The federal minister of Aboriginal Affairs and Northern Development, Bernard Valcourt, gave his approval today to Avalon Rare Metals' Nechalacho project, about 100 kilometres east of Yellowknife.

It follows the recommendation from the Mackenzie Valley Environmental Review Board in July, and marks a major milestone in the company's effort to turn the project into an operating mine. Avalon claims Nechalacho is “the most advanced large heavy rare earth development project in the world.”

The Toronto-based company will still have to obtain several operating permits before work can begin.

Along with the mine, Avalon initially proposed building a secondary processing facility at Pine Point. However, the company announced this summer it's reconsidering that location. Pine Point was selected because it had access to sulphur — a main ingredient for sulphuric acid, which is needed to extract rare earths.

Thor Lake map

The Nechalacho project at Thor Lake is about 100 kilometres east of Yellowknife. (Avalon Rare Metals Inc. )

The company plans to ship chemical concentrate by rail to a refinery in Louisiana.

A feasibility study indicated the mine would have a life of 20 years or more. Avalon says 220 workers will be needed to operate it. The company is now trying to raise the $1.6 billion needed to build the mine.

There has been opposition to the mine. Last February, the Yellowknives Dene First Nation passed a motion saying they don't support "development of the Thor Lake project on Chief Drygeese lands," citing a lack of consultation. Other aboriginal groups said their concerns about the project have not been addressed.