SUNSTONE METALS LTD — AGM Information 2023

Sep 14, 2023

15 SEPTEMBER 2023

Annual General Meeting

Sunstone Metals Ltd (ASX: STM; "Sunstone") advises that the attached Notice of Annual General Meeting and Explanatory Memorandum will today be dispatched to shareholders.

The meeting is scheduled for Tuesday 17 October 2023, commencing at 11.30am AEST at Sunstone's offices 9 Gardner Close Milton QLD.

Electronic copies of the Annual General Meeting material and the 2023 Annual Report are available on the Company's website.

A personalised Proxy form will also be provided with the meeting materials

Gavin Leicht

Company Secretary

For further information please visit www.sunstonemetals.com.au

SUNSTONE METALS LTD ACN 123 184 412

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

PROXY FORM

Date of Meeting Tuesday 17 October 2023

Time of Meeting

11.30am (Brisbane time)

Place of Meeting

Sunstone Metals 9 Gardner Close Milton Qld 4064

NOTICE OF ANNUAL GENERAL MEETING SUNSTONE METALS LTD ACN 123 184 412

Notice is hereby given that the Annual General Meeting of Shareholders (Meeting or AGM) of Sunstone Metals Ltd ACN 123 184 412 (Company) will be held at 11.30am (Brisbane time) on Tuesday 17 October 2023 at the offices of Sunstone Metals Ltd, 9 Gardner Close, Milton, Queensland.

AGENDA

The business of the Meeting will be to consider the Resolutions set out below. Full details on the nature of the Resolutions are set out in the Explanatory Memorandum accompanying this Notice of Meeting.

Capitalised terms are defined in the Glossary to this Notice of Meeting and Explanatory Memorandum.

This Notice of Meeting should be read in its entirety together with the Explanatory Memorandum and Proxy Form.

ORDINARY BUSINESS

Financial Statements and Reports

To receive the financial report of the Company and its controlled entities for the year ending 30 June 2023, together with the declaration of the directors, the directors' report, the Remuneration Report, and the auditor's report.

RESOLUTION 1: Adoption of Remuneration Report

To consider and, if thought fit, pass, with or without amendment, the following resolution as a nonbinding ordinary resolution:

'That, for the purpose of section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the Remuneration Report as contained in the Company's annual financial report for the financial year ended 30 June 2023.'

RESOLUTION 2: Ratification of prior issue of placement Shares under Listing Rule 7.1

To consider and if thought fit, pass, with or without amendment, the following Resolution as an ordinary resolution:

'That, for the purpose of Listing Rule 7.4 and for all other purposes, Shareholders ratify the prior issue and allotment of 393,066,963 Shares at an issue price of $0.026 (2.6 cents) to the allottees as set out in the Explanatory Memorandum.'

RESOLUTION 3: Ratification of prior issue of placement Shares under Listing Rule 7.1A

To consider and if thought fit, pass, with or without amendment, the following Resolution as an ordinary resolution:

'That, for the purpose of Listing Rule 7.4 and for all other purposes, Shareholders ratify the prior issue and allotment of 68,471,498 Shares at an issue price of $0.026 (2.6 cents) to the allottees as set out in the Explanatory Memorandum.'

RESOLUTION 4: Issue of Options to Mr Graham Ascough

To consider and, if thought fit, pass, with or without amendment, the following resolution as an ordinary resolution:

'That, for the purposes of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 6,000,000 Options to Mr Graham Ascough (or his nominee) on the terms and conditions set out in the Explanatory Memorandum.'

RESOLUTION 5: Issue of Options to Mr Stephen Stroud

To consider and, if thought fit, pass, with or without amendment, the following resolution as an ordinary resolution:

'Subject to the passing of Resolution 7, that, for the purposes of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 6,000,000 Options to Mr Stephen Stroud (or his nominee) on the terms and conditions set out in the Explanatory Memorandum.'

RESOLUTION 6: Issue of Performance Rights to Mr Malcolm Norris

To consider and, if thought fit, pass, with or without amendment, the following resolution as an ordinary resolution:

'That, for the purposes of Listing Rule 10.14, sections 200B and 200E of the Corporations Act, and for all other purposes, approval is given to the issue by the Company of a total of 6,000,000 Performance Rights under the Employee Performance Rights Plan to Mr Malcolm Norris (or his nominee) on the terms and conditions set out in the Explanatory Memorandum.'

RESOLUTION 7: Re-election of Director, Mr Stephen Stroud

To consider and, if thought fit, pass, with or without amendment, the following resolution as an ordinary resolution:

'That in accordance with the Constitution of the Company, Mr Stephen Stroud who retires by rotation and being eligible, be re-elected as a Director of the Company.'

RESOLUTION 8: External Auditor Appointment

To consider and, if thought fit, pass, with or without amendment, the following resolution as an ordinary resolution:

'That, subject to the resignation of the current auditor of the Company, for the purposes of section 327B of the Corporations Act and for all other purposes, approval is given for HLB Mann Judd, having been nominated by a shareholder and given its consent in writing to act as auditor, to be appointed as auditor of the Company in accordance with the Corporations Act, with effect from the later of: (a) the conclusion of the AGM;

(bl the date on which ASIC gives its consent to the resignation of BDO as the current auditor of the Company; or

(c) the date (if any) fixed by ASIC for the resignation of BDO to take effect under section 329(8) of the Corporations Act,

and the Board is authorised to agree HLB Mann Judd's remuneration in connection with the appointment."

SPECIAL BUSINESS

RESOLUTION 9: Approval of 10% Placement Facility

To consider and, if thought fit, pass, with or without amendment, the following resolution as a special resolution:

'That, for the purposes of Listing Rule 7.1A and for all other purposes, Shareholders approve the issue of Equity Securities up to 10% of the issued Shares (at the time of the issue) calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Memorandum.'

RESOLUTION 10: Renewal of proportional takeover bid provisions

To consider and, if thought fit, pass, with or without amendment, the following resolution as a special resolution:

'That, for the purposes of sections 136(2) and 648G of the Corporations Act, the proportional takeover bid provisions in rule 161 of the Company's Constitution be and are hereby adopted for the three year period from 17 October 2023 up to and including 17 October 2026.'

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How to Vote

You may vote by attending the Meeting in person, by proxy or authorised representative. Registration will commence just prior to the Meeting. To vote in person, attend the Meeting on the date and at the place set out above.

Voting entitlement

In accordance with regulation 7.11.37 of the Corporations Regulations 2001 (Cth), the Board has determined that the Shareholders who are on the Company's share register at 7.00 pm (Sydney time) on 15 October 2023 (being not more than 48 hours before the Meeting on 17 October 2023) will be taken, for the purposes of the Meeting, to be entitled to attend and vote at the Meeting. If you are not the registered holder of a Share at that time, you will not be entitled to vote at the Meeting.

Voting at the Meeting

Ordinary resolutions require the support of more than 50% of the votes cast. Special resolutions require the support of at least 75% of the votes cast. All the Resolutions at this Meeting, other than Resolutions 9 and 10, are ordinary resolutions. Resolutions 9 and 10 are a special resolution.

All resolutions at the Meeting will be voted on by poll and Shareholders who are entitled to vote may vote either prior to the Meeting by appointing a proxy or by poll during the Meeting.

Shareholders are strongly urged to appoint the Chair of the Meeting as their proxy. Shareholders can complete the proxy form to provide specific instructions on how a Shareholder's vote is to be exercised on each item of business, and the Chair of the Meeting must follow your instructions. Lodgement instructions (which include the ability to lodge proxies electronically) are set out in the Proxy Form attached to the Notice of Meeting.

Voting Exclusion Statements

(a) Resolution 1

A vote on Resolution 1 must not be cast (in any capacity) by or on behalf of any of the following persons:

• (i) a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report; or
• (ii) a Closely Related Party of such a member.

However, a person described above may cast a vote on Resolution 1 as a proxy if the vote is not cast on behalf of a person described above and either:

• (i) the person is appointed as a proxy by writing that specifies the way the proxy is to vote on the resolution; or
• (ii) the person is the chair of the meeting and the appointment of the chair as proxy:
  • does not specify the way the proxy is to vote on the resolution; and
  • expressly authorises the chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.

(b) Resolutions 2 and 3

The Company will disregard any votes cast in favour of Resolutions 2 and 3 by or on behalf of:

• (i) an Allottee; and
• (ii) an associate of an Allottee.

However, the Company will not disregard a vote cast in favour of Resolution 2 and 3 if:

• it is cast by the person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
• it is cast by the person chairing the meeting as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the chair to vote as the chair decides; or
• it is cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
  • o the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
  • o the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

(c) Resolution 4

For the purposes of Listing Rule 14.11, the Company will disregard any votes cast in favour of this Resolution by or on behalf of Mr Graham Ascough and any of his Associates and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the entity). However, the Company will not disregard a vote cast in favour of Resolution 4 if:

• it is cast by the person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
• it is cast by the person chairing the meeting as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the chair to vote as the chair decides; or
• It is cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
  • o the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
  • o the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

For the purposes of section 250BD of the Corporations Act, a person appointed as proxy must not vote, on the basis of that appointment, on Resolution 4 if:

• the person is either:
  • o a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity; or
  • o a Closely Related Party of such a member, and
• the appointment does not specify the way the proxy is to vote on the Resolution.

However, the Company will not disregard a vote if:

• the person is the chair of the meeting at which the Resolution is voted on; and
• the appointment expressly authorises the chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.

(d) Resolution 5

For the purposes of Listing Rule 14.11, the Company will disregard any votes cast in favour of this Resolution by or on behalf of Mr Stephen Stroud and any of his Associates and any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the entity). However, the Company will not disregard a vote cast in favour of Resolution 5 if:

• it is cast by the person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
• it is cast by the person chairing the meeting as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the chair to vote as the chair decides; or
• It is cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
  • o the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
  • o the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

For the purposes of section 250BD of the Corporations Act, a person appointed as proxy must not vote, on the basis of that appointment, on Resolution 5 if:

• the person is either:
  • o a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity; or
  • o a Closely Related Party of such a member, and
• the appointment does not specify the way the proxy is to vote on the Resolution.

However, the Company will not disregard a vote if:

• the person is the chair of the meeting at which the Resolution is voted on; and
• the appointment expressly authorises the chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.

(e) Resolution 6

For the purposes of Listing Rule 14.11, the Company will disregard any votes cast in favour of Resolution 6 by or on behalf of:

• the Managing Director of the Company, Mr Malcolm Norris (Non-executive directors are ineligible to participate in the Employee Performance Rights Plan), any Associates of the Managing Director of the Company or a person whose relationship with the Managing Director or Associate is such that, in ASX's opinion, the acquisition should be approved by shareholders, who is eligible to participate in the EPRP; and
• any Associate of such a member.

