Toronto, Ontario--(Newsfile Corp. - April 2, 2026) - Avalon Advanced Materials Inc. (TSX: AVL) (OTCQB: AVLNF) ("Avalon" or the "Company") announced today that it has completed the strategic reorganization of its Separation Rapids joint venture with SCR-Sibelco NV ("Sibelco"), pursuant to which Avalon has exited its 40% interest in Separation Rapids Ltd. ("SRL") and retained full ownership of the Lilypad cesium project. The transaction results in a debt-free balance sheet, enhanced strategic focus, the elimination of a significant source of potential shareholder dilution, and a simplified corporate structure.

Transaction Highlights

• Strengthens Balance Sheet and Eliminates ~15% Potential Shareholder Dilution

  • Eliminates approximately $7.5 million of debt and accrued interest in a non-cash manner by transferring Avalon's 40% interest in SRL to Sibelco, while recovering its 100% interest in the Lilypad cesium project.

  • Fully extinguishes the convertible debenture without issuing shares or using cash.

  • Removes the risk of issuing ~15% more shares to repay the debt, as the debenture allowed Sibelco to convert the amount owing, including accrued interest, into Avalon shares at maturity. The transaction eliminates this risk by fully extinguishing the debenture.

  • Avoids dilution and strengthens the Company's financial position.

• Sharpens Strategic Focus

  • Exits Separation Rapids, a petalite-based lithium asset not aligned with Avalon's current spodumene-based lithium refinery feedstock strategy

  • Aligns portfolio with the Company's focus on establishing a fully scaled critical minerals platform focused on rare earth and lithium.

• Obtains 100% Ownership of Lilypad Cesium Project

  • Positions Avalon to pursue near-term monetization opportunities given the project's exposure to cesium, a critical mineral characterized by limited global supply and increasing demand across industrial and advanced technology applications.

  • Enhances flexibility to generate value through strategic transactions

Transaction Overview

Under the terms of the agreement:

• Avalon will receive full ownership of the Lilypad cesium project

• The outstanding convertible debenture has been fully satisfied and extinguished

• Sibelco will increase its ownership of SRL from 60% to 100% and retain the Separation Rapids project

• No cash consideration will be exchanged between the parties

As a holder of more than 10% of the issued and outstanding common shares of Avalon, Sibelco is a related party of the Company, and the transaction constituted a "related party transaction" for the purposes of Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). The Company was exempt from the formal valuation and minority shareholder approval requirements under MI 61-101 pursuant to Sections 5.5(a) and 5.7(1)(a), respectively, because neither the fair market value of the subject matter of the transaction, nor the fair market value of the consideration for the transaction, at the time the transaction was agreed to exceeded 25% of the Company's market capitalization, as determined in accordance with MI 61-101. The transaction was unanimously approved by the board of directors of the Company, with no materially contrary view by any director and with Sibelco's nominee to the board abstaining from voting.

The Company did not file a material change report more than 21 days before the expected closing date of the Transaction, which it considers reasonable in the circumstances, as the terms of the transaction were not settled until shortly prior to the closing and the Company wished to close the transaction on an expedited basis for sound business reasons.

Strategic Rationale

• Sharpens Avalon's strategic focus on its core rare earth and lithium assets and simplifies its capital structure.

• Avalon becomes debt-free and removes a significant source of potential shareholder dilution - estimated at approximately 15% to otherwise satisfy the debt, strengthening its balance sheet.

• Enables Avalon to exit an asset that does not align with its lithium refinery strategy focused on building spodumene-based North American midstream processing capacity, while recovering full ownership of the Lilypad cesium project, which provides a clear path to near-term value realization through potential strategic transactions.

Management Commentary

"This is an important step in sharpening Avalon's strategic focus," said Scott Monteith, President and Chief Executive Officer. "We are eliminating a significant source of potential shareholder dilution, simplifying our corporate structure, and aligning our asset base with our long-term strategy. While Separation Rapids is a high-quality asset, our current strategy is focused on optimizing the portfolio around spodumene-based feedstock for our lithium refinery. Importantly, we regain 100% ownership of the Lilypad cesium project, which we believe provides a clear path to near term monetization and value creation. This positions Avalon to move forward with greater clarity and assets aligned with our long-term strategy - establishing Avalon as a fully-scaled critical minerals platform focused on rare earth and lithium."

"Importantly, Avalon emerges debt-free, eliminating approximately $7.5 million of debt and accrued interest - without issuing shares or using cash, and removes a meaningful dilution overhang," said Lorin Crenshaw, Chief Financial Officer. "This strengthens our financial position, preserves shareholder value, and positions the Company to pursue future strategic initiatives from a position of even greater strength."

"This transaction aligns well with Sibelco's strategy to focus on industrial minerals solutions for ceramics, glass, and specialty applications," said Nick Traber, Executive Vice President and Executive Committee member of Sibelco. "By consolidating ownership of Separation Rapids, we are strengthening our ability to advance a high-quality petalite resource that fits directly within our core markets. We also welcome Avalon's continued progress in building a focused lithium and rare earth platform."

About Avalon Advanced Materials Inc.

Avalon Advanced Materials Inc. is a Canadian critical minerals company focused on advancing lithium and rare earth elements — two of the fastest-growing segments of the global energy transition. The Company is developing strategic assets to participate in high-growth markets and support the build-out of secure North American supply chains. Avalon is advancing the Nechalacho Rare Earth Elements and Zirconium Project in the Northwest Territories, which contains all light and heavy rare earth elements, as well as yttrium, zirconium, tantalum, and niobium-critical minerals used in advanced technologies across the communications, defense, advanced technologies, and energy sectors. The Company is also focused on vertically integrating the Ontario lithium supply chain through the development of Lake Superior Lithium Inc., Ontario's first midstream lithium hydroxide processing facility, located in Thunder Bay. This facility will serve as a cornerstone of North America's integrated battery materials supply chain, transforming northern Ontario lithium into essential inputs for transportation, grid storage, and advanced manufacturing.

Cautionary Statement Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "add" or "additional", "advancing", "anticipates" or "does not anticipate", "appears", "believes", "can be", "conceptual", "confidence", "continue", "convert" or "conversion", "deliver", "demonstrating", "estimates", "encouraging", "expand" or "expanding" or "expansion", "expect" or "expectations", "forecasts", "forward", "goal", "improves", "increase", "intends", "justification", "plans", "potential" or "potentially", "promise", "prospective", "prioritize", "reflects", "robust", "scheduled", "suggesting", "support", "top-tier", "updating", "upside", "will be" or "will consider", "work towards", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved".

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including those risk factors discussed or referred to in the annual information form of the Company dated November 26, 2025 (the "AIF") under the heading "Description of the Business - Risk Factors". Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Although the Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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