AVALON RARE METALS INC. TECHNICAL REPORT DISCLOSING THE RESULTS OF THE FEASIBILITY STUDY ON THE NECHALACHO RARE EARTH ELEMENTS PROJECT Report Date: 31 May, 2013 Effective Date: 17 April, 2013 Report By Tudorel Ciuculescu, M.Sc., P.Geo. Barnard Foo, P.Eng. Richard Gowans, P.Eng. Kevin Hawton, P.Eng. Christopher Jacobs, CEng, MIMMM Jane Spooner, M.Sc., P.Geo. SUITE 900 - 390 BAY STREET, TORONTO ONTARIO, CANADA M5H 2Y2 Telephone (1) (416) 362-5135 Fax (1) (416) 362 5763 Page Table of Contents 1.0 SUMMARY ................................................................................................................... 1 1.1 INTRODUCTION ...................................................................................................... 1 1.1.1 Scope of the Feasibility Study ............................................................................ 1 1.2 GEOLOGY ................................................................................................................. 2 1.2.1 Mineralization ..................................................................................................... 3 1.3 EXPLORATION ........................................................................................................ 3 1.4 DRILLING .................................................................................................................. 3 1.4.1 Sampling Method and Approach ........................................................................ 4 1.5 SAMPLE PREPARATION, ANALYSES AND SECURITY ................................... 4 1.5.1 Specific Gravity .................................................................................................. 5 1.6 DATA VERIFICATION ............................................................................................ 5 1.6.1 Quality Assurance/Quality Control..................................................................... 5 1.7 MINERAL PROCESSING AND METALLURGICAL TESTING .......................... 6 1.7.1 Mineralogy .......................................................................................................... 6 1.7.2 Hydrometallurgical Testwork ............................................................................. 7 1.7.3 Refinery............................................................................................................... 7 1.8 MINERAL RESOURCE ESTIMATE ........................................................................ 8 1.8.1 Cut-off Grade ...................................................................................................... 9 1.9 MINERAL RESERVE ESTIMATE ........................................................................... 9 1.9.1 Mine Design Parameters ..................................................................................... 9 1.10 MINING METHODS ............................................................................................... 11 1.11 RECOVERY METHODS......................................................................................... 12 1.11.1 Nechalacho Concentrator .................................................................................. 13 1.11.2 Pine Point Hydrometallurgical Plant ................................................................ 14 1.11.3 Geismar Rare Earth Refinery ............................................................................ 14 1.12 INFRASTRUCTURE ............................................................................................... 15 1.12.1 Nechalacho Site ................................................................................................ 15 1.12.2 Pine Point Site ................................................................................................... 17 1.12.3 Geismar Site ...................................................................................................... 18 1.13 MARKET STUDIES AND CONTRACTS .............................................................. 19 1.13.1 Product Pricing.................................................................................................. 19 1.14 ENVIRONMENTAL STUDIES, PERMITTING AND SOCIAL OR COMMUNITY IMPACT ......................................................................................... 20 1.14.1 Northwest Territories ........................................................................................ 20 1.14.2 Louisiana ........................................................................................................... 21 1.15 CAPITAL AND OPERATING COSTS ................................................................... 21 1.15.1 Capital Costs ..................................................................................................... 21 1.15.2 Operating Costs ................................................................................................. 22 1.16 ECONOMIC ANALYSIS ........................................................................................ 22 1.16.1 Base Case Evaluation ........................................................................................ 23 1.16.2 Sensitivity Analysis .......................................................................................... 24 1.16.3 Conclusion ........................................................................................................ 24 1.17 OTHER RELEVANT DATA AND INFORMATION ............................................ 24 1.17.1 Project Implementation ..................................................................................... 24 i Page 1.17.2 Risk Analysis .................................................................................................... 25 1.17.3 Health and Safety .............................................................................................. 25 1.18 INTERPRETATION AND CONCLUSIONS .......................................................... 25 1.19 RECOMMENDATIONS .......................................................................................... 27 1.19.1 Geology and Exploration .................................................................................. 27 1.19.2 Mining ............................................................................................................... 27 1.19.3 Mineral Processing............................................................................................ 28 1.19.4 Infrastructure and Transportation ..................................................................... 29 1.19.5 Community Engagement .................................................................................. 29 1.19.6 Marketing .......................................................................................................... 29 1.19.7 Project Development ......................................................................................... 29 2.0 INTRODUCTION....................................................................................................... 31 2.1 SCOPE OF WORK AND TERMS OF REFERENCE ............................................. 31 2.1.1 Scope of the Feasibility Study .......................................................................... 31 2.2 QUALIFIED PERSONS AND SITE VISITS .......................................................... 34 2.3 USE OF REPORT .................................................................................................... 35 2.4 UNITS ....................................................................................................................... 36 2.5 LIST OF ABBREVIATIONS ................................................................................... 36 3.0 RELIANCE ON OTHER EXPERTS........................................................................ 41 4.0 PROPERTY DESCRIPTION AND LOCATION ................................................... 42 4.1 NECHALACHO SITE ............................................................................................. 42 4.1.1 Land Tenure ...................................................................................................... 43 4.1.2 Royalty Interests ............................................................................................... 45 4.1.3 First Nation Communities ................................................................................. 45 4.1.4 Permits .............................................................................................................. 45 4.1.5 Environmental Liabilities.................................................................................. 45 4.2 PINE POINT SITE ................................................................................................... 46 4.2.1 First Nation Communities ................................................................................. 46 4.2.2 Permits .............................................................................................................. 47 4.2.3 Environmental Liabilities.................................................................................. 50 4.3 GEISMAR SITE ....................................................................................................... 50 4.3.1 Permits .............................................................................................................. 51 4.3.2 Environmental Liabilities.................................................................................. 51 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY ...................................................... 52 5.1 NECHALACHO SITE