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Avalon Rare Metals lead mad surge in rare earth juniors

Avalon Rare Metals (TSE:AVL) gained 11% on Tuesday, adding to a 80% spike in value over the past three month as the junior rare earth sector enjoys a significant rerating from investors.

There was no fresh news concerning the company or its flagship Nechalacho project in Canada’s Northwest Territories, but Avalon like other heavy REE explorers have been boosted by a recent surge in the price for heavy REEs.

The Toronto-based explorer Avalon was trading at $1.02 on the Toronto big board affording the stock a $105 million market value with more than eight times the usual volume of shares changing hands.

Nechalacho, which would be Canada’s first rare earth mine, located some 100 kilometres southeast of Yellowknife, is a potential $1.6 billion project. The Toronto-based explorer described it the largest deposit outside China of  heavy rare earths and hopes to start building in 2017.

Heavy REE prices have fallen dramatically just like the more abundant light REEs since hitting peaks in 2011, but the most sought after heavies such as terbium and dysprosium used in a variety of high-tech industries have climbed rapidly since hitting multi-year lows in July.

Dysprosium metal, a hybrid-vehicle ingredient which is also used in conjunction with vanadium and other elements in making laser materials, has risen by more than $100 per kilogram since June to over $700, while terbium oxide has rocketed from around $700 a kilogram FOB China to roughly $900 over the same period.

Other heavy rare earth explorers and mine developers have also seen keen investor interest with Rare Element Resources (TSE:REE), Tasman Metals (NYSE:MKT:TAS) and Texas Rare Earth Resources (OTCMKTS:TRER) all experiencing double digit gains on Tuesday. Like Avalon, Rare Earth Elements which is advancing a project in Wyoming has seen a rapid revaluation – the counter is up 77% over the last three months.

Australia’s Peak Resources (ASX:PEK) added 9% in Sydney after the company announced it’s speaking to a number of funders for its Ngualla Rare Earth Project in Tanzania. Canada’s Great Western Minerals (CVE:GWG) was up over 4%. The Saskatoon-based company is probably closest to having an operating mine when it recommissions the Steenkampskraal mine in South Africa within the next couple of years.