Mr. Scott Monteith reports

AVALON ANNOUNCES $3.5M FINANCING FROM JV PARTNER AND MAJOR SHAREHOLDER SIBELCO

Avalon Advanced Materials Inc. has completed $3.5-million in convertible debenture financing from its significant shareholder, SCR-Sibelco NV, a global leader in material solutions and a leader in the mining and processing of high-purity quartz. The proceeds will be used to finance the advancement of its Lake Superior lithium project in Thunder Bay, the Nechalacho REE (rare earth element) and zirconium project in the Northwest Territories, and for working capital and general and administrative expenses.

Sibelco has provided an additional financing of $3.5-million to Avalon by way of an amended and restated debenture. The debenture replaced the company's existing $3-million convertible secured debenture (dated June 14, 2023, and amended on Nov. 9, 2023) and has a principal amount of $6.5-million.

Scott Monteith, chief executive officer and director of Avalon, commented: "We are very pleased to have secured this new $3.5-million financing from our JV [joint venture] partner, Sibelco. We are preparing our new mineral resource estimate at the Separation Rapids JV project, and this new funding will enable us to accelerate the technical studies on our Lake Superior lithium project."

Avalon has applied for both provincial and federal funding in support of the Lake Superior lithium project in Thunder Bay. Avalon also recently published the results of a preliminary economic assessment (PEA) on Sept. 3, 2024, showing positive results, including an after-tax net present value of $4.1-billion at an 8-per-cent discount rate and capex (capital expenditure) of $1.3-billion.

The debenture bears interest at 7.5 per cent per annum, with the principal and accrued interest payable on maturity, which will be Nov. 18, 2026. Should the debenture not be repaid by Avalon at maturity, Sibelco has the right to: (a) convert the outstanding principal and accrued interest into additional common shares of Avalon at a price equal to the greater of: (i) the 15-day volume-weighted average price of the company's common shares on the Toronto Stock Exchange immediately prior to the exercise of this right; and (ii) the minimum price allowed by the TSX; or (b) convert the outstanding principal and interest into additional common shares of the Avalon-Sibelco joint venture company, Separation Rapids Ltd. (SRL), based on a prorated formula.

If the entire amount of the debenture and accrued interest is converted at maturity, then Sibelco's JV interest in SRL will be increased by 30 per cent. This would result in a change in the participating interests of Sibelco and Avalon in SRL to 90 per cent and 10 per cent, respectively. Sibelco will also have the right to exercise its conversion rights prior to maturity if Avalon does not make certain reductions in its corporate and administrative costs. The debenture will continue to be secured by a pledge of Avalon's shares in SRL.

About Avalon Advanced Materials Inc.

Avalon Advanced Materials is a Canadian advanced manufacturing company focused on vertically integrating the Ontario lithium supply chain. The company, through its joint venture with SCR-Sibelco NV, is currently developing its Separation Rapids lithium deposit near Kenora, Ont., while also continuing to advance the Snowbank lithium project and the Lilypad lithium-cesium project. Avalon is also working to develop its Nechalacho rare earth and zirconium project located in the Northwest Territories. This deposit contains critical minerals for use in advanced technologies in the communications and defence industries, among other sectors.

In addition to these upstream activities, Avalon is executing on a key initiative to develop Ontario's first mid-stream lithium hydroxide processing facility in Thunder Bay, Ont., a vital link bridging the lithium resources of the north with the downstream EV (electric vehicle) battery manufacturing base in the south.

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