However, the Company will not disregard a vote cast in favour of Resolution 6 if:

• it is cast by the person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
• it is cast by the person chairing the meeting as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the chair to vote as the chair decides; or
• it is cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
  • o the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
  • o the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

For the purposes of the Corporations Act, a person appointed as proxy must not vote, on the basis of that appointment, on Resolution 6 if:

• the person is either:
  • o a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity; or
  • o a Closely Related Party of such a member, and
• the appointment does not specify the way the proxy is to vote on the Resolution.

However, the Company will not disregard a vote if:

• the person is the chair of the meeting at which the Resolution is voted on; and
• the appointment expressly authorises the chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.

(f) Resolution 9

The Company will disregard any votes cast in favour of Resolution 9 by or on behalf of, if at the time the approval is sought the Company is proposing to make an issue of equity securities under listing rule 7.1A.2, any person (and any Associates of such a person) who is expected to participate in the 10% Placement Facility, or any person (and any Associates of such a person) who will obtain a material benefit as a result of, the proposed issue, except a benefit solely by being a holder of ordinary shares in the Company.

However, the Company will not disregard a vote cast in favour of Resolution 9 if:

• it is cast by the person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
• it is cast by the person chairing the meeting as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with a direction given to the chair to vote as the chair decides; or
• it is cast by a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
  • o the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
  • o the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

Proxies

A Shareholder who is entitled to attend this Meeting and vote is entitled to appoint a proxy to attend and vote for the Shareholder at the Meeting. A proxy need not be a Shareholder. If the Shareholder is entitled to cast two or more votes at the Meeting the Shareholder may appoint two proxies and may specify the proportion or number of votes which each proxy is appointed to exercise. A form of proxy accompanies this Notice.

To be valid, the appointment of a proxy (made using a properly completed and executed Proxy Form) must be received by the Company no later than 11.30am (Brisbane time) on 15 October 2023.

Proxy Forms can be submitted by the below methods:

• (a) Online by visiting www.investorvote.com.au and entering the 6-digit control number found on the front of the Proxy Form. Intermediary Online subscribers (Custodians) may lodge proxy instructions at www.intermediaryonline.com;
• (b) by mail to Computershare Investor Services Pty Limited, GPO Box 242, Melbourne Victoria 3001; and
• (c) by facsimile 1800 783 447 (within Australia) or +61 3 9473 2555 (outside Australia)

Please note that if the Chairman of the Meeting is your proxy (or becomes your proxy by default), you expressly authorise the Chair to exercise your proxy on Resolutions 1, 4, 5 and 6 even though they are connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, which includes the chair. If you appoint the Chair as your proxy you can direct the Chair to vote for or against or abstain from voting on any of Resolutions 1, 4, 5 and 6 by marking the appropriate box on the Proxy Form.

The Chair intends to vote undirected proxies in favour of each item of business.

Corporate Representative

Any corporate Shareholder who has appointed a person to act as its corporate representative at the Meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company's representative. The authority may be sent to the Company and/or registry in advance of the Meeting.

NOTE: Please refer to the Explanatory Memorandum accompanying this Notice of Meeting for further information regarding all of the above Resolutions.

By order of the Board

Gavin Leicht Company Secretary 7 September 2023

EXPLANATORY MEMORANDUM GENERAL INFORMATION

This Explanatory Memorandum contains an explanation of, and information about, the Resolutions to be considered at the Annual General Meeting of Shareholders of Sunstone Metals Ltd, to be held on Tuesday 17 October 2023.

The Explanatory Memorandum is to assist Shareholders in understanding the background to and the legal and other implications of the Notice of Meeting and the reasons for the Resolutions proposed. Shareholders should read the Explanatory Memorandum in full.

The Explanatory Memorandum forms part of the accompanying Notice of Meeting and should be read with the Notice of Meeting.

The Explanatory Memorandum does not take into account the individual investment objectives, financial situation and needs of individual Shareholders or any other person. If you are in doubt about what to do in relation to the Resolutions, you should consult your financial or other professional adviser.

Capitalised words used in the Notice of Meeting and in the Explanatory Memorandum are defined in the Glossary at the end of the Explanatory Memorandum.

The information contained in this Explanatory Memorandum has been prepared by the Company and is the responsibility of the Company. Other than the information set out in this Explanatory Memorandum, the Directors believe that there is no other information that could reasonably be required by Shareholders to consider Resolutions 1 to 9 (inclusive).

A copy of this Notice of Meeting and Explanatory Memorandum was lodged with ASX pursuant to the Listing Rules. Neither ASX nor any of its officers take any responsibility for the contents of this Notice of Meeting and Explanatory Memorandum.

ORDINARY BUSINESS

Financial Statements and Reports

In accordance with the Constitution, the business of the Meeting will include receipt and consideration of the Annual Report together with the declaration of the directors, the directors' report, the Remuneration Report, and the auditor's report.

The Company will not provide a hard copy of the Company's Annual Report to Shareholders unless specifically requested to do so. The Company's Annual Report can be found on its website at www.sunstonemetals.com.au.

Remuneration Report

The Remuneration Report sets out the Company's remuneration arrangements for the Directors and senior management of the Company. The Remuneration Report is part of the directors' report contained in the Annual Report.

A reasonable opportunity will be provided for discussion of the Remuneration Report at the Meeting.

"Two Strikes"

The Corporations Act requires that at a listed company's annual general meeting, a resolution that the remuneration report of the company be adopted must be put to the Shareholders. However, such a resolution is advisory only and will not bind the Directors or the Company.

The Corporations Act gives shareholders the opportunity to remove the whole Board except the Managing Director if the Remuneration Report receives votes against of 25% or more (Strike) at two consecutive annual general meetings.

Where a resolution on the Remuneration Report receives a Strike at two consecutive annual general meetings, the Company will be required to put to Shareholders at the second annual general meeting a resolution (Spill Resolution) on whether another meeting should be held (within 90 Days) (Spill Meeting), at which all Directors (other than the Managing Director) who were in office at the date of approval of the applicable Directors' Report, must cease to hold office immediately before the end of the Spill Meeting and must stand for re**-**election, unless the Company put to Shareholders a Spill Resolution at the first annual general meeting.

The Company did not receive a Strike at its 2022 annual general meeting and as a result, if the Remuneration Report receives a Strike at this Meeting, the Company will not be required to put a Spill Resolution. However, if the Remuneration Report receives a Strike at this Meeting and a second Strike at the 2024 annual general meeting, the Company will then be required to put a Spill Resolution.

Proxies

Resolution 1 is an ordinary resolution.

The Corporations Act places certain restrictions on the ability of "Key Management Personnel" (including the Chairman of the Meeting) and their "Closely Related Parties" to vote on Resolution 1 and also places restrictions on "Key Management Personnel" and their "Closely Related Parties" where they are voting as proxy for another shareholder on resolutions connected with the remuneration of Key Management Personnel.

To ensure that your vote is counted on Resolution 1, you are encouraged to direct your proxy how to vote on that item by indicating your preference by completing the "For", "Against" or "Abstain" boxes on the Proxy Form. If you provide an undirected proxy in relation to Resolution 1 to a director (other than the Chairman of the Meeting) or other Key Management Personnel or their Closely Related Parties, such a proxy will not vote on Resolution 1. To allow such a proxy to vote on Resolution 1, you must direct the proxy how to vote by completing the "For", "Against" or "Abstain" boxes on the Proxy Form.

If you appoint the Chairman of the Meeting as your proxy in relation to Resolution 1, but do not complete the "For", "Against" or "Abstain" boxes on the Proxy Form for Resolution 1, the Chairman will exercise your proxy even though Resolution 1 is connected directly or indirectly with the remuneration of Key Management Personnel. The Chairman intends to vote all available proxies in favour of Resolution 1. If you wish to appoint the Chairman as proxy with a direction to vote against, or to abstain from voting on, Resolution 1, you must specify this by completing the "Against" or "Abstain" box on the Proxy Form.

RESOLUTIONS 2 and 3 – Ratification of the prior issue of placement Shares under Listing Rules 7.1 and 7.1A

Background

Resolutions 2 and 3 seeks ratification by Shareholders of the issue of 461,538,461 Shares to the Allottees set out below on 23 May 2023.

The placement was undertaken under Listing Rule 7.1 and Listing Rule 7.1A as follows: -

• (a) 393,066,963 Shares were issued under the Company's annual 15% placement capacity under Listing Rule 7.1; and
• (b) 68,471,498 Shares were issued under the Company's additional 10% placement capacity under Listing Rule 7.1A.

Listing Rule 7.1 provides, in summary, that a listed company may not issue equity securities in any 12-month period which exceeds 15% of the number of issued securities of the company held at the beginning of the 12-month period, except with the prior approval of shareholders of the company in general meeting, unless an exception in Listing Rule 7.2 applies.

However, Listing Rule 7.4 provides that an issue of equity securities made without shareholder approval under Listing Rule 7.1 is treated as having been made with shareholder approval for the purpose of Listing Rule 7.1 if:

• the issue did not breach Listing Rule 7.1; and
• holders of ordinary securities subsequently approve it.

The issue of the Shares did not result in the Company breaching the 15% limit referred to in Listing Rule 7.1. The issue of the Shares does not therefore depend upon shareholders passing Resolution 2. The purpose of Resolution 2 is to obtain shareholder approval for the purpose of Listing Rule 7.4 and for all other purposes. If shareholders approve the issue of the Shares for the purpose of Listing Rule 7.4, the issue of the Shares will not count towards determining the number of equity securities which the Company can issue in any 12-month period. However, if shareholders do not approve the issue of the Shares for the purpose of Listing Rule 7.4, the issue of the Shares will count towards the number of equity securities which the Company can issue in any 12-month period.

Listing Rule 7.1A enables certain eligible entities to seek shareholder approval to issue equity securities up to 10% of its issued share capital over a 12-month period after the annual general meeting at which a resolution for the purposes of Listing Rule 7.1A is passed by special resolution. This additional 10% placement capacity is in addition to the Company's 15% placement capacity under Listing Rule 7.1. The Company obtained approval from Shareholders to issue equity securities under Listing Rule 7.1A at the Company's last annual general meeting held on 27 October 2022.

A note to Listing Rule 7.4 provides that the issue of securities made under Listing Rule 7.1A can be ratified by shareholders under Listing Rule 7.4. If Shareholders ratify the issue of securities, the issue will not reduce the Company's placement capacity under Listing Rule 7.1A.

