Mr. Scott Monteith reports

AVALON ANNOUNCES THE COMMENCEMENT OF FEASIBILITY STUDY AT LAKE SUPERIOR LITHIUM PROJECT, ONTARIO

Avalon Advanced Materials Inc. has commenced feasibility study (FS) engineering for its Lake Superior Lithium Inc. (LSLi) lithium hydroxide processing project in Thunder Bay, Ont., Canada.

Following the successful completion of a preliminary economic assessment (PEA) in September, 2024, Avalon has assembled a highly experienced and integrated engineering team to advance the project through the FS phase. The contracting process included a comprehensive review of proposals from multiple qualified firms, culminating in the selection of the most technically aligned and cost-effective partners for the next stage of project development.

Nordmin Engineering Ltd. has been engaged as the lead FS consultant, responsible for the overall project co-ordination, as well as design of the processing plant and site infrastructure in collaboration with Primero Americas Inc. and Krech Ojard & Associates. Complementing Nordmin's role, Avalon has retained Metso Corp., which previously engaged during the PEA phase and is already deeply familiar with the project's data and design basis.

Each discipline within the feasibility study will be overseen by qualified persons under National Instrument 43-101, ensuring technical continuity and regulatory rigor throughout the FS process. These firms were selected following a rigorous evaluation and competitive review process, based on their demonstrated technical excellence, team integration and relevant experience on the project. Together, they form a cohesive and high-calibre engineering consortium with proven success delivering complex lithium projects.

"We are excited to move into the feasibility engineering phase for the Lake Superior Lithium project," stated Scott Monteith, president and chief executive officer of Avalon. "The feasibility study builds on the technical and commercial groundwork established in the PEA as the project advances toward partnership engagement and financing readiness. With a strong technical foundation, a highly experienced, and capable in-house owner's team and a solid funding position, Avalon is well positioned to deliver the feasibility study in the first half of 2027 and move decisively toward construction readiness. The LSLi processing facility will position Avalon to play a key role in the emerging North American lithium supply chain serving EV and energy storage markets."

"Nordmin Engineering is very pleased to support Avalon in advancing the feasibility study for the LSLi project," said Kurt Boyko, director, consulting engineering, of Nordmin Engineering. "This study represents an important step in demonstrating the potential of a significant project at LSLi, and we're proud to contribute our technical expertise to its development. We look forward to working closely with Avalon's team to deliver a high-quality and comprehensive study."

North American electrification and energy storage markets remain reliant on offshore lithium conversion capacity, as commercial-scale refining of battery-grade lithium currently occurs largely outside of North America. Avalon's decision to advance toward a feasibility study marks a meaningful step forward in positioning LSLi as one of the first lithium refineries in Canada and a prospective contributor to a more secure North American battery supply chain.

Notably, the feasibility study will include trade-off studies with a comprehensive evaluation of whether battery-grade lithium hydroxide and/or lithium carbonate represents the optimal final product for the facility, based on evolving market demand, customer qualification requirements and downstream engagement.

In October, 2025, the company closed a $18.65-million financing and committed to advancing its core rare-earth and lithium assets through updating technical and economic studies. The initiation of a feasibility study for its planned lithium refinery demonstrates the company's execution on those commitments, advancing project readiness, and supporting continuing strategic partnership and financing discussions.

2024 PEA demonstrated strong project economics

The September, 2024, PEA was prepared by DRA Americas Inc. and demonstrated the project's compelling economic viability. The PEA considered a design capacity for the annual production of 30,000 tonnes of battery-grade lithium hydroxide (LiOH).

Key highlights of PEA include:

• After-tax net present value (NPV) of $4.1-billion at 8-per-cent discount rate;
• After-tax internal rate of return (IRR) of 48 per cent for the 30-year period;
• Initial capital cost $1.2-billion and total capital cost $1.3-billion;
• All-in life-of-project operating costs of $13,029/tonne (includes spodumene purchased);
• Innovative Metso technology provides an environmentally clean process over conventional lithium hydroxide processes;
• Strategically located in historical industrial land with well-established infrastructure.

The basis of the PEA is built on the utilization of the innovative Metso lithium hydroxide conversion technology that is currently being tested. This technology allows for a clean zero-discharge process with no acid roasting and the production of a byproduct that can be used as an industrial building material.

Lake Superior lithium hydroxide facility overview

Avalon Advanced Materials Inc. owns 100 per cent of the property situated on the north shore of Lake Superior approximately 13 km northeast of Thunder Bay, at 965 Strathcona Ave. It was formerly a pulp and paper facility last owned by Smurfit-Stone.

Metso process design

The plant will utilize Metso's proprietary technologies, which includes calcination, pressure leaching, conversion, purification through ion exchange (IX), and crystallization before the drying and packaging processes to ensure the production of high-quality lithium hydroxide monohydrate. Metso's technologies will enable the creation of a compact, energy-efficient lithium hydroxide production plant with minimal chemical usage, aiming to produce 30,000 tonnes per annum of battery-grade lithium hydroxide monohydrate (LHM).

Infrastructure

The project benefits from having significant existing infrastructure, enabling accelerated development of the project.

Roads

The property is accessed via Shipyard Road which intersects Strathcona Avenue. Strathcona Avenue is linked to the Trans-Canada Highway (Highway 11/17) by Spruce River Road just east of the property. Internal roads for the property will be developed to access all buildings for personnel movement and commercial deliveries.

Port

An existing deepwater port will provide access to the property via Lake Superior, enabling the products to reach customers in Ontario and beyond. Plans are in place to refurbish the existing port. An existing warehouse adjacent to the deepwater port will be utilized for offloading spodumene concentrate from the Great Lakes freighters. The warehouse will be refurbished and retrofitted with material handling equipment to receive the spodumene concentrate.

Rail

A CN Rail line runs along the property dead ending just east of the property. A spur from the rail line currently enters from the northeast corner. The rail spur splits into multiple spurs and enters the existing warehouse adjacent to the deepwater port. Additional spurs will be added to allow for spodumene concentrate offload and analcime load out. The existing spurs entering the warehouse will require refurbishment. Rail will be the primary method used for the delivery of spodumene concentrate when the lithium mines in the region come on line in the years to come. Rail will also be utilized to transport reagents to site and byproducts from site.

Spodumene concentrate storage

After being offloaded the spodumene concentrate will be conveyed from the rail and deep water port facilities to a spodumene concentrate storage building. The facility will provide dry storage feed buffering for management of feed material and inventories, ensuring stable continuous operation of the process.

Fresh water

Fresh water is required for the process, a freshwater intake is envisioned in Lake Superior.

Potable water and sewage

The property is serviced by Thunder Bay municipal sewage and potable water utilities.

Other utilities

Two 115,000 VA power lines run adjacent to the property to the north. An electrical substation will be installed to connect to the grid power and provide electricity to the process. Natural gas is available on site and will be primarily used for heating in the calciner process, and for building area heating.

Analcime storage

A byproduct, mix of Analcime and calcium carbonate, will be produced from the process. The byproduct material will be dried and conveyed to the analcime storage building. The Analcime material can be loaded onto railcars and shipped externally to customers to be used in industrial applications and construction material such as concrete additive.

About Avalon Advanced Materials Inc.

Avalon Advanced Materials is a Canadian critical minerals company advancing the supply of materials essential for Canada's future. 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 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 and Lilypad lithium-cesium deposits.

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