CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
TSX: AVL
OTCQX: AVLNF
A fresh look at Technology Metals
opportunities at Nechalacho, NWT
May 2018 Donald S. Bubar
President & CEO
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Forward looking information
This corporate presentation contains or incorporates by reference “forward looking statements” within the meaning of the United States Private Securities Litigation
Reform Act of 1995 and applicable Canadian securities legislation, which may not be based on historical fact. Readers can identify many of these statements by
looking for words such as “believe”, “expects”, “will”, “intends”, “projects”, “anticipates”, “estimates”, “continues” or similar words or the negative thereof.
Statements that are not based on historical fact contained in this presentation, including through documents incorporated by reference herein, are forward-looking
statements that involve risks and uncertainties that could cause actual events or results to differ materially from estimated or anticipated events or results reflected
in the forward-looking statements . Such forward-looking statements reflect the Company’s current views with respect to future events and include, among other
things, statements regarding targets, estimates and/or assumptions in respect of reserves and/or resources , and are based on estimates and/or assumptions
related to future economic, market and other conditions that, while considered reasonable by the Corporation, are inherently subject to risks and uncertainties,
including significant business, economic, competitive, political and social uncertainties and contingencies. These estimates and/or assumptions include, but are
not limited to: grade of ore; rare metal and by-product commodity prices; metallurgical recoveries; operating costs; achievement of current timetables for
development; strength of the global economy; availability of additional capital; and availability of supplies, equipment and labour. Factors that could cause the
Company’s actual results, performance, achievements, developments or events to differ materially from those expressed or implied by forward-looking statements
include, among others, but are not limited to, market conditions, the possibility of cost overruns or unanticipated costs and expenses, the impact of proposed
optimizations at the Company’s projects, actual results of exploration activities, mineral reserves and mineral resources and metallurgical recoveries,
discrepancies between actual and estimated production rate, mining operational and development risks and delays, regulatory restrictions (including
environmental), activities by governmental authorities, financing delays, joint venture or strategic alliances risks, or other risks in the mining industry, as well as
those risk factors discussed or referred to in the Company’s annual Management’s Discussion and Analysis and Annual Report filed with the securities regulatory
authorities in all provinces and territories of Canada, other than Québec, and available at www.sedar.com. Most of the foregoing factors are beyond Avalon’s
ability to control or predict. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or
intended. There can be no assurance that the plans, intentions or expectations upon which these forward-looking statements are based will occur. The forward-
looking statements contained herein are qualified in their entirety by this cautionary statement. Readers should not place undue reliance on the forward-looking
statements, which reflect management’s plans, estimates, projections and views only as of the date hereof. The forward looking statements contained herein is
presented for the purpose of assisting readers in understanding the Corporation’s expected financial and operating performance, and the Company’s plans and
objectives, and may not be appropriate for other purposes. Avalon does not undertake to update any forward-looking statements that are contained herein, except
in accordance with applicable securities law. The geological information contained in this presentation has been reviewed and approved by Don
Bubar P. Geo. (ONT) and President & CEO, Avalon Advanced Materials, qualified person for the purposes of National Instrument 43-101.
2
Safe Harbour Statement
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
• Soaring demand for neodymium and praseodymium for use in high
strength magnets - now vital for electric motors used in electric
vehicles
• Rising prices of neodymium and praseodymium
• Presence of high grade, near surface Nd-Pr and Dy resources in
T-Zone and Lake Zone
• T-Zone also contains significant lithium resources as lepidolite /
polylithionite - which are in increasing demand to make lithium
battery materials
• Potential for near-term, small-scale development to produce Nd-Pr
rich concentrates for export
3
What has changed since 2013?
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
• Focus on materials that enable clean technology
• Design the operation to minimize environmental impacts and plan for
productive use of the land post closure
• Focus on process efficiency, minimizing waste and maximizing the
recoverable products from the ore
• Apply a staged development approach, starting at a modest scale, to
minimize project footprint and potential risks to environment, while
also reducing investment risk
• Engage early and often with local indigenous communities to create
awareness about risks and the opportunities for business
partnerships and job creation
4
Avalon’s Sustainable Development Strategy
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Nechalacho Project History: Part 1
First U, then Nb-Ta, later Be create interest
1970-71: The first claims were staked in the area on a radiometric anomaly
and optioned to Giant Yellowknife Mines as a uranium prospect.
