TECHNICAL REPORT ON THE NECHALACHO DEPOSIT, THOR LAKE PROJECT, NORTHWEST TERRITORIES, CANADA PREPARED BY AVALON RARE METALS INC. Report for NI 43-101 Authors: Finley Bakker, P. Geo. (BC) Brian Delaney, P. Eng. (Newfoundland and Labrador) Bill Mercer, P Geol. (NWT) Dezhi Qi, P. Eng. (Alberta) Date: March 13, 2011 Document title: Technical Report on the Nechalacho Deposit, Thor Lake Project, Northwest Territories, Canada Authors: Finley Bakker, P.Geo. (BC) Brian Delaney, P. Eng. (Newfoundland and Labrador) Bill Mercer, P. Geol. (NWT ) Dezhi Qi, P. Eng (Alberta) Suite 1901, 130 Adelaide Street West Toronto, Ontario, M5H 3P5 Technical Report 43-101 – March 13, 2011 Page ii Prepared by Avalon Rare Metals Inc. TABLE OF CONTENTS 1. SUMMARY ...........................................................................................................1-1 EXECUTIVE SUMMARY ....................................................................................1-1 Introduction ....................................................................................................1-1 Conclusions ...................................................................................................1-1 Current Project Status....................................................................................1-8 Recommendations .........................................................................................1-8 2. INTRODUCTION ...................................................................................................2-1 RARE EARTH ELEMENTS.................................................................................2-3 Sources of Information ...................................................................................2-6 LIST OF ABBREVIATIONS............................................................................2-7 3. RELIANCE ON OTHER EXPERTS.......................................................................3-1 4. PROPERTY DESCRIPTION AND LOCATION .....................................................4-1 LOCATION .........................................................................................................4-1 LAND TENURE ..................................................................................................4-1 LEGAL AGREEMENTS, UNDERLYING ROYALTY INTERESTS.......................4-3 LEGAL SURVEY ................................................................................................4-3 ENVIRONMENTAL LIABILITIES ........................................................................4-3 5. ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY..................................................................................................5-1 ACCESSIBILITY.................................................................................................5-1 CLIMATE............................................................................................................5-1 LOCAL RESOURCES ........................................................................................5-2 Infrastructure..................................................................................................5-2 PHYSIOGRAPHY...............................................................................................5-3 Technical Report 43-101 – March 13, 2011 Page iii Prepared by Avalon Rare Metals Inc. 6. HISTORY.................................................................................................................... 6-1 7. GEOLOGICAL SETTING ......................................................................................7-1 REGIONAL GEOLOGY ......................................................................................7-1 REGIONAL STRUCTURES................................................................................7-4 DIABASE DYKES ...............................................................................................7-5 STRUCTURE AND TECTONICS........................................................................7-5 LATE TECTONIC FAULTS.................................................................................7-6 LOCAL GEOLOGICAL SETTING .......................................................................7-6 8. DEPOSIT TYPES ..................................................................................................8-1 CHARACTERISTICS OF THE NECHALACHO DEPOSIT ..................................8-2 9. MINERALIZATION................................................................................................9-1 TABLE OF MINERALS AND COMPOSITIONS ..................................................9-1 10. EXPLORATION...................................................................................................10-1 11. DRILLING............................................................................................................11-1 RECENT DRILLING .........................................................................................11-1 RECENT AND FUTURE DRILLING..................................................................11-2 CORE LOGGING AND CORE RECOVERY .....................................................11-5 NITON HANDHELD ANALYZER FOR GRADE AND QUALITY CONTROL......11-7 12. SAMPLING METHOD AND APPROACH ...........................................................12-1 13. SAMPLE PREPARATION, ANALYSES AND SECURITY SAMPLE..................13-1 SAMPLE PREPARATION AND STORAGE FOR CONVENTIONAL CORE......13-1 Analytical Procedures ..................................................................................13-2 CONCLUSIONS...........................................................................................13-5 14. DATA VERIFICATION ........................................................................................14-1 Technical Report 43-101 – March 13, 2011 Page iv Prepared by Avalon Rare Metals Inc. QUALITY ASSURANCE / QUALITY CONTROL...............................................14-1 SPECIFIC GRAVITY MEASUREMENT ............................................................14-8 15. OTHER PROPERTIES ........................................................................................15-1 16. MINERAL PROCESSING AND METALLURGICAL TESTING...........................16-1 METALLURGICAL TESTING............................................................................16-1 MINERALOGY..................................................................................................16-1 COMMINUTION................................................................................................16-1 FLOTATION .....................................................................................................16-2 HYDROMETALLURGY.....................................................................................16-2 17. MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES......................17-1 MINERAL RESOURCES ..................................................................................17-1 Summary......................................................................................................17-1 Resource Database .....................................................................................17-3 Geological Modelling....................................................................................17-5 Composites..................................................................................................17-6 STATISTICS.....................................................................................................17-8 Cut-Off Grade ............................................................................................17-11 Specific Gravity ..........................................................................................17-12 Capping .....................................................................................................17-15 Database Validation ...................................................................................17-15 Block Grade Estimation..............................................................................17-15 Interpolation ...............................................................................................17-16 Search Strategy .........................................................................................17-16 Resource Classification..............................................................................17-17 Resource Estimate.....................................................................................17-18 Conclusion .................................................................................................17-22 MINERAL RESERVES ...................................................................................17-24 Cut-off Grade .............................................................................................17-24 Extraction and Dilution ...............................................................................17-26 Conclusions ....................................................................................................17-27 Technical Report 43-101 – March 13, 2011 Page v Prepared by Avalon Rare Metals Inc. 18. OTHER RELEVANT DATA AND INFORMATION..............................................18-1 MINING OPERATIONS ....................................................................................18-1 Mining Method .............................................................................................18-1 Mine Design.................................................................................................18-3