Avalon closes $18.65-million private placement

On October 24, 2025, Avalon Advanced Materials announced the closing of its previously announced brokered private placement for gross proceeds of approximately C$18.65 million. The financing was conducted under the Listed Issuer Financing Exemption (LIFE).

It consisted of: - 133,218,180 non-flow-through units at C$0.11 per unit for proceeds of C$14.65 million. Each unit includes one common share and one common share purchase warrant. - 30,769,231 flow-through units at C$0.13 per unit for proceeds of C$4.0 million. Each unit includes one flow-through share and one common share purchase warrant.

Each warrant entitles the holder to purchase one common share at an exercise price of C$0.17 for a period of 36 months. The proceeds will be used to fund updated feasibility studies for the Nechalacho rare earth project and the Thunder Bay lithium refinery, repay outstanding convertible notes, and for general working capital.

This financing is a highly material and positive event for Avalon. The company's financial position was precarious, with only C$910k in cash and a working capital deficit of C$1.45 million as of its May 31, 2025 financial statements. This C$18.65 million cash injection is a critical lifeline that substantially de-risks the company's balance sheet and provides a clear runway to advance its key projects over the next 12-24 months.

The financing was first announced on October 14, 2025, for "up to C$21 million," so the final amount of C$18.65 million is a slight miss on the initial target but is still a resounding success given the challenging market for junior miners. The capital allows Avalon to repay high-cost debt, specifically its convertible notes, and fund the essential feasibility studies for its two cornerstone assets: the Nechalacho Rare Earths project and the Thunder Bay Lithium Refinery. This directly addresses the company's most pressing needs and allows it to execute its stated strategy.

The primary negative is the significant dilution. The financing adds approximately 164 million shares to the outstanding count, an increase of over 25%. Furthermore, it creates a massive warrant overhang of roughly 164 million warrants at C$0.17 and 9.8 million broker warrants at C$0.11. This will create significant selling pressure and act as a cap on the share price, particularly as it approaches the C$0.17 exercise price.

Despite the dilution, this was a necessary step for survival and progress. Without this capital, the company's ability to continue as a going concern was in question. The positive impact of securing the funds and cleaning up the balance sheet far outweighs the negative of dilution at this stage.

Avalon Advanced Materials is a Canadian mineral development company focused on critical minerals essential for clean energy and technology. The company is transitioning from an explorer to a vertically integrated developer and mid-stream processor.

Its two primary flagship assets are: 1. Nechalacho Rare Earths & Zirconium Project: Located in the Northwest Territories, this is one of the most advanced heavy rare earth element projects in North America. The company is advancing it towards production. 2. Thunder Bay Lithium Refinery: A proposed mid-stream processing facility in Thunder Bay, Ontario, designed to convert lithium concentrates into battery-grade lithium hydroxide for the North American EV market. This project is central to the company's value-add strategy.

Avalon also holds other lithium projects in Ontario, including the Separation Rapids Lithium Project (in a joint venture with Sibelco), the Snowbank Lithium Project, and the Lilypad Lithium-Cesium Project.