Accordingly, Resolutions 2 and 3 seek Shareholder approval for and ratification of the issue of: -

• (a) 393,066,963 Shares issued under the Company's annual 15% placement capacity under Listing Rule 7.1 (Resolution 2); and
• (b) 68,471,498 Shares issued under the Company's additional 10% placement capacity under Listing Rule 7.1A (Resolution 3),

under Listing Rule 7.4 to provide flexibility for the Company to issue equity securities under the 15% placement capacity under Listing Rule 7.1 and additional 10% placement capacity under Listing Rule 7.1A in the next 12 months without the requirement to obtain Shareholder approval.

Listing Rule disclosure

Pursuant to and in accordance with Listing Rule 7.5, the following information is provided in relation to the issue of Shares, the subject of Resolutions 2 and 3:

	Required disclosure
Number of securities allotted	Total of 461,538,461 Shares were issued, where:
	(i)393,066,963 Shares were issued under the Company'sannual 15% placement capacity under Listing Rule 7.1(Resolution 2); and
	(ii)68,471,498 Shares were issued under the Company'sadditional 10% placement capacity under Listing Rule 7.1A(Resolution 3).
Issue price	$0.026 (2.6 cents) per Share
Terms of the securities	The Shares were issued as fully paid ordinary shares rankingequally with existing Shares, for which the Company soughtquotation on the official list of the ASX on 23 May 2023.
Names of Allottees or the basison which those persons wereidentified or selected	The Shares were issued to professional and sophisticatedinvestors on the basis of advice from Lead Manager MorgansCorporate Limited and amicaa as Co-Lead Manager.
Use of funds	The funds raised pursuant to the placement will be applied toexploration at the Bramaderos gold-copper project in southernEcuador, the El Palmar gold-copper project in NorthernEcuador and for working capital, including corporate costs tomanage the exploration program and costs of the offer.

A voting exclusion applies to these resolutions – please see the notes.

Recommendation: The Board unanimously recommend that Shareholders vote in favour of Resolutions 2 and 3.

RESOLUTION 4 – Approval to issue up to 6,000,000 Options to Non-Executive Director, Mr Graham Ascough or his nominee

RESOLUTION 5 – Approval to issue up to 6,000,000 Options to Non-Executive Director, Mr Stephen Stroud or his nominee (subject to the passing of Resolution 7)

Background

The Board is seeking Shareholder approval for Resolutions 4 and 5 referred to in the accompanying Notice of Meeting for the purposes of Listing Rule 10.11.

Because Messrs Ascough and Stroud are Directors of the Company and as the Company is seeking to issue them with the same form of equity (i.e. Options under Resolutions 4 and 5 respectively), the explanations on these two Resolutions have been grouped as set out below.

Corporations Act

Shareholder approval under Chapter 2E of the Corporations Act (related party benefits) is not required because the issue of Options is considered to be reasonable remuneration and falls within the exception to the requirement for shareholder approval.

Listing Rules

Listing Rule 10.11 requires a listed company to obtain Shareholder approval by ordinary resolution prior to the issue of equity securities to a related party. The definition of 'equity securities' under the Listing Rules includes an 'option over an issued or unissued security'. Further, as noted above, Messrs Ascough and Stroud are considered to be related parties of the Company by virtue of their roles on the Board of Sunstone, hence Shareholder approval under Listing Rule 10.11 is being sought.

If Resolution 4 is passed, the Company will be able to issue the 6,000,000 Options to Mr Ascough and, subject to the exercise conditions being met, issue the shares on exercise of the Options. If Resolution 4 is not passed, the Company will not be able to issue the Options to Mr Ascough and will need to reconsider the remuneration arrangements for Mr Ascough.

If Resolution 5 is passed (and subject to the passing of Resolution 7), the Company will be able to issue the 6,000,000 Options to Mr Stroud and, subject to the exercise conditions being met, issue the shares on exercise of the Options. If Resolution 5 is not passed, the Company will not be able to issue the Options to Mr Stroud and will need to reconsider the remuneration arrangements for Mr Stroud.

In accordance with Listing Rule 7.2, Exception 14, the general prohibition under Listing Rule 7.1 in relation to the 15% threshold will not apply to the Options issued under Resolutions 4 and 5 provided Shareholder approval is obtained under Listing Rule 10.11. If Shareholder approval is given under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

Corporations Act and Listing Rule disclosure

Details of the proposed issues under Resolutions 4 and 5 as required by Listing Rule 10.13 are as follows:

	Required disclosure
Proposed	Mr Graham Ascough and Mr Stephen Stroud or their nominees
allottees
Nature of	Messrs Ascough and Stroud are related parties of Sunstone because of their
relationship with	roles as Non-Executive Directors of the Company. Mr Ascough is also the
Sunstone	Non-Executive Chairman of the Company.
Maximum	Subject to Shareholder approval, it is proposed that Messrs Ascough and
number of	Stroud (subject to the passing of Resolution 7) will each be issued up to
securities to be	6,000,000 Options to subscribe for new ordinary shares in the Company.
issued
	For the purposes of relying on the Shareholder approval obtained for these
	Resolutions, all Options will be issued no later than 1 month after this Annual
	General Meeting.

Issue Price	Nil
Exercise price	The Options to be issued and their exercise price are as follows:
and expiry date	All 12,000,000 Options will be exercisable at the maximum of $0.042, or aprice 50% above the Volume Weighted Average Price (VWAP) of theCompany's shares on the 5 days prior to the date Shareholder approval isgranted, rounded up to the next tenth of a cent. All of the Options will havean exercise period commencing 12 months from the date Shareholderapproval is granted and expiring 3 years from the date Shareholderapproval is granted.
Terms of issue	The terms and conditions of the Options to be issued are set out inAnnexure A to this Explanatory Memorandum.
	Each Option proposed to be granted is subject to a 12-month vestingcondition before the Option can be exercised, lapsing if the allotteedeparts the Company within this period, and entitles the holder tosubscribe for one new ordinary share in the Company at the exerciseprice specified above exercisable during the exercise period specified.The Shares issued on exercise of the Options will rank equally in all respectswith the existing fully paid ordinary shares in the Company.
Use of funds	No funds will be raised on the initial issue of the Options to Messrs Ascoughand Stroud as they are being granted for no consideration.
	If Messrs Ascough and Stroud exercise any or all of their Options, funds willbe raised based on the exercise price set out above. These funds will be puttowards the Company's general working capital requirements andexploration activities at the relevant time.
Why theOptions arebeing issued tothe allottees	The primary purpose of the issue of the Options is to provide cost effectiveremuneration and incentives for Messrs Ascough and Stroud in theirrespective roles as Directors and reflects what the Board considers to beappropriate in the circumstances.
	It is considered appropriate to grant the Options to Messrs Ascough andStroud as a means of:retaining their services by providing a competitive remuneration•package;providing incentives linked to the performance of the Company,•thereby aligning their interests more closely with that of theCompany; andproviding them with an opportunity to acquire equity in the•Company.
	It is further considered that the performance of Messrs Ascough andStroud and the performance and value of the Company will be closelyrelated. The Options to be granted will only be of benefit if MessrsAscough and Stroud perform to the level whereby the value of theCompany increases sufficiently to warrant exercising the Options.
	Messrs Ascough and Stroud bring a wealth of experience to the Companyand valuable fundraising experience, mine development and miningexploration contacts.
	The Directors believe that the proposed issue of Options are in the bestinterests of the Company and promote the interests of the Company onthe basis that the Directors will be increasingly committed to improving theperformance of the Company for the benefit of Shareholders.

Why the	Why the number of Options?
number ofOptions andvalue of theOptions waschosen	The number of Options was chosen following a review of similarorganisations to be market competitive. The Options will be granted as akey component of the relevant Director's remuneration in order to retainservices and provide incentives linked to the performance of the Company.It is further considered that the performance of Directors and theperformance and value of the Company will be closely related. As such,the Options to be granted will only be of benefit if the Directors perform to
	the level whereby the value of the Company increases sufficiently towarrant exercising the Options.
	What is the value of the Options?22 Corporate Advisory Pty Ltd, as independent valuers, has determined thatthe total value of the Options to be issued is (as at the date of the OptionsValuations) $158,400, based on a closing share price of $0.028 at 7 August2023 and an exercise price of $0.042 (50% premium).
	Attaining all the exercising conditions will also mean an increase in the shareprice. If a share price increase is attained the Board determined that thefinancial reward to Messrs Ascough and Stroud was appropriate andaligned their interests with that of all Shareholders.
Valuation of thefinancial benefit	The Company engaged 22 Corporate Advisory Pty Ltd to undertakevaluations of the Options proposed to be issued to Messrs Ascough andStroud (Options Valuations). 22 Corporate Advisory Pty Ltd valued theOptions using a Black-Scholes Option Pricing (BSOP) methodology.
	The Options Valuations assumed an exercise price of $0.042, and attributeda total value of $158,400 to the total 12 million Options proposed to beissued under Resolutions 4 and 5 as follows:
	Exercise Price $0.042
	Mr Ascough $79,200Mr Stroud$79,200
	However, it is important for Shareholders to note that this stated value of theOptions may go up or down at any time despite the Options Valuations. Thisis because the value of the Options will depend on the valuationmethodology used in any future valuation, together with the relevantassumptions made under the Options Valuations compared to any futurevaluations.
	For the purposes of the Options Valuations, the following facts orassumptions were used:•the Options are exercisable at the higher of $0.042 (used for thevaluation) or 150% of the 5-day VWAP prior to approval;the volatility of the Company's share price was calculated with•regard to the historical volatility, being 85% for 3 years;the Options expire 3 years from date of shareholder approval;•
	the risk-free rate used is 3.761%, which is the 3-year Government•Bond Rate as at 7 August 2023;for the purposes of the Options Valuations, no future dividend•payments were forecast, given the Company is a mineralexploration company with no history of paying dividends; andthe valuation of the share-based payments do not consider non•market vesting conditions, consistent with AASB 2 (i.e. probability ofNon-executive Directors leaving before vesting date).
	Based on the assumptions outlined above, 22 Corporate Advisory Pty Ltdcalculated the value of the Options to be $158,400.

