Annual & Special Meeting

February 25, 2014

Safe Harbour Statement

Forward Looking Information

This corporate presentation contains “forward-looking statements” (“FLS”) within the meaning of the United States Private Securities

Litigation Reform Act of 1995 and applicable Canadian securities legislation. Generally, these FLS can be identified by the use of forward-

looking terminology such as “plans” or “estimates” or derivations thereof. FLS contained herein include, without limitation, Avalon Rare

Metals Inc (“Avalon”)’s forecasts of a correlation between REE prices and Avalon’s stock price, predictions of the future supplies and prices

of and demand for REE, potential future applications for REE, Avalon’s beliefs and expectations concerning its strategic advantage, the

Nechalacho REE Project’s technical and economic feasibility, the Nechalacho REE Project’s status as the most advanced heavy rare earth

elements project in the world outside China, the key measures, timelines and economics reported in the Feasibility Study, life of mine,

social, community and environmental impacts, mineral resource and mineral reserve estimates, off-take agreements and purchasers for the

Company’s products, environmental assessment and permitting, securing sufficient financing on acceptable terms, opportunities for short

and long term optimization of the Nechalacho REE Project, and continued positive discussions and relationships with local communities

and stakeholders. FLS are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of

activity, performance or achievements of Avalon to be materially different from those expressed or implied by such FLS. FLS are based on

assumptions management believes to be reasonable at the time such statements are made. Although Avalon has attempted to identify

important factors that could cause actual results to differ materially from those contained in FLS, there may be other factors that cause

results not to be as anticipated, estimated or intended. Factors that may cause actual results to differ materially from expected results

described in FLS include, but are not limited to those risk factors set out in the Company’s current Annual Information Form, Management’s

Discussion and Analysis and other disclosure documents available under the Company’s profile at www.SEDAR.com. There can be no

assurance that FLS will prove to be accurate, as actual results and future events could differ materially from those anticipated in FLS. FLS

have been provided for the purpose of assisting investors in understanding the Company’s plans and objectives and may not be appropriate

for other purposes. Accordingly, readers should not place undue reliance on FLS. Avalon does not undertake to update any FLS that are

contained herein, except in accordance with applicable securities laws.

_______________________________________

The technical information contained in this presentation has been reviewed and approved by William Mercer, Ph.D., P.Geo. (Ont), P.Geo.

(NWT), Vice President, Exploration and Donald Bubar, P.Geo. (Ont), President and CEO of Avalon, qualified persons for the purposes of

National Instrument 43-101. For additional information on the Nechalacho Rare Earth Elements Project, see the technical report entitled

“Technical Report Disclosing the Results of the Feasibility Study of the Nechalacho Rare Earth Elements Project” dated May 31, 2013 and

effective April 17, 2013.

2013 Corporate Highlights

● Reached several major milestones on Nechalacho:

● Completed Comprehensive Feasibility Study

● Environment Assessment completed and approved

● Developed improved process flowsheets and mine plan

● Signed Participation Agreement with NWTMN

● Lost-time injury free year at Nechalacho

● Published second Sustainability Report

● Raised over $4 million in “top-up” equity financing

● Re-activated Separation Rapids Project

Capital Structure January 31, 2014

Canada - TSX: AVL

United States – NYSE MKT: AVL Frankfurt- OU5

Shares Outstanding 110,479,567

Fully Diluted 119,304,817

Market Capitalization US$62 million (S/O @ $0.56)

Recent Price Range US$0.61 - $0.51

52 Week High / Low US$1.27 - $0.46

Cash Reserves C$6 million (No debt)

Insider Share Position 3 million shares

Institutional Investors Hancock, Global X, Encompass, Chilton & others

Analyst Coverage CIBC, Roth, Citigroup, Cowen, Edison

4

One Year Stock Chart

Feasibility

Study Tax-loss

Selling

REE Price Recovery

Avalon Share Price vs. REE Prices 2009-2014

Rare Earth Oxide Commodity Price Index (FOB $US/tonne) vs Share Price ($CAD)

2013 Expenditure Summary

In CAD$ Millions

Nechalacho $18.6

Separation Rapids 0.3

Other Projects 0.2

General and Administration 6.5

$25.6

Working Capital – November 30, 2013 $7.6

(1) From September 1, 2012 to August 31, 2013

Rare Metals Projects Avalon is not just about rare earths

All projects 100% owned

Avalon offers

diversified

exposure to a

broad range

of rare metals

Thor Lake Area and Regional Infrastructure

100 km

NORTHWEST TERRITORIES

Fort Smith

Fort Resolution Hay River/

K’atl’odeeche

Canadian National

Railway

Yellowknife

Pine Point

Bluefish

Hydro Dam

Taltson

Hydro Dam

Great

Slave

Lake

Behchoko ]

