Avalon Advanced Materials Inc. — Capital/Financing Update 2025

Jul 28, 2025

FORM 51-102F3
MATERIAL CHANGE REPORT

Item 1
Name and Address of Company

Avalon Advanced Materials Inc. ("Avalon" or the "Company")
130 Adelaide Street West
Suite 2060
Toronto, ON M5H 3P5

Item 2
Date of Material Change

July 18, 2025

Item 3
News Release

A news release was disseminated on July 21, 2025 through the facilities of Newsfile and subsequently filed on SEDAR+.

Item 4
Summary of Material Change

On July 18, 2025, Avalon entered into a supplemental funding agreement to draw down an additional $1,300,000 from its $15,000,000 convertible security funding agreement (the "Funding Agreement") with Lind Global Fund II, LP.

Item 5
Full Description of Material Change

On July 18, 2025, Avalon entered into a supplemental funding agreement to draw down an additional $1,300,000 from the Funding Agreement with Lind Global Fund II, LP, an entity managed by The Lind Partners, a New York based institutional fund manager (together "Lind").

The convertible security to be issued pursuant to the second drawdown under the Funding Agreement will have a two-year term and will accrue a simple interest rate obligation of 10% per annum on the funded amount, which is prepaid and attributed to the face value of the convertible security upon issuance, resulting in a face value of $1,560,000 (the "Face Value"). Lind will be entitled to convert the Face Value amount over a 24-month period, subject to certain limits, at a conversion price equal to 85% of the five-day trailing volume weighted average price of Avalon's common shares prior to the date of conversion. The convertible security matures 24 months after closing. Commencing 30 days after the expiry of the 4-month statutory hold applicable to the convertible security, Avalon has the right to repurchase the convertible security, subject to Lind's option to convert up to one third of the Face Value into Avalon common shares prior to such repurchase.

In conjunction with the closing of the second drawdown under the Funding Agreement, Lind received a closing fee of $45,500, and 10,600,000 common share purchase warrants. Each warrant entitles Lind to purchase one common share of the Company at a price of $0.09 per common share until July 25, 2030.

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-2-

Pursuant to Canadian securities laws, the securities issuable under this private placement are subject to a hold period which expires on November 26, 2025. The Company has received conditional approval of the TSX in connection with this second drawdown.

This material change report is not an offer of securities for sale in the United States. The securities have not been and will not be registered under the US Securities Act of 1933, as amended (the "US Securities Act"), and may not be offered or sold in the United States or to US persons (as defined in Regulation S under the US Securities Act) absent registration or an applicable exemption from registration. All currency reported in this release is in Canadian dollars.

Item 6 Reliance on subsection 7.1(2) of National Instrument 51-102

Not applicable.

Item 7 Omitted Information

Not applicable.

Item 8 Executive Officer

Scott Monteith, President and CEO, (416) 364-4938.

Item 9 Date of Report

July 28, 2025.