1976: Highwood Resources, while exploring for uranium, discovered that
the property was in fact host to niobium-tantalum and REE mineralization.
1980: Placer Dome, recognizing the size potential of the “Lake Zone,”
optioned the property and conducted geophysics, drilling and metallurgical
tests for Nb and Ta. PD dropped the option in 1982 because the Nb-Ta
mineralization was too fine-grained for liberation.
1983: Follow-up drilling by Highwood on Lake Zone and T-Zone
1983-85: Highwood discovered beryllium in the T-Zone and focused on
North T. A decline was driven into the North T-Zone and a bulk sample
extracted for metallurgical testing and market development.
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Nechalacho Project History: Part 2
Be, then Y and HREE, now Nd-Pr, Dy & Li
1986-90: Highwood joint ventured the North T to Hecla and later Conwest
with further metallurgical testwork completed for beryllium and yttrium.
1999: Dynatec took control of Highwood and re-activated the project.
2001-02: Navigator optioned the property focused on tantalum, but
relinquished it when tantalum prices dropped.
2002-05: Highwood re-organized and spun out Thor Lake into a new
public company called Beta Minerals, but did no new work.
2005: Avalon acquired the property and began re-evaluating Lake Zone
REE potential as well as North T, leading to completion of 2007 Scoping
Study followed by initial drilling in 2006-07.
2008: Discovery of Basal Zone high grade HREE resource leads to major
work program culminating in full Feasibility Study in 2013.
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
7
Avalon Share Price vs.
REE Prices 2008-2013
Rare Earth Oxide Commodity Price Index (FOB $US/tonne) vs Share Price ($CAD)
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
What are Rare Earth Elements?
Light REE:
La = Lanthanum
Ce = Cerium
Pr = Praseodymium
Nd = Neodymium
Sm = Samarium
Heavy REE:
Eu = Europium
Gd = Gadolinium
Tb = Terbium
Dy = Dysprosium
Ho = Holmium
Er = Erbium
Tm = Thulium
Yb = Ytterbium
Lu = Lutetium
Y = Yttrium
Critical Magnet REE: Neodymium, Praseodymium and Dysprosium
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
• REE (NdFeB) or “Neo” Magnets reduce
electric motor/generator size and weight, and
reduce power consumption
• Major applications include:
• Electric Cars (5-10 kg)
• Hybrid-electric cars (1-3 kg)
• Wind turbines (0.6-1.0 tonne/MW)
• MRI machines (1-3 tonnes)
• Trend toward larger volume applications
• Approximately 30% of the magnet is neodymium-praseodymium metal
• HREE dysprosium and terbium additions are key to making “heat resistant” magnets
vital to automotive and other applications
• The world still largely relies on China for rare earth supply where it is still produced
unsustainably. New sustainable sources are needed.
Electric Motors for EVs rely on rare
earth magnets using Nd-Pr
100 Kw generator
with neo magnets
9
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
10
Report on Critical Materials for the EU All REE are seen as having supply risk
Report of the Ad hoc Working Group on defining critical raw materials May 2014
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Neodymium Prices Steady increase from 2015 to 2018 predicted to continue
11
Price used in Avalon FS (2013) $76.78/kg
Price predicted for 2022 $123/kg
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
12
Rare Earth Elements Supply Chain
Requires significant capital investment
Mining Milling Hydro-
metallurgy
Refining Reduction Applications
From the
ground to
crushed
ore
Beneficiation &
concentration
of REE
minerals
Cracking & dissolving
the REE minerals to
produce a mixed REE
oxide precipitate
Separating and
purifying the
individual REE
oxides
To metals for
specific applications
such as magnet
alloys
Permanent magnets
for automotive and
consumer electronics
phosphors in lighting,
etc.
