Climate Change Data

Environmental Metrics

ESG Focus Areas

• Sustainability
• Corporate Social Responsibility (CSR)
• Aboriginal Relations
• Environmental Performance
• Health and Safety

Environmental Achievements

• Simplified Concentrator flowsheet resulting in reduced energy use, reduced carbon dioxide emissions and improvements in water treatment efficiencies.
• 80% reduction in hydrochloric acid (HCl), 90% reduction in magnesium oxide and almost 100% reduction in calcium carbonate in Hydrometallurgical Plant optimization.

Social Achievements

• Accommodation Agreement with the Deninu K’ue First Nation (DKFN) establishing an implementation committee, providing business, employment, training and scholarship opportunities, and mitigating environmental and cultural impacts.
• Agreement with the Northwest Territory Métis Nation (NWTMN) providing training, employment, and business opportunities.
• Medical aid and lost time accident free since August 2013 at Nechalacho site due to additional safety training and preventative measures.

Governance Achievements

• Independent Sustainability Advisory Committee (SAC) reviews sustainability-oriented work.
• Formal risk management program developed to assess business, construction and operating risks.

Climate Goals & Targets

Environmental Challenges

• Challenging market conditions for raising project financing delaying pre-construction development work.
• Increased capital costs for Nechalacho Project due to metallurgical process optimization.
• Securing off-take agreements and project financing in a depressed global economic environment.
• Uncertainty related to title to the Company’s properties and delays in obtaining licenses and permits due to local opposition and aboriginal land title claims.

Mitigation Strategies

• Efforts to identify strategic partners and other sources of project capital are ongoing.
• Formal risk management program implemented.
• Negotiating partnership agreements with local Aboriginal groups.
• Continuing to progress the permitting process to obtain necessary licenses and permits.

Supply Chain Management

Responsible Procurement

• Agreement with Solvay for toll processing of rare earth concentrate.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: Global Reporting Initiative (GRI) Version 4

Environmental Metrics

ESG Focus Areas

• Sustainability
• Corporate Social Responsibility (CSR)

Environmental Achievements

• Metallurgical improvements contributing to improved environmental performance
• Opportunities identified to significantly reduce existing site environmental and associated financial liabilities through innovative management of future waste rock and tailings and through the processing of ores already stockpiled on site.

Social Achievements

• Released fourth comprehensive Sustainability Report in accordance with GRI Version 4 guidelines.
• Continued community engagement work with Aboriginal governments and local community groups.
• Signed an Accommodation Agreement with the DKFN and continued negotiations with the LKDFN and YKDFN.
• Concluded a Participation Agreement with the NWTMN and commenced negotiating an agreement with the NSMA.

Governance Achievements

• Maintains an independent Sustainability Advisory Committee (SAC) to review sustainability-oriented work related to Nechalacho.
• Aligned sustainability reporting period with fiscal year ended August 31.

Climate Goals & Targets

Environmental Challenges

• Uncertainty related to title to properties and delays in obtaining licenses and permits due to local opposition and Aboriginal land title claims.
• Risks related to Aboriginal rights limiting property development.
• Need to acquire properties for hydrometallurgical plant and potentially a rare earth refinery.
• Potential for actual capital costs, production schedules, and economic returns for the Nechalacho Project to differ significantly from anticipated.
• Fluctuations in rare metals and minerals demand and pricing.
• Competition and actions of competitors.
• Costs or delays in commercialization of rare earth products.
• Shortages of supplies, equipment, and labor.
• Uncertainty whether commercially mineable ore deposits can be developed.
• Extensive federal, state, provincial, territorial, and local laws and regulations.
• Availability and reliability of adequate infrastructure.
• Inherent risks and hazards of the mining industry.
• Changes in critical accounting estimates.
• Potential conflicts of interest of directors and officers.
• Being a “passive foreign investment company” for U.S. purposes.
• Fluctuations of currency exchange rates.
• Share price volatility.
• Delisting of common shares from the NYSE MKT.
• Dilution of existing shareholders.
• Not paying cash dividends.
• Being a non-US corporation.
• Lack of market for the Company’s warrants.
• Weak investor sentiment and capital market conditions in the junior resource sector.
• Inability to raise additional funds on favorable terms or at all.

Mitigation Strategies

• Metallurgical test work to optimize process flowsheets, improve recoveries, and reduce costs.
• Negotiations with potential future customers and strategic partners.
• Slow progress on permitting process for Class A Water License and Land Use Permit.
• Efforts to reduce overhead costs, including salary reductions for senior management and directors.
• Reduced investor relations and financing advisory expenses.
• Private placement to raise funds.
• Exploration and development activities adjusted based on funding availability.
• Voluntary delisting from NYSE MKT and listing on OTCQX Best Market.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Version 4

Environmental Metrics

ESG Focus Areas

• Health and Safety
• Environment
• Local Communities
• Biodiversity
• Closure Planning
• Compliance, Emissions, Effluents & Waste
• Employment
• Energy
• Outreach
• Procurement
• Economics

Environmental Achievements

• Completed a draft Project Description for the Separation Rapids Project in March 2017.
• Completed the first phase of the environmental baseline validation study in June 2017 for Separation Rapids.
• Developed a closure strategy for the East Kemptville Project that minimizes land disturbance and prevents acid mine drainage.
• Reduced energy consumption through the implementation of a renewable energy system at the Nechalacho Project, resulting in significant diesel savings.
• Toronto office diverted 72.5 lbs. of waste from the landfill by joining a coffee pod recycling program.

