SUNSTONE METALS LTD - Interim / Quarterly Report 2013

31 July 2013

AVALON MINERALS LTD JUNE 2013 QUARTERLY REPORT

HIGHLIGHTS

- - Viscaria Copper Iron Project, Sweden (Avalon 100%)

Scoping Study results indicate that the potential NPV10% REAL (pre-tax) of an Open Pit Mining Scenario on the Viscaria Project is now US$373 million dollars (using US$3.00/lb copper price, US$150/t iron ore pellet price), greatly exceeding the target project NPV of US$300M announced following the Scoping Study of October 2012;
Increased Project NPV is due to recently announced upgrade of the D Zone Mineral Resource (see ASX Announcement 26 June 2013), Discovery Zone Mineral Resource and revised mining cost assumptions;
Pre-production CAPEX is estimated at US$180M, with a total Life-ofMine CAPEX of US$231M;
Internal Rate of Return (IRR) = 56.6% and the C1 Cash Cost, net of iron credits, for the Open Pit Mining Scenario is US$0.49/lb copper;
At US$3.25/lb copper price, the Open Pit Mining Scenario has a NPV10% REAL (pre-tax) of US$423M;
At US$2.75/lb copper price, the Open Pit Mining Scenario has a NPV10% REAL (pre-tax) of US$323M;
Scoping Study results indicate that the Open Pit Mining Scenario produces between 15,000 to 22,000t of copper and 625kt to 1.25Mt of magnetite concentrate per annum over a 10.3 year mine life;
The portion of the D Zone Mineral Resource that could be mined by underground methods could potentially add US$34M net cash margin.
Overall Mineral Resource at D Zone prospect increased to 30.0 million tonnes from 15.5 million tonnes;
Copper Metal increased at D Zone by 183% to 136,000t, with the copper Mineral Resource tonnage increased by 152% to 13.6 million tonnes @ 1.00% Cu above a 0.4% copper cut-off grade, an 11% increase in copper grade;
Estimated recoverable iron at D Zone increased by 78% to 5.7 million tonnes and the iron Mineral Resource increased by 73% to 25.6 million tonnes @ 26.4% Fe at a 15% Mass Recovery cut-off;

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Final assay results from 2012-2013 winter drill program at D Zone were received during the quarter and best intersections include:
VDD0166: 13.0m @ 2.1% CuEq and 5.9m @ 2.1% CuEq, within a larger zone of 82.0m @ 0.9% CuEq*;
VDD0169: 6.1m @ 2.3% CuEq and 7.0m @ 1.7% CuEq, within a larger zone of 77.1m @ 0.8% CuEq*;
VDD0163: 3.8m @ 2.3% CuEq and 9.0m @ 1.5% CuEq, within a larger zone of 55.0m @ 1.1% CuEq*;
VDD0167: 5.8m @ 1.8% CuEq and 5.0m @ 1.5% CuEq, within a larger zone of 15.8m @ 1.2% CuEq*;
VDD0171: 14.7m @ 1.7% CuEq, within a larger zone of 39.0m @ 1.1% CuEq;
VDD0175: 8.0m @ 1.7% CuEq, within a larger zone of 19.0m @ 1.1% CuEq;
VDD0177: 5.0m @ 1.6% CuEq, within a larger zone of 15.0m @ 1.1% CuEq;
VDD0178: 4.55m @ 1.6% CuEq, within a larger zone of 8.35m @ 1.1% CuEq;
Drilling at the Tjärro Prospect, located approximately 20kms to the northeast of the Viscaria Project, has located a trend of copper mineralisation over at least 200m of strike, with the mineralisation open both to the north and the south;
Drill hole TD005 at Tjärro intersected 2.85m @ 0.7% Cu and 0.5g/t Au, within a larger mineralisation zone of 11.45m @ 0.4% Cu and 0.2g/t Au;
TD005 is approximately 200m along strike from historic drilling that intersected:
15m of 1.3% Cu from 80m, including 8m @ 1.7% Cu;
17m @ 1% Cu, including 7m @ 1.4% Cu;
34.45m @ 0.6% Cu & 0.4g/t Au, including 3.6m @ 1.6% Cu & 1.2g/t Au;
This is the first exploration drilling outside the Viscaria area that Avalon has conducted to date on its 720km² of regional tenements in Northern Sweden.

