Will Molycorp (MCP)(SHZ)(REE)(AVL)(PLM) be Pressured on Japan Rare Element Discoveries?

Molycorp (NYSE: MCP), China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element (AMEX:REE), Avalon Rare Metals (AMEX:AVL) and Polymet Mining Corp (AMEX:PLM) could face share pressure on news of the massive discovery of rare element properties in the Pacific Ocean by Japan.

Japanese scientists assert there are "vast deposits" of rare earth minerals at 78 locations in the Pacific. They also claim the deposits are readily extractable.

Yasuhiro Kato, an associate professor of earth science at the University of Tokyo, said, "The deposits have a heavy concentration of rare earths. Just one square kilometre (0.4 square mile) of deposits will be able to provide one-fifth of the current global annual consumption,"

Kato noted the discoveries were rich in heavier rare earths like dysprosium, gadolinium, lutetium and terbium. Total rare earths discovered were estimated at 80 to 100 billion tons, according to the online version of British journal Nature Geoscience, which reported the story.

Molycorp (MCP) Crushed After Big Miss

Spin as the company likes, rare earth miner Molycorp (NYSE:MCP) missed big in their quarterly report last night, generating a profit of 1 cent (adjusted) when analysts from FactSet were looking for 7 cents a share.

After closing at $66.47, losing $5.13, or 7.16 percent for the day, Molycorp continued its freefall after hours, plunging another $3.82, or 5.75 percent, to $62.65.

Revenue rose to $26.3 million from $3 million from the same quarter last year. Analysts had projected $41.68 million in revenue for the quarter.

Analysts had projected 10 cents a share in earnings on revenue of $42 million. Its net loss did shrink to $909,000, or 3 cents a share, from a net loss of $7.7 million, or 16 cents a share, a year ago.

According to Molycorp, it realized an average sales price of $37.73 per kilogram during the quarter, compared to an average sales price of $34.02 per kilogram in the fourth quarter of 2010, and an average sales price of $7.13 per kilogram for the first quarter of 2010.

Molycorp estimates it will produce between 4,541 metric tons and 5,813 metric tons of rare earth oxides this year.

CEO Mark Smith spun it this way, “We were very pleased to see both sales volume and revenue increase for Molycorp in the first quarter of 2011, as this quarter is typically characterized by slow buying and depressed activity in China due to its New Year celebrations. In spite of this, and in spite of the natural catastrophes experienced by Japan in the first quarter, we continued to see strong global demand for our products. Market prices of REOs rose significantly in the first quarter, helping to boost our price realizations.”

“A very significant development in the first quarter is the fact that we saw domestic Chinese REO prices rising along with prices for Chinese rare earth exports,” Smith said. “This points to several trends that we have noted for some months now: growing demand by China’s burgeoning manufacturing sector for Chinese rare earths; continuing success in the Chinese government’s efforts to crack down on illegal mining and exports; greater industry consolidation forced by the Chinese government; continuing impact on production of new environmental regulations on Chinese producers; government-mandated production quotas; and a halt to the issuance of new licenses for domestic exploration,” added Smith.

Molycorp is dragging down the rare earths sector as a whole, with China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element Res Ltd (AMEX:REE) and Avalon Rare Metals (AMEX:AVL) all closing down on the day and in after hours trading.

Rare Earths (MCP) (SHZ) (REE) (AVL) All Plunge

Not totally unexpectedly, shares of rare earths miners (or potential miners) Molycorp (NYSE:MCP), China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element Res Ltd (AMEX:REE) and Avalon Rare Metals (AMEX:AVL) all closed down by at least 4 percent on Wednesday as investors take a closer look at the companies.

All that these particular stocks are trading on is potential and rare earth demand, more than the reality of what they are doing, which is basically nothing, as far as mining goes, with the probable exception of China Shen Zhou Mining & Resources, Inc..

Molycorp CEO Mark Smith has been all over the media attempting to position the company as the giant outside of China, but most of that is potential more than reality, as they are mining very little, and most through a recent small acquisition.

Smith has let it be known he's interested in making acquisitions, but needs to do less talking and taking more action. One problem he faces is the huge surge in valuaton of rare earths companies coming from the announcement by China they were cutting back on another 35 percent in rare earth exports in the early part of 2011, following up on the announcement in the middle of 2010 they were cutting back rare earth exports by 40 percent.

Shares of Molycorp (MCP) closed at $72.01 Wednesday, dropping $5.53, or 7.13 percent.

Coverage on (AVL) (DSW) (FSRV) (HTWR) Initiated

Avalon Rare Metals (NYSE: AVL), DSW Inc. (NYSE: DSW), FirstService Co. (NASDAQ: FSRV) and HeartWare (NASDAQ: HTWR) had coverage initiated on them today by analysts.

Dahlman Rose initiated coverage on Avalon Rare Metals (AVL). They placed a “buy” rating and a price target of $15.00 on the company.

Capstone initiated coverage on DSW Inc. (DSW). They set a “buy” rating on the company.

JMP Securities initiated coverage on FirstService Co. (FSRV). They set an “outperform” rating and a price target of $45.00 on the company.

