SUNSTONE METALS LTD — Capital/Financing Update 2009

May 5, 2009

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003, 24/10/2005.

Name of entity

Avalon Minerals Ltd

ABN

123 184 412

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of +securities issued or to be issued

Ordinary shares

21,873,333

• 2 Number of +securities issued or to be issued (if known) or maximum number which may be issued
• 3 Principal terms of the +securities (eg, if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

Ordinary fully paid shares

+ See chapter 19 for defined terms.

4	Do the +securities rank equally inall respects from the date ofallotment with an existing +classof quoted +securities?	Yes
	If the additional securities do notrank equally, please state:•the date from which they do•theextenttowhichtheyparticipateforthenextdividend, (in the case of atrust, distribution) or interestpayment•the extent to which they donot rank equally, other than inrelation to the next dividend,distributionorinterestpayment
5	Issue price or consideration	5 cents
6	Purpose of the issue(If issued as consideration for theacquisitionofassets,clearlyidentify those assets)	Viscaria drilling program, working capitaland costs of issue
7	Dates of entering +securitiesinto uncertificated holdings ordespatch of certificates	12 June 2009
		Number	+Class
8	+classNumberandofall+securitiesquotedonASX(includingthesecuritiesinclause 2 if applicable)	87,493,333	Ordinary

+ See chapter 19 for defined terms.

9	+classNumberandofall
	+securities not quoted on ASX
	(includingthesecuritiesin
	clause 2 if applicable)

		Number	+Class
9	+classNumberandofall+securities not quoted on ASX(includingthesecuritiesinclause 2 if applicable)	3,900,000	20 cent options expiring 10
			February 2010
		800,000	20 cent options expiring 31
			January 2010
		125,000	25 cent options expiring 31
			January 2010
		1,075,000	40 cent options expiring 31
			January 2010
		300,000	30 cent options expiring 31
			July 2011
		100,000	20 cent options expiring 31
			July 2011

10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)

Part 2 - Bonus issue or pro rata issue

11	Issecurityholderapprovalrequired?	No
12	Is the issue renounceable or nonrenounceable?	Non-renounceable
13	Ratio in which the +securitieswill be offered	1:3
14	+Class of +securities to which theoffer relates	Ordinary shares
15	+Recorddatetodetermineentitlements	15 May 2009
16	Willholdingsondifferentregisters(orsubregisters)beaggregatedforcalculatingentitlements?	No
17	Policy for deciding entitlementsin relation to fractions	Rounded down

+ See chapter 19 for defined terms.

18 Names of countries in which the entity has +security holders who will not be sent new issue documents

Note: Security holders must be told how their entitlements are to be dealt with.

Cross reference: rule 7.7.

19 Closing date for receipt of acceptances or renunciations

All other countries except Australia and New Zealand

4 June 2009

+ See chapter 19 for defined terms.

20	Names of any underwriters	Tan Sri Abu Sahid MohamedDavid Leslie McSweeneyRobert WittenoomOakhurst Enterprises Pty LtdSolequest Pty LtdStephen Stone & Julia Pearl ATF the WestOne Superannuation FundTimothy Nicholas WiseGrasmere Nominees Pty LtdPeter Reginald McSweeney ATF the BreezeSuperannuation Fund
21	Amount of any underwriting feeor commission	Nil
22	Names of any brokers to theissue	Indian Ocean Capital
23	Fee or commission payable to thebroker to the issue	$25,000
24	Amount of any handling feepayable to brokers who lodgeacceptances or renunciations onbehalf of +security holders	N/A
25	If the issue is contingent on+security holders' approval, thedate of the meeting	N/A
26	Date entitlement and acceptanceform and prospectus or ProductDisclosure Statement will be sentto persons entitled	21 May 2009
27	If the entity has issued options,and the terms entitle optionholderstoparticipateonexercise,thedateonwhichnotices will be sent to optionholders	6 May 2009
28	Date rights trading will begin (ifapplicable)	N/A
29	Date rights trading will end (ifapplicable)	N/A

+ See chapter 19 for defined terms.

30	How do +security holders sell	N/A
	their entitlements in full through
	a broker?

• 31 How do +security holders sell part of their entitlements through a broker and accept for the balance? N/A
• 32 How do +security holders dispose of their entitlements (except by sale through a broker)? N/A

33 +Despatch date 12 June 2009

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of securities (tick one)
• (a) Securities described in Part 1

(b) All other securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35 If the + securities are +equity securities, the names of the 20 largest holders of the additional +securities, and the number and percentage of additional +securities held by those holders 36 If the +securities are +equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000

+ See chapter 19 for defined terms.

100,001 and over

37 A copy of any trust deed for the additional +securities

Entities that have ticked box 34(b)

38 Number of securities for which +quotation is sought

• 39 Class of +securities for which quotation is sought
• 40 Do the +securities rank equally in all respects from the date of allotment with an existing +class of quoted +securities?

If the additional securities do not rank equally, please state:

• the date from which they do
• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
• 41 Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another security, clearly identify that other security)

(including the securities in clause
38)

42 Number and +class of all +securities quoted on ASX

+ See chapter 19 for defined terms.

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.
• 2 We warrant the following to ASX.
  • The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.
  • There is no reason why those +securities should not be granted +quotation.
  • An offer of the + securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no-one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.
• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.
• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here:	(Director/Company secretary)	Date: 6 May 2009
Print name:
	== == == == ==

+ See chapter 19 for defined terms.