Mr. Scott Monteith reports

AVALON ADVANCED MATERIALS ANNOUNCES FINNVERA LETTER OF INTEREST SUPPORTING POTENTIAL EUR 100 MILLION FINANCING FOR METSO EQUIPMENT AND SERVICES AT THUNDER BAY LITHIUM PROCESSING FACILITY

Finnvera PLC, Finland's official export credit agency, has issued a non-binding letter of interest in connection with the potential financing of equipment and services to be supplied by Metso Oyj for Avalon Advanced Materials Inc.'s proposed lithium processing facility in Thunder Bay, Ont.

The letter follows an application submitted by Metso relating to an anticipated commercial contract with an estimated value of approximately 100 million euros. Finnvera has confirmed that sufficient Finnish interest has been established for it to consider supporting Metso's commercial contract through an export credit financing structure.

Subject to satisfactory due diligence, credit approval, and the establishment of an appropriate financing and security structure, Finnvera may provide a buyer credit guarantee for the benefit of an eligible arranging commercial bank. Finnish Export Credit Ltd., Finnvera's subsidiary, may also act as lender under the potential export credit facility.

"This letter of interest represents an important initial milestone in the development of a comprehensive financing strategy for Avalon's Lake Superior lithium processing facility," said Scott Monteith, president and chief executive officer. "Metso is a globally recognized processing technology and equipment provider, and the potential availability of Finnish export credit support provides Avalon with a credible pathway to finance a significant equipment package while advancing the development of a secure and resilient North American lithium supply chain."

Under Finnvera's financing framework, an export credit may generally finance up to 85 per cent of the value of eligible Finnish goods and services exported under the relevant commercial contract, together with certain eligible local costs, guarantee premiums and interest capitalized during construction. The ultimate amount and terms of any financing support would be determined following Finnvera's detailed assessment and would remain subject to its applicable policies, project-finance limits, internal credit requirements and final approvals.

"This development creates a potential foundation for long-term, government-supported project debt associated with the Metso equipment and services package," said Lorin Crenshaw, chief financial officer. "Importantly, it also enhances our ability to pursue an integrated financing structure that could combine export credit support with Canadian and U.S. government programs, commercial project debt, strategic investment, and customer or offtake-related financing. Our objective is to develop an optimized capital structure that minimizes our blended cost of capital by maximizing long-term institutional, strategic and project-level financing while minimizing reliance on parent-level common equity."

Avalon intends to work with Metso and Finnvera to further define the eligible equipment and service package, applicable due diligence requirements, and the potential financing process. The company also intends to evaluate eligible arranging banks and advance discussions regarding the prospective credit amount, tenor, security structure, covenants, repayment profile and any applicable offtake requirements.

The letter of interest is non-binding and does not constitute a legal commitment by Finnvera or Finnish Export Credit. Any financing would remain subject to, among other matters, legal, financial, market, technical, environmental and regulatory due diligence; satisfactory credit and project-risk assessments; the establishment of an acceptable commercial, financing and security structure; negotiation of definitive documentation; and final approvals by the respective boards of Finnvera and Finnish Export Credit. Accordingly, the potential financing remains subject to customary project finance due diligence, structuring and approvals, and there can be no assurance that definitive financing arrangements will ultimately be completed.

About Avalon Advanced Materials Inc.

Avalon is a Canadian critical mineral 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 buildout of secure North American supply chains. Avalon is advancing the Nechalacho rare earth element 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, 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 mid-stream lithium hydroxide processing facility, located in Thunder Bay. This facility is expected to serve as a cornerstone of North America's integrated battery material supply chain, transforming Northern Ontario lithium into essential inputs for transportation, grid storage and advanced manufacturing.

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