Avalon Advanced Materials Inc. is pleased to report on highlights from the Industrial Minerals Lithium conference held May 24-26, 2016 in Las Vegas, USA. Over 260 delegates from 21 countries attended the conference, representing lithium producers, consumers, traders, project developers, analysts and suppliers. Avalon was represented by Pierre Neatby, VP, Sales and Marketing, who provided the following report.

Growing interest in lithium supply is driven by shortages currently being experienced in certain market segments, related to an increase in demand for lithium in rechargeable batteries; principally for electric vehicles.

During the two day event there were 19 presentations mostly on supply, with just one presentation focused on demand. It was clear from the agenda and the discussions held with various participants that the main concern of the industry is on the rate of future supply growth. Will the major producers (Albemarle Corporation, SQM, FMC Corporation and Tianqi Group) be able to rapidly expand their production, or will new producers need to emerge to keep pace with demand growth?

Many of the presenters suggested that numerous new brines projects in South America will be challenged to achieve commercial production quickly or at all. The Salar de Atacama that SQM and Albemarle have been producing from is exceptional - not all salars in Chile, Argentina or Bolivia are of this high quality. High magnesium levels in many salars, for example, make extraction of lithium difficult and more expensive, and government restrictions on water use in these arid regions may create additional challenges. Other lithium resources including 'hard rock' pegmatite deposits in other parts of the world (including Canada) are becoming increasingly attractive alternatives.

A panel of experts (market analysts and participants) shared their views with the audience on lithium supply and demand, including pricing. The four panellists agreed that demand growth for lithium will be steady and prices for lithium carbonate would be strong over the next few years:

• Joe Lowry, President, Global Lithium LLC (often referred to as 'Mr. Lithium'), believes the price for lithium carbonate outside China will exceed $10,000/tonne to 2025.
• John Kanellitsas, Vice Chairman, Lithium America, forecast average pricing at $7,500/t.
• Anthony Tsee, MD, Galaxy Resources, forecast $10,000-13,000/t to 2025.
• Jon Hykawy, President, Stormcrow Capital, has a forecast of $7,000-8,000/t.

Lithium was one of very few commodities to see a significant price increase in 2015 and this trend continues into 2016. Battery makers, particularly for the electric vehicle market, are now looking for other lithium compounds such as lithium hydroxide for certain cathode chemistries. There are currently fewer producers of lithium hydroxide and it presently commands a price premium of some $2,000/t over lithium carbonate. Hardrock deposits such as Avalon's Separation Rapids pegmatite are well-suited to produce high purity lithium hydroxide at competitive costs.

About Avalon Advanced Materials Inc.
Avalon Advanced Materials Inc (TSX: AVL & OTCQX:AVLNF), formerly Avalon Rare Metals Inc., is a Canadian mineral development company specializing in niche market metals and minerals which are in growing demand in new technology. The Company has three advanced stage projects, all 100%-owned, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, niobium, and zirconium. Avalon is currently focusing on its Separation Rapids Lithium Project, Kenora, ON and its East Kemptville Tin-Indium Project, Yarmouth, NS. Social responsibility and environmental stewardship are corporate cornerstones.