Avalon Advanced Materials Inc. announce it has signed a memorandum of understanding to create a strategic partnership with Metso Corporation. The agreement, signed at Canada House in London UK, will immediately the parties seek to establish terms to develop a lithium hydroxide production facility to process lithium mineral concentrates that are essential for the North American electric vehicle (EV) battery value chain. Avalon intends to deploy Metso's world-leading technology to construct and operationalize a full-service lithium processing facility at the Company's recently acquired Thunder Bay, ON.

industrial site. Upon completion of the project, Avalon will be the first vertically integrated lithium producer in Ontario, while ensuring Canada's EV battery manufacturing base has a stable, proximate and long-term supply of this strategically vital resource. The Non-Binding Memorandum of Understanding stipulates: The pursuit of a definitive agreement to establish a lithium hydroxide processing facility in Thunder Bay, ON.

Avalon to license Metso technology and solutions to produce lithium hydroxide cathode materials to serve the EV market. Allow Metso to conduct testing and engineering work across Avalon's portfolio of critical-mineral projects, including the Company's deposit at Separation Rapids near Kenora, ON. The parties anticipate reaching a definitive agreement on or before Sept.

1, 2023. Metso's sustainable next-generation production and processing technologies are being deployed internationally by governments and clean-energy producers in order to address and deliver the necessary supply required by the emerging EV battery industry. Avalon's strategic partnership with Metso is a first in Canada, and is a significant step towards helping the Company execute on its vertically-integrated business strategy—and in turn, entrench Ontario's position as an advanced manufacturing hub serving not only North America, but the world.

Canada's Critical Minerals Strategy: This partnership complements Avalon's strategic business objectives, while also providing direct support to the federal government's Critical Minerals Strategy to increase the supply of responsibly sourced critical minerals and develop domestic supply chains for the green and digital economy, as announced by Natural Resources Minister, the Honourable Jonathan Wilkinson, as well as the Honourable Francois-Phillippe Champagne, Minister of Innovation, Science and Industry. The planned Thunder Bay processing facility and upstream lithium project in the Kenora region will create an estimated 500 jobs. It will also enable broader development of northwestern Ontario's regional lithium assets by other producers seeking to utilize the proximity of Avalon's processing capacity.

The facility will also help foster new economic development opportunities for local and regional First Nations communities.