Bank of America (NYSE:BAC) initiated coverage on HudBay Minerals (HBM). They placed a “buy” rating and a price target of $20.00 on the company.

Wunderlich initiated coverage on HeartWare (HTWR). They placed a “hold” rating and a price target of $80.00 on the company.

Molycorp (MCP) (SHZ) (REE) (XING) (GMO) (AVL) Closed Mixed on Volatile Day

Rare earths miners like General Moly (AMEX:GMO), Avalon Rare Metals (AMEX:AVL), China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element Resources Ltd (AMEX:REE), Qiao Xing Universal Resources, (Nasdaq:XING) and Molycorp, Inc (NYSE:MCP) closed mixed Thursday as investors have been uncertain over the soaring mining sector in general, along with rare earths, as well as gold and silver as well.

Most believe that rare earth supply will remain tight for at least five years, even with the media hype of all the projects coming on line. Those proposed projects will take years to go through the process before production is ready to begin.

According to Molycorp CEO, Mark Smith, there will probably be two coming on stream within that five-year period. During that same time rare earths demand is projected to double annually.

That means those companies that already have operations going should enjoy solid pricing power during that season.

As to the silly proposal by big-government politicians concerning the Rare Earth Supply-Chain Technology and Resources Transformation Act, the last thing we need is for the government to use yet another so-called crisis or "national security" issue to expand government in a useless manner as is now being attempted.

The markets should and will sort it out, as it has already began to do.

Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX) closed at $27.85, falling $0.18, or 0.64 percent.

Molycorp (MCP) (SHZ) (AVL) (REE) (XING) Close Down on Tough Trading Day

Rare earths miners have been soaring since the announcement by China it's going to cut back on exports significantly. but that wasn't the case Tuesday, as the major rare earths miners pulled back with China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Avalon Rare Metals (AMEX:AVL), Rare Element Resources Ltd (AMEX:REE), Qiao Xing Universal Resources, (Nasdaq:XING) and Molycorp, Inc (NYSE:MCP) closing down on the day.

Most think that the rare earth supply will remain tight for at least five years, even with the media hype of all the projects coming on line. Those proposed projects will take years to go through the process before production begin.

According to Molycorp CEO, Mark Smith, there will probably be two coming on stream within that five-year period. During that same time rare earths demand is projected to double annually.

That means those companies that already have operations going should enjoy solid pricing power during that period of time.

But it appears it'll be a somewhat volatile rare earths ride until there's much clearer economic clarity for the sector. It appears bullish long term at this time.

Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX) closed down on Tuesday as well, closing at $27.80, falling $0.20, or 0.71 percent.

Avalon (AVL) (CDII) (AVL) Close Mixed as Rare Earths Remain Tight

Rare earths miners have been jumping since the announcement by China it's going to cut back on exports in a major way. Some of them have been pulling back after the recent surge, as companies China Direct Industries, Inc. (Nasdaq:CDII), Avalon Rare Metals (AMEX:AVL) and China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ) closed mixed Thursday.

The majority believe that rare earth supply will remain constrained for at least five years, even with the media hype of all the projects coming on line. Those proposed projects will take years to go through the process before production is ready to start.

Molycorp CEO, Mark Smith recently said that there will probably be two coming on stream within that five-year period. During that same time rare earths demand is estimated to double annually.

That means those companies that already have operations going should enjoy solid pricing power during that season.

As to the ignorant proposal by big-government politicians concerning the Rare Earth Supply-Chain Technology and Resources Transformation Act, the last thing we need is for the government to use yet another so-called crisis or "national security" issue to expand government in a useless manner as is now being attempted.

The markets should and will sort it out, as it has already began to do.

China Shen Zhou Mining & Resources, Inc. closed at $4.45, falling $0.27, or 5.72 percent. Avalon Rare Metals closed at $9.32, up $0.44, or 4.95 percent. China Direct Industries, Inc. ended the session at $1.30, falling $0.03, or 2.26 percent.

Avalon (AVL) (GMO) (REMX) (OSN) Close Up on Rare Earths Demand

Rare earths miners have been moving up quickly since the announcement by China it's going to cut back on exports significantly. Some have been pulling back after the recent surge, although companies and ETFs like General Moly (AMEX:GMO), Avalon Rare Metals (AMEX:AVL), Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX) and Ossen Innovation Co., Ltd. (NYSE:OSN) closed up Wednesday.

Expectations are rare earth supply will remain tight for at least five years, even with the media hype of all the projects coming on line. Those will take years to go through the process before production begins.

According to Molycorp CEO, Mark Smith, there will probably be two coming on stream within that five-year period. At the same time rare earths demand is estimated to double annually.

That means those companies that already have operations online should enjoy significant pricing power during that time.

As to the foolish proposal by big-government politicians concerning the Rare Earth Supply-Chain Technology and Resources Transformation Act, the last thing we need is for the government to use yet another so-called crisis or "national security" issue to be used to expand government in a useless manner as is being attempted.

The markets should and will sort it out, as it has already began to do.

