Rare Earths Power Breakfast March 7, 2011

1. Rare Earths Power BreakfastMarch 7, 2011 Don Bubar, President & CEO

2. Safe Harbour Statement Forward looking information Certain statements contained in or incorporated by reference into this presentation constitute forward-looking statements. Such statements reflect the current views of Avalon Rare Metals Inc. with respect to future events and are subject to certain risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of Avalon Rare Metals Inc. that may be expressed or implied by such forward-looking statements to vary from those described herein should one or more of these risks or uncertainties materialize. Avalon Rare Metals Inc. does not intend, and does not assume any obligation, to update these forward-looking statements.

3. Capital StructureFebruary 25, 2011

4. Project Locations NECHALACHO Heavy Rare Earths Tantalum Niobium Zirconium Hafnium Gallium NORTH T DEPOSIT Beryllium Light Rare Earths Lithium Gallium Niobium Avalon offers diversified exposure to a broad range of rare metals All projects 100% owned

5. Nechalacho REE Deposit at Thor Lake: Key Facts • Positive pre-feasibility study completed in 2010. >C$30 million invested since 2005, incl. 59,000m of drilling in 266 holes • $40 million Bankable feasibility underway, funded, complete in 2012 • Large resource amenable to low cost underground mining methods • Rich in heavy rare earths (20-28%), High grade subzones defined • Recovery process defined at bench scale. Pilot plant in progress • Product sales and marketing program initiated... Strategic partners • 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

6. Basal Zone Indicated Resources atVarious NMR Cut-offsupdated Jan. 27, 2011 • Prepared from 2009 data by Scott Wilson RPA detailed in Technical Report filed July 29, 2010 and updated for 2010 drilling by Finley Bakker, P. Geo., Sr. Resource Geologist • Mineral Resources are estimated using price forecasts for 2014 for rare earth oxides prepared early in 2010. Some prices are higher and some are lower than current prices. • NMR is defined as “Net Metal Return” or the gross in situ value of all the payable rare metals in the ore. $US FX rate: $1.11. The 2010 base case NMR is C$260/tonne. • Mineral Resources NMR price assumptions (2010): US$21.94/kg TREO, US$3.76/kg ZrO2, US$130/kg Ta2O5, and US$45/kg/Nb2O5 .

7. Rare Earth Element Supply Chain Avalon’s contributions to the REE supply chain Downstream contributions

8. 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 tpa 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

9. Schedule to Production in 2015 Bankable Feasibility Study Budget Sept. 1, 2010 to Aug 31. 2012= $40.5 million Cost Estimate for Feasibility Study = $43 million Total Estimated CapEx: +C$1.0 billion

10. Community information sessions and site visits Aboriginal Training First Aid, Driller Helper Employment at site 40% Aboriginal Business development Major contractors with Aboriginal ownership Ice road haulage, airstrip Wind power evaluation Helped start a new core box business with DeninuKue Signed MOUs (Negotiation Agreement) with two FN’s First Nations Community Engagement & CSR

11. The business case for embracing CSR • Reduced risk of permitting delays • Local community support • Better access to investment capital • CleanTech funds and SRI’s are increasingly important sources of investment capital • Better access to markets for products • Socially responsible manufacturers are managing their supply chains to the source of raw materials to encourage sustainability and avoid sourcing from conflict areas (eg; tantalum from Congo) • Dodd Frank Bill will force US consumers to audit their supply chains to avoid use of conflict minerals

12. Competitive Advantages Relatively Advanced 5 years down a 10 year development timeline Prefeasibility Study Completed Allows company to enter into discussions with customers about off-take Metallurgical Flowsheet Determined No issues with contaminants and good recoveries confirmed (75%) Significant By-product revenue indicated (Zr, Nb, Ta) Heavy Rare Earth Enrichment Marketing Opportunity No other advanced projects have all the heavies to offer First Mover Advantage is Key First to market will capture available market share Only room for a handful of new producers “first come, first served”

13. REE COMPARABLES: With Market Capitalization Normalized to TREO Resources

14. Some objectives for 2011 • Update of Nechalacho PFS Economic Model by mid-year • Attracting a consumer or consumers as strategic partners and entering into off-take agreements • Advancing feasibility study work especially pilot plant work and planning for HREE separation plant • Concluding First Nations Participation Agreements • Expanding our investor audience internationally and in the Clean Tech community (CSR Road Map 2011) • Increased Research Analyst coverage • Advance East Kemptville and Separation Rapids projects and begin generating other new rare metals projects