Corporate

Completed institutional placements to raise A$2.4M (before costs) to progress work at Avalon’s flagship Viscaria Copper-Iron Project in northern Sweden;
Proceeds from the placements will be used by the Company to:
Complete studies on the Viscaria Copper Project;
Pursue acquisition activities; and
Provide working capital;
Strategic Review Process commenced to determine how best to fund the future development of the Viscaria Copper Project and maximise shareholder value.
Cash position of the Company at the end of the quarter was $1.18M.

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Avalon Minerals Limited (‘Avalon’ or ‘Company’) (ASX: AVI) continued to progress the Viscaria Copper Project ( Viscaria Project ) in northern Sweden during the quarter and into July 2013, with the release of an updated Scoping Study for the Base Case Open Pit mining scenario, a revised Mineral Resource for D Zone, assay results received from prospects targeted during the recently completed Viscaria drill program and regional exploration drilling (Figure 1).

Figure 1 – Viscaria Project Location

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Scoping Study on Viscaria Copper Project Open Pit Mining Scenario

On 9 July 2013, the Company announced the results of a Scoping Study completed on the Viscaria Project by Xstract Mining Consultants. The Scoping Study Open Pit Mining Scenario assessed the viability and potential value of the currently defined Mineral Resources on the Viscaria Copper Project, with the addition of the Discovery Zone Mineral Resource. The Viscaria Copper Project is based upon the updated Mineral Resources announced to the ASX on 26 June 2013 (see Table 1). The Discovery Zone Prospect has a current JORC Inferred Mineral Resource of 10.9Mt @ 0.31% Cu, 38.7% Fe and 0.08g/t Au, reported above a 20% Fe cut-off. These Mineral Resources were subjected to open pit optimisations using the parameters and revenue assumptions outlined in Table 2. Using these parameters, a series of optimised open pit shells were generated along the near-surface trends of the A Zone, B Zone and D Zone Mineral Resources at Viscaria. Figures 2 and Table 3 show the production profile developed for the optimised open pit mining scenario.

Table 1: Currently Defined Mineral Resources on the Viscaria Project.

	Resource Name	Resource Name	Classification	Classification	Tonnes (t)	Cu Grade (%)	Cu Metal (t)
		A Zone*	Measured		14,439,000	1.66	240,000
			Indicated		4,690,000	1.22	57,000
			Inferred		2,480,000	1.03	26,000
			Subtotal		21,609,000	1.49	323,000


		B Zone*	Measured		123,000	1.33	2,000
			Indicated		4,118,000	0.72	30,000
			Inferred		15,410,000	0.77	118,000
			Subtotal		19,651,000	0.76	150,000

			Indicated**		5,100,000	1.07	55,000
		D Zone Cu Resource	Inferred**		8,500,000	0.96	81,000
			Subtotal		13,600,000	1.00	136,000
		Overall Cu		Total	54,860,000	1.11	609,000
Resource	Name	Classification	Tonnes (Mt)	Fe Grade (%)	Mass Recovery (%)	Contained lron (Mt)	Estimated recoverable iron (Mt)
		***
D Zone Fe Resource		Indicated	11.7	27.5	33.4	3.2	2.7
		Inferred***	13.9	25.7	31.0	3.6	3.0
Overall Fe		Total	25.6	26.4	32.1	6.8	5.7

2011 Mineral Resources for A Zone and B Zone are reported above a cut‐off grade of 0.4% Cu.
** 2013 Copper Mineral Resource for D Zone above a cut‐off grade of 0.4% Cu.

* 2013 Iron Mineral Resource for D Zone above a cut‐off grade of 15% Mass Recovery.

Note that the total D Zone Indicated and Inferred Mineral Resource reported for the Copper and Iron above 15% Mass Recovery (Table 1) are not mutually exclusive; the Mineral Resource for Iron above 15% Mass Recovery excludes 4.4 million tonnes at 0.89% Cu above a cut-off grade of 0.4% Cu.

Contained iron is tonnes x Fe%, which may include iron content in silicates that could not be recovered. Estimated recoverable iron is based on Davis Tube Recovery test work at a 75 micron grind size. Estimated contained iron is tonnes x mass recovery % x Fe % in concentrate (69% Fe).

