MEDIA BULLETIN: Transforming Northern Ontario into a Clean Tech Hub

TRANSFORMING NORTHERN ONTARIO INTO A CLEAN TECH HUB

AVALON ADVANCED MATERIALS PARTNERS WITH INTERNATIONAL INDUSTRY LEADERS TO BUILD A DOMESTIC LITHIUM BATTERY MATERIALS SUPPLY CHAIN

ABy manda Graff

valon Advanced Materials Inc. (TSX:AVL) is a Canadian

mineral development company that specializes in sustainably producing materials to support the burgeoning clean technology

market, providing investors with exposure to lithium, tin and indium, as well as rare earth elements. The company is currently developing its Separation Rapids Lithium project while continuing to advance its 100%-owned

Lilypad Cesium-Tantalum-Lithium project, both located in Ontario.

Avalon recently secured a $1.95 million private placement to fund a winter deep drilling program at Separation Rapids where minimal drilling has been carried out on the primary lithium pegmatite resource known as the Big Whopper. Open for expansion below a depth of 250 metres, deeper drilling will assess the resource's ultimate size potential, and drilling is also planned for the new Snowbank lithium pegmatite discovery.

With a vision that extends beyond supplying critical minerals and rare earth elements to meet growing global demand, Avalon is building an end-to-end lithium battery materials supply chain in Northern Ontario. The company has selected a location to establishabatterymaterialsprocessing facility in Thunder Bay which offers proximity to an abundance of lithium resources and excellent transportation infrastructure, allowing the facility to strategically serve both domestic and international markets. Initially, the facility will be supplied with mineral concentrates derived from Separation Rapids, and eventually from other aspiring lithium minerals producers.

The development of a domestic battery materials supply chain will meet the needs of future electric vehicle (EV)

and lithium-ion battery manufacturers within the province and beyond while providing significant economic growth potential for Northwestern Ontario and First Nations communities. The supply chain will empower local communities to take advantage of lithium resources in their traditional territories and produce lithium mineral concentrates for purchase by Avalon.

"The City of Thunder Bay has been very supportive of our aspirations and recognizes the need for a new industry that will stimulate the local economy and bring a wealth of opportunities to the region," said Don Bubar, President

• CEO, Avalon Advanced Materials. "Fortunately, this region is replete with lithium pegmatite resources. The next steps toward production will involve establishing the mid-

stream processing capacity to produce lithium hydroxide at a location near the resources with excellent transportation infrastructure. This will encourage more battery and EV manufacturers to establish production capacity in Ontario."

PARTNERING WITH GLOBAL LEADERS TO SOLIDIFY A LOCAL BATTERY MATERIALS SUPPLY CHAIN

Avalon recently announced a major development related to the establishment of the Thunder Bay battery materials facility. The company signed a memorandum of understanding (MOU) with LG Energy Solution (LGES) to supply 50% of its planned initial lithium hydroxide

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production from the facility, with the potential to increase production as demand grows. LGES is a South Korea- based leading global manufacturer of lithium-ion batteries for EVs and energy storage systems.

The MOU was signed while South Korea'sPresident,YoonSukYeol,visited Canada at a ceremony supported by the Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR), Natural Resources Canada (NRCAN), and other partners. The MOU builds on growing Canada-South Korea bilateral economic ties while supporting clean energy and foreign direct investment objectives.

"This agreement significantly advances our vision to develop a sustainable and secure domestic battery materials supply chain," said Don Bubar. "Northern Ontario's rich endowment of critical minerals strategically positions us to develop full supply chains and take advantage of demand in the advanced technology manufacturing sector of the economy. These supply

chains will vastly expand Ontario's economy and provide many remote First Nations communities with new economic development opportunities."

In addition to the partnership with LGES, Avalon is currently in discussions with another global company that has expressed a keen interest in supporting the development of the regional battery materials supply chain. "This global company has an existing relationship with LGES, so it's very encouraging," said Don Bubar. "We envision that they will have a major influence on the success of our initiatives, and we look forward to releasing more information very soon."

Avalon's initiatives are bolstered by Ontario's first-ever critical minerals strategy that prioritizes local electric vehicle supply chains. The strategy is a five-year roadmap to better connect mines in the north with the manufacturing sector in the south, focusing on Ontario-based electric vehicle and battery manufacturing.

Furthermore, Canada recently unveiled its critical minerals strategy to increase

the supply of responsibly sourced critical minerals while supporting the development of domestic and global value chains for the green and digital economy. The strategy's five core objectives include supporting economic growth, competitiveness, and job creation; promoting climate action and environmental protection; advancing reconciliation with Indigenous peoples; fostering diverse and inclusive workplaces and communities; and enhancing global security and partnerships with allies.