General Moly closed Wednesday at $5.27, gaining $0.18, or 3.54 percent. Avalon Rare Metals closed at $8.88, up $0.09, or 1.02 percent. Market Vectors Rare Earth/Strategic Metals ETF ended the day at $27.59, jumping $0.48, or 1.77 percent. Ossen Innovation Co., Ltd. closed at $3.32, rising $0.09, or 2.79 percent.

Molycorp (MCP) (REE) (AVL) Jump on (JPM) Rare Earths Price Estimate

JPMorgan Chase & Co. (NYSE:JPM) raised its price outlook for rare earths and Molycorp Inc. (MCP), Rare Element Resources (REE), and Avalon Rare Metals (AMEX:AVL) all soared in response.

“While China is expected to produce roughly 120k tons of rare earths in 2011, production quotas stand at 93.8 tons, with the difference largely due to illegal mining. If China only allowed 93.8k tons to be produced (which we are not arguing for at this point) and allowed roughly 28k tons to be exported, the resulting 65.8k tons of supply would not meet domestic demand of roughly 75k tonnes. While we don’t think we will see such a deficit this year, we think prices are rising as China cuts back on illegal mining, takes significant supplies from both the export and domestic markets, and causes jittery buyers (even in the domestic market) to worry about tighter markets in the foreseeable future,” JP Morgan analyst Michael Gambardella

Avalon was trading at $9.64, gaining $0.36, or 3.88 percent, as of 2:46 PM EDT. Rare Element Resources was at $15.43, up $1.01, or 7.00 percent. Molycorp was trading at $70.69, rising $3.50, or 5.21 percent.

Molycorp (MCP) (REE) (AVL) (SHZ) Soar on Disastrous Rare Earths Bill

Shares of rare earth companies like Rare Element Res Ltd (AMEX:REE), Molycorp, Inc (NYSE:MCP), Avalon Rare Metals (AMEX:AVL) and China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ) soared today on the misguided and foolish introduction of the so-called Rare Earth Supply-Chain Technology and Resource Transformation (RESTART) Act of 2011, by Colorado Congressman Mike Coffman.

The incredibly stupid bill would create another government department with the high cost that accompanies it, under the guise of the "dangerous" Chinese because they're not exporting as much of their rare earths as they have in the past.

Look at the destruction the government has already put on the people, as it refuses to cut back on unsustainable programs and spending which are bringing the country to the brink of destruction.

Some idiots are even spinning this as a national security threat, the usual ploy to expand government and the spending that ensues.

The idea that these companies need anything from the government is ridiculous. They're already moving to growing and expanding in response to the growing demand for rare earths.

What this is probably really all about is rare earths serve other government boondoggles like the so-called green energy areas like solar and electric cars, which will obviously be held back if there are shortages of supply.

Of course rare earths are important for legitimate industries like mobile phones; something there is real consumer demand for.

Molycorp closed at $68.45, gaining $6.39, or 10.30 percent. Rare Element Resources closed at $15.30, up $2.16, or 16.44 percent. Avalon closed the session at $9.52, rising $0.83, or 9.55 percent. China Shen Zhou Mining & Resources, Inc. closed at $5.40, up $0.67, or 14.16 percent.

Molycorp (MCP) (REE) (AVL) Soar on Rare Earths Bill

Shares of Molycorp (NYSE:MCP), Rare Element Resources Ltd. (AMEX:REE) and Avalon Rare Metals Inc. (AMEX:AVL) are skyrocketing today after a new bill was introduced by Colorado Congressman Mike Coffman which "seeks to curtail dangerous reliance on China for critical materials."

Coffman said, "Currently, the world is nearly 100 percent reliant on Chinese exports for these critical materials and China’s trade policies of restricting rare earth exports pose a serious threat to both the economic and national security of the United States."

The bill, H.R. 1388, the Rare Earths Supply-Chain Technology and Resources Transformation Act of 2011 (RESTART Act), would allegedly establish a domestic rare earth industry in the United States.

This is about as stupid as a bill as you could get, and irresponsible at best, as the last thing we need to create another government agency and increase the crony capitalism that has already poisoned the country.

It's not China that is dangerous, simply because they've developed their industry while the United States has caved to radical environmental groups, making it extremely difficult to do any type of mining in a profitable manner.

The market is already working these things out, and the creating of another government agency and expanding the government in the United States, which is already bankrupt, is a disastrous idea. That's what's dangerous here.

Major provisions of the bill include:

Directing appropriate federal agencies to expedite the permitting process in order to increase the exploration and development of domestic rare earth elements, without waiving environmental laws, and establishing a multi-agency Task Force to carry out this process;

Setting up a Defense Logistics Agency (DLA) rare earth inventory - where DLA enters into long-term supply contracts and then makes the supplies available for purchase to federal government contractors - to generate a domestic market and facilitate the domestic sourcing of rare earth alloys and magnets;

Making loans, backed by the federal government, available to start production should lending from the capital markets not be available;

Requiring the various cabinet Secretaries to appoint Executive Agents for rare earths;

Establishing a rare earth program at the U.S. Geological Survey.

This thing needs to immediately be killed. Companies are already expanding operations and making moves to expand operations in response to demand. We don't need a bigger government to interfere with the market. Period.

