Critical Metals SymposiumVancouverVancouver

January 22, 2011

Don Bubar, President & CEO Don Bubar, President & CEO Don Bubar, President & CEO Don Bubar, President & CEO

Safe Harbour Statement

Forward looking informationForward looking informationForward looking informationForward looking information

Certain statements contained in or incorporated by reference into thispresentation constitute forward-looking statements. Such statementsreflect the current views of Avalon Rare Metals Inc. with respect to futureevents and are subject to certain risks, uncertainties and assumptions.Many factors could cause the actual results, performance or achievements

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Many factors could cause the actual results, performance or achievementsof Avalon Rare Metals Inc. that may be expressed or implied by suchforward-looking statements to vary from those described herein shouldone or more of these risks or uncertainties materialize. Avalon Rare MetalsInc. does not intend, and does not assume any obligation, to update theseforward-looking statements.

Project Locations

NECHALACHONECHALACHONECHALACHONECHALACHOHeavy Rare EarthsTantalumNiobiumZirconiumHafniumGallium

NORTH T DEPOSITNORTH T DEPOSITNORTH T DEPOSITNORTH T DEPOSITBerylliumLight Rare EarthsLithiumAvalon offers

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LithiumGalliumNiobium

All projects 100% owned

Avalon offers diversified exposure to a broad range of rare metals

Nechalacho REE Deposit at Thor Lake: Key Facts

Positive pre-feasibility study completed in 2010. C$27 million invested since 2005, incl. 59,000m of drilling in 266 holes

Bankable feasibility underway, fully financed, completion in 2012

Large resource amenable to low cost underground mining methods

High proportion of heavy rare earths (20-28%)

Recovery process defined. Pilot plant work in progress

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Recovery process defined. Pilot plant work in progress

PFS Production model: 10,000 tpa TREO... Could be increased

By-product revenues from zirconium, niobium and tantalum (40%)

Environmental assessment and permitting process in progress with First Nations support

Planning for N. American HREE separation plant

Production start-up in 2015

+C$1.0 billion estimated total capital cost

Thor Lake: Project Location

Flotation plant at Thor lake, shipping of concentrate by barge to hydromet plant

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hydromet plant at Pine Point.

Concentrates shipped by rail from Hay River to Separation Plant

Nechalacho Deposit Basal Zone REE Mineralogy

Heavy REE Minerals

Fergusonite Y, HREE (Nb,Ta) OFergusonite Y, HREE (Nb,Ta) OFergusonite Y, HREE (Nb,Ta) OFergusonite Y, HREE (Nb,Ta) O4 4 4 4

Zircon Zr (HREE) SiOZircon Zr (HREE) SiOZircon Zr (HREE) SiOZircon Zr (HREE) SiO4444

Light REE Minerals

20µm

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Light REE Minerals

Bastnaesite (LREE) F CO3

Allanite (LREE,Ca,Y)2 (Al,Fe)3 (SiO4)4 OH

Synchisite Ca (LREE) (CO3)2 F

Monazite (LREE) PO4

REEREEREEREE YYYY LaLaLaLa CeCeCeCe PrPrPrPr NdNdNdNd SmSmSmSm EuEuEuEu GdGdGdGd TbTbTbTb DyDyDyDy HoHoHoHo ErErErEr TmTmTmTm YbYbYbYb LuLuLuLu

Oxide %Oxide %Oxide %Oxide % 29.029.029.029.0 0.300.300.300.30 4.404.404.404.40 1.701.701.701.70 15.615.615.615.6 10.410.410.410.4 1.601.601.601.60 14.314.314.314.3 1.801.801.801.80 9.809.809.809.80 1.201.201.201.20 4.104.104.104.10 0.700.700.700.70 4.404.404.404.40 0.700.700.700.70

FergusoniteFergusoniteFergusoniteFergusonite

REE distribution in fergusonite:REE distribution in fergusonite:REE distribution in fergusonite:REE distribution in fergusonite:

ZirconZirconZirconZircon

NECHALACHO METALLURGY

Metallurgical testing at SGS Minerals Lakefield

Under supervision of John Goode, P.Eng, Consulting Metallurgist

Flotation bench scale testing complete

Concentrate with REE, Nb, Ta, Zr at about 5X concentration

REE content approx. 10%, present recoveries: 80-85%

Gangue minerals (silicates, etc.) ~40% of concentrate

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Gangue minerals (silicates, etc.) ~40% of concentrate

Mini-pilot flotation plant (4-5 tonnes) trial in progress at XPS

Hydrometallurgical flowsheet defined (90% TREO recovery)

“Cracking” of minerals complete

Separation procedure for REE, Zr, Nb, Ta designed

Mini-Pilot plant work to begin when flotation work complete

Feasibility Study Pilot Plant work on 30 tonne sample (H2 2011)

Planning for HREE Separation Plant in North America

No large scale heavy REE separation capability outside China at present. Customers want an outside China separation solution

Scoping Study by SNC Lavalin assuming S. Ontario location

CAPEX estimated at C$345 million (+/- 35%) for 25,000 tpaHREE separation plant

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HREE separation plant

Sized to accommodate additional supply from other producers

Delivered cost of reagents accounts for 90% of OPEX

Locate plant near sources of HCL and caustic soda

Review of potential sites in progress

Consider partnership opportunities

Avalon can be the leading producer of separated HREE oxides from outside China

NechalachoNechalachoNechalachoNechalacho Mt WeldMt WeldMt WeldMt Weld Mountain PassMountain PassMountain PassMountain Pass NolansNolansNolansNolans

CanadaCanadaCanadaCanada(10,000 (10,000 (10,000 (10,000 tpatpatpatpa))))

AustraliaAustraliaAustraliaAustralia(11,000 (11,000 (11,000 (11,000 tpatpatpatpa))))

USAUSAUSAUSA(20,000 (20,000 (20,000 (20,000 tpatpatpatpa))))

AustraliaAustraliaAustraliaAustralia(20,000 (20,000 (20,000 (20,000 tpatpatpatpa))))

Europium EuEuEuEu 49494949 48 24 80

Gadolinium GdGdGdGd 371371371371 107 34 200

Terbium TbTbTbTb 54545454 8 - 16Dysprosium DyDyDyDy 271271271271 13 - 66

Holmium HoHoHoHo 48484848 - - -

Erbium ErErErEr 126126126126 - - -

REE OXIDE

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Erbium ErErErEr 126126126126 - - -

Thulium TmTmTmTm 17171717 - - -

Ytterbium YbYbYbYb 101101101101 - - -

Yttrium YYYY 1,1691,1691,1691,169 41 20 264

Lutetium LuLuLuLu 14141414 - - -

Total Total Total Total HeaviesHeaviesHeaviesHeavies 22.20%22.20%22.20%22.20% 1.98%1.98%1.98%1.98% 0.39%0.39%0.39%0.39% 3.13%3.13%3.13%3.13%

Lanthanum La 1,583 2,805 6,640 3,948

Cerium Ce 3,572 5,141 9,820 9,506

Praseodymium Pr 451 585 868 1,164

NeodymiumNeodymiumNeodymiumNeodymium NdNdNdNd 1,7831,7831,7831,783 2,0352,0352,0352,035 2,4002,4002,4002,400 4,2404,2404,2404,240

Samarium Sm 391 250 160 474

Total Lights 77.80% 98.33% 99.44% 96.66%

Schedule to Production in 2015

Bankable Feasibility Study = $43 million

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Total Estimated CapEx:+C$1.0 billion

Competitive Advantages

Relatively AdvancedRelatively AdvancedRelatively AdvancedRelatively Advanced5 years down a 10 year development timeline

Prefeasibility Study CompletedPrefeasibility Study CompletedPrefeasibility Study CompletedPrefeasibility Study CompletedAllows company to enter into discussions with customers about off-take

Metallurgical Flowsheet DeterminedMetallurgical Flowsheet DeterminedMetallurgical Flowsheet DeterminedMetallurgical Flowsheet Determined