	The Board believes, having taken appropriate expert advice on the matter,that the Options Valuations and use of the trinomial lattice valuation modelwas appropriate in the circumstances. The Board has not used any othervaluation model in proposing the terms or number of Options.
Disclosure oftotalremunerationpackage	As noted above, the Options are proposed to be issued to Messrs Ascoughand Stroud as a means of providing cost effective remuneration andincentives for them in their roles as Directors. These Options are proposed tobe a one-off issue of securities to Messrs Ascough and Stroud or theirnominees for that purpose.The remuneration and emoluments from the Company for Messrs Ascough
	and Stroud for the current financial year are:
	Related party			Current financial year remuneration*
	Mr Graham Ascough	$95,000 per annum
	Mr Stephen Stroud	$60,000 per annum	6,000,000 Options per Resolution 4
			the passing of Resolution 7	6,000,000 Options per Resolution 5, subject to
	*Paid pursuant to service contracts with the Company.
				Directors are also entitled to reimbursement of all reasonable travelling,
				accommodation and other expenses that are properly incurred in
				attending meetings of Directors or any meetings of committees of
	Directors, in attending meetings of Shareholders or in connection withthe business of the Company.
Directors'
interest in the	Other than the interests that Messrs Ascough and Stroud each have in theresolutions that relate to their individual allotment, none of the other
outcome	Directors have an interest in the outcome of Resolutions 4 and 5.
Dilution effect	If all the Options granted to each of Messrs Ascough and Stroud are
the issue of theOptions will	exercised, a total of 24,000,000 Shares would be allotted and issued. Thiswould increase the total number of Shares on issue from 3,081,984,879 to
have on existing	3,105,984,879 (assuming no other Options or Shares are issued), with the
Shareholders	effect that the shareholding of existing Shareholders would be diluted by0.78%.
Securities heldin the Company	The current relevant interests (i.e. before any of the Resolutions 4 and 5 areapproved) of each of Messrs Ascough and Stroud in the securities of theCompany are set out below:
	Related party	Shares	Options	Performance Rights
	Mr GrahamAscough	19,865,143	6,000,000	Nil
	Mr Stephen Stroud	10,553,026	6,000,000	Nil
				If Resolutions 4 and 5 are approved by shareholders, the relevant interests(i.e. after the Resolutions are approved) of each of Messrs Ascough and
	Stroud in the securities of the Company will be as set out below:
	Related party	Shares	Options	Performance Rights
	Mr Graham	19,865,143	12,000,000	Nil
	Ascough
	Mr Stephen Stroud	10,553,026	12,000,000	Nil
Voting exclusion	Voting exclusions apply to Resolutions 4 and 5 – please see the notes.

The market price of Shares in the Company would normally determine whether Messrs Ascough and Stroud (or their nominee) will exercise the Options. If the Options are exercised at a price that is lower than the price at which Shares are trading on ASX, there may be a perceived cost to the Company. The highest, lowest, and last recorded closing market price of the Shares quoted on ASX during the 12-month period prior to the date of this Notice of Meeting were:

Highest	$0.046 on 12 December 2022
Lowest	$0.020 on 27 June 2023
Last	$0.021 on 6 September 2023

Additional information and Directors' recommendation

Resolution 4 - Approval to issue up to 6,000,000 Options to Non-Executive Director, Mr Graham Ascough or his nominee

Mr Ascough declines to make a recommendation to Shareholders in relation to Resolution 4 due to his material personal interest in the outcome of the Resolution. The other Directors, who do not have a material interest in the outcome of Resolution 4, recommend that Shareholders vote in favour of Resolution 4. The Board, other than Mr Ascough, are not aware of any other information which would reasonably be required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 4.

Recommendation: The Board, with Mr Ascough abstaining, unanimously recommend that Shareholders vote in favour of Resolution 4.

Resolution 5 - Approval to issue up to 6,000,000 Options to Non-Executive Director, Mr Stephen Stroud or his nominee

Mr Stroud declines to make a recommendation to Shareholders in relation to Resolution 5 due to his material personal interest in the outcome of the Resolution. The other Directors, who do not have a material interest in the outcome of Resolution 5, recommend that Shareholders vote in favour of Resolution 5. The Board, other than Mr Stroud, are not aware of any other information which would reasonably be required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 5.

Recommendation: The Board, with Mr Stroud abstaining, unanimously recommend that Shareholders vote in favour of Resolution 5.

RESOLUTION 6 – Approval to issue up to 6,000,000 Performance Rights to CEO/Managing Director, Malcolm Norris or his nominee.

Background

The Board is seeking Shareholder approval for Resolution 6 referred to in the accompanying Notice of Meeting for the purposes of Listing Rule 10.14 and all other purposes.

Corporations Act

Shareholder approval under Chapter 2E of the Corporations Act (related party benefits) is not required because the issue of Performance Rights is considered to be reasonable remuneration and falls within the exception to the requirement for shareholder approval.

Listing Rules

Listing Rule 10.14 requires a listed company to obtain Shareholder approval by ordinary resolution prior to the issue of equity securities under an employee incentive scheme to a director of the company. The Company proposes to grant the performance rights to Mr Norris under the Employee Performance Rights Plan and the Plan Rules will apply to the grant. The definition of 'equity securities' under the Listing Rules includes a 'right to a share or unit or option'. Further, as noted above, Mr Norris is a director of the Company, hence Shareholder approval under Listing Rule 10.14 is being sought.

If Resolution 6 is passed, the Company will be able to issue the 6,000,000 Performance Rights to Mr Norris and, subject to the performance conditions being met, issue the shares on the vesting of the Performance Rights. If Resolution 6 is not passed, the Company will not be able to issue the Performance Rights to Mr Norris and will need to reconsider the remuneration arrangements for Mr Norris.

In accordance with Listing Rule 7.2, Exception 14, the general prohibition under Listing Rule 7.1 in relation to the 15% threshold will not apply to the Performance Rights issued under Resolution 6 provided Shareholder approval is obtained under Listing Rule 10.14. If Shareholder approval is given under Listing Rule 10.14, the issue would be not be counted towards the 15% placement capacity of the entity and approval is not required under Listing Rule 7.1.

Listing Rule disclosure

Details of the proposed issues under Resolution 6 as required by Listing Rule 10.15 are as follows:

Required disclosure
Proposedallottees	Mr Malcolm Norris, or his nominee
Nature ofrelationship withSunstone	Mr Malcolm Norris is a related party of the Company because of his role asCEO/Managing Director.
Maximumnumber ofsecurities to beissued	Subject to Shareholder approval, it is proposed that Mr Norris will be issuedup to 6,000,000 Performance Rights to subscribe for new ordinary shares inthe Company.
Issue Price/ Useof funds	Nil. No funds will be raised on the initial issue of the Performance Rights toMr Norris as they are being granted for no consideration.

The number ofsecurities thathave previouslybeen issued tothe Allotteeunder thescheme (since2015) and theaverageacquisition price(if any) paid bythe allottee forthose securities	Performance Rights previously issued to the Allottee: 35,233,000Performance Rights vested: 23,413,651Performance Rights lapsed: 6,219,349Performance Rights outstanding: 5,600,000No acquisition price has been paid by the allottee on any of the PerformanceRights.
Terms of issueand materialterms of theEmployeePerformanceRights Plan	The terms and conditions of the Performance Rights to be issued to Mr Norrisunder Resolution 6 and the material terms of the Employee PerformanceRights Plan are set out in Annexure B to this Explanatory Memorandum.Each Performance Right proposed to be granted entitles the holder tosubscribe for one new ordinary share in the Company, upon satisfying theperformance conditions. Shares issued on vesting of the Performance Rightswill rank equally in all respects with the existing fully paid ordinary shares inthe Company.There are no Loans associated with the issue.
PerformanceConditions, andexpiry date	In relation to Mr Norris, the Performance Rights to be issued and theperformance conditions required for vesting are as follows:(i)6,000,000 Performance Rights, with an exercise period of 3 yearscommencing on the date Shareholder approval is granted andexpiring on the third anniversary of that date; and(ii)Performance Conditions for Vesting of:a)Tranche 1 – 33.33% or 2,000,000 Performance Rights to vest uponthe later of both the following vesting conditions occurring:Closing Price of Sunstone Shares being at or above the higher•of $0.067, or 50% above the 15 trading day VWAP ending onthe trading date that immediately precedes the date ofshareholder approval, for minimum 10 trading days out of any20 consecutive trading days; and12 months after issue.•b)Tranche 2 – 33.33% or 2,000,000 Performance Rights to vest upon TSRperformance as measured against the ASX Small Resources Index(Index), as follows:Performance below the Index - no shares will vest.•Performance equal to the Index will see 50% vest, increasing•linearly with outperformance of the Index by up to 25%, suchthat 100% of shares will vest should Sunstone's performance begreater than 25% above the Index performance.Testing will be annually on 30th June.•c)Tranche 3 – 33.33% or 2,000,000 Performance Rights to vest uponthe later of both the following vesting conditions occurring:Closing Price of Sunstone Shares being at or above the higher•of $0.085, or 100% above the 15 trading day VWAP ending onthe trading date that immediately precedes the date ofshareholder approval, for minimum 10 trading days out of any20 consecutive trading days; and12 months after issue.•

Why thePerformanceRights are beingissued to theAllottee	The primary purpose of the issue of the Performance Rights is to provide costeffective remuneration and incentives for Mr Norris in his role as ManagingDirector and reflects what the Board considers to be appropriate in thecircumstances.It is considered appropriate to grant the Performance Rights to Mr Norris asa means of:retaininghisservicesbyprovidingacompetitiveremuneration•package;providing incentives linked to the performance of the Company,•thereby aligning his interests more closely with that of the Company;andproviding him with an opportunity to acquire equity in the Company.•It is further consideredthattheperformanceofMr Norris andtheperformance and value of the Company will be closely related.Mr Norris brings a wealth of experience to the Company and valuablefundraising experience, mine development and mining exploration contacts.The Directors (other than Mr Norris) believe that the proposed issue ofPerformance Rights are in the best interests of the Company and promote theinterests of the Company on the basis that the Managing Director will be
	increasingly committed to improving the performance of the Company for thebenefit of Shareholders.
Why the threeperformancerelated vestingconditions were	The three performance related vesting conditions were chosen in order toclosely align rewards for performance of key employees with the achievementof the Company's growth and strategic objectives for the 2024 financial yearand beyond, to deliver superior performance that creates shareholder value.
chosen	Closing share price being the higher of $0.067 or more for 10 trading days?
	This vesting condition was chosen as it represents a share price equal to thePlacement and SPP price from the capital raising in April/May 2022; isapproximately 100% above the Volume Weighted Average Price ("VWAP") forthe 12 months to 30 June 2023 ($0.0335), and more than double the capitalraising price of $0.026 in May 2023 (158% premium). The vesting condition willincrease to 50% above the 15 trading day VWAP ending on the trading datethat immediately precedes the date of shareholder approval should this beabove $0.067.
	TSR Performance against the ASX Small Resources Index?
	This vesting condition was chosen as it represents the performance of theCompany against a relevant index of resource companies, comparing thegrowth of the Company with the growth of the index. No shares will vest underthis condition unless the Company's performance is equal to or above that ofthe index.
	Closing share price $0.085 or more for 10 trading days?
	This vesting condition was chosen as it represents a 154% premium to the VWAPfor the 12 months to 30 June 2023, and a premium of over 200% to the 30 dayVWAP to 30 June 2023 of $0.0225 and the capital raising price of $0.026 in May2023. The vesting condition will increase to 100% above the 15 trading dayVWAP ending on the trading date that immediately precedes the date ofshareholder approval should this be above $0.085.