Avalon’s contribution to REE supply chain Value added
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
NORTHWEST TERRITORIES
Fort Smith
Fort Resolution Hay River/
K’atl’odeeche
Canadian National Railway
Yellowknife
Pine Point
Bluefish
Hydro Dam
Taltson
Hydro Dam
Great
Slave
Lake
Behchoko
13
Thor Lake Area and Regional
Infrastructure
]
] Snare
Hydro Dam
Lutsel K’e
Proposed
National Park
Thor Lake
(Nechalacho Mine and Concentrator)
ALBERTA
N
0 100 km
Whati
SASKATCHEWAN
Potential
Hydro Line
]
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
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• A world-class technology
metals resource with
numerous zones enriched in
REE, lithium, beryllium,
niobium, tantalum, gallium and
zirconium
• Several near surface zones
highly enriched in Nd-Pr: T-
Zone and Tardiff Lake Zones
Nechalacho
North Tardiff Zone
South Tardiff Zone
Lake Zone
Line of Cross Section
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Nechalacho Lake Zone General
Geology (Vertical Cross Section Looking West)
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Looking west at 416200E
High Grade “Basin”
S N
1600 metres
Upper Zone
Basal Zone High Grade HREE “Basin”
T-Zone deposits are satellite pegmatites
to the north also rich in Nd-Pr, as well as
lithium and beryllium
N S
North & South Tardiff
Rich in Nd-Pr grading up to
8%TREO and 2% Nd+Pr
North and South Tardiff Lakes
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Nechalacho 2013 Feasibility Study
Basal Zone Development Concept
• Mining underground drift and
fill/long-hole stoping at 2,000 tpd, or
730,000 tonnes per year (tpy)
• Flotation process to produce
130,000 tpy of mineral concentrate
• Hydrometallurgical treatment of
mineral conc by sulphuric acid bake
at Pine Point to yield 55,000 tpy of
REE conc and 112,000 tpy of
Enriched Zirconium Conc (EZC)
• Rail shipment of REE Conc to
Refinery in southern U.S. (Geismar,
Louisiana)
• Planned initial production of 7,000 tpy
separated REE oxides plus EZC (with
Nb, Ta, HREE)
• CAPEX:
CAD$1.575 billion (incl. refinery and
sustaining capital)
• Operating Costs:
CAD$265 million/ year or $362/mined
tonne of ore (all inclusive)
• Revenues: CAD$646 million /year or
$885/ mined tonne of ore
• Pre-tax IRR: 22.5%
• NPV @ 10%: $1.35 billion
17
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
18
Measured and Indicated Resources in the Basal Zone at
Various NMR Cut-offs (August 2013)
Basal Zone Tonnes
(millions)
%
TREO
%
HREO
% HREO/
TREO
%
ZrO2
%
Nb₂O₅ %
Ta₂O₅
US$345 NMR Cut-Off (Reflects entire Basal Zone)
Measured 12.56 1.71 0.38 22.50 3.20 0.405 0.0404
Indicated 49.33 1.62 0.35 21.27 3.07 0.405 0.0398
US$800 NMR Cut-Off (Approximately Reflects High Grade “Basin”)
Measured 5.11 2.20 0.58 26.17 4.23 0.52 0.0544
Indicated 16.15 2.20 0.55 24.87 4.13 0.52 0.0542
US$1,000 NMR Cut-Off (Selected parts of High Grade “Basin”)
Measured 2.49 2.49 0.68 27.38 4.77 0.59 0.0620
Indicated 6.99 2.52 0.66 26.03 4.66 0.58 0.0614
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Near-surface Rich Nd-Pr Mineralization –
North and South Tardiff Zones
Thor Lake
Long Lake
S Tardiff
N Tardiff
N Tardiff surface
mineralization
S Tardiff surface
mineralization
Trench B (Bastnaesite): 7-8% TREO (2.0% Nd+Pr)
Trench Zr (Zircon): 3.8-5% TREO (0.7% Nd+Pr)
DH 519 3.5% TREO/9.8m with 8.6kg/t Nd+Pr
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Target Potential for >1 million tonnes at 2.5 – 3.5%
TREO
At surface so small open pit
~8 kg/tonne Nd2O3+Pr2O3
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Nechalacho: Known Mineralized Zones
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North Tardiff Zone
North Tardiff
Zone
North T Deposit
South T Deposit
Lake Zone
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
• A decline was driven into
the North T Deposit in 1983-
85 to conduct underground
exploration and recover a
bulk sample of the high-
grade beryllium ore
• Decline also intersected the
F-Zone Nd-Pr and Y-Zone
lithium resources near-
surface
21
North T Deposit
3-D Model
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
22
Mineralized Zones - North T Deposit
Y-Zone is also a rich lithium resource!
