East Kemptville Tin-Indium Project As at June 11, 2015 TSX & NYSE MKT: AVL Property Location Project Description The 100% owned East Kemptville Tin-Indium Project is located approximately 55 km northeast of Yarmouth, Nova Scotia, Canada. The property consists of 4 exploration licences and a Special Licence covering over 10,000 acres in aggregate. East Kemptville operated from 1985-1992 and was North America’s only large primary tin producer before closing in 1992 due to a collapse in tin prices after the international cartel was disbanded. Increasing global demand for tin and limited tin supplies have resulted in strengthening tin prices, creating an opportunity to consider redeveloping the tin-indium resource at East Kemptville. There is excellent infrastructure in the area, including paved highway access and grid power. Mineral tenure at the East Kemptville mine site is held under a Special License which was recently renewed for a three year term expiring in February 2018. The Special Licence requires exploration and development expenditures of $5.25 million over 3 years and is subject to receiving permission from the surface rights holder to access the site. In May 2014, Avalon entered into an agreement with the surface rights holder to secure access for an initial drilling program, in 2014 and the agreement was recently extended to allow for a second drilling program to be completed in the summer of 2015. A 43-101 resource estimate of the historical mine resource was subsequently reported in October 2014. In early 2015, Hains Engineering Company Limited completed a Conceptual Redevelopment Study (“CRS”) to determine if there was a business case for re-developing the site and to justify further investment in feasibility study work. The CRS demonstrated potential for positive economics based on recent metal price forecasts and a development model similar to the historical 10,000 tonnes per day operation. Project Next Steps Avalon plans to proceed with an initial $1.2 million work program to begin gathering the information needed to complete a Feasibility Study in 2017. The work will include: a Phase 2 drilling program in the summer of 2015 with the objective of bringing more Inferred Mineral Resources into the Indicated category and drilling for extensions of the known resources as well as testing two other exploration targets HALIFAX YARMOUTH COUNTY EAST KEMPTVILLE PROPERTY Tin Markets Rising tin prices over the past 10 years reflect growing global demand for tin due to its increased application in electronics, where it is used in solders as a nontoxic alternative to lead. Production of tin concentrates from traditional sources in southeast Asia has declined in recent years, increasing the need for new primary supply sources such as East Kemptville to emerge. Currently, most analysts covering the tin sector (including the World Bank) are forecasting increasing tin prices over the next ten years potentially reaching US$25,000/ tonne by 2025. However, short term price volatility typical for small market commodities, has been a characteristic of the tin market for the past 10 years and is expected to continue. New Applications for Tin Source: Hallgarten & Co 14 02 bench scale metallurgical testing, using sample material collected during the 2014 and 2015 programs, to verify metallurgical recoveries, concentrate grades and evaluate ore variability preliminary environmental studies to examine the nature of the waste rock generated in any proposed mine, and to identify and fill key data gaps with respect to permitting, water management and treatment, and waste management completing a formal Preliminary Economic Assessment of the Project securing surface tenure to the site Source: ITRI’s Tin for Tomorrow : Contributing to Global Sustainable Development (www.ITRI.co.uk) Strategic Advantages Infrastructure in place: accessible by paved highway and grid power on site Deep water port within 60 kilometres Skilled labour available locally: Yarmouth and other communities commuting distance Politically-stable, mining-friendly jurisdiction (Government is supportive of new investment in mineral development) Could achieve production by 2018 Mineral Resources Following the completion of the seven-hole confirmation drilling program in 2014, Avalon released an initial 43-101 resource estimate containing an estimated Indicated Mineral Resource of 18.47 million tonnes averaging 0.176% tin, 0.173% zinc and 0.064% copper and an estimated Inferred Mineral Resource of 16.95 million tonnes averaging 0.148% tin, 0.122% zinc and 0.062% copper at a 0.10% tin cut-off grade. At the 0.10% tin historical cut -off grade the resources roughly approximate what was calculated to have been left unmined by the original operator following closure of the mine in 1992. This cut-off grade will be adjusted in future resource estimates to reflect present metal prices and cost assumptions. Cautionary Statement The Conceptual Economic Study is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves. There is no certainty that the preliminary economics indicated in the Study will be realized. The results were released in Avalon’s News Release of February 25th, 2015. Mineral Resources Estimate (October 31, 2014) Conceptual Redevelopment Study The purpose of the CRS was to confirm the business case for the re-development East Kemptville before securing the necessary approvals to proceed with physical work at the site. The proposed development model assumes a conventional open pit mining and processing operation at a production rate of 10,000 tonnes per day similar to the historical operation. Hains recommends that a new operation take advantage of recent innovation in metallurgical recovery technology for tin ores that can improve recoveries for tin as well as by-product copper and zinc. In addition, Hains recommends building a tin refinery at the site that will produce tin ingots as a final saleable tin product. This strategy offers the potential for creating valueadded in Nova Scotia, reducing the business risks associated with using third party processors and potentially enhancing the overall economics of the operation. Sustainability Reporting In December 2014, Avalon released its third Sustainability Report which includes a selfassessment of sustainability performance in accordance with the Global Reporting Initiative G4 core level and the Mining Association of Canada’s Towards Sustainable Mining standards. It can be downloaded from Avalon’s website. 1. CIM definitions were followed for Mineral Resources. 2. The Independent Qualified Person for this Mineral Resource estimate is Donald Hains, P. Geo. 3. The resource estimate is based on 275 drill holes totalling 29,587 metres drilled between 1979 and 1991 by previous operators and 7 holes totalling 984 metres drilled by Avalon in 2014. 4. Drill data was organised in Maxwell DataShed and for estimation purposes was transferred to MineSight 3D software, wherein the block model was developed. 5. Resources were estimated by interpolating composites within a block model of 5x5x3 m blocks. Interpolation used the inverse distance squared method with localization of higher grades. 6. Indicated material was defined as blocks with an average distance to interpolated composites of ≤ 50 m while inferred material was defined as blocks with an average distance to interpolated composites of ≤ 75 m, thus limiting the depth of the resource to 75 m below drill holes. 7. Three metre composites were capped at 1% Sn, 1% Zn, and 0.5% Cu which are the 99th percentiles of assay data for those elements, reducing contained tin by about 1% compared to uncapped resource. 8. The median density of available data of 2.78 t/m3 was used for all mineralized material. 9. Several possible cut-off grades are reported in this resource estimate. Based on past mining practice at East Kemptville a cut-off grade of 0.1% Sn is reasonable. However, no value or cost estimates are available at this time. 10.Mineral resources do not have demonstrated economic viability and their value may be materially affected by environmental, permitting, legal, title, socio-political, marketing, or other issues. The technical information contained in this document has been reviewed and approved by Bill Mercer, Ph.D., P.Geo. (ON), P.Geo. (NWT), Vice President Exploration of Avalon, the qualified person for the purposes of National Instrument 43-101. FORWARD LOOKING INFORMATION: This document 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; tin 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 130 Adelaide St. W., Suite 1901 Toronto, ON Canada M5H 3P5 Phone: +1 (416) 364-4938 Email: [email protected] www.avalonraremetals.com 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.
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