Canada is the only Western nation with abundant cobalt, graphite, lithium, and nickel, representing a generational opportunity for Canada's workers, the economy, and a net-zero future. According to the newly established national strategy, six critical minerals are considered essential for priority supply chains, advanced manufacturing, clean technologies, and zero-emission vehicles, of which lithium topped the list.

"The government is starting to realize that producing non-traditional

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CRITICAL MINERALS FOR CLEAN TECHNOLOGY
Diverse critical minerals portfolio, offering investors exposure to
	lithium, cesium, tantalum and the rare earths in Canada
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commodities like lithium and rare earth elements is a very different business than traditional mining," said Don Bubar. "It's now being recognized that regulations must be updated to reflect this fundamental difference. I've been talking about this for many years, and it's finally starting to resonate at a national level."

MAKING INROADS WITH THE GLASS-CERAMIC MARKET THROUGH A NEW MULTI-YEAR AGREEMENT

While focusing on the establishment of a domestic battery materials supply chain, Avalon is also making inroads with the flourishing glass-ceramic market. Separation Rapids hosts one of the world's few significant resources of the high-purity lithium aluminum silicate mineral petalite required within this industry. Due to a global shortage of petalite supply that stems from China gaining control of traditional petalite supply sources in Zimbabwe, considerable interest exists from major international glass-ceramic manufacturers across Europe and Asia.

A few short months ago, Avalon announced that it entered into a multi- year off-take agreement with a major international glass-ceramic manufacturer that outlines a firm commitment to purchase petalite concentrates produced at Separation Rapids.

"This is one of many global companies that are knocking on our door and

demanding supply," said Don Bubar. "There currently exists a minimal supply of the high-purity lithium alumino-silicate mineral petalite which is the dominant lithium mineral in our resource. This petalite is used to introduce lithium into the batch formulation for high-strength glass- ceramic products. We have an ideal opportunity to serve this growing market as we get the lithium battery materials processing facility up and running."

The next step involves processing the 5,000-tonne bulk sample collected from Separation Rapids in 2021 to produce trial quantities

of the petalite product for the many end-users that have expressed interest. While Avalon establishes the Dense Media Separation (DMS) processing facility on the property to begin producing these trial quantities, the company has access to an alternative process facility. This will accelerate the process work to create the large product samples requested by the off- taker and other end-users.

"The key first step in providing petalite mineral concentrates to end users is to produce trial quantities so they can confirm that it will meet their requirements," said Don Bubar. "Based on this, our primary objective for 2023 is to get the DMS processing facility up and running to start producing those trial quantities as we simultaneously kick off construction of the Thunder Bay lithium battery materials refinery."

Work required to establish the DMS has been undertaken by SOW Construction Limited Partnership, a joint venture between Moncrief Construction Limited, a large Kenora- based construction contractor, and Wabaseemoong Independent Nations (WIN), in whose traditional territory the project is located.

The name of the joint venture is derived from the three First Nations

that comprise Wabaseemoong Independent Nations - Swan Lake, One Man Lake, and Whitedog. The

joint venture mandate is to work with WIN to offer construction services and employment opportunities within their Traditional Land Use Area. Avalon first signed a memorandum of understanding with WIN in 1999 that was later renewed in 2013. WIN leadership continues to support the development of Separation Rapids, and Avalon encourages WIN's direct participation in project development through numerous opportunities.

Economic opportunities for First Nations communities are also being generated by Avalon's Lilypad-Cesium-Tantalum-Lithium project. Located on the traditional territory of the Eabametoong First Nation (EFN), the project is anticipated to become a significant new producer of the rare cesium mineral pollucite, in addition to tantalum and lithium.

Cesium carbonate is in very short supply and is currently attracting prices as high as $5,000 per kilogram. Avalon plans to begin with a small-scale production of pollucite concentrates that will be flown from Fort Hope to Thunder Bay for further processing, creating a near-term economic development opportunity for the EFN. There's also a future opportunity for the Lilypad project to supply Avalon's battery materials processing facility alongside Separation Rapids, which would require building a separate circuit to process pollucite concentrates.

Don Bubar commented:

"Sustainable mineral

development initiatives

related to critical minerals for clean technology have inspired us to look at new process technologies that will make our projects more

cost efficient and greatly

reduce environmental impacts while adding to shareholder value and generating significant benefits for local First Nations communities."

To learn more about Avalon Advanced Materials Inc., please visit: www. avalonadvancedmaterials.com

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