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Table 2: Pit Optimisation Parameters and Revenue Assumptions

P	Ui	Vl
arameter	nt	aue	Comments
Overallpit slope angle	Degrees	60
Copper Price	US$/t	US$6,614	US$3.00/lb Cu
Fe Price	US$/t	US$150	Iron orepelletprice
Mining Cost(ore)	US$/t	US$4.00
Mining Cost(waste)	US$/t	US$3.00
Mining Recovery	%	95%
Mining Dilution	%	5%
Metallurgical Recovery	% Cu	85%
	% Fe	76%
Concentrate Grade	% Cu	25%

	% Fe	69%
Processing Costs	US$/t ore	US$9.39
Admin Costs	US$/t ore	US$3.08
Payable Copper	% Cu contained	98%
Payable Magnetite	% Fe contained	98%
Copper Conc. Treatment charge	c/lb Cu	90

Copper Conc. Refining charge	c/lb Cu	9
Magnetite Conc. Treatment charge	US$/dmt	28

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Figure 2: Open Pit Mining Scenario Production Profile

	4.0 a)	4.0 a)	4.0 a)

	2.0 2.5 3.0 3.5 duction (Mtp		D‐Zone Pit A‐Zone Pit B‐Zone Pit
	0.0 0.5 1.0 1.5 Mine Pro		Discovery Pit

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A summary of the economic assessment of the Open Pit Mining Scenario is given in Table 4.

Table 4: Summary of the Economic Assessment of the Open Pit Mining Scenario

Open Pit Mining Scenario	Viscaria Project Mineral Resources + Discovery Zone Mineral Resource	Viscaria Project Mineral Resources + Discovery Zone Mineral Resource

Tonnage and grade
	33.7 Mt @ 0.61% Cu and 22% Fe

Optimum Mining Rate	3.5 Mtpa
Mine Life
	10.3 years

Pre-Production Caex		Includes US$206M re-stri
	US$180 M
p		. pp

Life-of-Mine Capex		Excludes closure costs
	US$231 M

NPV10% REAL (pre-tax)	US$373 M	US$3.00/lb Cu US$150/t iron orepellets

Price Sensitivity

In order to understand the sensitivity of the Project NPV to changes in the prices of copper and iron, an economic analysis was completed using varied price scenarios, as outlined in Table 5.

Table 5: Price Sensitivity (NPV 10% real)

Project NPV10% real	(Pre-Tax)	Fe Price(for 69%	Fe iron orepellets)	Fe iron orepellets)
		US$130/t	US$150/t	US$170/t
Cu Price	US$3.50/lb Cu	$371	$474	$578
	US$3.25/lb Cu	$321	$423	$527
	US$3.00/lb Cu	$270	$373	$477
	US$2.75/lb Cu	$219	$323	$426

Cost and Revenue Assumptions

The capital costs used in the Open Pit Mining Scenario have been summarised in Table 6, with the operating costs assumptions in Table 7. The C1 copper cash operating costs, net of iron credits, for the Open Pit Mining Scenario is predicted to be $0.49/lb Cu, which is in the lower quartile of copper producers. The breakdown of the project value minus the various capital and operating cost assumptions is shown in Figure 3.

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Table 6: Capital Cost assumptions

Item	Open Pit Mining	Comments
	Scenario (US$M)
Process Plant	151.7	Scalable on production capacity
Pit D site establishment	2.5	Includes provision of site services and access roads

Pre-Strip	20.6
Tailings Storage Facility	5.0
Pre-Production Total	180
		Includes provision of site services and
Pit A site establishment	1.7	access roads
Pit B site establishment	1.5	Includes provision of site services and access roads
Discovery Zone	15.0	Includes provision of site services, access roads surface water berm
site establishment		,
Replacement Capital	33.0
Closure Costs	-	Not Included
Life of Mine Total	231

Table 7: Operating Cost assumptions

Parameter			Comments
	Unit	Value

Mining Cost (ore)	US$/t	$4.00

Mining Cost (waste)	US$/t	$3.00
Processing Costs	US$/t ore	$9.39	Variable – assumes 40% fixed costs and 9.39/t @ 3.5Mtpa
Admin Costs	US$/t ore	$3.08
Copper Conc. Transport	US$/DMT conc	15.75	Assumes local smelter
Magnetite Conc. Transport	US$/DMT conc	1.50	Assumes slurry pipe to LKAB

