT and is, therefore, subject to the provisions of the Mackenzie Valley Resource Management Act (MVRMA) in addition to other federal and territorial legislation of general application. The Thor Lake site has been subject to mineral exploration by others since the 1970s. Previous exploration focused on beryllium resources in the T-zone and included drilling and bulk sampling. Since acquiring the property in 2006, Avalon has focused on delineating the rare earth resource within the Nechalacho Deposit, which is not part of the T-zone. Preliminary development concepts being considered for the Nechalacho Deposit during the PFS include development of an underground mine, mineral concentration, tailings disposal, waste rock disposal, fuel and concentrate storage, power generation and transportation infrastructure (airstrip, upgraded site roads, wharf on Great Slave Lake). Concentrate would be shipped off-site seasonally for refinement into a marketable rare earth product. Stantec (formerly Jacques Whitford) initiated environmental baseline studies at the Thor Lake project site in fall 2008. Aquatic monitoring of drilling was undertaken during fall 2007 and winter 2008. This Technical Data Report (TDR) presents and analyzes data collected for the terrain, soils and permafrost disciplines as of fall 2009. ii January 15, 2010 Project No. 123510050 and 123510051 Thor Lake Rare Earth Metals Baseline Project Environmental Baseline Report: Volume 4 – Terrain, Soils and Permafrost Final Interim Report Table of Contents TABLE OF CONTENTS 1 Project Background ............................................................................................................... 1 1.1 Focus of Baseline Investigation ..................................................................................... 1 1.2 Study Area and Physiography ....................................................................................... 1 1.2.1 Quaternary History .......................................................................................... 3 1.2.2 Landforms and Surficial Geology .................................................................... 3 1.2.3 Climate and Permafrost Conditions................................................................. 3 1.2.4 General Soil Patterns ...................................................................................... 4 1.3 Methodology ................................................................................................................... 4 1.3.1 Literature Review............................................................................................. 4 1.3.2 High Definition Mapping and Applications (HD-MAPP) .................................. 4 1.3.3 Field Program .................................................................................................. 5 1.4 Quality Assurance/Quality Control ................................................................................. 7 1.4.1 Preliminary Mapping ........................................................................................ 8 1.4.2 Field Inventory Program .................................................................................. 8 1.4.3 Final Mapping and Classification..................................................................... 8 2 Results .................................................................................................................................... 8 2.1 Terrain ............................................................................................................................ 8 2.1.1 Surficial Geology and Geomorphology ........................................................... 8 **insert figure here**Surficial Material Description ....................................................... 10 Surficial Material Description ....................................................................................... 11 2.2 Permafrost .................................................................................................................... 15 2.2.1 Permafrost Distribution and Landforms ......................................................... 15 2.2.2 Permafrost thermal regime and thickness ..................................................... 19 2.2.3 Active Layer Thickness ................................................................................. 20 2.2.4 Upper Permafrost Cryostructure, Ice Content and Thaw-Susceptibility........ 20 2.3 Soils.............................................................................................................................. 25 2.3.1 Overview ........................................................................................................ 25 2.3.2 Soil Map Units ............................................................................................... 25 3 Closure .................................................................................................................................. 29 4 References ............................................................................................................................ 29 January 15, 2010 iii Proposal No. 123510050 and 123510051 Thor Lake Rare Earth Metals Baseline Project Environmental Baseline Report: Volume 4 – Terrain, Soils and Permafrost Final Interim Report Table of Contents List of Tables Table 2-1: Surficial Materials within the Thor Lake Project Area ............................................... 11 Table 2-2: Active Layer and Near Surface Permafrost Temperatures as Measured by a Thermistor Cable Located Near Thor Lake (see Figure 2-8) ................................... 19 Table 2-3: Description of Soil Units Mapped in the Thor Lake Project Area ............................. 26 Table 2-4: Extent of Soils Mapped within the Thor Lake Project Area ...................................... 27 List of Figures Figure 1-1: Project Location .......................................................................................................... 2 Figure 2-1: Bedrock Outcrops and Ice Flow Indicators ................................................................. 9 Figure 2-2: Surficial Deposits of the Thor Lake Project Area ...................................................... 10 Figure 2-3: Till material (ST21).................................................................................................... 12 Figure 2-4: Glaciofluvial material (ST25) ..................................................................................... 13 Figure 2-5: Lacustrine Material Found at Site ST25 ................................................................... 14 Figure 2-6: Blocky Colluvial Deposit ........................................................................................... 15 Figure 2-7: Location of Potential Ice-Rich Deposits .................................................................... 17 Figure 2-8: Temperature profile of the active layer and near surface permafrost ....................... 20 Figure 2-9: Selected sediment samples from the boreholes showing the fine-grained nature of glaciolacustrine (ST44, ST46), lacustrine (ST48) deposits and the coarse-grained nature of washed-out till (ST08) (see Appendix A for additional information) ...............................................................................................................