Avl: TSX-V

President and CEO: Donald S. Bubar, M.Sc., P. Geo.

Senior Vice President and COO: Brian Chandler, P.Eng

Vice-President, Exploration: William Mercer, Ph.D., P. Geo.

Avalon Rare Metals focused in 2012 on advancing its Thor Lake Rare Earth Metals Project located in the Mackenzie Mining District of the Northwest Territories, about 100 kilometers southeast of the city of Yellowknife.

Avalon completed a total of 10,725.4 meters of drilling in 47 holes using two drills during its 2012 winter drilling program that ended April 26.

The main objective of the program was to better define the geometry and continuity of the Nechalacho deposit at Thor Lake in the areas to be mined in the first three years of production.

A summer drilling program commenced in July with about 12,000 meters of additional definition drilling with one HQ core drill focused on the southern margin of the deposit in the Long Lake area, where some of the highest grade resources in the Nechalacho Deposit are situated.

Avalon also reported an updated resource estimate in July highlighted by initial definition of mineral resources in the Nechalacho deposit at the measured level of confidence.

Measured and indicated mineral resources totaled 72.66 million metric tons grading 1.53 percent total rare earth oxides of which 21.5 percent are heavy rare earth oxides, using the base case US$260/metric ton net metallurgical return cut-off for the key Basal Zone.

This compares with indicated mineral resources of 57.49 million metric tons grading 1.56 percent TREO of which 20.72 percent are HREO reported for the Basal Zone in January 2011.

In late August, Avalon reported that it chose a site in Louisiana for a heavy rare earth separation plant and refinery for the project.

A bankable feasibility study for the Thor Lake project is due in late 2012 with production startup anticipated in 2015.

Cash and short-term deposits: C$45.97 million (May 31, 2012)

Working capital: C$45.62 million (May 31, 2012)

Market capitalization: C$199.99 million (Sept. 28, 2012)

Avalon Rare Metals Inc.

Suite 1901 - 130 Adelaide Street West

Toronto, ON Canada M5H 3P5

Tel: 416 364-4938 • Fax: 416 364-5162

http://www.avalonraremetals.com