Molycorp was trading at $65.89, gaining $3.83, or 6.17 percent, as of 11:21 AM EDT. Rare Element was trading at $14.57, rising $1.43, or 10.88 percent. Avalon Rare Metals was trading at $9.12, up $0.43, or 4.95 percent.

Avalon Rare Metals (AVL) Updates Nechalacho Project

Avalon Rare Metals (AMEX:AVL) has released a report on its progress at its Nechalacho, including rare earths niobium, tantalum, and zirconium products from those minerals.

TORONTO, ONTARIO--(Marketwire - 04/05/11) - Avalon Rare Metals Inc. (TSX:AVL)(AMEX:AVL) ("Avalon" or the "Company") is pleased to provide an update its progress on the Nechalacho deposit, Northwest Territories, Canada.

METALLURGICAL TESTWORK

Avalon is continuing to conduct metallurgical testwork toward proving its proposed process for concentration of the Nechalacho ore minerals. This process is designed to produce rare earths, niobium (Nb), tantalum (Ta), and zirconium (Zr) products from those minerals.

The process begins with froth flotation in a Flotation Plant to concentrate the ore minerals. This is followed by a leaching process to chemically break down the ore minerals in a Hydrometallurgical Plant which brings the rare earths and by-product rare metals into solution. The final stage will be rare earth separation in a Separation Plant to produce refined individual rare earth oxides.

Overall, the various metallurgical test programs to prove these processes are progressing steadily and close to original projected timelines, except that the hydrometallurgical pilot plant work is now forecast to take up to four months longer to complete than originally estimated, in order to achieve the highest level of confidence in the process design. The forecast completion date for the Bankable Feasibility Study (BFS) in mid 2012 could be delayed until the fourth quarter of 2012 if the time estimate to complete the hydrometallurgical pilot plant is accurate. Commented President Don Bubar, "We have been pleased with the progress achieved to date on our metallurgical test program and are now implementing measures to ensure that the hydrometallurgical pilot plant work does not significantly delay the completion of the bankable feasibility study."

The additional time and complexity of the hydrometallurgical pilot plant work, in addition to more updated cost information for other areas of the BFS, have resulted in an increase in the BFS budget to $54 million, which is comprised of direct costs of $46 million and administrative and overhead costs of $8 million. This compares to the previous budget of $47 million, which was comprised of $40 million in direct costs and $7 million in administrative and overhead costs. Approximately $11 million of the BFS budget has been spent to date.

MINERALOGICAL STUDIES

Understanding the mineralogy is an important step to both developing and improving metallurgical processes. To this end, Avalon has carried out multiple mineralogical studies at SGS Minerals Services, Lakefield, ON ("SGS"), Xstrata Process Support, Sudbury, ON ("XPS") and McGill University, Montreal, QC. The results to date have indicated that the light rare earths (LREE) in the Nechalacho deposit are contained in four minerals: allanite, monazite, bastnaesite and synchisite, and the heavy rare earths (HREE) are present in two minerals: fergusonite and zircon, the latter also being host to zirconium (Zr). niobium (Nb) and tantalum (Ta) are present in fergusonite and columbite(1). Mineralogical studies continue in all three research centres.

FLOTATION PROCESS

Extensive flotation tests, including many locked cycle tests, have been undertaken since 2008 at SGS and the basics of the process for concentration of the valuable minerals have been defined. The tests have utilized a number of representative composite samples of both the Basal and Upper Zones and from various geographic areas within the Nechalacho deposit.

The flotation process comprises crushing and grinding to a grain size of less than 38 Mm (microns), leading to de-sliming to remove particles less than 8 microns, then the removal of barren magnetite through magnetic separation. The feed then passes through Rougher and Cleaner flotation stages, followed by gravity concentration, where the valuable minerals are separated from waste minerals.

This process has been refined through bench-scale testing, including locked cycle tests at SGS. Tests have been repeated and confirmed at XPS.

Subsequent to the completion of the bench-scale testing, Avalon commissioned XPS to conduct two mini-pilot plant ("MPP") tests. The MPP facility allows testing of flotation schemes at sample rates of about 8 kg/hour or, for a five day campaign, about one tonne, thus simulating an industrial scale plant. The utilization of a sample of about 1 tonne in weight means sufficient sample material can be readily obtained from diamond drill core sample material. Two such composite samples from Basal Zone have been tested to date.

The MPP runs comprised initial crushing of the sample at XPS in Sudbury with the next step being carried out at Process Research Ortech in Mississauga, Ontario, where the sample was ground to less than 38 microns, de-slimed and the magnetic fraction removed. The prepared sample was then trucked to Sudbury on a daily basis for the remaining flotation processing. The MPP was a continuous operation from flotation feed conditioning through to concentrate with the prepared feed delivered in time to maintain continuous operation.

The MPP demonstrated that recovery targets outlined previously by Avalon should be achievable. In addition the results of the MPP tests provide important information for further enhancement of the flotation scheme. As a result, further bench-scale testing is underway at both XPS and SGS focused on specific aspects of the flotation process. Some of the tests will examine changes in reagent schemes. In addition, a pilot-scale multi-gravity separator that promises enhanced gravity separation of finely ground feed is being evaluated for use in future MPP tests and the larger scale flotation pilot plant.