F Zone: 43,877 tonnes at 6.50% TREO including 1.55% Nd oxides
Y Zone is enriched in lithium mica (lepidolite) but never assayed systematically
and also contains xenotime which is rich in HREO including dysprosium
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
• The adit into the North T encounters the first mineralization in the F
Zone (subzone of North T Deposit)
• The F Zone has 43,877 tonnes at estimated 6.5% TREO with
estimated 1.5% Nd2O3 (15 kgs/t) plus 0.2% Pr2O3 (2 kgs/t)
(Bastnaesite-Quartz mineralization)
• Small tonnage but very high grade REE and bastnaesite readily
recoverable using low-cost optical sorting or DMS technology
• Nd2O3 and Pr2O3 projected value 2020 is >$100/kg so this is
US$1000+ rock gross value
• Mining out the F Zone would open further access to the deeper lithium,
beryllium and xenotime (Dysprosium) rich portions of the North T
deposit
23
The S, R and T Zones also rich in REE
F Zone – Particularly high grade REE
Note: Resource estimate from Avalon Preliminary Economic Assessment (2007) NI 43-101 report available on SEDAR
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
North T Deposit F-Zone Bastnaesite:
Highly Enriched in Nd-Pr
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Bastnaesite amenable to recovery using low cost DMS techniques
Cut-offCutting
Element
Sub-
ZoneTonnes Density
TREO +
Y2O3 %%Ce2O3 %Nd2O3 %Y2O3
0.1 %Ce2O3 F 43,877 2.68 6.50 3.14 1.55 0.06
Note: Resource estimate from Avalon Preliminary Economic Assessment (2007) NI 43-101 report available on SEDAR
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
• The S, North T and South T Zones at Thor Lake are all polylithionite (“lepidolite”) bearing
• The North T has polylithionite, with 6.97% Li2O predominantly in the Upper Intermediate Zone. Lithium resources not yet defined because there was no systematic assaying for lithium.
• The South T has reported 2.39Mt of low grade Be mineralization with no analyses for lithium but abundant polylithionite reported (it is a high Be-Nb deposit as well)
• R and S Zones have polylithionite (6.6% Li2O in mineral) on surface but not drilled. S Zone trench samples ave. 1.0% Li2O.
• Potential for lepidolite tonnage equal to or greater than the present Separation Rapids lepidolite resource (1.85Mt at 1.38% Li2O)
Polylithionite / lepidolite (lithium)
mineralization at Nechalacho
(Note polylithionite is a type of lepidolite)
25
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
F-Zone Li-Mica (grey
mineral) zone in walls
of decline underground
in the North T Deposit
26
Resources delineated in the
T Zone Deposits but not
analyzed for lithium:
North T (460,000 t)
South T (2,390,000 t)
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
• Leaders in Aboriginal Community Outreach
• The name Nechalacho was formally conveyed by
the YKDFN in a ceremony held at site in 2009 in
respect of the First Nations’ traditional land use
• Accommodation Agreements
• Signed with Deninu K’ue First Nation and
NWT Métis Nation (Participation Agreement)
• Negotiations completed with Lutsel K’e Dene
• Continuing engagement with NSMA,
Yellowknives Dene, Tli Cho, KFN
• Completed and approved Report of Environmental Assessment
• Received preliminary construction Class A Land Use Permit (April 2014) and Class B
Water License (May 2014) and site preparation initiated.
• Final permitting process can be completed when work at the site resumes
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Environmental and Social
Responsibility at Nechalacho
Naming ceremony attended by YKDFN Chiefs
Edward Sangris and Ted Tsetta
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Nechalacho: Plans for 2018
• Complete scoping study on East Arm-YK Road / Hydro infrastructure
corridor (in progress)
• Prepare scoping study on small scale development model for F-
Zone and Tardiff Zones Nd-Pr resources
• Re-sample old drill cores to analyze for lithium and establish initial T-
Zone lithium resource estimate
• Look at Dysprosium potential deeper in North T
• Resume permitting process and community engagement toward
identifying local indigenous business partners
CRITICAL MATERIALS FOR A SUSTAINABLE FUTURE
Contact us: 1901-130 Adelaide St. W.
Toronto, Ontario, Canada
M5H 3P5
+1 (416) 364-4938
Thor Lake, NWT
www.AvalonAdvancedMaterials.com
TSX: AVL
OTCQX: AVLNF
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