Toronto, Ontario--(Newsfile Corp. - May 19, 2026) - Avalon Advanced Materials Inc. (TSX: AVL) (OTCQB: AVLNF) ("Avalon" or the "Company") is pleased to provide a year-to-date progress update on its Nechalacho Rare Earth Elements and Zirconium Project, located in the Northwest Territories, as it advances efforts to build North America's supply and processing of critical rare earth elements essential to future technologies and supply chain security.

Avalon has taken a series of important steps in 2026 to re-activate and advance Nechalacho as a strategic Canadian rare earth project capable of contributing to secure North American and allied supply chains. These steps include the establishment of a new dedicated rare earth subsidiary designed to provide a focused platform for advancing Nechalacho, engaging strategic partners, and supporting potential project-level capital formation, the appointment of experienced northern project leadership, moving forward with plans to establish a Yellowknife office, and the advancement of a preliminary economic assessment (PEA) to refresh the project's existing (2013) definitive feasibility study (DFS)-level technical work.

"Nechalacho is no longer simply a legacy rare earth asset with a historic technical foundation," said Scott Monteith, President and Chief Executive Officer. "Avalon is now taking concrete steps to reposition and advance the project as an active development platform with dedicated leadership, northern presence, updated economics, and a clearer pathway toward strategic partnerships and project-level capital."

Year-to-Date Progress at Nechalacho

Over the past several months, Avalon has advanced several key initiatives intended to support the next stage of project development:

• Established Magmic Rare Earths, Inc. as the dedicated subsidiary through which Avalon intends to advance the Nechalacho project. This structure is expected to provide a focused platform for project-level development, strategic partnerships, government funding, and potential third-party capital participation.

• Appointed Burl Joseph as Project Director to guide technical execution, northern engagement, development planning, and coordination of the updated engineering and economic work.

• Advancing plans to open a Yellowknife office to strengthen Avalon's northern presence, support Indigenous and regional engagement, improve project coordination, and prepare for future technical, permitting, and development activities.

• Advancing an updated PEA to refresh and update the project's 2013 DFS-level technical work using current market conditions, cost structures, development assumptions, and processing alternatives.

• Continuing to evaluate rare earth processing pathways, including technologies that may support improved recovery, enhanced environmental performance, and reduced reliance on processing capacity currently concentrated outside North America and allied jurisdictions.

"Against the backdrop of a fundamental shift in North American industrial policy, national security priorities, and critical minerals supply-chain strategy, these actions are intended to move Nechalacho from a long-recognized strategic asset toward an active development platform," said Lorin Crenshaw, Chief Financial Officer. "The objective is to create a clearer technical, commercial, and capital formation pathway for a project that we believe has significant strategic relevance to Canada, the United States, and allied supply chains."

Nechalacho's Strategic Importance

Nechalacho is one of North America's most advanced rare earth projects and is distinguished by its concentration of magnet-critical light and heavy rare earth elements, including neodymium, praseodymium, dysprosium, and terbium. In addition to hosting 15 of the 17 rare earth elements, Nechalacho contains zirconium-bearing mineralization and other strategically relevant elements, including gadolinium, samarium, ytterbium, and yttrium, which may support broader industrial and defense-related applications.

Rare earth elements are essential inputs for permanent magnets used in electric motors, defense systems, aerospace platforms, robotics, wind turbines, precision-guided systems, and advanced electronics. Heavy rare earth elements such as dysprosium and terbium are particularly important in high-performance magnets that must operate under elevated temperature and demanding performance conditions.

Global rare earth mining, separation, refining, and magnet production remain highly concentrated in China. This concentration creates a structural vulnerability for North American and allied supply chains, particularly for heavy rare earths and other magnet-critical materials. Avalon believes that advancing Canadian rare earth resources such as Nechalacho represents a practical step toward diversifying supply and supporting greater supply-chain resilience.

Updating the Development Plan

Avalon's current technical work is focused on updating the project's prior DFS-level foundation to reflect current development realities. The updated PEA is intended to assess contemporary capital and operating cost assumptions, market conditions, project sequencing, mining approaches, processing options, and potential development scenarios.

The update is not being driven by a change in the underlying strategic importance of the deposit. Rather, Avalon believes that the broader market, policy, and supply-chain environment for rare earths has changed materially since the prior feasibility work was completed. Critical minerals are now viewed not only as industrial inputs but also as strategic assets tied to national security, economic resilience, electrification, advanced manufacturing, and allied defense preparedness.

The PEA is expected to be completed in fall 2026.

Mining Approach and Coordinated Development Potential

Avalon's current development concept contemplates underground access to the Basal Zone below 150 metres, targeting the deeper rare earth-bearing portion of the deposit while limiting surface disturbance and preserving flexibility in relation to near-surface activity.