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Figure 3: Project Value Breakdown (at US$3/lb Cu, US$150/t iron ore pellets)
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Figure 3: Project Value Breakdown (at US$3/lb Cu, US$150/t iron ore pellets)

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Comparison with previous Open Pit Mining Scenario result

March 20 Open Pit 13 Mining Sce nario	D Zone Ope n Pit and A Zone Op en Pit-A	D Zone Ope n Pit and A Zone Op en Pit-A
Tonnage a nd grade	1 3.3.0 Mt @0 .54% Cu 22 .2% Fe

Optimum M ining Rate	2 .1 Mtpa
Mine Life	7 years
Pre-Produ ction Capex	U S$138.7 M	Includes US$17.9Mp re-strip
Life-of-Min e Capex	U S$152.2 M	Excludes closure cos ts
NPV10% REA L	U S$97 M	US$3.25/ pellets lb Cu US$1 50/t iron ore

The economic summary o f the previous Open Pi t Mining Sc e nario, as announced i n March 2013, as displ a yed in Table 8, was o nly based o n open pit m ining the D Z one and A Zone Miner a l Resource s . In contras t , the curren t Open Pi t Mining Sc e nario econ o mic summ a ry has a s ignificantly increased r e source ba s e due to t h e inclusion of the upgraded D Z o ne Mineral R esource (a n nounced 2 6 June 2013); the addition of the B Z o ne Mineral Resource; a nd the addition of the Discovery Z one Mineral Resource ( a nnounced 6 May 2013). This has allowed for t h e Optimum Mining R a te to be ex p anded to 3. 5 Mtpa, the m ine life to be extended t o 10.3 year s and the N P V to be increased by US$276 million dollars t o US$373 m illion dollar s .

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Review of Costs and Revenue Assumptions

As a part of the Scoping Study the costs and revenue assumptions used in previous economic assessments were also reviewed. One of the most significant findings of this review was that the open pit mining costs used previously were too high in comparison to several operating mines in Scandinavia. The review recommended that the open pit mining costs should be lowered to US$4.00/t for ore and US$3.00/t for waste, in comparison to US$4.55/t for ore and waste that was previously used.

Other costs and revenue assumptions from previous economic assessments that were adjusted are shown in Table 9. These include: lowering the copper price to US$3.00/lb Cu from US$3.25/lb Cu, to represent a wider view of copper price forecasts; decreasing the overall Metallurgical Recovery of the copper to 85% from 90% due to presence of copper oxides in some areas; and increasing the copper treatment (TC) and refining (RC) charges to reflect increases in these costs since the 2010 Pre-Feasibility Study.

Table 9: Summary cost and revenue assumptions adjusted in the July 2013 open pit mining scenario, in comparison to previous open pit mining scenarios.

Parameter	Unit	March 2013 Scoping Study	July 2013 Scoping Study	Comments
C Pi	USD/	7165	6614	Decreased to US$3.00/lb Cu due
opper rce	t	$,	$,	lower copperprice forecasts
Open Pit Mining Cost (ore)	USD/t	$4.55	$4.00	Decreased due to review of Scandinaviamining costs
Open Pit Mining Cost (waste)	USD/t	$4.55	$3.00	Decreased due to review of Scandinaviamining costs
Metallurgical Recovery	% Cu	90%	85%	Reduced due to uncertainty around processing some areas of oxide copper
Copper Conc. Treatment Charge	USD/dmt	$45	$90	Increased to reflect 2013 TC prices
Copper Conc. Refinin Chare	c/lb Cu	4.5	9	Increased to reflect 2013 RC prices
g g
Royalty Viscaria	%	0.75	1.00	Increased due to Discovery Zone royalty

Potential Value Opportunities and Risks

Mine design

All of the scenarios have included some Inferred Mineral Resource estimates. Ongoing exploration drilling and subsequent re-estimation may result in changes to the economically minable portions of the resource. This may result in an increase or decrease in the tonnage and/or grade estimates.