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Metallurgical Flowsheet DeterminedMetallurgical Flowsheet DeterminedMetallurgical Flowsheet DeterminedMetallurgical Flowsheet DeterminedNo issues with contaminants and good recoveries confirmed (75%)

Significant By-product revenue indicated (Zr, Nb, Ta)

Heavy Rare Earth Enrichment Marketing OpportunityHeavy Rare Earth Enrichment Marketing OpportunityHeavy Rare Earth Enrichment Marketing OpportunityHeavy Rare Earth Enrichment Marketing OpportunityNo other advanced projects have all the heavies to offer

First Mover Advantage is KeyFirst Mover Advantage is KeyFirst Mover Advantage is KeyFirst Mover Advantage is KeyFirst to market will capture available market share

Only room for a handful of new producers “first come, first served”

Zirconium Production

Primary zirconium production mainly from zircon sands in Australia and South Africa (1.5 million tpa zircon)

China imports zircon sands and is the only global producer of Zirconium Oxychloride (ZoC) the basic chemical feedstock for producing Zr metal and other chemicals

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feedstock for producing Zr metal and other chemicals

China increasing ZoC consumption, applying export taxes

Zr Metal critical for nuclear reactors as fuel cladding

Many emerging uses:

Hemodialysis treatment (zirconium phosphate)

Solid Oxide Fuel Cells (yttrium stabilized zirconia)

Zirconium Use in Dialysis

Zirconium Phosphate can be used for home dialysis treatment.

The benefits of home dialysis:

No time-consuming trips to hospital

More frequent treatments possible, to mimic natural kidney function.

More mobility possible for patients

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More mobility possible for patients

Less costly for government

Individual consumption of ZrO2 equivalent is 1lb per treatment, with 3 treatments per week or potential demand of 7,000 tonnes per year ZrO2 to treat 100,000 patients

Nechalacho will produce 18,000 tpy ZrO2

Management & Board of Directors

ManagementManagementManagementManagementDonald S. BubarDonald S. BubarDonald S. BubarDonald S. Bubar, P.Geo, President, CEO & Director

Jim AndersenJim AndersenJim AndersenJim Andersen, C.A., C.P.A., V.P. Finance & CFO

Bill MercerBill MercerBill MercerBill Mercer, Ph.D., P.Geo., V.P. Exploration

DirectorsDirectorsDirectorsDirectorsAlan FerryAlan FerryAlan FerryAlan Ferry, CFA

Ron MalashewskiRon MalashewskiRon MalashewskiRon Malashewski, P.Eng (AB), Manager, Investor Relations

Virginia MorganVirginia MorganVirginia MorganVirginia Morgan, Investor Relations (on maternity leave)

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V.P. Exploration

David Swisher, David Swisher, David Swisher, David Swisher, B.S. Min.Eng.,

V.P. Operations

Pierre NeatbyPierre NeatbyPierre NeatbyPierre Neatby, B.A. Econ, V.P. Sales & Mktg

Charlotte MayCharlotte MayCharlotte MayCharlotte May, Corporate Secretary

Cindy HuCindy HuCindy HuCindy Hu, CA, CPA, CGA, Controller

Non-Executive Chairman

David ConnellyDavid ConnellyDavid ConnellyDavid Connelly, CStJ, CD, MBA, B.Comm

Phil Fontaine, Phil Fontaine, Phil Fontaine, Phil Fontaine, B.A., LL.D.

Brian D. MacEachenBrian D. MacEachenBrian D. MacEachenBrian D. MacEachen, C.A. Audit Committee Chair

Peter McCarterPeter McCarterPeter McCarterPeter McCarter, B.A., LL.B., M.B.A. Chair Governance/Compensation ctte

Hari PandayHari PandayHari PandayHari Panday, C.A.

