SUNSTONE METALS LTD — Governance Information 2007

Mar 19, 2007

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	ASX recommendation	Avalon position	Explanation
$\overline{\mathbb{Z}}$	Formalise and disclose the functions reservedto the Board and those delegated to	The Board is responsible for the overall corporategovernance of the Company. The Board's	Not applicable.
	management.	responsibilities are disclosed in the Prospectus ofAvalon dated 9 February 2007.
ಸ	A majority of the Board should be independentdirectors.	Currently, Avalon has one independent director and twonon-independent directors	The Board considers that the Company is notcurrently of a size, nor are its affairs of such
			complexity to justify the expense of the
			appointment of a majority of independent non-executive directors.
			The Board believes that the individuals on the
			Board can make, and do make, quality and
			independent judgments in the best interests
			of the Company on all relevant issues.
			Directors having a conflict of interest in
			relation to a particular item of business must
			absent themselves from the Board meeting
			before commencement of discussion on the
			topic.

Corporate Governance Statement

The primary responsibility of the Board is to represent and advance Shareholders' interests and to protect the interests of all stakeholders, To fulfill this role the Board is responsible for the overall corporate governance of Avalon Minerals Ltd (Avalon or Company) including its strategic direction, establishing goals for management and monitoring the achievement of these goals.

Recommendations to determine an appropriate system of control and accountability to best fit its business and operations commensurate The Company has considered the ASX Corporate Governance Council's Principles of Good Corporate Governance and Best Practice with these quidelines

9:20

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Directors and members of Executive Management mayperiod of time may not be disclosed to the public underthe terms of the continuous disclosure regulations ofn the course of their duties be made aware of InsideThe Company acknowledges that from time to time,nformation in respect of the Company, which for ahe ASX Listing Rules.	The Company requires Directors and Executiveto the public through the Company's announcements tothey believe that all such information is made availableManagement not to trade in the Company's securitiesWhere a member of Executive Management ora Director intends to trade in the Company's securitiesWhere the Chairperson intends to trade in theand that person is unsure that they may haveinformation which could constitute Inside Information,where the person reasonably believes that they maythey may have information which could constituteInside Information, that person shall first notify one ofthe other Directors to seek clarification.tformation, they should not trade until such time asthat person shall first notify the Chairperson to seekclarification.(d) Where the Chairperson intends to trade in theCompany's securities and that person is unsure that(b) Where a relevant mentuer of the power of listdeExecutive Management is in possession of InsideExecutive Management is in possession of Insidehave information which could constitute insidee market via the ASX.Information.$\bullet$ਵ ਨ
Company securities by Directors, officers andDisclose the policy concerning trading inemployees.
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္က	Provide the information indicated in Guide to	As disclosed above.	As disclosed above.
	reporting on Principle 3.
	Company Secretary to state in writing to theRequire the Chief Executive Officer and theBoard that the Company's financial reports	Secretary will provide the Board with this statement.The Chief Executive Officer and the Company	Not applicable.
	respects, of the Company's financial conditionand operating results and are in accordancepresent a true and fair view, in all materialwith relevant accounting standards.
$\frac{1}{4}$्।न	The Board should establish and auditconnmittee.	The Board has not established an audit committee.	of such complexity to justify the formation of aThe Board considers that the Company is notcurrently of a size, nor are its financial affairsnomination committee.
			selection and proper application of accountingpolicies, the identification and management ofrisk and the review of the operation of theThe Board as a whole undertakes the
	Provide the information indicated in Guide toreporting on Principle 4.	As disclosed above.	internal control systems.As disclosed above.
	ensure accountability at a senior managementListing Rule disclosure requirements and toEstablish written policies and proceduresdesigned to ensure compliance with ASXlevel for that compliance.	the Company has adopted a policy on continuousdisclosure.ᄐ	Not applicable.
	Provide the information indicated in Guide toreporting on Principle 5.	As disclosed above.	As disclosed above,

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				As disclosed above.
Not applicable.	Not applicable	Not applicable.	Not applicable.
disclosure and is aware of its obligations under theThe Company has adopted a policy on continuousAll documents that a released publicly may beInformation is communicated to shareholders asNotices of all meetings of shareholders;accessed on the Company's website.Corporations Act and Listing Rules.follows:׳.	The Directors advise that the Company will comply withPrinciple 6.2.	The Board has established a policy on RiskVlanagement.	A policy to require such a statement is in place.	s disclosed above.ц
strategy to promote effective communicationswith shareholders and encourage effectiveDesign and disclose a communicationsparticipation at general meetings.	conduct of the audit and the preparation andannial general meeting and be available toRequest the external auditor to attend theanswer shareholder questions about thecontent of the auditor's report.	should establish policies on risk oversight andThe Board or appropriate Board committeemanagement.	management internal control which implementsThe Chief Executive Officer and the CompanySecretary should state to the Board in writingbest practice recommendation 4.1 is foundedthat the statement given in accordance withthe policies adopted by the Board and theCompany's risk management and internalcontrol system is operating efficiently andon a sound system of risk oversight andeffectively in all material respects.	Provide the information indicated in Guide toreporting on Principle 7.
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connnittee.≑⊢Provide disclosure in relation to the Company'sexecutive Directors remuneration from that ofremuneration policies to enable investors toThe Board should establish a remunerationunderstand the costs and benefits of thosepolicies and the link between remunerationremuneration is made in accordance withpaid to directors and key executives andClearly distinguish the structure of non-Ensure that the equity-based executivecorporate performance.committee.executives.	The Prospectus discloses the remuneration payable towhen the Company is of a size which warrants suchcommittees, individual directors and key executivesprocedures. The current evaluation is informal andThe Board has not established a remunerationthe Directors and the incentives in place.assessed by the Board as a whole.	The Board considers that the Company is notcurrently of a size, nor are its affairs of suchNot applicable.
		complexity to justify the formation of a
		The Board as a whole is responsible for theremuneration committee.
		remuneration arrangements for Directors and
	The Prospectus discloses the remuneration payable to	executives of the Company.Not applicable.
	re executive Director and the non-executive Directors.
	The Prospectus discloses this information.	Not applicable.
thresholds set in plans approved byshareholders.
Provide the information indicated in Guide to	As disclosed above.
reporting on Principle 9.		As disclosed above.
Establish and disclose a code of conduct toguide compliance with legal and other	Refer to comments in 3.1 above.	Not applicable.
obligations to legitimate stakeholders.

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