July 13, 2015

Avalon Rare Metals is pleased to provide shareholders with an update on lithium markets and the implications for Avalon�s Separation Rapids Lithium Project located near Kenora, Ontario.

The lithium ion battery is now seen as the primary energy storage solution for the foreseeable future, not only for electric vehicles, but also for home energy storage to enable greater use of renewable energy and reduce reliance on the grid. This will create new demand for lithium and other specialty metals and minerals used in this technology, as well as contribute to expanded use of renewable energy technologies such as solar, which also rely on rare metals.

Since the late 1990s, full electric and hybrid electric cars (most notably the Toyota Prius) have been powered by rechargeable nickel-metal-hydride (�NiMH�) batteries. These batteries were relatively large, heavy and costly. In 2005, Toyota announced that it would accelerate the development of lithium ion batteries for use in their hybrids as a more practical long term solution.

Lithium-ion (�Li-ion�) batteries offer higher energy density (the amount of energy that can be stored for a given weight or volume), no memory effect (i.e. do not have to be fully discharged before recharging) and a relatively slow discharge rate when not in use, compared to NiMH batteries. Today, most major car manufacturers have been focusing their efforts on developing more efficient and lower cost Li-ion battery technology to power future hybrid or fully electric cars.

In September 2014, Tesla Motors announced plans to build a �Gigafactory� in Nevada to produce Li-ion batteries for its future electric cars. They also announced that they intend to locally source the raw materials needed for this factory in North America. In April 2015, Tesla CEO Elon Musk unveiled their exciting new Li-ion �Powerwall� battery for home energy storage. This battery charges using electricity generated from solar panels or, when utility rates are low, to power the home in the evening. It also fortifies the home against power outages by providing a backup supply of electricity. Costs for these batteries are expected to fall as technology advances. One of the ways improvements in energy density are being achieved is through utilization of ever higher purities of input raw materials including lithium chemicals.

In addition to the automotive and energy storage markets, lithium use in electronics, power tools, glass and ceramics will contribute to an overall doubling of lithium demand from current levels by 2020, according to analyst Jon Hykawy of Stormcrow Capital. Lithium is one of the few commodity sectors experiencing strong growth in demand in the current economy. While demand is increasing, it is doubtful that traditional suppliers will have enough capacity to increase production to the levels required to meet future demand. New suppliers will be needed in the marketplace and Avalon�s Separation Rapids deposit is well-positioned to serve that need.

Separation Rapids is a large resource, exceptional in its enrichment in the high purity lithium mineral petalite that offers the potential to produce a low-cost, high purity lithium chemical to serve the lithium ion battery markets, in addition to providing a high purity lithium mineral for glass-ceramic applications. Read more about the Separation Rapids Project at www.avalonraremetals.com/projects/separation_rapids/.

If you have any comments or questions on this Bulletin or lithium markets generally, please do not hesitate to contact Avalon directly at ir@avalonraremetals.com.

ABOUT AVALON RARE METALS INC.
Avalon Rare Metals Inc. (TSX & NYSE MKT: AVL) is a mineral development company focused on rare metal deposits in Canada, with three advanced stage projects. Its 100%-owned Nechalacho Deposit, Thor Lake, NWT is exceptional in its large size and enrichment in the scarce 'heavy' rare earth elements, key to enabling advances in clean technology and other growing high-tech applications. Avalon is also advancing its Separation Rapids Lithium Minerals Project, Kenora, ON and its East Kemptville Tin-Indium Project, Yarmouth, NS. Social responsibility and environmental stewardship are corporate cornerstones.

130 Adelaide St. W, Suite 1901
Toronto, ON M5H 3P5
Tel: (416) 364-4938
Email: ir@avalonraremetals.com