When undertaking final designs from an optimised pit shell, practical mining considerations may require additional waste to be mined and/or ore to be left behind. In the absence of any geotechnical study into pit wall stability, reasonably conservative pit angles have been assumed (60 degrees). Any change in pit wall angles is likely to materially impact on the strip ratio and pit economics.

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The D-Zone pit has been optimised as a standalone pit, on the assumption that there will be no underground mining. A preliminary assessment has shown that part of the remaining resource below the pit may be economic to mine by underground methods. If ongoing work substantiates this, then a combined open pit and underground optimisation is recommended. This is likely to result in a smaller pit with additional material mined from underground.

D Zone Underground Mining Potential

A preliminary assessment was completed on the portion of the D Zone Mineral Resource under the open pit shell that could be extracted by underground mining methods. Wireframes were constructed around high grade areas based on a cut-off value of US$70 Net Smelter Return (NSR) to simulate underground stopes with a minimum mining width of 4.0m (Figure 4). These stopes contained a total of 4.7 million tonnes @ 0.92% Cu and 25% Fe.

Additional CAPEX for the underground development has been estimated at US$30M and includes the ramp development (two declines 560m in length), access cross cuts, mine establishment, pumping, ventilation and egress. The average NSR is US$81/ tonnes of ore at a copper price of US$3.25/lb and an iron price of US$150/tonne. The operating costs have been estimated using US$65/tonne of mined material and $4500/m for underground development for a total OPEX of US$64M. Accounting for both the CAPEX and OPEX, this gives a net cash margin of US$34M.

The value of the underground mining potential at D Zone has not been included in the NPV calculation, as it does not materially impact the NPV calculation. This is due to the fact that underground mining cannot begin until the D Zone open pit has finished and will require some higher value ore (from lower cost open pits) to be displaced in order to maintain mill throughput. However, it is very likely that the D Zone underground would be mined near the end of the mine life and therefore remains an upside of US$34M to the project.

Figure 4: D Zone Long Section Underground Mining Wireframes

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Scheduling and stockpiling

At this level of concept mining study, the production scheduling undertaken has been set at a fixed rate and average grades with no allowance for production ramp-up or build-up of stockpiles ahead of the process plant. Open pit waste material is scheduled at a constant rate six months in advance of ore production. In reality, there would be a ramp-up period as the process plant is commissioned, operators trained, recoveries and throughput optimised. A ramp-up period of 3 to 6 months would be typical for an operation of this scale.

An operating mine would normally optimise the mining schedule by targeting higher grade ore early in the mine life in order to increase revenue in the early years, with the stockpiling of lower grade ore as required. Optimising the ore mining sequence would be expected to add further value.

Processing

In this Scoping Study it has been assumed that all ore types will be treated through the same process plant configuration with an average ore blend. All material has been assumed to pass through the comminution and copper flotation stages of the plant before passing through the magnetic separation section to recover the magnetite as documented in the 2010 Pre-Feasibility Study.

There may be opportunity to add further value by optimising the plant by batch processing different ore types with the plant configured specifically for each ore type, rather than a blend. In addition to maximising payable metal recovery, there may be savings in plant operating and capital costs.

In the economic evaluation, a fixed recovery for copper has been used. In practice, the recovery will improve with head grade and applying a fixed recovery will tend to overstate recovery for low-grade ore and understate recovery for high-grade ore.

Also, the 2010 Pre-Feasibility Study assumed some revenue from small amounts of gold, silver and zinc. No revenue has been assumed for these metals in this Scoping Study.

Discovery Zone

The Company has included in its calculation of the NPV the assets being acquired under a Heads of Agreement between Hannans Reward Ltd (Hannans) and Avalon (HOA). The fundamental terms of the HOA were announced by Avalon on 6 May 2013. The Company also refers to the announcement made by Hannans on 4 July 2013 in relation to the Statutory Demand issued by Hannans to Avalon and Avalon’s announcement on 4 July 2013 outlining the Company’s response to the Statutory Demand. The Company disputes the validity of the Statutory Demand and intends to vigorously protect its rights under the HOA and apply to have the Statutory Demand set aside by the Court. The Company intends to proceed in accordance with the correct legal interpretation of the terms of the HOA. Avalon has applied to the Supreme Court of Western Australia to set aside the Statutory Demand and the matter is listed for a first Court hearing on 29 August 2013.

