Water Tower Research Publishes Initiation of Coverage Report on Avalon Advanced Materials Inc., “Pursuing Dual-Track Strategy to Enable Domestic REE & Lithium Processing Self-Sufficiency”

April 7, 2026, ST. PETERSBURG, FL – Water Tower Research (www.watertowerresearch.com) has published an Initiation of Coverage Report on Avalon Advanced Materials Inc. (OTCQB: AVLNF) titled, “Pursuing Dual-Track Strategy to Enable Domestic REE & Lithium Processing Self-Sufficiency”. The report can be accessed here.

Avalon Advanced Materials Inc. (TSX: AVL; OTCQB: AVLNF) is a Canadian critical minerals company formed in 1991 and headquartered in Toronto, Ontario, focused on advancing a vertically integrated North American supply chain for rare earths and battery materials. Its flagship asset is the 100%-owned Nechalacho REE and Zirconium Project in the Northwest Territories, an advanced-stage deposit containing both LREEs and HREEs alongside zirconium, niobium, and tantalum. The project has been studied to feasibility level with a staged development approach and benefits from a geologically differentiated, vertically zoned system with meaningful exposure to higher-value heavy rare earths, compared with other REE deposits in production or development.

In parallel, Avalon is developing the LSLi project, a LiOH processing facility in Thunder Bay, Ontario, designed as a midstream hub connecting regional lithium resources to downstream EV battery markets. The project has completed a PEA outlining a 30,000-tpa battery-grade LiOH operation and is advancing through feasibility, supported by a brownfield site with existing infrastructure. The project’s key differentiator versus existing lithium processing plants is the use of Metso’s alkaline pressure leach technology, which eliminates acid roasting and reduces environmental impact, positioning the facility as a cleaner alternative to conventional lithium conversion processes, thus improving operating economics.

Avalon’s valuation is not constrained by asset quality, but by project maturity and execution visibility. The company trades at ~1% of combined NAV (~$4 billion) versus 10–80% for more advanced peers, implying substantial upside if key milestones are achieved. The pathway to value creation is therefore clearly defined: (1) update economic studies (REE DFS refresh and lithium FS) to enhance credibility; (2) secure strategic partners, offtake agreements, and feedstock supply to validate commercial viability; and (3) advance permitting and financing toward construction readiness. Each step corresponds to a step-change in valuation multiples, from ~1% NAV today to potentially 10–25% at DFS stage and 30–60%+ at financing stage. Ultimately, Avalon’s re-rating is contingent on transitioning from a “concept-stage” perception to a “financeable project” reality.

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