Social Achievements

• Engaged with Wabaseemoong Independent Nation (WIN) and Métis Nation of Ontario (MNO) on the Separation Rapids Project.
• Hosted a Valued Components Workshop with over 60 Métis people.
• Employed local contractors for various activities at the Separation Rapids Project.
• Supported a health and safety course at the PDAC Conference.
• Continued support for student research projects at various universities.

Governance Achievements

• Welcomed Ms. Patricia Mohr to the Company’s Board of Directors.
• Updated and streamlined the sustainability questionnaire used to screen potential contractors.
• Formalized the management system to ensure appropriate use of the sustainability questionnaire for screening new contracts.
• No known instances of non-compliance with regulatory requirements.

Climate Goals & Targets

Environmental Challenges

• One contractor medical aid injury occurred at the Separation Rapids Project.
• Low market capitalization hindering attraction of socially responsible investors.
• Challenges in obtaining government and industry support for project initiatives (partially mitigated by joining CUTRIC and establishing OCMG).

Mitigation Strategies

• Risk assessment training/retraining for geology team members and development of an Emergency Response Plan.
• Continued outreach to socially responsible investors and green funds.
• Active participation in industry associations and collaborations with government agencies.

Supply Chain Management

Supplier Audits: Sustainability questionnaire used to screen contractors.

Responsible Procurement

• Ethical procurement behavior.
• Multiple bids required for contracts above certain thresholds.
• Evaluation criteria include HSE performance and community engagement.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Potential carbon tax and cap and trade programs.

Opportunities

• Reduced operating costs through energy efficiency initiatives.

Reporting Standards

Frameworks Used: GRI Standards: Core option, PDAC’s e3 Plus, MAC’s TSM framework

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Best Use of Renewables for Mine Exploration Award

Environmental Metrics

ESG Focus Areas

• Environmental Responsibility
• Social Responsibility
• Indigenous Relations
• Governance
• Cleantech Materials Production

Environmental Achievements

• Developed cost-effective strategies to completely revive and restore the East Kemptville site, reducing long-term environmental liability.
• Redesigned Separation Rapids project layout for smaller impact, reducing energy requirements and GHG generation.
• Investigated power line routes to Separation Rapids to minimize GHG emissions.

Social Achievements

• Maintained positive engagement with regulators and NGOs at East Kemptville.
• Continued discussions with local Indigenous groups at Separation Rapids and Nechalacho.
• Developed and ran successful health and safety and environmental management courses at the PDAC Convention.

Governance Achievements

• 100% compliance with all applicable legal requirements.
• Continued outreach to socially responsible financial community.

Climate Goals & Targets

Environmental Challenges

• Need to prove reliable production of high-quality product at Separation Rapids before achieving initial production.
• Securing full tenure to the East Kemptville site.
• Attracting significant investment capital from socially responsible investors due to low market capitalization.

Mitigation Strategies

• Extensive process development work to prove product and provide test samples at Separation Rapids.
• Ongoing discussions with Nova Scotia Ministry of Natural Resources officials to validate Special License and prepare applications for Mineral Lease and Crown Land Lease at East Kemptville.
• Continued promotion of sustainability leadership to attract socially responsible investors.

Supply Chain Management

Supplier Audits: Sustainability questionnaire used for all major project work bids.

Responsible Procurement

• Use of sustainability questionnaire to evaluate contractors.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Development of energy-efficient products and processes.

Reporting Standards

Frameworks Used: GRI Standards: Core option, PDAC's e3 Plus, MAC's Towards Sustainable Mining (TSM)

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• High-purity petalite for specialty glass-ceramic manufacturers.

Awards & Recognition

• Corporate Knights' Future 40 Responsible Corporate Leaders in Canada (three times in four years)

Environmental Metrics

ESG Focus Areas

• Health and safety
• Social
• Environmental
• Economic

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI

Environmental Metrics

ESG Focus Areas

• Climate Change
• Biodiversity
• Indigenous Relations
• Health and Safety
• Environmental Stewardship
• Responsible Sourcing
• Governance

Environmental Achievements

• Developed new lithium mineral processing technology to significantly reduce energy use and waste generation
• Updated quarry site plan for Separation Rapids approved with no new conditions and no annual limit on aggregate production
• Received approvals to proceed with 2,500-tonne bulk sample extraction program at Separation Rapids
• Initiated strategy development and assessment of feasibility for carbon neutrality by 2050

Social Achievements

• Connected 64 times with Indigenous Communities of Interest and 285 times with non-Indigenous Communities of Interest at Separation Rapids with no objections or concerns
• Donation of $10,000 (matched by Manulife) to Eabametoong First Nation for COVID-19 protective equipment
• Continued support for graduate student research projects
• Active participation in industry associations (CREEN/C2M2A) to advance sustainable practices