Why the number	Why the number of Performance Rights?
of PerformanceRights and valueof thePerformanceRights waschosen	The number of Performance Rights was chosen following a review of similarorganisations to be market competitive. The Performance Rights will be grantedas a key component of the Managing Director's remuneration in order to retainservices and provide incentives linked to the performance of the Company. Itis further considered that the performance of the Managing Director and theperformance and value of the Company will be closely related.
	What is the value of the Performance Rights?
	22 Corporate Advisory Pty Ltd, as independent valuers, has determined thatthe total value of the Performance Rights to be issued to Mr Norris is (as at thedate of the Performance Rights Valuations) $128,200.
	Attaining all the exercising conditions will also mean a significant increase in theshare price. If such a share price increase is attained the Board (excluding MrNorris) determined that the financial reward to Mr Norris was appropriate andaligned his interests with that of all Shareholders.
Valuation of thefinancial benefit	The Company engaged 22 Corporate Advisory Pty Ltd to undertake valuationsof the Performance Rights proposed to be issued to Mr Norris (PerformanceRights Valuations).22 Corporate Advisory Pty Ltd valued the PerformanceRights using the Monte Carlo simulation for the valuation to simultaneouslysimulate the performance of the Company's share price and the ASX SmallResources Index taking into account the correlation between the two.
	The valuation models use the following variables to determine the value of thePerformance Rights:
	a)value of the underlying asset – share price of $0.028 being the closingshare price on ASX as at 7 August 2023;
	b)vesting conditions – as referred to above, with Tranche 1 share pricehurdle being $0.067 and Tranche 3 being $0.085, as these are higherthan 50% and 100% above the share price referred to in a) above;
	c)expected volatility of the share price – 85% based on 3 year historicalvolatility;
	d)expected volatility of the ASX Small Resources Index – 30% based on3-year index volatility;
	e)correlation of Sunstone's share price and the ASX Small Resources Indexfor the 3 year period to 7 August 2023 of 0.3;
	f)risk free rate – the Australian Government 3-year bond rate as at7 August 2023 of 3.761%;
	g)time to maturity – the Performance Rights expire 3 years from the dateof issue; and
	h)expected dividend yield – Nil, given the Company is a mineralexploration company with no history of paying dividends.
	Based on the assumptions outlined above, 22 Corporate Advisory Pty Ltdcalculated the value of the Performance Rights to be $128,200, with a totalvalue for each Tranche as follows:
	Tranche 1 – $0.0209 per Performance Right = $41,800•
	Tranche 2 – $0.0243 per Performance Right = $48,600•
	Tranche 3 – $0.0189 per Performance Right = $37,800•

	However, it is important for Shareholders to note that this stated value of thePerformance Rights may go up or down at any time despite the PerformanceRights Valuations.This is because the value of the Performance Rights willdepend on the valuation methodology used in any future valuation, togetherwith the relevant assumptions made under the Performance Rights Valuationscompared to any future valuations.The Board (other than Mr Norris) believes, having taken appropriate expertadvice on the matter, that the valuation and use of the Monte Carlo simulationmodel was appropriate in the circumstances. The Board has not used any other
				valuation model in proposing the terms or number of Performance Rights.
Directors'interest in theoutcome		Other than the interests that Mr Norris has in the resolution, none of the Directorshave an interest in the outcome of Resolution 6.
Date of issue ofthePerformanceRights	If Resolution 6 is passed, the Performance Rights to be issued to Mr Norris (or hisnominee) are expected to be issued no later than one month after the date ofthe Meeting but in any event the Performance Rights will be issued no later thanthe date that is 3 years after the date of the meeting.
Disclosure oftotalremunerationpackage	As noted above, the Performance Rights are proposed to be issued to Mr Norrisas a means of providing cost effective remuneration and incentives for him inhis role as Managing Director. These Performance Rights are proposed to bepart of the annual remuneration of Mr Norris, under the approved EmployeePerformance Rights Plan, with the annual value being subject to the discretionof the Board and also subject to shareholder approval.The remuneration and emoluments from the Company for Mr Norris for currentfinancial year are:
	Related partyCurrent financial year remuneration
	Mr Malcolm Norris	superannuation*	$366,639 per annum inclusive of
	6,000,000 Performance Rights per Resolution 6(subject to shareholder approval)
	*Paid pursuant to service contracts with the Company.
Securities held inthe Company	The current relevant interests (i.e. before Resolution 6 is approved) of Mr Norrisin the securities of the Company are set out below*:
	Related party	Shares	Options	Performance Rights
	Mr Malcolm Norris	43,362,312	NIL	5,600,000
	If Resolution 6 is approved by shareholders, the relevant interests (i.e. after theResolution is approved) of Mr Norris in the securities of the Company will be asset out below:
	Related party	Shares	Options	Performance Rights
	Mr Malcolm Norris	43,362,312	NIL	11,600,000
	* Includes direct and Indirect holdings

Statementrequired ListingRule 10.15.11	Details of any securities issued under the scheme will be published in the annualreport of the Company relating to the period in which they were issued, alongwith a statement that the approval for issue was obtained under listing rule10.14.
	Any additional persons covered by listing rule 10.14 who become entitled toparticipate in an issue of securities under the scheme after the resolution isapproved and who were not named in the notice of meeting will notparticipate until approval is obtained under that rule.
Dilution effectthe issue of thePerformanceRights will haveon existingShareholders	If all the Performance Rights currently held by Mr Norris and to be granted toMr Norris pursuant to Resolution 6 vest, a total of 11,600,000 Shares would beallotted and issued. This would increase the total number of Shares on issue from3,081,984,879 to 3,093,584,879 (assuming no other Performance Rights or Sharesare issued or Options exercised), with the effect that the shareholding of existingShareholders would be diluted by 0.4%.
Voting exclusion	A voting exclusion applies to this resolution – please see the notes.

The following table demonstrates the dilution of all other shareholdings in the Company upon exercise of all existing Options and Performance Rights, and exercise of the Performance Rights issued to Mr Norris, assuming that Shareholders pass Resolution 6:

Current shares issued	3,081,984,879	Dilution effect
SharesissuedassumingallexistingOptionsandPerformance Rights are exercised	40,000,000	1.3%
Shares issued assuming exercise of the PerformanceRights to be granted to Mr Norris pursuant to Resolution 6	6,000,000	0.2%
Total shares	3,127,984,879	1.5%

Section 200E of the Corporations Act – retirement benefits

Section 200B of the Corporations Act requires shareholder approval by ordinary resolution, and in accordance with the provisions of section 200E of the Corporations Act, in order to access the exemption from the prohibition on a company giving a person a benefit in connection with that person's retirement from an office or employment in that company where that person is, or was in the three years prior to his or her retirement, in a managerial or executive office in that company.

The Employee Performance Rights Plan allows the Board, in its discretion, to determine that some or all of the Performance Rights are deemed to have vested in the event a participant's employment ceases (Accelerated Vesting).

In the circumstance of Accelerated Vesting, the value of the termination benefits that the Board may give under the Employee Performance Rights Plan cannot be determined in advance, as many of the factors that will or are likely to affect that value will not be known until the benefit is decided to be given (if at all). The Board has not determined whether it will exercise discretion to grant any Accelerated Vesting or, in what circumstances, it will exercise its discretion.

Specifically, the value of an Accelerated Vesting will depend on a number of factors, including the Company's share price at the time of vesting of the Performance Rights and the number of Performance Rights that the Board determines to vest early (if any).

Additional information and Directors' recommendation

Mr Norris declines to make a recommendation to Shareholders in relation to Resolution 6 due to his material personal interest in the outcome of the Resolution. The other Directors, who do not have a material interest in the outcome of Resolution 6, recommend that Shareholders vote in favour of Resolution 6.

Recommendation: The Board, with Mr Norris abstaining, unanimously recommend that Shareholders vote in favour of Resolution 6.

In accordance with the Company's Constitution, Mr Stephen Stroud retires by rotation and, being eligible, offers himself for re**-election as a Director of the Company. Mr Stroud was appointed as an independent, non-**executive Director on 6 September 2017.

Stephen is Chairman of the Company's Audit and Financial Risk Committee.

He is an experienced CPA qualified corporate finance executive with over 20 years' experience advising across all aspects of corporate finance. He advises boards and management teams across a broad range of transactions including public and private equity raisings, debt/hybrid debt, Initial Public Offerings, mergers & acquisitions, sell-downs and restructures both in Australia and overseas.

Mr Stroud is Director - Corporate Advisory with Morgans Financial Limited, with a key focus on the small-mid cap market listed space on the ASX working across a broad range of sectors including IT, retail, FMCG, healthcare, metals and mining, energy, property and general industrials. Mr Stroud possesses strong relationships across buy and sell side clients across Australia, Asia, UK and North America.

Mr Stroud holds a Bachelor of Business (Accounting) degree, a Graduate Diploma in Applied Finance, and is a member of CPA Australia.

The Board considered that Mr Stroud is an independent director.

Recommendation: The Board (excluding Mr Stroud) recommends that Shareholders vote in favour of Resolution 7.

BDO Audit Pty Ltd ("BDO") is the current auditor of the Company. Following completion of a tender process, and upon the recommendation of the Audit and Risk Committee, the Board recommends that, given BDO's tenure as auditor of 10 years, and subject to ASIC consenting to the resignation of BDO, the Company appoint HLB Mann Judd as the Company's external auditor.

Section 328B(1) of the Corporations Act requires the Company to obtain a nomination form from a shareholder for HLB Mann Judd to be appointed as the Company's auditor. A Copy of this nomination is attached to this Notice of Meeting as Annexure C.

HLB Mann Judd confirms that it is unaware of any matter or circumstances that would give rise to a conflict of interest situation, as defined in section 324CD of the Corporations Act, in relation to appointment. Further, for the purposes of section 328A of the Corporations Act, HLB Mann Judd has given its written consent to act as the Company's auditor subject to the approval of the Company's shareholders being obtained, ASIC giving its consent to BDO's resignation, and BDO resigning.

