Avalon Ventures Ltd.: Remaining Assays From Phase 2 Winter Drilling Produce Most Encouraging Results to Date From the Lake Zone REE Deposit, Thor Lake, NWT

Avalon Ventures Ltd.: Remaining Assays From Phase 2 Winter Drilling Produce Most Encouraging Results to Date From the Lake Zone REE Deposit, Thor Lake, NWT

Avalon Ventures Ltd. is pleased to announce the assay results from the remaining twelve holes from the Phase 2 winter drilling program on the Lake Zone Rare Earth Element (“REE”) deposit. The deposit is located on the Company’s 100% owned Thor Lake Rare Metals project, 100km southeast of Yellowknife, NWT. The highlights from these results were from Holes L08-97 and L08-98 located in a previously untested area in the southern part of the deposit. These two holes produced some of the broadest intervals of the more valuable heavy rare earth element (“HREE” consisting of europium through lutetium plus yttrium) enriched mineralization yet discovered in the Lake Zone deposit.

Hole L08-98 intersected 48.0 metres averaging 1.57% TREO (“Total Rare Earth Oxides”) with 21.5% HREE(oxide form) including 14.00 metres averaging 2.03% TREO with 28.6% HREE. Further the complete mineralized interval from 4.10 to 159.0 m in this hole assayed 0.99% TREO averaging a remarkable 16.4% HREE over the entire 154.90 metre mineralized core length. Hole L08-97 intersected 20.0m of 2.02% TREO in the Basal Zone containing 21.2% HREE including 10.00m of 2.77% TREO with 22.5% HREE. These intervals are believed to approximate true thicknesses. Hole L08-92 contained a narrower but much richer interval of Basal Zone mineralization assaying 5.07% TREO with 23.7% HREE over 2.80m.

Hole L08-98 was located the furthest south of any of the holes drilled to that date in the deposit, extending the known resource into this area and implying that the Basal Zone remains open to the south beyond the previously interpreted limits of the Lake Zone deposit and appears to be wider in this area. As note that in the Company’s news release dated June 25, 2008, drill hole L08-89 had similarly high values and was the furthest west of any drill holes to date (older drill holes in the same area were too shallow to reach the economically-important Basal Zone). This area to the south has been tested with five additional drill holes over the past few weeks (assays pending) and further drilling is planned to better define this new area high-grade REE mineralization.

Individual values for some of the high demand HREE in the Basal Zone intersection in Hole L08-92, quoted above, were 276 ppm terbium (Tb) oxide, 222 ppm europium (Eu) oxide and 1461 ppm dysprosium (Dy) oxide over 2.80 metres (Table 3, 100ppm equals 0.1 kg/t). Recent bid prices for these oxides as reported for July 29, 2008 by Metal-Pages.com on an FOB China basis as: US$720/kg Tb, US$470/kg Eu and US$113/kg Dy compared to just US$4.70/kg for the more abundant Light REE cerium. These elements are in short supply yet are vital to many current applications in electronics (colour phosphors) and hybrid cars (high strength magnets). Rapidly rising fuel prices are creating soaring demand for more fuel efficient cars (especially hybrids such as the Toyota Prius) which is estimated to contain an aggregate of 30kg of rare earth elements, including light rare earths used in the rechargeable battery and catalytic converter. The same intercept had an analysis of 7411 ppm lanthanum oxide, which Metal-Pages reports a bid price of $8.90/kg and 8579 ppm neodymium oxide, a light rare earth element also in high demand for magnet applications, that is currently quoted at US$30/kg on a bid FOB China basis.

The Company has contracted with Wardrop Engineering to produce a new 43-101 compliant resource estimate for the deposit based on all the drilling completed since last summer, up to and including, hole L08-98. This new resource estimate is expected to be ready by early September.

Meanwhile, drilling on the southern part of the deposit resumed on June 22, 2008 after a brief hiatus for spring break-up and since then, 13 more holes have been completed including the 5 mentioned above). The current program will include in-fill holes to increase certainty in the resource, with the objective of defining indicated resources, and a number of step-out holes to test for extensions to the high grade mineralization in the southern and eastern parts of the Basal Zone and map the limits of the deposit.

Metallurgical testwork program update

As reported previously, a detailed drilling program involving 11 holes totalling 2277 metres was undertaken in May, for the primary purpose of collecting a 1600 kg bulk sample for metallurgical testwork. Processing of this sample commenced recently, and involves mineral separation studies, followed by flotation tests, so as to produce a saleable rare earth element rich mineral concentrate. This work will be followed by hydrometallurgical testing for recovery of individual rare earth element oxides. The full metallurgical test program is expected to take about 5 months to complete and is being conducted by SGS Lakefield Research.

The metallurgical testing was preceded by QEMSCAN microprobe and conventional mineralogical studies of all the ore types present, focusing on the Basal Zone with the higher HREE values. This work is providing valuable information on the mineral species present, any interlocking relationships, and grain sizes, which are critical for the subsequent flotation testing.

The principal HREE bearing mineral phases in the Basal Zone have been confirmed as fergusonite, an yttrium, niobium, tantalum oxide mineral and zircon, a zirconium oxide mineral. Consequently, this zone also contains high levels of tantalum and niobium along with zirconium in zircon, all representing potential valuable by-product credits. For example, the 2.8 m intercept of Basal Zone in L0-92 averaged 15,351 ppm niobium oxide and 1390 ppm tantalum oxide, along with 67,550 ppm zirconium oxide and 109 ppm gallium oxide (Table 4).

A rigorous QA/QC program was implemented for all of the program samples to ensure high quality data. Analytical standards were prepared from crushed rejects of historical Lake Zone drill core samples, then analysed at five separate laboratories to determine an average value. These standards were then routinely inserted into the sample batches to monitor analytical data. All drill core was split on site, sampled in 2m intervals and shipped to Acme Laboratories facility in Yellowknife for sample preparation. Acme then shipped pulverized splits from all the samples to its laboratory in Vancouver, BC. Duplicates and other check samples are being analysed at ALS Chemex Laboratories, Vancouver, BC.

All samples are being analysed at both laboratories by lithium metaborate/tetraborate fusion and dilute nitric acid digestion, followed by whole rock and 45 element multielement ICP analysis. Details of the factors used to calculate rare earth oxides are posted on the Company website along with complete analytical data.

Drilling operations were performed by Peak Drilling Ltd. of Courtenay B.C. under the supervision of J.C. Pedersen, P.Geo., Senior Geologist. The Company’s Vice-President, Exploration, Dr. William Mercer, Ph.D., P.Geo. provided overall direction on the project.

Full analytical details of all intervals for all REE and other rare metals received to date are posted on the Company’s website along with a drill hole location plan and related cross-sections at http://www.avalonventures.com/projects/rare/thor_lake.

Share this post