The MPP testwork is an interim step designed to identify key design criteria for the larger scale flotation pilot plant trial and economize on the cost and the size of the bulk sample required for the large scale trial. Additional MPP testwork is planned for completion by the end of the June, 2011.

LARGE SCALE FLOTATION PILOT PLANT

Avalon is planning to run a larger scale flotation pilot plant trial, processing between 20 and 30 tonnes of ore, late in the third quarter or early in the fourth quarter of 2011. The timing of this is partially dependent on the availability of equipment and personnel at SGS. The objectives of the larger scale test are:


-- Provide adequate mineral concentrate for hydrometallurgical pilot testing.-- Confirm the flotation scheme on a larger scale for the BFS.
Since June, 2010, the Company's drilling program has included one drill rig equipped to recover large diameter PQ core. This core weighs in excess of 15 kg per metre, and consequently the Company's geologists estimate that sufficient mineralized core will have been acquired by the end of this winter drill program to provide the bulk sample for the large scale pilot plant trial.

HYDROMETALLURGICAL PROCESS DEVELOPMENT

Avalon has previously disclosed the outline of its planned hydrometallurgical process to extract the rare earths and other valuable rare metals from the Basal Zone ore minerals (News Releases 10-05, March 29, 2010 and 10-09, June 21, 2010). The purpose of the hydrometallurgical plant is to decompose or "crack" the ore minerals, bring the metals into solution and separate the rare earths from the Zr, Nb and Ta. The mixed rare earths concentrate would then be further processed in a Separation Plant, as announced in the Company's News Release 10-24 dated October 21, 2010.

To achieve the hydrometallurgical processing in the most efficient and economical way, Avalon has developed a two stage process to crack the ore minerals. The first step is heating the sample to 200 degrees C with sulphuric acid ("Acid Bake") which breaks down most of the LREE minerals and fergusonite. Through this stage of the process, the LREE and about half the HREE can be brought into solution. This process has now been successfully demonstrated at the bench-scale numerous times at SGS. On-going work is concentrating on refining the details of the process and the optimum process for separating the rare earth elements from impurities such as iron.

The Acid Bake has been shown to solubilize about 80% of the light rare earths and about 40-50% of the heavy rare earths along with very limited quantities of Zr, Nb and Ta. The residue from this process contains the remaining 20% of the light rare earths, 50-60% of the heavy rare earths and the bulk of the Zr, Nb and Ta. This residue is largely comprised of zircon (zirconium silicate) and columbite (niobium and tantalum mineral) along with any silicate gangue minerals that have not broken down during the acid bake process.

The residue, containing the zircon, is then broken down in caustic decomposition which involves sodium hydroxide at about 600 degrees C ("Caustic Crack"). This is a common process for producing zirconium chemicals from zircon, such as zirconium oxychloride ("ZoC"), and utilized presently in China and other countries for this purpose. The difference in this case is that the process will yield heavy rare earths, Nb and Ta, as well as Zr. The Caustic Crack process has also been successfully demonstrated at the bench scale numerous times at SGS.

The hydrometallurgical process steps following the Caustic Crack step are being investigated at present, to determine the optimum process for separating the rare earths from Zr, and from Nb and Ta. This will likely involve a combination of precipitation and solvent extraction.

The products from the Acid Bake and Caustic Crack will comprise:


-- A mixed light and heavy rare earth precipitate as hydrated oxides or carbonates-- A mixed heavy rare earth precipitate as hydrated oxides or carbonates-- ZoC or other zirconium product-- Nb and Ta precipitates
The two rare earth products would be shipped to the Separation Plant to be separated into individual rare earth oxide products.

HYDROMETALLURGICAL PILOT PLANT

After the hydrometallurgical process is fully defined at the bench scale, pilot plant testing will be required. In order to secure access to the SGS facilities later this fall, a contract was signed with SGS for the design and operation of a hydrometallurgical pilot plant. The estimated cost for this work is $7.5 million, approximately $5.5 million higher than originally forecast by Avalon last year before the full scope of work was known.

Since the prefeasibility study was completed last year, it has become evident that this work will take longer than anticipated to complete to the high level of confidence required for a bankable feasibility study. The extra time and complexity of the process will result in considerable additional costs but will also ensure a more robust process is developed and reduced operational risk in the future. The whole operation is expected to take about 40 weeks to complete, finishing by mid-2012.

Preparation for the hydrometallurgical pilot plant work is commencing immediately with the design of the system and bench scale tests. Initiatives to accelerate the acquisition of sufficient concentrate are underway along with sourcing of the required equipment. It is also now clear that the hydrometallurgical pilot will require up to 4 tonnes of mineral concentrate feed.

SEPARATION PLANT

As described in the Company's News Release 10-23 dated October 13, 2010, following the prefeasibility study, Avalon commissioned a scoping study on the costs associated with building a Separation Plant in North America, to produce individual rare earth oxides and carbonates including the heavy rare earths. No such plant, with sufficient capacity to handle the large volume of heavy rare earth rich mixed rare earth oxide concentrates contemplated from Nechalacho, presently exists outside China.

