The Anchor House, Inc.

Don Bubar, President and CEO of Avalon Ventures, answered the following questions via written response on 18 February 2008:

Clint Cox: Describe the current state of the Rare Earth market.

Don Bubar: Tight. Demand is growing while supplies are increasingly constrained. Potential new non-Chinese supply sources of LREE are still at least a year or two away from production and they cannot alone fill the growing demand. Potential new sources of HREE are fewer and even further away from production. Prices are likely to stay buoyant for a few years.

Clint Cox: Talk about China and REEs.

Don Bubar: For the global market to grow, new sources of supply are needed. The Chinese also recognize this. They also recognize the need for new supply sources to emerge that are enriched in HREE.

Clint Cox: Who is most concerned about China?

Don Bubar: Japan. REE are vital to many Japanese industries, yet they have no domestic sources of supply of raw materials and they are totally reliant on China.

Clint Cox: Describe the difference between the HREEs & LREEs.

Don Bubar: Like Gold and Silver…both precious and typically found together but like silver, the far greater abundance of the LREE compared to the HREE makes them much less valuable.

Clint Cox: Which elements are you most excited about?

Don Bubar: Terbium, dysprosium and especially lutetium. Lutetium is already extremely valuable (at several thousands of dollars per kg) and has many exciting potential applications that are not being exploited because of its rarity. It is virtually absent in most REE deposits but is enriched at Thor Lake and could add enormous value to the ore.