Report to: AVALON RARE METALS INC. Thor Lake – Lake Zone Mineral Resource Update Document No. 0851530201-REP-R0002-01 Report to: AVALON RARE METALS INC. THOR LAKE – LAKE ZONE MINERAL RESOURCE UPDATE MARCH 2009 Prepared by “Original document, revision 01, signed Date by Joanne Paul, P.Geo.” March 30, 2009 Joanne Paul, P.Geo. Prepared by: “Original document, revision 01, signed Date by Thomas C. Stubens, P.Eng.” March 30, 2009 Thomas C. Stubens, P.Eng. Reviewed by “Original document, revision 01, signed Date by Gilles Arseneau, P.Geol.” March 30, 2009 Gilles Arseneau, P.Geol. Authorized by “Original document, revision 01, signed Date by Tim Maunula, P.Geo. March 30, 2009 Tim Maunula, P.Geo. 330 Bay Street, Suite 900, Toronto, Ontario M5H 2S8 Phone: 416-368-9080 Fax: 416-368-1963 0851530201-REP-R0002-01 REVISION HISTORY REV. PREPARED BY REVIEWED BY APPROVED BY ISSUE DATE DESCRIPTION OF REVISION NO AND DATE AND DATE AND DATE J. Paul/T. Stubens G. Arseneau T. Maunula 00 2009/03/20 First Draft to Client 2009/03/20 2009/03/20 2009/03/20 J. Paul/T. Stubens G. Arseneau T. Maunula 01 2009/03/30 Final Report 2009/03/30 2009/03/30 2009/03/30 0851530201-REP-R0002-01 TABLE OF CONTENTS GLOSSARY..................................................................................................................................... VI 1.0 SUMMARY .......................................................................................................................... 1 2.0 INTRODUCTION AND TERMS OF REFERENCE .............................................................. 4 2.1 TERMS OF REFERENCE ......................................................................................................... 6 3.0 RELIANCE ON OTHER EXPERTS ..................................................................................... 8 4.0 PROPERTY DESCRIPTION AND LOCATION ................................................................... 9 4.1 PROPERTY LOCATION ........................................................................................................... 9 4.2 PROPERTY DESCRIPTION ...................................................................................................... 9 4.2.1 LEGAL AGREEMENTS, UNDERLYING ROYALTY INTERESTS .................................... 10 4.2.2 LEGAL SURVEY .................................................................................................. 10 4.2.3 MINERALIZED ZONES ......................................................................................... 10 4.2.4 ENVIRONMENTAL LIABILITIES .............................................................................. 10 5.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY .............................................................................................................. 12 5.1 TOPOGRAPHY, ELEVATION AND VEGETATION ....................................................................... 12 5.2 ACCESSIBILITY .................................................................................................................... 12 5.3 CLIMATE ............................................................................................................................. 13 5.4 INFRASTRUCTURE ............................................................................................................... 13 6.0 HISTORY ........................................................................................................................... 16 6.1 HISTORICAL MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ................................. 18 6.1.1 LAKE ZONE ........................................................................................................ 18 6.1.2 NORTH T-ZONE ................................................................................................. 20 6.1.3 SOUTH T-ZONE .................................................................................................. 20 7.0 GEOLOGICAL SETTING .................................................................................................. 21 7.1 REGIONAL GEOLOGY........................................................................................................... 21 7.2 LOCAL GEOLOGY ................................................................................................................ 22 7.3 LAKE ZONE GEOLOGY ......................................................................................................... 22 7.4 MINERALOGY OF THE LAKE ZONE ........................................................................................ 25 8.0 DEPOSIT TYPE................................................................................................................. 27 9.0 MINERALIZATION ............................................................................................................ 28 9.1 LAKE ZONE ......................................................................................................................... 28 A valon Rare Metals Inc. i 0851530201-REP-R0002-01 Thor Lake – Lake Zone Mineral Resource Update 10.0 EXPLORATION ................................................................................................................. 29 11.0 DRILLING .......................................................................................................................... 30 12.0 SAMPLING METHOD AND APPROACH ......................................................................... 31 12.1 SAMPLE INTERVAL .............................................................................................................. 31 12.1.1 CHAIN OF CUSTODY ........................................................................................... 32 13.0 SAMPLE PREPARATION, ANALYSES, AND SECURITY ............................................... 34 13.1 SAMPLE PREPARATION........................................................................................................ 34 13.2 LABORATORY METHOD ........................................................................................................ 34 14.0 DATA VERIFICATION ...................................................................................................... 36 14.1 QUALITY ASSURANCE/QUALITY CONTROL ............................................................................ 37 14.2 SPECIFIC GRAVITY DATA VERIFICATION ............................................................................... 39 15.0 ADJACENT PROPERTIES ............................................................................................... 42 16.0 MINERAL PROCESSING AND METALLURGICAL TESTING ......................................... 43 16.1 INTRODUCTION ................................................................................................................... 43 16.2 LAKE ZONE METALLURGICAL TESTING ................................................................................. 43 16.3 SOLVENT EXTRACTION PROCESSING ................................................................................... 47 16.4 PRELIMINARY PROCESS OPERATING COST ESTIMATES ........................................................ 48 17.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES .................................... 53 17.1 INTRODUCTION ................................................................................................................... 53 17.2 DATA .................................................................................................................................. 53 17.3 GEOLOGICAL INTERPRETATION ............................................................................................ 54 17.4 EXPLORATORY DATA ANALYSIS ........................................................................................... 55 17.4.1 CORRELATION COEFFICIENTS ............................................................................. 55 17.4.2 CAPPING OF HIGH GRADES ................................................................................ 55 17.4.3 COMPOSITING STRATEGY ................................................................................... 55 17.4.4 DENSITY ............................................................................................................ 59 17.5 BLOCK MODELLING ............................................................................................................. 59 17.6 RESOURCE ESTIMATION ...................................................................................................... 61 17.6.1 SEMI-VARIOGRAM ANALYSIS .............................................................................. 61 17.6.2 DYNAMIC ANISOTROPY MODEL ........................................................................... 63 17.6.3 ESTIMATION PARAMETERS ................................................................................. 64 17.6.4 RESOURCE CLASSIFICATION............................................................................... 64 17.6.5 RESOURCE TABULATION .................................................................................... 65 17.6.6 COMPARISON WITH EARLIER RESOURCE ESTIMATES ........................................... 68 18.0 OTHER RELEVANT DATA AND INFORMATION ............................................................ 69 19.0 MINING OPERATIONS ..................................................................................................... 70 20.0 INTERPRETATION AND CONCLUSIONS ....................................................................... 71 A valon Rare Metals Inc. ii 0851530201-REP-R0002-01