The scoping study revealed that costs are highly sensitive to plant location as the delivered cost of the chemical reagents required for the separation process represents the majority of the operating costs. Subsequently, the Company has evaluated potential locations for this plant in North America and has identified a number of sites that meet the key criteria.

The Company intends to select a plant location within the next few months and is now in discussions with a number of engineering companies about carrying out a prefeasibility study on the separation plant. It is expected that this contract will be awarded and work initiated shortly after the plant site is determined.

UPDATE ON OTHER PROJECT ACTIVITIES

The 2011 winter drilling program commenced in January and 34 holes totaling 8291 metres have now been completed with 17 of these holes recovering the larger PQ core. An additional 10 short holes were drilled for purely geotechnical purposes. The smaller drill, equipped to recover HQ core, has been drilling holes to define additional Indicated Mineral Resources in the West Long Lake area, where previous drilling has identified a high grade sub-zone within the Basal Zone. Initial assay results from this drilling should be available in early May.

Simultaneously, the larger rig (equipped for PQ core) has been completing 50 metre spaced holes in areas of thicker Basal Zone intercepts in order to generate a bulk sample for metallurgical testwork, as well as upgrading Inferred resources to the Indicated level of confidence. Results from this drilling will be slower to arrive due to a lengthy sample preparation procedure designed to maximize the amount of sample available for future metallurgical testing.

A program of geotechnical drilling is commencing using the smaller drill, to test ground conditions in the proposed tailings area where berms would be required. This drilling is proceeding ahead of schedule and will finish within a few days when the drill will return to resource drilling. The larger drill will continue acquiring metallurgical sample until Spring break-up in May.

Avalon continues to hold discussions with potential customers for its rare earth products. Many industrial consumers in the US, Japan and Korea are very concerned about the future availability of heavy rare earths and neodymium. Some of these consumers have expressed interest in partnering with the Company in the development of the project and discussions in this regard are on-going.

On the permitting process, the Company received the final Terms of Reference ("TOR") for the environmental impact assessment from the Mackenzie Valley Environmental Impact Review Board ("MVEIRB") on February 15, 2011. Since then Avalon, along with EBA Engineering Consultants Ltd, have been working diligently on the Developers Assessment Report ("DAR"), commonly known as an Environmental Impact Statement utilizing the TOR as its foundation. Avalon anticipates the completion of the DAR by the end of April, 2011. Upon submittal of the DAR to MVEIRB, a work schedule will be developed by MVEIRB outlining the expected timeline for completion of the Environmental Assessment process.

Community engagement efforts continue with all of the Company's aboriginal partners in the Northwest Territories. Avalon has entered into Negotiation Agreements with the Yellowknives Dene First Nation and the Deninu K'ue First Nation and is presently working toward concluding a similar agreement with the Lutsel K'e Dene First Nation.

QUALIFIED PERSONS

The Company's Vice-President, Exploration, William Mercer, Ph.D., P.Geo. (Ont), P. Geol (NWT) is providing overall direction on the project. The qualified persons for the purposes of this news release are Dezhi Qi, P. Eng (Alberta), William Mercer and Donald Bubar, P. Geo., President.

About Avalon Rare Metals Inc. (TSX:AVL - News)(AMEX:AVL - News)

Avalon Rare Metals Inc. is a mineral exploration and development company focused on rare metals deposits in Canada. Its flagship project, the 100%-owned Nechalacho Deposit, Thor Lake, NWT, is emerging as one of the largest undeveloped rare earth elements resources in the world. Its exceptional enrichment in the more valuable 'heavy' rare earth elements, which are key to enabling advances in clean technology and other growing high-tech applications, is one of the few potential sources of these critical elements outside of China, currently the source of 95% of world supply. Avalon is well funded, has no debt and its work programs are progressing steadily. Social responsibility and environmental stewardship are corporate cornerstones. Avalon's performance on community engagement in the north earned it the 2010 PDAC Environmental and Social Responsibility Award.

Shares Outstanding: 93,618,265. Cash Resources: $34 million.

To find out more about Avalon Rare Metals Inc., please visit our website at www.avalonraremetals.com. For questions and feedback, please e-mail the Company at ir@avalonraremetals.com or phone Donald S. Bubar, President and CEO, at 416-364-4938.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS:

This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Statements that are not historical fact are forward-looking statements that involve risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected in the forward-looking statements. Readers can identify forward-looking statements by the use of words such as "believe", "expects", "will", "intends", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof.

All forward-looking statements contained herein reflect management's plans, estimates, projections and views only as of the date hereof. Such forward-looking statements include, among other things, statements regarding targets, estimates and/or assumptions in respect of resources and potential reserves, and are or may be based on assumptions and/or estimates related to future economic, market and other conditions. Many factors could cause the Company's actual results, performance or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking statements, including, among others: the estimation or realization of mineral resources; recovery rates and production costs of the rare metals; the timing and amount of estimated future production; requirements for additional capital; future prices of rare metals and minerals; market demand for rare metals and minerals; the reliability of plant operations at production scale; energy costs; availability of required skilled labour, contractors and other human resources; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals, permits or financing or in the completion of development or construction activities; currency exchange rate fluctuations; title disputes or claims limitations on insurance coverage and the timing and possible outcome of pending litigation; and the other factors described in the Company's annual Management's Discussion and Analysis and Annual Information Form filed with the applicable securities regulatory authorities in Canada and available at www.sedar.com.

Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. Most of such factors are beyond the Company's control.

The forward-looking statements contained herein are qualified in their entirety by this cautionary statement. Readers should not place undue reliance on the forward-looking statements. The forward-looking statements contained herein are presented for the purpose of assisting investors in understanding the Company's plans and expectations regarding operations and performance and may not be appropriate for other purposes.

(1)Total Rare Earth Oxides (TREO) refers to the elements lanthanum to lutetium, plus yttrium, expressed as oxides. Heavy Rare Earth Oxides (HREO) refers to the elements europium to lutetium, plus yttrium, expressed as oxides. Light rare earths (LREO) refers to the elements lanthanum to samarium, expressed as oxides. LREE refer to the light rare earths and HREE as the heavy rare earths as elements. See Avalon's website for conversion factors from elements to oxides.

Contact:
Contacts:Avalon Rare Metals Inc.Donald S. BubarPresident and CEO416-364-4938ir@avalonraremetals.comwww.avalonraremetals.com

Rare Earths (REE) (MCP) (GMO) (AVL) Down on Large China Discovery

Rare earths companies outside of China, like Rare Element Res Ltd (AMEX:REE), Molycorp, Inc (NYSE:MCP), General Moly (AMEX:GMO) and Avalon Rare Metals (AMEX:AVL) are all trading down today on news of a huge rare earths discovery in China, which could end up boosting supply while pushing down prices.

Of particular not was a huge deposit of Scandium, one of 17 rare earths, and which is used in the building of a variety of high-tech products. Estimates are there are over 70 tons of scandium in the deposit.

Also part of the discovery was 130,000 tons of lead and zinc, 3,000 tons of cadmium, and 800 tons of silver. In addition, there were significant deposits of rhenium, stannum and gallium found.

This actually boosted share of Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX), as well as Chinese rare earths companies like China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ) and Qiao Xing Universal Resources (Nasdaq:XING).

Molycorp (MCP) Leads Rare Earths (REE) (AVL) Higher

After JPMorgan (NYSE:JPM) raised its price target on rare earths giant Molycorp (NYSE:MCP) today, shares of the company jumped, helping to boost the overall rare earths sector.

Avalon Rare Metals (AMEX:AVL), Lynas Corporation (LYSCF), Neo Material Technol (NEMFF) and Rare Element Resources (AMEX:REE) are all up on the day.

The catalyst for the increase in the price target of Molycorp by JPMorgan was the recent boost in domestic rare earth prices in China.

The giant bank maintains their "Overweight" rating on Molycorp, while raising its price target from $66 to $74. They see the prices as being sustainable for a period of time.

Rare earths ETF Market Vectors Rare Earth/Strategic Metals (NYSE:REMX) was also trading up today.

Molycorp was trading at $59.68, gaining $4.17, or 7.51 percent, as of 2:17 PM EDT. Market Vectors Rare Earth/Strategic Metals was at $25.12, up $0.49, or 1.99 percent. Avalon was at $7.83, up $0.60, or 8.30 percent. Rare Element Resources rose to $13.38, gaining $1.19, or 9.76 percent.

China Taxing Rare Earth (SHZ) (XING) Minerals

The cost of producing rare earths in China will go up on April 1, as according to the Ministry of Finance and the State Administration of Taxation, cited by Xinhua, they are going to start taxing the minerals.

Xinhua said the tax start off at $9.1 a ton for light rare earths and about $4.55 a ton for medium and heavy rare earths.

Since China announced it was cutting back on rare earth exports, prices have soared from $14,405 a ton to $109,036 a ton.

Public Chinese companies specifically affected by this include Qiao Xing Universal Resources, Inc. (Nasdaq: XING) and China Shen Zhou Mining & Resources, Inc. (AMEX: SHZ).

Publicly traded rare earth competitors outside of China are Molycorp Inc. (NYSE: MCP), Rare Element Resources (AMEX: REE), and Avalon Rare Metals (AMEX: AVL).

Molycorp (MCP) (REE) (AVL) Soaring on Rare Earths Price Surge

Since China announced it's going to limit the amount of rare earths it's going to export, shares of miners like Molycorp Inc. (NYSE:MCP), Rare Elements (AMEX:REE) and Avalon Rare Metals (AMEX:AVL) have been skyrocketing as the price on the 17 metals rise.

In February alone the price of rare earths rose by $34,000 to hit $100,000 a ton; almost 9 times what it was last year at that time.

Interestingly, a lot of investors haven't gravitate toward rare earths miners, as the trading volume has remained below its historical average.

The price of the minerals have risen close to $10,000 a month since China announced the export restrictions, where prices per ton were at $14,405.

According to data from China's Customs office, the price per ton of rare earths in February reached $109.036.

