Mr. Don Bubar reports

AVALON CONTINUES TO ADVANCE METALLURGICAL WORK ON THE SEPARATION RAPIDS LITHIUM PROJECT, KENORA, ONTARIO

Avalon Advanced Materials Inc. is providing an update on the 2016 work program on its 100-per-cent-owned Separation Rapids lithium project, near Kenora, Ont. Since the last update (provided in the news release dated April 5, 2016), the company has initiated its lithium hydrometallurgical process development work at the facilities of Thibault and Associates Inc., Fredericton, N.B., utilizing the bulk concentrate sample produced in the winter. Thibault is an expert in applied process chemical engineering, with considerable experience in rare metals including lithium. The work is scheduled for completion in late June, following which the preliminary economic assessment will be finalized.

Lithium hydrometallurgical process development

The focus of the hydrometallurgical process development work is to produce a lithium hydroxide product from a petalite (lithium mineral) concentrate suitable for use in lithium-ion batteries. Preliminary work demonstrated that this product could be achieved employing a flowsheet using sulphuric acid as the primary solvent.

Recent work has successfully produced a very high-purity lithium sulphate solution from the petalite concentrate. This is currently being converted to lithium hydroxide solution via an established electrolysis process using another service provider. Preliminary observations indicate a lithium hydroxide conversion efficiency matching, and possibly exceeding, original expectations.

Avalon personnel recently visited with a number of key equipment suppliers and technology experts in Europe in order to review alternative processes and technologies in key aspects of the proposed flowsheet. One such area is the use of fluidized bed roasting in place of conventional processing via rotary kilns. This technology offers significant reductions in energy requirements as well as better operating control. Other potential opportunities for optimization were also identified with regard to upfront ore sorting, modularized flotation plant design and acid-roasting equipment.

Avalon has been active in finalizing the logistics for piloting the complete process flowsheet from optical ore sorting through to battery-grade lithium hydroxide production. To this end, Avalon is in discussion with vendors and technology centres both in Europe and North America and plans to proceed with these programs later in 2016.

Feldspar and silica byproducts

Avalon is awaiting the results of testwork being conducted in Europe to evaluate the suitability of the feldspar byproduct as a paint filler product. Discussions with vendors of suitable mills for the fine-grinding requirements both in Europe and North America are already in progress. Results of testwork evaluating the potential production of a high-purity silica byproduct are also awaited and should be available by the end of May. Successful inclusion of one or both byproducts into the final project will potentially improve overall project economics and reduce the environmental footprint.

Avalon is also awaiting further feedback from potential glass industry customers interested in the petalite concentrate as an industrial mineral product for glass ceramics.

Other project activities and future plans

Engineering work continues for the PEA, which is currently scheduled for completion this summer. The company is advancing capital and operating cost estimates, and evaluating various production scenarios. Samples of products from the flotation plant process have been sent for environmental testing as part of the project permitting process.

Avalon continues to investigate the possibility of developing a clean, low-cost, run-of-river, hydro-power supply to the mine site with potential development partners. At least three sites have been identified along the English River near the deposit that offer this potential. Clean, low-cost hydro-power generation could provide environmental benefits and economic benefits both to the project and to local business partners interested in this opportunity.

A diamond drilling program is tentatively planned for August/September with the objective of demonstrating potential for significant additions to the historical mineral resources originally delineated in 1997 to 2001. The known resource remains open for expansion to depth and along strike.

Lithium market development work continues, with the company attending the 8th Lithium Supply & Marketing Conference this week in Las Vegas. Avalon will also be presenting a paper entitled "Electric Vehicle Growth Dependent on Lithium Supply" at the Electric Vehicle Symposium and Exhibition in Montreal, Que., from June 19 to June 22.

Following the completion of the PEA this summer, Avalon intends to proceed into a full feasibility study and environmental assessment work with a target date for completion in second quarter 2017.

The technical information included in this news release has been reviewed and approved by the company's senior vice-president, metallurgy and technology development, David Marsh, FAusIMM (CP), who is a qualified person under National Instrument 43-101.

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