SUNSTONE METALS LTD — Capital/Financing Update 2023

May 14, 2023

Proposed issue of securities

==> picture [21 x 22] intentionally omitted <==

Announcement Summary

Entity name

SUNSTONE METALS LTD

Announcement Type

New announcement

Date of this announcement

15/5/2023

The Proposed issue is: A placement or other type of issue

Total number of +securities proposed to be issued for a placement or other type of issue

		Maximum Number of
ASX +security code	+Security description	+securities to be issued
STM	ORDINARY FULLY PAID	461,538,461

Proposed +issue date 22/5/2023

Refer to next page for full details of the announcement

Proposed issue of securities

1 / 5

Proposed issue of securities

==> picture [21 x 22] intentionally omitted <==

Part 1 - Entity and announcement details

1.1 Name of +Entity

SUNSTONE METALS LTD

We (the entity named above) give ASX the following information about a proposed issue of +securities and, if ASX agrees to +quote any of the +securities (including any rights) on a +deferred settlement basis, we agree to the matters set out in Appendix 3B of the ASX Listing Rules.

If the +securities are being offered under a +disclosure document or +PDS and are intended to be quoted on ASX, we also apply for quotation of all of the +securities that may be issued under the +disclosure document or +PDS on the terms set out in Appendix 2A of the ASX Listing Rules (on the understanding that once the final number of +securities issued under the +disclosure document or +PDS is known, in accordance with Listing Rule 3.10.3C, we will complete and lodge with ASX an Appendix 2A online form notifying ASX of their issue and applying for their quotation).

1.2 Registered Number Type

ACN

Registration Number 123184412

1.3 ASX issuer code

STM

1.4 The announcement is

==> picture [8 x 8] intentionally omitted <==

New announcement

1.5 Date of this announcement

15/5/2023

1.6 The Proposed issue is:

==> picture [8 x 8] intentionally omitted <==

A placement or other type of issue

Proposed issue of securities

2 / 5

Proposed issue of securities

==> picture [21 x 22] intentionally omitted <==

Part 7 - Details of proposed placement or other issue

Part 7A - Conditions

7A.1 Do any external approvals need to be obtained or other conditions satisfied before the placement or other type of issue can proceed on an unconditional basis? No

Part 7B - Issue details

Is the proposed security a 'New Will the proposed issue of this class' (+securities in a class that is +security include an offer of not yet quoted or recorded by ASX) attaching +securities? or an 'Existing class' (additional No securities in a class that is already quoted or recorded by ASX)? Existing class

Details of +securities proposed to be issued

ASX +security code and description STM : ORDINARY FULLY PAID Number of +securities proposed to be issued 461,538,461 Offer price details Are the +securities proposed to be issued being issued for a cash consideration? Yes In what currency is the cash What is the issue price per consideration being paid? +security? AUD - Australian Dollar AUD 0.02600

Will these +securities rank equally in all respects from their issue date with the existing issued +securities in that class? Yes

Proposed issue of securities

3 / 5

Proposed issue of securities

==> picture [21 x 22] intentionally omitted <==

Part 7C - Timetable

7C.1 Proposed +issue date

22/5/2023

Part 7D - Listing Rule requirements

7D.1 Has the entity obtained, or is it obtaining, +security holder approval for the entire issue under listing rule 7.1? No

7D.1b Are any of the +securities proposed to be issued without +security holder approval using the entity's 15% placement capacity under listing rule 7.1? Yes

7D.1b ( i ) How many +securities are proposed to be issued without security holder approval using the entity's 15% placement capacity under listing rule 7.1?

393,066,963 shares

7D.1c Are any of the +securities proposed to be issued without +security holder approval using the entity's additional 10% placement capacity under listing rule 7.1A (if applicable)? Yes

7D.1c ( i ) How many +securities are proposed to be issued without +security holder approval using the entity's additional 10% placement capacity under listing rule 7.1A?

68,471,498 shares

7D.1c ( ii ) Please explain why the entity has chosen to do a placement rather than a +pro rata issue or an offer under a +security purchase plan in which existing ordinary +security holders would have been eligible to participate

The Company considered a placement to existing institutional and sophisticated shareholders as well as new institutional investors to be more efficient and effective than a pro-rata issue or SPP, given previous acceptance rates on such offers. Approximately 78% of the Placement was to existing large shareholders holding approximately 20% of the shares on issue.

7D.2 Is a party referred to in listing rule 10.11 participating in the proposed issue? No

7D.3 Will any of the +securities to be issued be +restricted securities for the purposes of the listing rules? No

7D.4 Will any of the +securities to be issued be subject to +voluntary escrow? No

Part 7E - Fees and expenses

7E.1 Will there be a lead manager or broker to the proposed issue?

==> picture [8 x 7] intentionally omitted <==

Proposed issue of securities

4 / 5

Proposed issue of securities

==> picture [21 x 22] intentionally omitted <==

Yes

7E.1a Who is the lead manager/broker?

Morgans Corporate Limited

7E.1b What fee, commission or other consideration is payable to them for acting as lead manager/broker?

5%

7E.2 Is the proposed issue to be underwritten?

==> picture [8 x 8] intentionally omitted <==

No

7E.4 Details of any other material fees or costs to be incurred by the entity in connection with the proposed issue

The Company considered a placement to existing institutional and sophisticated shareholders as well as new institutional investors to be more cost effective and time effective than a pro-rata issue or SPP, given previous acceptance rates on such offers. Approximately 78% of the Placement was to existing large shareholders holding approximately 20% of the shares on issue

Part 7F - Further Information

7F.01 The purpose(s) for which the entity is issuing the securities

To fund exploration at the Bramaderos gold-copper project in southern Ecuador, the El Palmar gold-copper project in Northern Ecuador and for working capital.

7F.1 Will the entity be changing its dividend/distribution policy if the proposed issue proceeds? No

7F.2 Any other information the entity wishes to provide about the proposed issue

7F.3 Any on-sale of the +securities proposed to be issued within 12 months of their date of issue will comply with the secondary sale provisions in sections 707(3) and 1012C(6) of the Corporations Act by virtue of: The publication of a cleansing notice under section 708A(5), 708AA(2)(f), 1012DA(5) or 1012DAA(2)(f)

Proposed issue of securities

5 / 5