Molycorp was trading at $48.52, gaining $3.84, or 8.59 percent, as of 11:34 AM EDT. Rare Elements was at $11.59, up $1.21, or 11.66 percent. Avalon was trading at $7.21, up $0.47, or 6.97 percent.

Rare Earths (REE) (AVL) (MCP) Price Jump May Be Overblown

While in the short term the price surge in rare earths is justified, as has been the performance of some of the miners outside of China like Avalon Rare Metals (AMEX:AVL), Rare Earth Elements (AMEX:REE) and Molycorp (NYSE:MCP).

But over the long term, prices of rare earths and the rare earths miners outside of China may be overpriced, or may be priced in at the current rates.

The Telegraph noted, "China is doing two things with its policy. It is protecting against foreign ownership of strategic resources and at the same time creating incentives for foreign companies to bring their manufacturing to China. The West has grown used to cheap raw materials, but is going to have to get used to the fact that prices are going up as countries scramble to secure finite resources."

"I've been in this business for 20 years and never seen anything like it. The reality is that China dominates the rare earths industry and it has a very clear policy of seeking to take those rare earth metals into value-added products and that is a concern in many people's minds. But if you look at production coming on-stream in the next 10 years, the situation is not as dire as people make out."

Still, as mentioned, in the short term China is definitely in control, and how they export their rare earths will determine the overall price of the minerals until more companies increase production to match the loss of access to a portion of the rare earths.

Rare Earth Elements was trading at $10.38, down $0.02, or 0.19 percent, as of 12:16 PM EDT. Avalon Rare Metals was trading at $6.61, gaining $0.17, or 2.64 percent. Molycorp was at $43.60, falling $0.38, or 0.86 percent.

Japan Crisis and (MCP)(REE)(SHZ)(XING)(AVL)(GMO) Rare Earths

Rare earths companies like China Shen Zhou Mining & Resources, Inc. (AMEX:SHZ), Rare Element Res Ltd (AMEX:REE), Qiao Xing Universal Resources, (Nasdaq:XING), Molycorp, Inc (NYSE:MCP), General Moly (AMEX:GMO) and Avalon Rare Metals (AMEX:AVL) could be affected in the near term from the crisis in Japan, as uncertainty as to manufacturing of products containing the elements will remain for at minimum days, and possibly weeks.

Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX) could also take a temporary hit if it is determined there will be significant delays.

Western companies are scrambling to redevelop mines capable of producing the 17 rare earth elements, used in everything from Apple iPads to wind turbines, after China last year began sharply reducing its exports of the materials.

Business in parts of Japan is at a standstill as authorities cope with aftermath of the quake and people worry about the release of radiation from nuclear reactors at the quake-affected Fukushima Daiichi power station.

That has meant a pause in demand for rare earths at one of the world's largest users, the Asian Metal International Rare Earth Summit in Pittsburgh heard on Tuesday.

over the long term, there is no doubt prices of rare earths will continue to climb, as China has cut back on exports, and may themselves become an importer, even though they at this time produce about 97 percent of rare earths in the world.




Source

Molycorp (MCP) Pushing Hard at Mountain Pass

Molycorp Inc.'s (NYSE:MCP) Mountain Pass mine is the focus of feverish work as the company has the goal of increasing the amount of dirt dug on an annual basis from 3,000 tons now to close to 40,000 tons by 2014.

At stake is the rare earth elements, minerals that are used in a number of electronic and so-called clean energy products, including mobile phones, fuel cells and wind turbines.

At this time China produces about 97 percent of all rare earths, and they announced they're cutting back on exports, creating possible production problems in several industries for at least a couple of years.

Molycorp CEO Mark A. Smith recently said, “The use of these materials has really skyrocketed, with demand outstripping supply literally overnight. We've got some serious issues in this industry. It's going to be a tough year.”

Avalon Rare Metals (AMEX:AVL), Rare Element Resources (AMEX:REE) and General Moly (AMEX:GMO) are companies also working to bring rare earths to market.

Molycorp closed Friday at $49.26, down $0.57, or 1.14 percent.

Rare Element (REE), Molycorp (MCP), China Shen Zhou (SHZ), Avalon (AVL) Mixed on China Rare Earths Strategy

The announcement by China that it's going to consolidate its rare earths sector has companies such as Rare Element Resources Ltd. (NYSE:REE), Avalon Rare Metals (NYSE:AVL), Molycorp (NYSE:MCP) and China Shen Zhou (NYSE:SHZ) mixed in response to the news.

A statement from an executive meeting of the State Council said, "China should accelerate industrial upgrading and technological innovation to protect the environment and save resources."

To attain those goals, China said they'll "maintain rational production and inventory control, make better use of domestic and overseas markets and resources, and have active international cooperation for a healthy and sustainable development."

Xinhua added, "authorities would carry out special campaigns to crack down on illegal mining activities to maintain order in production, further consolidate the industry and promote technological innovation, said the document."

Rare earths producers outside China are working feverishly to boost or enter into production phases in response to China's recent announcement they're cutting back on rare earths exports by about 35 percent.

Some of that is complicated by what rare earths are in the projects each company owns. Some are more profitable than others, serving various markets.