In accordance with section 329 of the Corporations Act, BDO will apply to ASIC for consent to resign as the Company's auditor with effect from the AGM. ASIC's consent to BDO's resignation is required under section 329(5) of the Corporations Act. If ASIC does not grant its consent, BDO will continue to hold office as the Company's auditor after the AGM.

Subject to the approval of shareholders being obtained and ASIC granting its consent to the resignation of BDO, the appointment of HLB Mann Judd as auditor will take effect from the later of

• conclusion of the AGM; or
• the day on which ASIC gives its consent to the resignation of BDO as the current auditor of the Company; or
• the day (if any) fixed by ASIC for the resignation of BDO to take effect (in accordance with section 329(8) of the Corporations Act).

Recommendation: The Board recommends that Shareholders vote in favour of Resolution 8.

SPECIAL BUSINESS

RESOLUTION 9 – Approval of 10% Placement Facility

Purpose of resolution

The purpose of Resolution 9 is to enable the directors to issue Equity Securities up to 10% of the Company's fully paid ordinary issued share capital under Listing Rule 7.1A during the 12-month period following this Meeting (10% Placement Period), without subsequent Shareholder approval and without using the Company's 15% placement capacity under Listing Rule 7.1 (Placement Facility).

Resolution 9 is a special resolution. Accordingly, at least 75% of votes cast by Shareholders present and eligible to vote at the Meeting must be in favour of Resolution 9 for it to be passed.

Recommendation: The Board recommends that Shareholders vote in favour of Resolution 9.

General information

Listing Rule 7.1A enables "eligible entities" to issue Equity Securities up to 10% of its fully paid ordinary issued share capital through placements over a 12-month period after the annual general meeting (10% Placement Facility). The 10% Placement Facility is in addition to the Company's 15% placement capacity under Listing Rule 7.1.

An "eligible entity" for the purposes of Listing Rule 7.1A is an entity that is not included in the S&P/ASX 300 Index and has a market capitalisation of $300 million or less. The Company is an eligible entity for the purposes of Listing Rule 7.1A as it is not included in the S&P/ASX 300 Index and has a market capitalisation of $67.8 million (on the basis of the Company's closing share price of $0.022 on 1 September 2023).

If Shareholders approve Resolution 9, the Company will be able to issue Equity Securities up to the combined 25% limit in Listing Rules 7.1 and 7.1A without any further shareholder approval. If Resolution 9 is not passed, the Company will not be able to access the additional 10% capacity to issue Equity Securities without shareholder approval provided for in Listing Rule 7.1A and will remain subject to the 15% limit on issuing Equity Securities without shareholder approval set out in Listing Rule 7.1.

The exact number of Equity Securities to be issued under the 10% Placement Facility will be determined in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to the formula for calculating 10% Placement Facility set out in (iii) below).

Description of Listing Rule 7.1A

(i) Shareholder approval

The ability to issue Equity Securities under the 10% Placement Facility is subject to shareholder approval by way of a special resolution at an annual general meeting.

(ii) Equity Securities

Any Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of Equity Securities of the Company.

The Company, as at the date of the Notice of Meeting, has on issue one class of quoted Equity Securities, namely Shares.

(iii) Formula for calculating 10% Placement Facility

Listing Rule 7.1A.2 provides that eligible entities which have obtained Shareholder approval at an annual general meeting may issue or agree to issue, during the 12-month period after the date of the annual general meeting, a number of Equity Securities calculated in accordance with the following formula:

A is the number of fully paid ordinary securities on issue at the commencement of the relevant period,

• plus the number of fully paid ordinary securities issued in the relevant period under an exception in Listing Rule 7.2 other than exception 9, 16 or 17,
• plus the number of fully paid ordinary securities issued in the relevant period on the conversion of convertible securities within rule 7.2 exception 9 where:
  • the convertible securities were issued or agreed to be issued before the commencement of the relevant period; or
  • the issue of, or agreement to issue, the convertible securities was approved, or taken under these rules to have been approved, under rule 7.1 or 7.4,
• plus the number of fully paid ordinary securities issued in the relevant period under an agreement to issue securities within rule 7.2 exception 16 where:
  • the agreement was entered into before the commencement of the relevant period; or
  • the agreement or issue was approved, or taken under these rules to have been approved, under rule 7.1 or 7.4,
• plus the number of any other fully paid ordinary securities issued in the relevant period with approval under rule 7.1 or 7.4,
• plus the number of partly paid ordinary securities that became fully paid in the relevant period;
• less the number of fully paid ordinary securities cancelled in the relevant period.

Note that A has the same meaning in Listing Rule 7.1 when calculating an entity's 15% placement capacity.

D is 10%

E is the number of Equity Securities issued or agreed to be issued under Listing Rule 7.1A.2 in the relevant period where the issue or agreement has not been subsequently approved by the holders of its ordinary securities under Listing Rule 7.4; and

"relevant period" has the same meaning as in rule 7.1. In the case of the Company the relevant period is the 12 month period immediately preceding the date of the issue or agreement.

(iv) Listing Rule 7.1 and Listing Rule 7.1A

The ability of an entity to issue Equity Securities under Listing Rule 7.1A is in addition to the entity's 15% placement capacity under Listing Rule 7.1.

The actual number of Equity Securities that the Company will have capacity to issue under Listing Rule 7.1A, subject to Shareholder approval being obtained under Resolution 9, will be calculated at the date of issue of the Equity Securities, or the agreement date, in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to the formula for calculating 10% Placement Facility set out in (iii) above).

(v) Minimum Issue Price

The issue price of Equity Securities issued under Listing Rule 7.1A must be not less than 75% of the volume weighted average price of Equity Securities in the same class calculated over the 15 Trading Days immediately before:

• a) the date on which the price at which the Equity Securities are to be issued is agreed by the Company and the recipient of the Equity Securities; or
• b) if the Equity Securities are not issued within 10 Trading Days of the date in paragraph (a) above, the date on which the Equity Securities are issued.

(vi) 10% Placement Period

Shareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the annual general meeting at which the approval is obtained and expires on the earlier to occur of:

• a) the date that is 12 months after the date of the annual general meeting at which the approval is obtained;
• b) the time and date of the Company's next annual general meeting; or
• c) the time and date of the approval by Shareholders of a transaction under Listing Rules 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking).

(10% Placement Period).

Specific information required by Listing Rule 7.3A

Pursuant to and in accordance with Listing Rule 7.3A, the information below is provided in relation to the approval of the 10% Placement Facility:

7.3A.1 Date of issue

The Company will only issue and allot the Equity Securities during the 10% Placement Period. The approval under Resolution 9 for the issue of the Equity Securities will cease to be valid in the event that Shareholders approve a transaction under Listing Rule 11.1.2 (a significant change to the nature or scale of activities) or Listing Rule 11.2 (disposal of main undertaking).

7.3A.2 Minimum Price

The Equity Securities will be issued at an issue price in accordance with paragraph (v) above.

7.3A.3 Purpose of issue under 10% Placement Facility

The Company can only issue the Equity Securities under the 10% Placement Facility for cash consideration. The Company intends to use the funds raised towards an acquisition of new assets or other investments (including expense associated with such acquisition), continued exploration and feasibility study expenditure on the Company's current assets and/or general working capital.

The Company will comply with the disclosure obligations under Listing Rule 7.1A.4 upon issue of any Equity Securities.

7.3A.4 Risk of voting dilution

If Resolution 9 is approved by Shareholders and the Company issues Equity Securities under the 10% Placement Facility, the existing Shareholders' voting power in the Company will be diluted as shown in the table in Appendix 1 to this Explanatory Memorandum. There is a risk that:

• a) the market price for the Company's Equity Securities may be significantly lower on the date of the issue of the Equity Securities than on the date of the Meeting; and
• b) the Equity Securities may be issued at a price that is at a discount to the market price for the Company's Equity Securities on the issue date.

The table in Appendix 1 shows the dilution of existing Shareholders on the basis of the current market price of Shares and the current number of ordinary securities for variable "A" calculated in accordance with the formula in Listing Rule 7.1A.4 as at 1 September 2023.

7.3A.5 Allocation under 10% Placement Facility

The Company's allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility. The identity of the allottees of Equity Securities will be determined on a case**-by-**case basis having regard to the factors including but not limited to the following:

• a) the methods of raising funds that are available to the Company, including but not limited to, a rights issue or other issue in which existing security holders can participate;
• b) the effect of the issue of the Equity Securities on the control of the Company;
• c) the financial situation and solvency of the Company; and
• d) advice from corporate, financial, and broking advisers (if applicable).

The allottees under the 10% Placement Facility have not been determined as at the date of this Notice of Meeting but may include existing substantial Shareholders and/or new Shareholders who are not related parties or associates of a related party of the Company.

7.3A.6 Equity Securities issued or agreed to issue under Listing Rule 7.1A.2 in the 12 months preceding the date of the Meeting

The Company previously obtained shareholder approval under Listing Rule 7.1A at its 2022 AGM.

In the previous 12 months, the Company has made an issue of 68,471,498 Shares (2.6% of Shares on issue) utilising Listing Rule 7.1A.2, the details of which are as follows:

Date of issue:	23 May 2023
Number issued:	68,471,498
Class/Type of equity security:	Ordinary shares
Summary of terms:	As per ASX Announcement dated 15 May 2023.Issued upon the same terms and conditions asexisting quoted ordinary shares.
Namesofpersonswhoreceivedsecuritiesorbasisonwhichthosepersons was determined:	The Shares were issued to professional andsophisticatedinvestorsapplicantsasdetermined by the Board on the basis of advicefromLeadManagerMorgansCorporateLimited and amicaa as Co-Lead Manager. Theallottees were not related parties.
Price:	$0.026 per Share
Discount to market price (if any):	10.3% discount to the closing share price prior toannouncement
For cash issues
Total cash consideration received:	$1,708,259
Amount of cash consideration spent:	NIL
Use of cash consideration:	exploration at the Bramaderos gold-copper•project in southern Ecuador;exploration at the El Palmar gold-copper•project in northern Ecuador; andworking capital•
Intended use for remaining amount ofcash (if any):	As above•

7.3A.7 Voting Exclusion

A voting exclusion statement is included in the Notice of Meeting. At the date of the Notice of Meeting, the Company has not approached any particular existing shareholder or security holder or an identifiable class of existing security holder to participate in the issue of the Equity Securities which would be issued under Listing Rule 7.1A. No existing shareholder's votes will therefore be excluded under the voting exclusion in the Notice of Meeting.

