Thor Lake is located about 100 kilometres southeast of Yellowknife in the N.W.T. (Google)

Avalon Rare Metals says its new feasibility study shows its project in the N.W.T. could pay off quickly.

The company is looking at mining rare earth elements from the site, located at Thor Lake in the Mackenzie Mining District. It’s about five kilometres north of the Hearne Channel of Great Slave Lake, and about 100 kilometres southeast of Yellowknife.

Avalon released its feasibility study on the project, which includes detailed cost estimates. The study shows the mine would cost $1.5 billion to build.

Avalon president and CEO Don Bubar said it wouldn't take long to pay that off because of high annual revenues.

"The average is about $650 million a year, against a cost of about $265 million a year," said Bubar. "Despite the very large amount of capital required to build the full project, you still pay back that capitol in about 4.3 years. That's pretty attractive actually."

Avalon said it has not yet secured any of the $1.5 billion needed to build the mine. But the company says it has signed several memorandum of understanding agreements with companies around the world which are interested in the project.

Bubar said the mine’s life is expected to be around 20 years, but it could last longer.

"The resource is much bigger than that… if you factor in the likelihood of ultimately developing the measured and indicated resources, you could see this thing being in production for over 90 years," he said.

Bubar said Avalon plans to use the feasibility study to draw in investors. Construction will start when there are commitments from investors.