Toronto, ON –  (TSX:,OTCQX:) is pleased to provide a progress report on the Separation Rapids Lithium Project (“Separation Rapids”) 2016 work program, last updated in the Company’s . Avalon remains focused on the lithium chemicals process development work, along with environmental studies, a mineral resource update and the engineering work needed to complete a Preliminary Economic Assessment (“PEA”). The PEA, which will be focused on the lithium ion battery materials market opportunity, is expected to be completed before the end of August, 2016. Expenditures on Separation Rapids for the nine month period ended May 31, 2016, totaled $1.4 million out of a budget of $2.0 million to August 31, 2016.

Lithium Hydrometallurgical Process Development Work

Bench-scale hydrometallurgical testwork initiated in May, 2016 to confirm the lithium hydroxide production process conceived for the lithium mineral (petalite) concentrate has essentially been completed. The Company is only awaiting analytical results for the lithium hydroxide product that was successfully produced from the low impurity lithium sulphate solution produced earlier using an established electrolysis process. A final report is expected in the next two weeks following which the data will be incorporated into the PEA.

Further work to optimize the process flowsheet is already underway, including evaluation of a fluidized bed roasting process as an alternative to a rotary kiln which, if successful, will create significant energy savings and improved overall metallurgical performance. Avalon is also in discussions with various laboratories and equipment vendors for conducting further pilot plant operations for both the flotation and hydrometallurgical processes in early 2017. These pilot programs will generate further samples for prospective customers, as well as provide necessary design information for future feasibility study work.

Market studies continue to indicate that lithium ion battery manufacturers are moving toward greater use of lithium hydroxide as the preferred lithium chemical feedstock in the battery chemistries being adopted for electric vehicles. Hardrock lithium deposits such as Separation Rapids are well suited to produce lithium hydroxide directly from the mineral concentrate utilizing a relatively efficient flowsheet that greatly reduces reagent consumption and the volume of waste material requiring disposal. Petalite from Separation Rapids offers the further advantage of being relatively free of impurities needing removal from the final product.

Environmental Studies

Minimizing environmental impacts remains a key objective of the project development model. Chemical analysis of the tailings and waste rock material has largely been completed. This information is being utilized for PEA design and costing of the waste rock dumps, the tailings management facilities and water treatment facility. Both the mill tailings and the mined waste rock are free of acid generating minerals or other materials that may create unwanted environmental impacts. This will reduce the cost of future treatment of waste water discharged from the site.

The sustainable use of the ore body has been improved by recovering by-product minerals such as feldspars, reducing reagent consumption by over 50% and total tailings produced by 17% in the most recent flowsheet. Total energy intensity per tonne of product has decreased by almost 40% and concentrator water use per tonne of product is down by 61% from initial estimates due in part to recycling initiatives. In addition to the environmental benefits, these process improvements will also enhance overall project economics.

Mineral Resource Update

An internal mineral resource estimate has been completed to bring the historic resource into compliance with current resource reporting protocols under NI 43-101. This involved re-defining confidence levels on the resources and re-sampling of drill core to incorporate modern QA/QC protocols into the database. No significant variances historic resource estimates were detected. The updated resource estimate will now be reviewed by independent Qualified Persons for inclusion in the PEA. Diamond drilling to delineate additional lithium resources at depth and along strike is planned for later in 2016 or early 2017.

Preliminary Economic Assessment

Internal work on the PEA is progressing steadily and it is now scheduled for completion sometime before the end of August, 2016. Micon International Inc., Toronto, ON has been retained as the independent consultant to serve as Qualified Person(s) to review and finalize the PEA. Many of the sections have been prepared and completion awaits the receipt of environmental test results and the cost estimates for the hydrometallurgical plant.

Other Project Activities

A desktop study into the feasibility of generating hydro-power near the site using “run-of-river” technology is now being implemented. In addition, Avalon is also exploring the possibility of using locally-generated waste wood products (currently transported long distances for disposal) as a source of feed for a biomass power generator.

The Company will be proceeding with work this summer to upgrade the access road to an all-weather condition. This will facilitate all-season access for heavy equipment needed for future bulk sampling and diamond drilling programs. Local sources of aggregate required for this work have been identified.

The technical information included in this news release has been reviewed and approved by the Company’s Senior Vice President, Metallurgy and Technology Development, Mr. David Marsh, FAusIMM (CP), and Donald S. Bubar, P.Geo. both Qualified Persons under NI 43-101.

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