Recommendation: The Board believes that the resolution under Resolution 9 is in the best interests of the Company and unanimously recommends that Shareholders vote in favour of this Resolution.

Proportional takeover provisions

A proportional takeover bid is one under which an offer is made for only a proportion of each shareholder's shares.

Rule 161 of the Constitution prohibits the registration of a transfer of shares under a proportional takeover bid unless and until an ordinary resolution approving the bid is passed by the relevant shareholders (Proportional Takeover Provisions).

Under the Corporations Act, the Proportional Takeover Provisions will apply for a maximum period of 3 years unless earlier renewed at a general meeting. The Proportional Takeover Provisions were last approved at the 2017 annual general meeting and have expired. Accordingly, a special resolution is being put to shareholders under sections 136(2) and 648G of the Corporations Act to approve the adoption of rule 161 of the Constitution for the period from 17 October 2023 up to and including 17 October 2026.

Effect of Proportional Takeover Provisions

The effect of Proportional Takeover Provisions is that, if a proportional takeover bid is made to Shareholders, the Directors are required to seek Shareholder approval for such takeover bid at least 14 days before the last day of the bid period.

The resolution approving the bid must be passed by more than 50% of the votes cast on the resolution. The bidder and any associate of the bidder will be excluded from voting.

If a resolution to approve the bid is voted on and is rejected, all offers under the bid are taken to be withdrawn and each binding takeover contract for the bid can be rescinded.

If no resolution has been voted on to approve the bid in the required timeframe, a resolution is taken to have been passed approving the bid.

The proportional takeover provisions do not apply to full takeover bids and, if Resolution 10 is passed, it will only apply until 17 October 2026, unless renewed again by Shareholders.

Reasons for adopting and renewing the proportional takeover provisions

A proportional takeover bid involves an offer to buy only a specified portion of each Shareholder's shares. Therefore, without the proportional takeover provisions, a proportional takeover bid for the Company might enable a bidder to obtain control of the Company without Shareholders having an opportunity to sell all their shares.

The proportional takeover provisions give Shareholders the opportunity to decide whether or not a proportional takeover bid is acceptable and should be allowed proceed.

Potential advantages of renewal - Shareholders

The Proportional Takeover Provisions ensure that all Shareholders have an opportunity to consider a proportional takeover bid and vote on whether it should be permitted to proceed.

The provisions may help Shareholders avoid being locked in as a minority and avoid a bidder acquiring control of the Company without paying an adequate control premium.

The provisions may assist in ensuring that any future proportional takeover bid is structured to be attractive to a majority of independent Shareholders.

Potential disadvantages of renewal - Shareholders

However, the Proportional Takeover Provisions may make a proportional takeover more difficult to achieve and therefore discourage proportional bids. This in turn, may reduce opportunities for Shareholders to sell shares in the Company at an attractive price to persons seeking control of the Company and may therefore eliminate any element of takeover speculation from the Company's share price. It may also be argued that the provisions constitute an additional restriction on the ability of Shareholders to deal freely with their shares.

Potential advantages and disadvantages of renewal - Directors

There are no specific advantages or disadvantages for Directors (in their capacity as Directors of the Company) of the Proportional Takeover Provisions.

Present acquisition proposals

At the date of this notice, no Director is aware of any proposal by any person to acquire, or to increase the extent of, a substantial interest in the Company.

Special resolution

Resolution 10 is a special resolution and therefore requires approval of 75% of the votes cast by Shareholders present and eligible to vote (in person online, by proxy, by attorney, in the case of a corporate Shareholder, by a corporate representative).

Recommendation: The Board believes that the resolution under Resolution 10 is in the best interests of the Company and unanimously recommends that Shareholders vote in favour of this Resolution.

In this Explanatory Memorandum and Notice of Annual General Meeting the following expressions have the following meanings unless stated otherwise or unless the context otherwise requires:

$ means Australian dollars.

10% Placement Facility has the meaning given in the Explanatory Memorandum for Resolution 9.

10% Placement Period has the meaning given in the Explanatory Memorandum for Resolution 9.

Allottee means a person who participated in the relevant issue.

Annual General Meeting, AGM or Meeting means the meeting convened by the Notice.

Applicable Law means each of:

• (a) the Corporations Act;
• (b) the Corporations Regulations;
• (c) the Listing Rules;
• (d) any other applicable securities laws;
• (e) the Constitution of the Company;
• (f) applicable taxation laws; and
• (g) any practice note, policy statement, class order, declaration or guideline relating to any of the items in paragraphs (a) to (f) of this definition.

ASIC means the Australian Securities and Investments Commission.

Associate has the meaning given to it in the Listing Rules.

ASX means ASX Limited ACN 008 624 691 or the Australian Securities Exchange, as the context requires.

Board means the current board of directors of the Company.

Chairman or Chair means the Chairman of the Board.

Closely Related Party of a member of Key Management Personnel means:

• (a) a spouse or child of the member;
• (b) a child of the member's spouse;
• (c) a dependant of the member or of the member's spouse;
• (d) anyone else who is one of the member's family and may be expected to influence the member, or be influenced by the member, in the member's dealings with the entity;
• (e) a company the member controls; or
• (f) a person prescribed as such by the Corporations Regulations 2001 (Cth).

Company or Sunstone means Sunstone Metals Limited ACN 123 184 412.

Constitution means the constitution of the Company currently in force.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company as at the date of the Explanatory Memorandum.

Employee Performance Rights Plan or EPRP means the employee performance rights plan implemented with Shareholder approval at the Company's Annual General Meeting held on 28 October 2021.

Equity Securities has the same meaning as in the Listing Rules.

Explanatory Memorandum means the explanatory memorandum that accompanies and forms part of the Notice of Meeting.

Group Company means the Company, its subsidiaries and any other entity declared by the Board to be a member of the group for the purposes of the Employee Performance Rights Plan.

Key Management Personnel has the same meaning as in the accounting standards as defined in section 9 of the Corporations Act (so the term broadly includes those persons having authority and responsibility for planning, directing, and controlling the activities of the Company, directly or indirectly, including any director, whether executive or otherwise, of the Company).

Listing Rules means the official listing rules of the ASX.

Notice or Notice of Meeting means the notice of Annual General Meeting including the Explanatory Memorandum and the Proxy Form.

Option means an option to acquire a fully paid ordinary share in t he Company.

Performance Right means a right to be issued, for no consideration, a fully paid ordinary share in the capital of the Company upon the satisfaction of specified performance conditions.

Performance Rights Valuations means the valuation undertaken by 22 Corporate Advisory Pty Ltd in relation to the value of the Performance Rights proposed to be issued to Mr Norris as described in the Explanatory Memorandum for Resolution 6.

Proxy Form means the proxy form accompanying the Notice.

Resolution means a resolution as set out in the Notice.

Share means a fully paid ordinary share in the Company.

Shareholder means a holder of a Share in the Company.

Shareholding means the aggregate of shares held by a Shareholder.

Trading Day means a day determined by ASX to be a trading day in accordance with the Listing Rules.

VWAP means volume weighted average market price.

The table below shows the dilution of existing Shareholders on the basis of the current market price of Shares and the current number of ordinary securities for variable "A" calculated in accordance with the formula in Listing Rule 7.1A.2 as at the date of this Notice of Meeting.

The table also shows:

• (i) an example where variable "A" has increased by 50% and 100%. Variable "A" is based on the number of fully paid ordinary securities the Company has on issue. The number of fully paid ordinary securities on issue may increase as a result of issues of fully paid ordinary securities that do not require Shareholder approval (for example, a pro rata entitlements issue or scrip issued under a takeover offer) or future specific placements under Listing Rule 7.1 that are approved at a future Shareholders' meeting; and
• (ii) an example of the result of the issue price of fully paid ordinary securities decreasing by 50% and increasing by 100% as against the current market price.

		Dilution
		$0.011	$0.022	$0.044
Variable 'A' inListing Rule 7.1A.2		50% decrease inIssue Price	Issue Price	100% Increase inIssue Price
Current Variable A	10% VotingDilution	308,198,488Shares	308,198,488Shares	308,198,488Shares
3,081,984,879 Shares	Funds raised	$3,390,183	$6,780,367	$13,560,733
50% increase in currentVariable A	10% VotingDilution	462,297,732Shares	462,297,732Shares	462,297,732Shares
4,622,977,319 Shares	Funds raised	$5,085,275	$10,170,550	$20,341,100
100% increase in currentVariable A	10% VotingDilution	616,396,976Shares	616,396,976Shares	616,396,976Shares
6,163,969,758 Shares	Funds Raised	$6,780,367	$13,560,733	$27,121,467

The number of Shares on issue (variable A in the formula) could increase as a result of the issue of Shares that do not require Shareholder approval (such as under a pro**-**rata rights issue or scrip issued under a takeover offer) or that are issued with Shareholder approval under Listing Rule 7.1.

The table has been prepared on the following assumptions:

• (i) The current Shares on issue are the Shares on issue as at 1 September 2023.

• (ii) The current issue price is $0.022, being the closing price of the Company's Shares on ASX on 1 September 2023.

• (iii) The Company issues the maximum number of Equity Securities available under the 10% Placement Facility.

• (iv) No Options or Performance Rights are exercised into Shares before the date of the issue of the Equity Securities.

• (v) The 10% voting dilution reflects the aggregate percentage dilution against the fully paid ordinary issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%.

• (vi) The table does not show an example of dilution that may be caused to a particular Shareholder by reason of placements under the 10% Placement Facility, based on that Shareholder's holding at the date of the Meeting.

• (vii) The table shows only the effect of issues of Equity Securities under Listing Rule 7.1A, not under the 15% placement capacity under Listing Rule 7.1.

