AVL: TSX

President and CEO: Donald Bubar

Senior Vice President, Metallurgy: Dave Marsh

Vice-President, Exploration: William Mercer

Avalon Rare Metals explored six of its seven properties in 2013, but focused most of its attention on the advanced Nechalacho rare earth elements project located at Thor Lake, Northwest Territories some 100 kilometers (62 miles) southeast of Yellowknife.

The property is comprised of five contiguous mining leases totaling 10,449 acres (4,249 hectares) and three claims totaling 4,597 acres (1,869 hectares), the latter staked in 2009 to cover favorable geology to the west of the mining leases.

Though the junior budgeted C$21.2 million for spending in fiscal 2013 and another C$2.1 million for the remainder of the 2013 calendar year, most of the funds were directed to development at Nechalacho and only a fraction went toward an exploration program.

Measured and indicated mineral resources for the Basal Zone at Nechalacho total 65.83 million tons grading 1.57 percent total rare earth oxides, including 0.34 percent heavy rare earth oxides - a 21.86 percent HREO/TREO - using the base case net metal return cut-off of US$320 per metric ton.

Avalon said this is enough resource to support mining at the production rate proposed in a feasibility study for the project for 90 years.

Recent drilling at Nechalacho further defined high-grade mineralization in the immediate vicinity of the planned location of an underground access ramp, close to where it would first encounter Basal Zone mineralization.

A 2013 winter drill campaign extended from February to early March with one rig drilling 12 HQ holes totaling 1,977 meters.

An additional four holes totaling 1,000 meters of definition drilling was completed by mid-August, and results from both drilling programs was to be incorporated into a new updated mineral resource estimate due for completion in late 2013.

Geological modeling of the resource has continued and the Avalon said an internal resource update has been completed which reflects an improved understanding of the geometry of the resource.

This updated estimate incorporates drill results from the eight-hole winter 2013 drill program and the final 41 holes from the 2012 summer drill program, none of which were incorporated into the resource model used in the feasibility.

Avalon also said in May that due to a delay in the start of underground development work at Nechalacho due to a lack of available project financing, the company would focus on project optimization during the remainder of 2013.

The delay, however, is not expected to affect the project's completion schedule, which anticipates production by 2017, subject to certain key factors.

Cash and short-term deposits: C$13.1 million (May 31, 2013)

Working capital: C$13.5 million (May 31, 2013)

Market capitalization: C$98.6 million (Sept. 27, 2013)

Suite 1901 - 130 Adelaide Street West

Toronto, ON

Canada M5H 3P5

Tel: 416 364-4938 • Fax: 416 364-5162

http://www.avalonraremetals.com