Based on Avalon's current understanding, underground development may be planned in a manner that is operationally distinct from potential near-surface activity by other parties, subject to appropriate engineering, permitting, safety, water management, and cooperation arrangements.

Coordinated open-pit and underground mining arrangements are not unprecedented in the mining industry, but they require disciplined technical planning and formal operating protocols. Key considerations include geotechnical engineering, crown-pillar design, boundary management, blast coordination, subsidence monitoring, water management, ventilation planning, surface access, and shared infrastructure.

Avalon believes these matters are technically manageable through rigorous mine planning, independent engineering review, and a comprehensive cooperation framework. Such an approach could allow multiple zones of the broader resource area to be developed and monetized in a coordinated manner while maintaining appropriate safety, environmental, operational, and regulatory controls.

Processing Pathway and North American Supply-Chain Relevance

Avalon is also evaluating processing alternatives that could support the conversion of Nechalacho mineralization into saleable rare earth products. While the project benefits from a substantial technical foundation, Avalon believes that processing remains the key gap to be solved across the North American rare earth supply chain.

The Company is assessing rare earth processing technologies and flowsheet alternatives that may reduce reliance on conventional processing routes that are intensive in acid and solvent use, improve recovery potential, and support the development of domestic and allied processing capacity. These efforts are expected to form part of the updated PEA and subsequent technical work.

Avalon believes this processing work is essential to positioning Nechalacho as more than a mineral resource. By advancing potential pathways from resource development through rare earth product generation, the Company aims to support a more secure and integrated North American supply chain for magnet-critical materials.

Positioning Nechalacho for the Next Stage

Avalon's year-to-date actions are intended to reposition Nechalacho for a more active and strategically relevant stage of development. The Company believes the combination of a dedicated rare earth project platform, expanded northern presence, experienced project leadership, updated technical work, and growing supply-chain urgency provides a strong foundation for engagement with government agencies, Indigenous and regional stakeholders, strategic partners, downstream customers, and potential capital providers.

Government participation, strategic partnerships, downstream customer engagement, and project-level capital are expected to be important elements of the broader development pathway. Avalon believes Nechalacho has the potential to contribute meaningfully to North American and allied efforts to secure rare earth feedstock and processing optionality for magnet-critical materials.

The establishment of Magmic Rare Earths, Inc. is intended to provide a focused structure for advancing Nechalacho, supporting project-level partnerships, and creating a clearer pathway for strategic and capital participation.

"Nechalacho has the scale, technical foundation, and strategic mineral profile to contribute to a more secure and resilient North American rare earth supply chain," said Mr. Monteith. "Avalon's work in 2026 is about turning strategic relevance into a practical development pathway - one supported by technical discipline, local engagement, potential partners, and a clear capital formation strategy."

About Avalon Advanced Materials Inc.

Avalon Advanced Materials Inc. is a Canadian critical minerals company focused on advancing lithium and rare earth elements-two of the fastest-growing segments of the global energy transition. The Company is developing strategic assets to participate in high-growth markets and support the build-out of secure North American supply chains. Avalon is advancing the Nechalacho Rare Earth Elements and Zirconium Project in the Northwest Territories, which contains all light and heavy rare earth elements, as well as yttrium, zirconium, tantalum, and niobium-critical minerals used in advanced technologies across the communications, defense, advanced technologies, and energy sectors. The Company is also focused on vertically integrating the Ontario lithium supply chain through the development of Lake Superior Lithium Inc., Ontario's first midstream lithium hydroxide processing facility, located in Thunder Bay. This facility is expected to serve as a cornerstone of North America's integrated battery materials supply chain, transforming northern Ontario lithium into essential inputs for transportation, grid storage, and advanced manufacturing.

Cautionary Statement Regarding Forward-Looking Information

This news release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Generally, forward-looking information can be identified by the use of forward-looking terminology such as "add" or "additional", "advancing", "anticipates" or "does not anticipate", "appears", "believes", "can be", "conceptual", "confidence", "continue", "convert" or "conversion", "deliver", "demonstrating", "estimates", "encouraging", "expand" or "expanding" or "expansion", "expect" or "expectations", "forecasts", "forward", "goal", "improves", "increase", "intends", "justification", "plans", "potential" or "potentially", "promise", "prospective", "prioritize", "reflects", "robust", "scheduled", "suggesting", "support", "top-tier", "updating", "upside", "will be" or "will consider", "work towards", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might", or "will be taken", "occur", or "be achieved".

Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including those risk factors discussed or referred to in the annual information form of the Company dated November 26, 2025 (the "AIF") under the heading "Description of the Business - Risk Factors". Forward-looking information is based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect. Although the Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable, undue reliance should not be placed on forward-looking information because the Company can give no assurance that such expectations will prove to be correct. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

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Source: Avalon Advanced Materials Inc.