• 1. Each Option entitles the holder to one ordinary share in the Company.
• 1. Each of the Options will be exercisable at a price equal to the higher of $0.042 or 50% above the 5-day Volume Weighted Average Price of the Company's shares before the date Shareholder approval for the grant of the Options is given, rounded up to the next tenth of a cent.
• 1. Each Option is subject t o a 12-month vest in g period commencing on the date of issue (following Shareholder approval) and the options will lapse if the director is no longer in service of the Company prior to this vesting date.
• 1. Each Option is exercisable in whole or in part at any time during the period commencing on the date of vesting (12 months following Shareholder approval) and expiring 3 years following Shareholder approval (Exercise Period). Options not exercised before the expiry of the Exercise Period will lapse.
• 1. Options are exercisable by notice in writing to the Board delivered to the registered office of the Company and payment of the exercise price per Option in cleared funds.
• 1. The Company will not apply to ASX for official quotation of the Options.
• 1. The Company will make application for official quotation on ASX of new shares allotted on exercise of the Options. Those shares will participate equally in all respects with existing issued ordinary shares, and in particular new shares allotted on exercise of the Options will qualify for dividends declared after the date of their allotment.
• 1. Options can only be transferred with Board approval, except that if at any time before expiry of the Exercise Period the optionholder dies, the legal personal representative of the deceased optionholder may:
  • (i) elect to be registered as the new holder of the Options;
  • (ii) whether or not he becomes so registered, exercise those Options in accordance with the terms and conditions on which they were granted; and
  • (iii) if the deceased has already exercised Options, pay the exercise price in respect of those Options.
• 1. An optionholder may only participate in new issues of securities to holders of ordinary shares in the Company if the Option has been exercised and shares allotted in respect of the Option before the record date for determining entitlements to the issue. The Company must give prior notice to the optionholder of any new issue before the record date for determining entitlements to the issue in accordance with the ASX Listing Rules.
• 1. If there is a bonus issue to the holders of ordinary shares in the capital of the Company, the number of ordinary shares over which the Option is exercisable will be increased by the number of ordinary shares which the holder of the Option would have received if the Option had been exercised before the record date for the bonus issue.

1. If the Company makes a rights issue (other than a bonus issue), the exercise price of Options on issue will be reduced according to the following formula:

$$ A = O - \underbrace{E [P - (S + D)]}_{(N + 1)} $$

Where:

A = the new exercise price of the Option;

O = the old exercise price of the Option;

E = the number of underlying ordinary shares into which one Option is exercisable;

P = the average closing sale price per ordinary share (weighted by reference to volume) recorded on the stock market of ASX during the five trading days immediately preceding the ex-rights date or ex-traded Option exercises);

S = the subscription price for a security under the pro rata issue;

D = the dividend due but not yet paid on existing underlying securities (except those to be issued under the pro rata issue); and

N = the number of securities with rights or entitlements that must be held to receive a right to one new security.

1. If, during the currency of the Options the issued capital of the Company is reorganised, those Options will be reorganised to the extent necessary to comply with ASX Listing Rules.

ANNEXURE B – MATERIAL TERMS AND CONDITIONS OF CEO/MANAGING DIRECTOR PERFORMANCE RIGHTS AND EMPLOYEE PERFORMANCE RIGHTS PLAN

CEO/Managing Director Performance Rights

• 1. Each Performance Right entitles the holder to one ordinary share in the Company on the vesting of the Performance Right.
• 1. A Performance Right will only vest if:
  • a) the Vesting Conditions applicable to that Performance Right are satisfied;
  • b) the Vesting Conditions applicable to that Performance Right are waived by the Board; or
  • c) a Change of Control event occurs.
• 1. 6,000,000 Performance Rights issued to the CEO/Managing Director (Performance Rights Holder) are subject to the following performance related vesting conditions (Vesting Conditions):
  • a) Tranche 1 33.33% or 2,000,000 Performance Rights to vest upon the later of both the following vesting conditions occurring:
    • a. Closing Price of Sunstone Shares being the higher of $0.067, or 50% above the 15 trading day VWAP ending on the trading date that immediately precedes the date of shareholder approval, for minimum 10 trading days out of any 20 consecutive trading days; and
    • b. 12 months after issue.
  • b) Tranche 2 – 33.33% or 2,000,000 Performance Rights to vest upon TSR performance as measured against the ASX Small Resources Index, as follows:
    • a. Performance below the index no shares will vest.
    • b. Performance equal to the index will see 50% vest, increasing linearly with outperformance of the index by up to 25%, such that 100% of shares will vest should Sunstone's performance be greater than 25% above the index performance.
    • c. Testing will be annually on 30th June.
  • c) Tranche 3 – 33.33% or 2,000,000 Performance Rights to vest upon the later of both the following vesting conditions occurring:
    • a. Closing Price of Sunstone Shares being the higher of $0.085, or 100% above the 15 trading day VWAP ending on the trading date that immediately precedes the date of shareholder approval, for minimum 10 trading days out of any 20 consecutive trading days; and
    • b. 12 months after issue.
• 1. Unless the Board determines otherwise in its absolute discretion, a Performance Right will lapse upon the earliest to occur of:
  • a) a Performance Rights Holder purporting to transfer or grant a security interest over that Performance Right;
  • b) cessation of employment;
  • c) fraudulent or dishonest actions;
  • d) winding up of the Company;
  • e) the Vesting Conditions in respect of a Performance Right not being met within any applicable period;
  • f) any date specified in the relevant Invitation by which the Performance Rights will automatically lapse; or
  • g) the 3 year anniversary of the date when the Performance Rights were granted (subject to testing of the Vesting Conditions).
• 1. Unless otherwise determined by the Board, if a Performance Rights Holder ceases to be an Eligible Employee, any Performance Rights of that Performance Rights Holder that have not as at that time already vested to Shares automatically lapse. In the case of cessation of employment due to death or ill health, the Board may determine that any of that Performance Rights Holder's Performance Rights vest, and the terms on which those Performance Rights vest. If the Board does not make such a determination within 3 months of the Performance Rights Holder ceasing to be an Eligible Employee, the Performance Rights of that Performance Rights Holder will be deemed to have lapsed on the date the Performance Rights Holder ceased to be an Eligible Employee.
• 1. Any shares that vest will be subject to Sunstone's Security Trading Policy which states certain closed periods where trading in shares is prohibited. The Policy also requires all employees to seek approval from the Company Secretary and/or Chairman to trade in the Company's shares.
• 1. The Company will not apply to ASX for official quotation of the Performance Rights.
• 1. The Company will make application for official quotation on ASX of new shares allotted on vesting of the Performance Rights. Those shares will participate equally in all respects with existing issued ordinary shares, and in particular new shares allotted pursuant to Performance Rights will qualify for dividends declared after the date of their allotment.
• 1. Performance Rights can only be transferred with Board approval, except that if at any time before the Performance Rights lapse the Performance Rights Holder dies, the legal personal representative of the deceased Performance Rights Holder may:
  • a) elect to be registered as the new holder of the Performance Rights; and
  • b) whether or not he becomes so registered, exercise those Performance Rights in accordance with the terms and conditions on which they were granted; and
  • c) if the deceased has already exercised Performance Rights, pay the exercise price (if any) in respect of those Performance Rights.
• 1. If there is a bonus issue to the holders of ordinary shares in the capital of the Company, the number of ordinary shares over which the Performance Rights are exercisable will be increased by the number of ordinary shares which the holder of the Performance Rights would have received if the Performance Rights had vested before the record date for the bonus issue.
• 1. If, during the currency of the Performance Rights the issued capital of the Company is reorganised, those Performance Rights will be reorganised to the extent necessary to comply with ASX Listing Rules.
• 1. Subject to the terms and conditions of a grant of a Performance Right and the Applicable Laws, if a Change of Control (as defined in the Employee Performance Rights Plan) occurs, all Performance Rights will immediately vest.

Material terms of Employee Performance Rights Plan

Eligibility	Any person, including an Executive Director, who is engaged in full time orpart time employment (including contractors) of the Company or anassociated body corporate of the Company or any person acquiring andholding any EPRP share or option for the benefit of any such person.If an Executive Director is to participate in the EPRP, the issues ofPerformance Rights to the Executive Director will be subject to firstobtaining shareholder approval.Non-Executive Directors are not eligible to participate in the EPRP.
PerformanceConditions	Vesting conditions may be imposed by Directors for each grant under theEPRP. These vesting conditions may differ for each grant of PerformanceRights under the EPRP, as they consider appropriate.
Grant of PerformanceRights	Unless the Board otherwise determines, all Performance Rights are to beoffered to participants for no consideration. The offer must be in writingand specify, amongst other things, the number of Performance Rights forwhich the participant may apply, any conditions to be satisfied beforevesting, and the expiry date (if any) (as determined by the Board).
Performance RightLimit	The maximum number of Performance Rights the Board may grant underthis Plan (including any Rights previously issued under this Plan within thelast 3 years) is 5% of the ordinary shares of the Company on issue as at theinvitation.
Vesting	The Performance Rights may vest, subject to the performance relatedvesting conditions imposed by the Board, prior to the expiry date. TheCompany will apply for official quotation of any Shares issued on vestingof any Performance Rights.
Lapse	Unless the Board otherwise determines, the Performance Rights shall lapsein accordance with specific offer terms or events contained in the EPRPrules, including termination of employment or resignation, redundancy,death or disablement (subject to the Directors' discretion to extend theterm of exercise in restricted cases).
Rights of participants	Once Shares are allotted upon exercise of the Performance Rights theparticipant will hold the Shares free of restrictions. The Shares will rankequally in all respects with all other ordinary shares on issue except asregards any rights attaching to ordinary shares by reference to a recorddate before the date of their allotment.
	Should the Company undergo a reorganisation or reconstruction ofcapital or any other such change, the terms of the Performance Rights willbe reorganised in the manner provided for by the Listing Rules.
	Subject to the terms and conditions of a grant of Performance Rights andApplicable Laws, in the event of a change of control, all PerformanceRights will automatically vest and convert to ordinary shares.
	A holder of Performance Rights is not entitled to participate in dividends, anew issue of Shares or other securities made by the Company toShareholders merely because he or she holds Performance Rights.
	If there is a bonus share issue of securities, the number of shares over whichPerformance Rights are exercisable will be increased by the number ofshares which the participant would have received if the PerformanceRights had been exercised before the record date for the bonus issue.
Assignment	The Performance Rights are not transferable or assignable without the priorwritten approval of the Board.

Administration	The EPRP will be administered by the Board which has an absolutediscretion to determine appropriate procedures for its administration andresolve questions of fact or interpretation and formulate special terms andconditions (subject to the Listing Rules) in addition to those set out in theEPRP.
Termination andamendment	The Board has, subject to certain restrictions contained in the EPRP, theCorporations Act, the Listing Rules or the Company's Constitution, thediscretion or power to alter, modify or add to the EPRP.

24 August 2023

Mr Gavin Leicht Company Secretary Sunstone Metals Limited 9 Gardner Close Milton QLD 4064

Dear Mr Leicht

Notice of Nomination of Auditor by Member

For the purposes of Section 328B(1) of the Corporations Act 2001 (Cth), I, Adrian John King being a member of Sunstone Metals Limited (Company) hereby nominate HLB Mann Judd as auditor of the company at the Annual General Meeting to be held on 17 October 2023.

Yours sincerely

Adrian John King