SUNSTONE METALS LTD — Capital/Financing Update 2009

Feb 22, 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

68 123 184 412

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

520,000

• 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

Fully Paid Ordinary Shares

conversion)

+ See chapter 19 for defined terms.

4	Do the +securities rank equally in allrespects from the date of allotmentwith an existing +class of quoted+securities?If the additional securities do notrank equally, please state:	Yes
	•the date from which they do•theextenttowhichtheyparticipate for the next dividend,(inthecaseofatrust,distribution) or interest payment•the extent to which they do notrankequally,otherthanin
	relation to the next dividend,distribution or interest payment
5	Issue price or consideration	10 cents per share
6	Purpose of the issue(If issued as consideration for theacquisition of assets, clearly identifythose assets)	Working CapitalMeeting of Shareholders held on 12 December 2008.	As part of Placement approved by the General
7	Dates of entering +securities intouncertificated holdings or despatchof certificates	23 February 2009
		Number	+Class
8	+classNumberandofall+securitiesquotedonASX(including the securities in clause2 if applicable)	55,558,750	Ordinary

		Number	+Class
9	+classNumberandofall	10,061,250	Ordinary Shares
	+securities not quoted on ASX(including the securities in clause2 if applicable)Please note that 5,600,000 40 centoptions expired on the 10 February2009 unexercised.	3,900,000	20centsoptions
			expiring 10 February
			2010
		800,000	20centsoptions
			expiring 31 Jan 2010
		125,000	25centsoptions
			expiring 31 Jan 2010
		1,075,000	40centsoptions
			expiry 31 Jan 2010
		300,000	30centsoptions
			expiry 31 July 2011
		100,000	20centsoptions
			expiring 31 July 2011
10	Dividend policy (in the case of atrust, distribution policy) on the	No change

Part 2 - Bonus issue or pro rata issue

increased capital (interests)

11	Issecurityholderapprovalrequired?
12	Is the issue renounceable or nonrenounceable?
13	Ratio in which the +securities willbe offered
14	+Class of +securities to which theoffer relates
15	+Recorddatetodetermineentitlements
16	Will holdings on different registers(or subregisters) be aggregated forcalculating entitlements?
17	Policy for deciding entitlements inrelation to fractions

+ 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

+ See chapter 19 for defined terms.

20	Names of any underwriters
21	Amount of any underwriting fee orcommission
22	Names of any brokers to the issue
23	Fee or commission payable to thebroker to the issue
24	Amountofanyhandlingfeepayabletobrokerswholodgeacceptances or renunciations onbehalf of +security holders
25	Iftheissueiscontingenton+securityholders'approval,thedate of the meeting
26	Date entitlement and acceptanceform and prospectus or ProductDisclosure Statement will be sent topersons entitled
27	If the entity has issued options, andthe terms entitle option holders toparticipate on exercise, the date onwhich notices will be sent to optionholders
28	Date rights trading will begin (ifapplicable)
29	Date rights trading will end (ifapplicable)
30	How do +security holders sell theirentitlementsinfullthroughabroker?
31	How do +security holders sell partof their entitlements through abroker and accept for the balance?

+ See chapter 19 for defined terms.

• 32 How do +security holders dispose of their entitlements (except by sale through a broker)?
• 33 +Despatch date

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 theadditional +securities, and the number and percentage of additional +securities held bythose holders
36	If the +securities are +equity securities, a distribution schedule of the additional+securities setting out the number of holders in the categories1 - 1,0001,001 - 5,0005,001 - 10,00010,001 - 100,000100,001 and over

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

+ See chapter 19 for defined terms.

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)

42 Number and +class of all +securities quoted on ASX (including the securities in clause 38)

Number	+Class

+ 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:	Date: .23 February 2009
	(Company secretary)

Print name: Desmond Kelly.........................................................

== == == == ==

+ See chapter 19 for defined terms.

23 February 2009

Company Announcements Australian Securities Exchange

Dear Sirs

Notice under Section 708A of the Corporations Act 2001

On 23 February 2009 Avalon Minerals Ltd ("Company") issued 520,000 fully paid ordinary shares ("Shares") as part of a placement approved by shareholders in General Meeting on the 12 December 2008.

The Company gives notice under section 708A(5)(e) of the Corporations Act 2001 (Cth) ("Act") that:

1 the Company issued the Shares without disclosure to investors under Part 6D.2 of the Act;

• 2 as at the date of this notice, the Company has complied with:
  • (a) the provisions of Chapter 2M of the Act as they apply to the Company; and
  • (b) section 674 of the Act; and
• 3 as at the date of this notice, there is no information to be disclosed which is excluded information (as defined in section 708A(7) of the Act) that is reasonable for investors and their professional advisers to expect to find in a disclosure document.

Yours faithfully

Desmond J Kelly Company Secretary For and on behalf of Avalon Minerals Ltd