Avalon to Pursue Staged Development Approach for the Separation Rapids Lithium Project, Kenora, ON 

April 25, 2017

Toronto, ON – Avalon Advanced Materials Inc.(TSX: AVL and OTCQX: AVLNF) (“Avalon” or the “Company”) is pleased to announce that it will be pursuing a staged development approach for the Separation Rapids Lithium Project involving initial construction of a demonstration scale process plant in the Kenora area. This approach will satisfy the need to produce large volume trial samples of the Company’s various lithium products for its customers. The facility would incorporate capacity both for lithium mineral concentration and for piloting Avalon’s proprietary hydrometallurgical process to produce lithium battery materials including both lithium hydroxide and carbonate from petalite concentrates. 

The Company’s Preliminary Economic Assessment (“PEA”), disclosed in the news release dated September 27, 2016, outlined a scenario for economic production of a high purity lithium hydroxide product from its concentrate of the lithium mineral petalite using an innovative new hydrometallurgical technique. The Company developed a proprietary flotation process in 1998-99 for concentrating the petalite which was further optimized during the 2016 pilot plant program and incorporated into the PEA model. This petalite concentrate can also be used as a direct input into high strength and thermal shock resistant specialty glass and ceramics products. Surging demand for lithium from battery makers is disrupting traditional supply sources for innovators in the glass industry, which still accounts for 30% of global lithium demand as reported by the USGS. This creates an opportunity for new producers of high purity lithium minerals to fill the growing supply gap. Avalon’s high purity petalite concentrate is ideally suited to meet this need. 

In addition, under the non-binding Letter of Intent entered into with Lepidico Ltd., disclosed in the Company’s news release dated February 6, 2017, the Company has a potential buyer for a lepidolite mineral concentrate which will also be produced from the Company’s demonstration plant. Lepidico has disclosed its desire to gain ready access to this high grade lithium product by co-locating its planned lithium carbonate demonstration plant facility with Avalon’s demonstration plant in the Kenora area.  

Recent work by Avalon has determined that a phase 1 demonstration plant designed to process 11 tonnes of ore per hour (90,000 tpa) could satisfy the initial requirements of Lepidico and potential glass customers, as well as provide sufficient feed for the lithium hydroxide hydrometallurgical process circuit in the same facility. It will also provide facilities for confirming other by-product opportunities including feldspar. Lastly it will demonstrate the efficiency of Avalon’s innovative processes and confirm the ability to scale up and expand this technology in an operational environment. Preliminary estimates of the capital requirements for the demonstration plant are in the order of US$25 million, which the Company expects to finance with the support of the customers for its lithium products. 

The Company now plans to proceed with an update of its 2016 PEA Technical Report to reflect the potential for petalite and lepidolite lithium concentrate production in addition to value-added lithium battery materials, using the staged development approach. This update will provide a more detailed cost estimate for the phase 1 demonstration plant and an update on the lithium battery materials price assumptions to reflect reports of recent price appreciation for both lithium carbonate and lithium hydroxide. The independent Qualified Persons from Micon International Limited that supervised the preparation of the Company’s 2016 PEA have agreed to provide the technical support for this updated study. 

A suitable industrial property with all required infrastructure including grid power, natural gas and rail access has already been identified in the Kenora area. With the availability of an industrial site, the Company anticipates that an efficient permitting process can be applied which could see the demonstration plant commence operations in less than two years. 

Avalon’s Senior Vice President for Metallurgy and Technology Development, Dave Marsh commented, “This staged approach has the potential to reduce overall investment risk for the Separation Rapids Project by establishing a small-scale demonstration plant to confirm the commercial viability of our innovative lithium processing technology before proceeding to a full-scale operation. This facility will also have the capacity to generate large volume trial samples of our lithium products for our customers, particularly consumers of petalite in the glass industry.”

Avalon’s President, Don Bubar, added, “Getting a lithium battery materials demonstration plant up and running in the Kenora area will establish northwestern Ontario as a new regional centre for the production of the critical materials needed for Canada’s growing cleantech supply chains.” 

The technical information included in this news release has been reviewed and approved by the Company’s Senior Vice President, Metallurgy and Technology Development, Mr. David Marsh, FAusIMM (CP), and Donald S. Bubar, P.Geo. both Qualified Persons under NI 43-101.

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