SUNSTONE METALS LTD — Interim / Quarterly Report 2011

Jul 28, 2011

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10

Name of entity

Avalon Minerals Limited

68 123 184 412 30 June 2011

ABN Quarter ended ("current quarter")

Consolidated statement of cash flows

		Current quarter	Year to date
	Cash flows related to operating activities	$A'000	(12 months)$A'000
1.1	Receipts from product sales and relateddebtors
1.2	Payments for(a) exploration & evaluation(b) development(c) production	(4,950)	(12,848)
	(d) administration	(386)	(1,593)
1.3	Dividends received
1.4	Interest and other items of a similar naturereceived	61	164
1.5	Interest and other costs of finance paid
1.6	Income taxes paid
1.7	Other (provide details if material)
	Net Operating Cash Flows	(5,275)	(14,277)
1.81.91.101.11	Cash flows related to investing activitiesPayment for purchases of:(a) prospects(b) equity investments(c) other fixed assetsProceeds from sale of:(a) prospects(b) equity investments(c) other fixed assetsLoans to other entitiesLoans repaid by other entities	(53)	(228)
1.12	Other (provide details if material)
1.13	Net investing cash flowsTotal operating and investing cash flows	(53)	(228)

+ See chapter 19 for defined terms.

1.13	Total operating and investing cash flows
	(brought forward)	(5,328)	(14,505)
	Cash flows related to financing activities
1.14	Proceeds from issues of shares, options, etc.	1,385	14,838
1.15	Proceeds from sale of forfeited shares
1.16	Proceeds from borrowings
1.17	Repayment of borrowings
1.18	Dividends paid
1.19	Capital raising costs	(21)	(600)
	Net financing cash flows	1,364	14,238
	Net increase (decrease) in cash held	(3,964)	(267)
1.20	Cash at beginning of quarter/year to date	6,624	2,927
1.21	Exchange rate adjustments to item 1.20
1.22	Cash at end of quarter	2,660	2,660

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

		Current quarter$A'000
1.23	Aggregate amount of payments to the parties included in item 1.2	499
1.24	Aggregate amount of loans to the parties included in item 1.10

1.25	Explanation necessary for an understanding of the transactions
	Director's remuneration.	177
	Other payments to director's related entities.	322

Non‐cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
• 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

+ See chapter 19 for defined terms.

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available$A'000	Amount used$A'000
3.1	Loan facilities	‐	‐
3.2	Credit standby arrangements	‐	‐

Estimated cash outflows for next quarter

		$A'000
4.1	Exploration and evaluation	1,249
4.2	Development	‐
4.3	Production	‐
4.4	Administration	406
	Total	1,655

Reconciliation of cash

Reconciliation of cash at the end of the quarter (asshown in the consolidated statement of cash flows)to the related items in the accounts is as follows.		Current quarter$A'000	Previous quarter$A'000
5.1	Cash on hand and at bank	2,660	1,624
5.2	Deposits at call	‐	5,000
5.3	Bank overdraft	‐	‐
5.4	Other (provide details)	‐	‐
	Total: cash at end of quarter (item 1.22)	2,660	6,624

Changes in interests in mining tenements

		Tenementreference	Nature of interest(note (2))	Interest atbeginningof quarter	Interest atend ofquarter
6.1	Interests in miningtenementsrelinquished, reducedor lapsed	Nil

+ See chapter 19 for defined terms.

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

		Total number	Number quoted	Issue price persecurity (seenote 3) (cents)	Amount paid upper security (seenote 3) (cents)
7.1	Preference+securities(description)
7.2	Changes duringquarter
7.3	+Ordinarysecurities	215,738,002	215,738,002
7.4	Changes duringquarter(a) Increasesthrough issues(b) Decreasesthrough returnsof capital, buy‐backs	6,500,000	6,500,000
7.5	+Convertibledebtsecurities(description)
7.6	Changes duringquarter
7.7	Options(description andconversionfactor)	100,000500,0001,000,000500,000500,0002,700,0002,700,000	NilNilNilNilNilNilNil	Exercise price20 cents30 cents40 cents30 cents40 cents30 cents30 cents	Expiry date31/07/201131/01/201331/01/20141/07/20141/07/201527/04/201427/04/2015
7.8	Issued duringquarter	2,700,0002,700,000	NilNil	30 cents30 cents	27/04/201427/04/2015
7.9	Exercisedduring quarter
7.10	Expired duringquarter
7.11	Debentures(totals only)
7.12	Unsecurednotes (totalsonly)

+ See chapter 19 for defined terms.

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).
• 2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: 29 July 2011 (Company Secretary)

Print name: Paul Bridson

Notes

• 1 The quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
• 2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
• 3 Issued and quoted securities. The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities*.*
• 4 The definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report.
• 5 Accounting Standards ASX will accept, for example, the use of International Financial Reporting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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+ See chapter 19 for defined terms.