Mr. Scott Monteith reports

AVALON AND ENGINA SUCCESSFULLY RECOVERED 15 RARE EARTH ELEMENTS WITH BREAKTHROUGH PROCESSING TECHNOLOGY FOR NECHALACHO PROJECT, NWT CANADA

Avalon Advanced Materials Inc. and Engina Corp. have completed a joint assessment confirming that Engina's proprietary hybrid supercritical refining (HSR) process, a next-generation rare earth extraction technology, can deliver breakthrough performance for Avalon's Nechalacho in the Northwest Territories, Canada.

The assessment confirms that Engina's next-generation hydrometallurgical process, which integrates a unique caustic pretreatment, together with supercritical fluid extraction, demonstrated overall rare earth recoveries exceeding 90 per cent in preliminary bench-scale testing across the full rare earth element inventory present in the Nechalacho concentrate under moderate operating conditions while also significantly reducing chemical consumption and environmental impact compared with the conventional acid bake-water leach (ABWL) and molten caustic-cracking routes previously assessed by Avalon.

The assessment was led by internationally recognized Dr. Gisele Azimi, PEng, of Engina. Dr. Azimi is a leading expert in hydrometallurgical process innovation and advanced materials engineering.

Transformative results and environmental benefits

The HSR process represents a step change in rare earth extraction technology. It is designed as a largely closed-loop, water-lean system. Based on modelling and design targets, the process is designed to eliminate the need for sulphuric acid plant operations and associated emissions and sulphate tailings and produce near-neutral, non-hazardous solids. Based on the modelling results, the process significantly reduces neutralization waste compared with existing hydrometallurgical circuits and operates with minimal combustion and no sulphuric acid handling, minimizing greenhouse gas emissions and improving worker safety. This innovative method, leveraging well understood and proven separation technology from other process intensive industries uses recycled CO2 (carbon dioxide) as the principal extraction solvent.

The initial design and simulations developed by Engina show that the hybrid circuit is expected to offer a lower specific energy intensity than the ABWL or traditional caustic-cracking processes and may be evaluated for integration in Avalon's Pine Point envisioned plant pending successful pilot-scale validation and subsequent engineering studies.

While the current HSR flow sheet delivered in the technology assessment focuses on rare earth extraction, the process modelling indicates that the caustic pretreatment step converts zirconium- and niobium-bearing minerals into reactive forms. Optional downstream unit operations -- which are not part of the current HSR configuration and have not yet been experimentally validated -- could be developed to selectively recover these accessory critical minerals. These pathways may be evaluated in future engineering phases based on technical feasibility and economic merit.

Strategic collaboration with Avalon

The Nechalacho project, one of Canada's major rare earth projects, provides Avalon with an opportunity to establish a sustainable, low-carbon supply chain for critical materials essential to clean-energy, medical and defence technologies. Engina's work supports Avalon's commitment to next-generation, low-impact processing that enhances Canada's position in the global rare earth market and exemplifies Canadian-led innovation in critical mineral processing.

Scott Monteith, president and chief executive officer, commented: "We are very thrilled for this breakthrough in the extraction of some of the most crucial rare earth elements (REE). We live in a world today that clearly indicates the urgent need for REE and to avoid the dominance of a single-producer nation. With a feasibility study that was completed in 2013 and approximately $100-million spent on the Nechalacho REE project, we believe this is the most advanced REE project that could be in production shortly. This collaboration demonstrates how Canadian innovation can redefine critical mineral processing. Engina's HSR process combines chemical efficiency, environmental responsibility and scalability -- addressing the industry's urgent need for cleaner rare earth refining solutions."

Dr. Azimi of Engina commented: "The hybrid supercritical refining platform offers Avalon a genuinely new pathway for responsible rare earth extraction. Achieving high recoveries while reducing reagent use and environmental load is a rare combination in our industry. We are pleased with the initial results and are committed to working with Avalon to advance the systematic testing required to determine the technology's full commercial potential."

Next steps toward commercialization

The technology assessment report, delivered to Avalon in November, 2025, outlines a multiphase development road map:

• Bench-scale variability testing using multiple Nechalacho concentrate samples to confirm performance across ore types;
• Integrated continuous mini-loop operation to validate mass and energy balances and solvent recyclability;
• Techno-economic and environmental assessment, leading to pilot design;
• Continuous pilot plant (TRL 7-8) and full feasibility study to support commercial deployment.

These next steps will establish the design basis for Avalon's future rare earth recovery facilities and reinforce Engina's position as a technology partner of choice for sustainable critical mineral extraction.

Qualified person and National Instrument 43-101 disclosure

The scientific and technical data contained in this news release were reviewed and approved by Dr. Azimi, a non-independent qualified person under NI 43-101, Standards of Disclosure of Mineral Projects.

IP (intellectual property) and legal disclaimer

The hybrid supercritical refining (HSR) process referenced in this release is proprietary to Engina and is patent protected and patent pending. No rights or licences to Engina's intellectual property are granted or implied by this release.

About Avalon Advanced Materials Inc.

Avalon Advanced Materials is a Canadian critical minerals company advancing the supply of materials essential to a resilient North American supply chain. The company is focused on developing strategic assets that support secure, domestic supply chains and long-term economic growth. 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, defence, clean-tech 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 mid-stream lithium hydroxide processing facility, located in Thunder Bay. This facility will serve as a vital link between Northern Ontario's lithium resources and the growing EV (electric vehicle) battery manufacturing base in Southern Ontario and North America. Through a joint venture with SCR Sibelco NV, Avalon is advancing the Separation Rapids lithium project near Kenora, Ont., as well as continuing exploration at its Snowbank lithium deposit and Lilypad lithium-cesium deposit.

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