] Snare

Hydro Dam

]

Lutsel K’e

Proposed

National Park

Thor Lake (Nechalacho Mine and Concentrator)

ALBERTA

N

0

Whati

SASKATCHEWAN

100 km

CN Route From Hay River to Geismar, LA

Separation Plant

Geismar, LA

Nechalacho

Mine , NWT

Proposed HREE Refinery Geismar, LA Local Infrastructure

• On Mississippi River

• Served by CN Rail and

Interstate Highway

• Well-established Chemical

Industry Cluster

• Ready availability of chemical

reagents

• Availability of skilled labour

Proposed Plant Site

Product Marketing Update Pierre Neatby Vice President, Sales and Marketing

REE Market Developments in 2013

● 2013 world demand increased 4% to 120,000 mt (destocking continues)

● Demand for REO from magnet industry growing at 9%/year

● Chinese “illegal activity” still in the 10,000-20,000 mt range

● 2013 Chinese export quotas were approx 30,000 mt

● “Baotou Rare Earths Trading Platform” initiated

● Leaks suggest WTO ruling to go against China

● Molycorp producing below capacity, losing money

● Lynas producing, but at 1/3 of capacity

● Continued concern in governments about security of supply ● Canadian Rare Earth Elements (Research) Network (“CREEN”)

created

Europium Price FOB China 2010-2013

Panic buying

and Stockpiling

Diayou Islands

Incident Reduced buying due

to De-stocking

Source: Asian Metal

0

5

10

15

20

25

30

35

US

$/p

ound

Annual Average Cobalt Prices

Partnership Discussions

● Three potential profiles of Strategic Partners

● Consumers of REE concerned about security of supply

motivated to secure off-take

● Technical partners with expertise in Rare Earth

processing and refining

● Financial partners seeking return on investment

● MOUs or NDAs have been signed with numerous parties in

various parts of the world over the past five years, falling

into one or more of these profiles

● Best progress to date has been made in discussions with

potential technical partners

● New market interest in Petalite from the glass industry in

2014 implies fundamental change in supply picture

● 2 tonne bulk sample of ore currently being processed in

Europe to define new flow sheet and produce Petalite

concentrate samples for glass industry customers.

● Updating PFS cost estimates and investigating alternatives

for constructing demonstration scale process plant

● Updating environmental studies in preparation for permitting

● Keeping First Nation as well as City of Kenora and Ontario

Government updated on recent work programs and future

development prospects

Separation Rapids Project Update

Operations Update Dave Marsh Senior Vice President, Metallurgy

Feasibility Study: Opportunities

● Many opportunities to optimize project development model

to reduce technical risk and increase revenues

● Improve recoveries in flotation plant and simplify flowsheet

● Develop alternative mixed alkali hydromet’ process

● Revise mine plan to prioritize high grade sub-zones

● Potential to partner on refinery or toll-process through third

party owned facility to reduce CAPEX and RISK

● Public policy initiatives to support development of REE

industry outside of China to address issue of security of

supply of critical raw materials

Concentrator Plant Optimization Progress in 2013

● Increased flotation recoveries

● REE recoveries up to 89% from 78% in Feasibility Study

● Simplified process flowsheet

● Removal of “de-sliming” and “gravity enrichment” circuits

● Easier to operate

● Reduced power consumption

● Environmental Benefits

● Optimised crushing and grinding circuits

● Single stage crushing (previously three stages)

● Improved grinding control

● Reduced power consumption

Hydrometallurgical Process Optimization Progress

● Process change to HCl leaching

● HREE recoveries to Separation up to 90% from 52%

● Valuable Zircon product for established markets

● Not reliant on marketing of Enriched Zircon Concentrate

● Removal of low value Ce and La ahead of Separation

● High purity mixed REE product (suitable for toll refining by

others)

● Potential to recover Niobium and Tantalum (testwork in

progress)

● Alternative site locations investigated

Conceptual Nechalacho Mine and Concentrator Plan

Concentrator Site Layout

Process Plant Layout Plan

Grinding - Section

Hydromet Plant Layout

Mining Optimization Progress

Improved Mining Operation by:

● Revised mine plan

● Higher grades in first five years

● Optimised mining method

● Improved efficiency

● Simplified ore handling

● Crusher relocated to surface

● Reduced u/ground installations

● Ore trucked to surface (previously by conveyors)

● Ability to blend ore ahead of milling

Measured and Indicated Resources in the Basal Zone at Various NMR Cut-offs

Basal Zone Tonnes

(millions)

%

TREO

%

HREO

% HREO/

TREO

%

ZrO2

%

Nb₂O₅ %

Ta₂O₅

US$345 NMR Cut-Off (Reflects entire Basal Zone)

Measured 12.56 1.71 0.38 22.50 3.20 0.405 0.0404

Indicated 49.33 1.62 0.35 21.27 3.07 0.405 0.0398

US$800 NMR Cut-Off (Approximately Reflects High Grade “Basin”)

Measured 5.11 2.20 0.58 26.17 4.23 0.52 0.0544

Indicated 16.15 2.20 0.55 24.87 4.13 0.52 0.0542

US$1,000 NMR Cut-Off (Selected parts of High Grade “Basin”)

Measured 2.49 2.49 0.68 27.38 4.77 0.59 0.0620

Indicated 6.99 2.52 0.66 26.03 4.66 0.58 0.0614

August 2013

Nechalacho General Geology (Vertical Cross Section Looking West)

29

Looking west at 416200E

S N

1600 metres

Upper Zone

Basal Zone HREE Deposit

High Grade “Basin”

Lakes and Overburden

Lower Zone

1,600 metres

14.6 million tonnes in Reserves

Sufficient for 20 years of production

1.70% TREO, (0.46%HREO), Zr, Nb

N S

Mine Optimization- Current Layout

30

Engineering and Plant Design Progress

Hatch Engineers work program:

● Finalizing mine design (essentially complete)

● Optimizing design of Concentrator (essentially complete)

● Up-dating Nechalacho Site layout (essentially complete)

● Re-design of Hydrometallurgical Plant (process and

engineering)

● Re-working of Capex estimates from first principles

● Re-working of Opex estimates

● Developing Implementation Plan

Nechalacho Feasibility Optimization Next Steps

● Collect bulk sample material for additional pilot plant trials of

new hydromet process

● Complete hydromet plant design

● Continue Niobium and Tantalum recovery process work

● Completion of Hatch OPEX and CAPEX up-dated cost

estimates

● Update 43-101 report

Nechalacho Project Timeline

As at February 19, 2014

Permitting and Sustainability Update Mark Wiseman Vice President, Sustainability

2013 Highlights

● Lost time accident free in fiscal year 2013

● Report of Environmental Assessment and Ministerial

Approvals received

● Final two stage permitting strategy includes:

● Early Works permits to allow construction start

April/May 2014

● Operations Permits for operations - target end 2014

● Multiple meetings, open house, community communication

and calls with aboriginal groups

● Two Aboriginal Agreements in place

2013 Corporate Sustainability Report

● ALIGN OPTIMIZE INNOVATE

● Published in December 2013

● MAC TSM Self Assessment

and GRI Level G3.1

● Aligns the Company’s

operating philosophy with its

Cleantech customers

● Aligned Sustainability and

Fiscal reporting

Importance of Sustainability

● Avalon is identified as a ‘preferred supplier’ for potential

customers

● Sustainability performance is a key criterion for socially

responsible investors, strategic partners and financiers

● Sustainability is a key driver for process design improvement

(cost, safety, environment)

● Organizational commitment and brand strengthening

● Strong risk management

● Drives performance

Economic Benefits of Sustainability

● Improved safety performance reduces downtime and

manpower costs

● Reduced energy use and cost, reduced reclamation cost

● Improved permitting and relationships with communities and

aboriginal governments/organizations

● Outreach initiatives led to projects with eight universities,

Council of Metallurgists Rare Earths Symposium, formation

of CREEN

Overall, Sustainability increases shareholder value

Employee Recognition

Cindy Hu

Special Achievement

Ron Malashewski

Environmental Excellence

2014 Objectives and Value Drivers for Avalon

● Nechalacho Rare Earth Elements Project

● Complete agreements with off-take / strategic partners

● Secure next stage Project Financing

● Secure Permits and commence site preparation

● Complete optimization work and produce updated FS

● Finalize remaining Aboriginal Participation Agreements

● Separation Rapids

● Secure off-take commitments and funding for demonstration plant

● East Kemptville

● Secure access for drilling program and complete PEA