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Industry Bulletin - Japan To Move To Secure Supplies Of Key Rare Metals - Nikkei & Toyota: One Million Hybrid Cars a Year

June 15, 2007

Dear Shareholder:

In our ongoing efforts to provide you with broader communications and industry information, we are pleased to issue an Industry Bulletin discussing the recent article in the June 12, 2007 editions of the Nikkei Business News Daily Newspaper in Japan.  The article describes Japan´s need to stockpile key rare metals.

Also, Japan is the world leader in producing hybrid cars. In fact, in the following article, which can also be found below, it is reported that Toyota will be setting a target of 1 Million Hybrid Car sales per year by the early part of the next decade.

http://money.cnn.com/2007/06/12/news/companies/toyota_hybrid/index.htm?source=yahoo_quote

This is welcome news to investors in the rare metals market as rare earth elements are a key component of hybrid cars and the lithium ion battery is emerging as the likely rechargeable battery of choice in the next generation of hybrids.  To achieve these lofty goals, rare metals need to be readily available but as the Nikkei article states: "Japan, however, relies heavily on imports from China, Russia and a few other countries. With booming demand, particularly in Asia, prices have shot up two-to eightfold in the last five years. And countries including China are introducing export taxes and other restrictions in a bid to protect supplies for their domestic users."

The Nikkei article is reproduced below for our readers.

Avalon is well-positioned to benefit from the demand for rare metals from the automotive industry through its large rare earth element resources at the Thor Lake deposit in the NWT and its large lithium deposit at Separation Rapids, Kenora, Ontario. Thor Lake is unique in its exceptional enrichment in the Heavy Rare Earths such as terbium and dysprosium which are amongst the rare earths in the highest demand for hybrid car applications.

For further information please visit Avalon´s website at http://www.avalonventures.com

If you have any comments or questions, please do not hesitate to post them on Avalon´s official investor relations hub at http://www.agoracom.com/ir/Avalon.

Regards,

AGORACOM Investor Relations

Japan To Move To Secure Supplies Of Key Rare Metals - Nikkei


TOKYO (Nikkei)--Japan's Ministry of Economy, Trade and Industry drafted Monday a package of proposals to ensure stable supplies of rare metals  essential to electronics and steel production amid growing demand and surging prices worldwide, The Nikkei reported in its Tuesday morning edition.

The measures include boosting the nation's stockpiles and increasing the number of rare metals targeted. In the medium and long term, METI aims to subsidize alternatives as well as secure new sources.

Thirty-one rare metals are crucial to industry. Platinum, for example, is used as an exhaust-cleaning catalyst for cars, while manganese is employed in steel production.

Japan, however, relies heavily on imports from China, Russia and a few other countries. With booming demand, particularly in Asia, prices have shot up two to eightfold in the last five years. And countries including China are introducing export taxes and other restrictions in a bid to protect supplies for their domestic users.

By increasing its reserves, Japan could improve its ability to respond in shortages or other emergencies. Currently, it holds the equivalent of 30-40 days' worth of domestic consumption for seven of these metals, with a target of 60 days. Under the new plan, reserves of four of them - vanadium, tungsten, cobalt and molybdenum - would be increased. Supplies of molybdenum, in particular, have dwindled in recent years because of problems including mine accidents in China.

Japan might also begin stockpiling other materials, such as platinum,
rare-earth metals and indium. In its decision, the ministry will take into account "market conditions and recycling technology development," according to sources.

Supply concerns are particularly acute for indium, 70% of which Japan
sourced from China in 2005. Demand has been growing sharply for use in LCD panel electrodes. Meanwhile, the international price has skyrocketed more than eightfold in five years.

Dow Jones Newswires
06-11-07 1347ET

Toyota reportedly eyes 1M hybrids a year

No. 1 automaker backs away from promises made in 2003 and sets goal of doubling lineup, according to newspaper report.

June 12 2007: 8:47 AM EDT

NEW YORK (CNNMoney.com) -- Toyota Motor Corp. set a goal to sell 1 million hybrids a year, even after taking nearly a decade to sell its first million, a newspaper reported Tuesday.

The goal is a step away from the automaker's previous promise made during a briefing on the redesigned Prius hybrid in 2003, where Toyota said it would make hybrid powertrains available as options on almost every one of its U.S. vehicles by 2010, USA Today reported.

"Hybrid technology is our core technology, and we will double our hybrid lineup. At the same time, we are accelerating the pace of our efforts to achieve annual sales of 1 million units in the early part of the 2010s," Mira Sleilati, a spokeswoman at Toyota Motor North America, said in an e-mail response to the newspaper.

Doubling the U.S. hybrid line would result in about 12 fuel-saving hybrids of the 35 total models that the No. 1 automaker creates and would not happen until after the 2010 date promised at the 2003 briefing, the newspaper reported.

Sleilati would not provide additional comment related to product planning or timing, the newspaper said.

Honda (Charts), Ford Motor (Charts, Fortune 500), General Motors (Charts, Fortune 500) and Nissan (Charts) all offer hybrids but fall far behind Toyota's hybrid sales, the paper said.
Toyota also said it plans to introduce diesel-power passenger vehicles and could make an announcement as soon as next month, according to the paper.