Following up on Avalon Rare Metals' July 13, 2015 Industry Bulletin 'Growing lithium demand creates new opportunities for Avalon's Separation Rapids Project,' we are pleased to provide an update on the lithium market, where demand for lithium chemicals is growing and prices are rising.

Sales of electric vehicles ('EVs') have increased significantly in 2015 due to a strong market in Europe and China. According to global market research firm TrendForce, the worldwide sales of EVs for the first three quarters of 2015 have increased 31% year on year to 330,000 units, with China accounting for the largest share, partly due to government support. This has had a positive effect on demand for lithium-ion batteries and in turn for lithium chemicals.

On September 15, 2015, FMC Corporation announced that effective October 1, 2015 it would increase prices for the lithium products it sells including lithium carbonate, lithium chloride and lithium hydroxide in all global regions by 15% as 'market growth is outpacing current industry supply capabilities,' according to Chris Senyk, global marketing director at FMC Corporation.

Also, the Xinhua Finance Agency recently reported on some transactions earlier this year inside China for battery grade lithium carbonate priced in the range of 58,000 - 60,000 yuan per metric ton (US$9,100-9,400 per tonne)*, an increase of between 9% and 11% from earlier this year. Note that lithium chemicals are not traded on a commodities exchange and prices reported represent periodic spot transactions.

The trend of increasing demand for EVs is consistent with Stormcrow Capital's forecast of May 2015 in which they anticipate demand for lithium for batteries to triple in the next ten years and the overall demand for lithium to double during the same period. Stormcrow also expects that this demand will outpace supply growth over the next five years.

Yesterday, Nemaska Lithium Inc. ('Nemaska') announced the signing of a Memorandum of Understanding ('MOU') with Johnson Matthey Battery Materials Ltd ('JMBM') of Candiac, Quebec. The MOU contemplates an up-front payment by JMBM of $12 million in return for future services and products of the same value. The MOU also includes provisions for a long term supply agreement between Nemaska and JMBM for lithium hydroxide and carbonate. This demonstrates that some consumers of lithium are taking action now to secure long term future supplies from emerging producers.

In September 2014, Tesla Motors announced plans to build a 'Gigafactory' in Nevada to produce Li-ion batteries for its future electric cars. In April 2015, Tesla CEO Elon Musk unveiled the Li-ion 'Powerwall' battery for home energy storage. 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. Simon Moores, Managing Director of Benchmark Minerals Intelligence, recently stated that 'Tesla will single-handedly increase lithium hydroxide demand by 50% on 2013 levels at a time when demand is also increasing from other battery producers that are expanding lithium-ion cell output on a significant scale. Should the company be looking to purchase even 10,000 tonnes today, the industry would not be able to meet this demand.'

Benchmark Minerals Intelligence provides independent data and analysis on the lithium ion battery supply chain. Mr. Moores will be joining Avalon's CEO Don Bubar at the Company's presentation on the Separation Rapids Lithium Project to investors in London on November 26, 2015 and will talk specifically about the market for the critical materials used in the lithium ion battery. Please contact Andrew Keen at ak@cityir.com for more information about this evening event.

For questions or feedback, please email Avalon at ir@avalonraremetals.com.

About Avalon Rare Metals Inc.
Avalon Rare Metals Inc. (TSX &NYSE MKT: AVL) is a Canadian mineral development company specializing in niche market metals and minerals which are in growing demand in new technology. The Company has three advanced stage projects, all 100%-owned, providing investors with exposure to lithium, tin and indium, as well as rare earth elements, tantalum, niobium and zirconium. Avalon is currently focusing on its Separation Rapids Lithium Project, Kenora, ON and its East Kemptville Tin-Indium Project, Yarmouth, NS. Social responsibility and environmental stewardship are corporate cornerstones.

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