Key Staff & Consultants

Chris PedersenChris PedersenChris PedersenChris Pedersen, P.Geo, Senior Geologist, Camp Manager

Martin Martin Martin Martin HeiligmannHeiligmannHeiligmannHeiligmann, Ph.D., Project Geologist

Finley BakkerFinley BakkerFinley BakkerFinley Bakker, P.Geo. Senior Resource Geologist

Brian DelanyBrian DelanyBrian DelanyBrian Delany, P.Eng., Senior Project Manager

DezhiDezhiDezhiDezhi QiQiQiQi, P.Eng. Process Engineer

John GoodeJohn GoodeJohn GoodeJohn Goode, P.Eng. Metallurgical Consultant

David TruemanDavid TruemanDavid TruemanDavid Trueman, Ph.D., P.Geo, Rare Metals Consulting Geologist

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SGS Lakefield ResearchSGS Lakefield ResearchSGS Lakefield ResearchSGS Lakefield Research, Metallurgy & Mineralogy

Scott Wilson RPA Inc., Scott Wilson RPA Inc., Scott Wilson RPA Inc., Scott Wilson RPA Inc., Pre-Feasibility Study Independent Consultants

Ian M. LondonIan M. LondonIan M. LondonIan M. London, P. Eng. Energy and Market Development Consultant

StantecStantecStantecStantec, Environmental Support

KazKazKazKaz MachidaMachidaMachidaMachida, KAY Investment, REE Market Development Asia

McGill UniversityMcGill UniversityMcGill UniversityMcGill University, (Dr. A.E. Williams(Dr. A.E. Williams(Dr. A.E. Williams(Dr. A.E. Williams----Jones) Jones) Jones) Jones) Geological Research

EBA Engineering, EBA Engineering, EBA Engineering, EBA Engineering, Permitting and Environmental Consultants

FL FL FL FL SmidthSmidthSmidthSmidth, , , , Engineering and Design, Flotation Plant

Xstrata Process Support, Xstrata Process Support, Xstrata Process Support, Xstrata Process Support, Metallurgical Testwork Support

Capital StructureJanuary 14, 2010

Canada Canada Canada Canada ---- TSX: AVLTSX: AVLTSX: AVLTSX: AVL

United States United States United States United States –––– NYSENYSENYSENYSE AmexAmexAmexAmex: AVL Frankfurt: AVL Frankfurt: AVL Frankfurt: AVL Frankfurt---- OUOUOUOU5555

Shares OutstandingShares OutstandingShares OutstandingShares Outstanding 93,113,523

Fully DilutedFully DilutedFully DilutedFully Diluted 103,508,970

Market CapitalizationMarket CapitalizationMarket CapitalizationMarket Capitalization US $532 million (S.O. @ $5.75)

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Market CapitalizationMarket CapitalizationMarket CapitalizationMarket Capitalization US $532 million (S.O. @ $5.75)

Recent Price RangeRecent Price RangeRecent Price RangeRecent Price Range US $4.32 - $7.18

52 Week High / Low52 Week High / Low52 Week High / Low52 Week High / Low US $8.20 – C $1.89

Cash ReservesCash ReservesCash ReservesCash Reserves C $38 million (No debt)

Insider Share PositionInsider Share PositionInsider Share PositionInsider Share Position 4.1 million shares (4.5%)

Institutional holdingsInstitutional holdingsInstitutional holdingsInstitutional holdings CPP, TDAM, Front St., Excalibur, MFC Global

(est. 30(est. 30(est. 30(est. 30----40%)40%)40%)40%) Middlefield, AGF , Cantara, Sentry, Chilton

EmployeesEmployeesEmployeesEmployees 20 (including part-time)

Corporate Information

Avalon Rare Metals Inc.

130 130 130 130 Adelaide St. W, Suite Adelaide St. W, Suite Adelaide St. W, Suite Adelaide St. W, Suite 1901190119011901

Toronto, ON Canada MToronto, ON Canada MToronto, ON Canada MToronto, ON Canada M5555H H H H 3333PPPP5555

T: (T: (T: (T: (416416416416) ) ) ) 364364364364----4938 4938 4938 4938 ۰۰۰۰ F: (F: (F: (F: (416416416416) ) ) ) 364364364364----5162516251625162

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www.avalonraremetals.comwww.avalonraremetals.comwww.avalonraremetals.comwww.avalonraremetals.com

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Investor Relations:

ir@avalonraremetals.com