Climate Goals & Targets

Environmental Challenges

• Financing limitations for several planned studies and initiatives
• COVID-19 pandemic impacting fieldwork and office operations
• Site access issues at East Kemptville Project delaying progress
• Negotiations with Métis Nation of Ontario for MOU at Separation Rapids

Mitigation Strategies

• Continued engagement with Communities of Interest despite challenges
• Developed COVID-19 risk assessment and office protocols
• Prepared for required permitting at East Kemptville pending resolution of access issues
• Continued discussions with MNO to find mutually agreeable MOU terms

Supply Chain Management

Supplier Audits: Sustainability questionnaire included in Requests for Proposals

Responsible Procurement

• Consideration of contractors' health, safety, and environmental records

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products and processes
• Opportunities to reduce costs and achieve carbon neutrality through clean energy options

Reporting Standards

Frameworks Used: GRI Standards: Core option, Towards Sustainable Mining (TSM)

Third-party Assurance: None

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• New lithium mineral processing technology

Awards & Recognition

• Corporate Knights Future 40 Responsible Corporate Leaders in Canada (2015, 2016, 2018)
• Prospectors and Developers Association of Canada Environment and Social Responsibility Award (2010)
• PDAC Distinguished Service Award (2019)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Energy consumption decreased by 1656.82 GJ from FY2021. This is attributed to the completion of the bulk sample program at Separation Rapids, reducing the use of diesel fuel. This was coupled with a decrease in external energy consumption due to reduced executive travel.
• Scope 1 emissions decreased substantially due to the impact of Covid restrictions and completion of work programs.
• Scope 2 emissions remained low due to a large decrease in electricity/steam power consumption at the company’s head office due to reduced activity in the building due to the COVID-19 pandemic.
• Scope 3 Emissions decreased primarily due to reduced executive travel.

Social Achievements

• Continued engagement with Indigenous governments and organizations at projects, including helping facilitate collaborations with other institutions
• Local leadership can directly engage in dialog with any member of Avalon management, including the President and CEO.
• Drilling and blasting were contracted out to a local certified Indigenous business.

Governance Achievements

• Obtained an independent audit of its ESG performance to secure an ESG risk rating in 2021 from Sustainalytics, a Morningstar company. Avalon’s ESG risk rating placed it in the top 5% of companies in its sector referred to as “diversified metals”.

Climate Goals & Targets

Environmental Challenges

• Ongoing effects of the COVID-19 pandemic
• Regulatory barriers to accessing and developing closed mine sites

Mitigation Strategies

• Remaining active doing the basic research work needed to start developing our projects that will supply the critical materials needed by Canada to sustainably achieve its greenhouse gas reduction targets
• Engaging with government and regulators to provide industry advice and perspective on more effective, practical, and achievable governance in cleantech materials development

Supply Chain Management

Responsible Procurement

• Avalon includes its sustainability questionnaire on Requests for Proposals. The contractors’ health and safety record, including sustainability questionnaire responses, are factored into Avalon’s ultimate choice of contractor.

Climate-Related Risks & Opportunities

Opportunities

• lithium for batteries for stationary energy storage or electric vehicles, and indium and rare earths in green power generation systems

Reporting Standards

Frameworks Used: GRI Standards: Core Option, Towards Sustainable Mining (TSM) framework, UN Sustainable Development Goals

UN Sustainable Development Goals

• 1
• 2
• 3
• 4
• 5
• 6
• 7
• 8
• 9
• 10
• 11
• 12
• 13
• 14
• 15
• 16
• 17

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Protection
• Indigenous Reconciliation
• Economic Growth
• Workforce Development
• Community Relations
• Governance
• Responsible Mining Practices

Environmental Achievements

• Partnership with Metso to implement a less polluting lithium hydroxide (LiOH) processing method, eliminating sulfuric acid and reducing air emissions.
• Water consumption of 4236.37 cubic meters (m3) at corporate office and Kenora site.

Social Achievements

• Establishment of a joint venture with Sibelco, a company focused on clean energy and environmental responsibility.
• Ongoing engagement with Indigenous communities, resulting in several Memoranda of Understanding (MOUs).

Governance Achievements

• Appointment of a new leadership team focused on execution and sustainability.
• Adoption of the IFRS sustainability disclosure standards.

Climate Goals & Targets

Environmental Challenges

• High global carbon footprint of EV batteries due to the current geographically dispersed supply chain.
• Transitioning to the new IFRS sustainability reporting standards.

Mitigation Strategies

• Localizing the end-to-end production of EV batteries in Ontario using a less polluting conversion method.
• Adoption of IFRS standards for improved reporting efficiency and transparency.

Supply Chain Management

Responsible Procurement

• Utilizing local services and suppliers whenever possible

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products and processes

Reporting Standards

Frameworks Used: IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2), Towards Sustainable Mining (TSM)

Sustainable Products & Innovation

• Lithium hydroxide processing method

Awards & Recognition

• Prospectors and Developers Association of Canada Distinguished Service Award