Satellite deposits

There may be opportunity to process ore from other deposits within trucking distance of the proposed plant. This may result from Avalon’s ongoing exploration efforts in the area and/or negotiation with third parties to toll treat ore, or purchase/joint venture separately owned resource assets. Value adding options would be to extend the operating life of the project and/or increase the processing capacity to achieve cost savings due to economies of scale.

D Zone Mineral Resource Upgrade

On 26 June 2013, the Company announced a Mineral Resource estimate upgrade at the D Zone Prospect on the Viscaria Project in northern Sweden. This resource upgrade is the culmination of the recently completed 2012-2013 northern hemisphere winter extensional drill program where 43 drill holes were completed at the D Zone prospect for 12,442 metres.

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Incorporating drilling information from the 2012-2013 winter extensional drill program as well as historical data deemed suitable for estimation, the new Mineral Resources for the D Zone Prospect are reported as:

13.6 million tonnes (Mt) @ 1.00% Cu above a 0.4% copper cut-off grade, and is classified as being 5.1 Mt @ 1.07% Cu Indicated and 8.5 Mt @ 0.96% Cu Inferred;
25.6 million tonnes (Mt) @ 26.4% Fe at a cut-off above a 15% Fe Mass Recovery grade, and is classified as 11.7 Mt @ 27.5% Fe Indicated and 13.9 Mt @ 25.7% Fe Inferred.

Table 10: D Zone Mineral Resource for Copper reported above a 0.4% Cu cut-off grade

Mineral Resource Category	TONNES (Mt)	Cu (%)	Copper Metal (t)
Indicated	5.1	1.07	55,000
Inferred	8.5	0.96	81,000
Indicated + Inferred	13.6	1.00	136,000

Table 11: D Zone Mineral Resource for Iron reported above a 15% Mass Recovery cut-off

Mineral Resource	TONNES	Fe	Mass	Contained	Estimated
Category	(Mt)	(%)	Recovery (%)	Iron (Mt)	Recoverable *Iron (Mt)**
Indicated	11.7	27.5	33.4	3.2	2.7
Inferred	13.9	25.7	31.0	3.6	3.0
Indicated + Inferred	25.6	26.4	31.9	6.8	5.7

*Estimated Recoverable Iron = Tonnes x Mass Recovery x Fe % in concentrate (69% Fe) and is based on DTR test work at a 75 micron grind size.

Note that the total Indicated and Inferred Mineral Resource reported for Copper (Table 10) and for above 15% Mass Recovery (Table 11) are not mutually exclusive; the Mineral Resource for above 15% Mass Recovery excludes 4.4Mt at 0.9% Cu above a cut-off grade of 0.4% Cu. Therefore, the overall Mineral Resource contains 30Mt; 25.6Mt from the Mineral Resource reported at a 15% Mass Recovery cut-off and 4.4Mt at 0.9% Cu above a cut-off grade of 0.4% Cu.

Comparison with D Zone Mineral Resource reported prior to 2012-2013 Winter drill program

The D Zone Mineral Resource prior to the recently completed 2012-2013 winter drill program was announced on 2 October 2012 and is displayed in Tables 12 and 13. The overall tonnage of the new revised Mineral Resource is approximately 30Mt, compared to approximately 15.5Mt in the previous D Zone Mineral Resource. This represents an increase of 14.5Mt or 94%.

Importantly, the increased tonnage of the overall mineral resource has also been achieved with an increase in copper and iron grade.

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The tonnage of the copper Mineral Resource itself increased from 5.4 to 13.6Mt or 152%. As the grade of the copper Mineral Resource has also increased from 0.9% Cu to 1.0% Cu, this has also resulted in a 183% increase to the contained tonnes of copper. Importantly for the possibility of mining parts of D Zone via underground methods, if a 0.8% Cu cut-off is used, the copper Mineral Resource has grown from 2.0 to 7.6Mt at 1.4% Cu or 280%.

The tonnage of the iron Mineral Resource itself increased from 14.8 to 25.6Mt, or 73%. As the grade of the iron Mineral Resource has increased this has also resulted in a 78% increase to the estimated recoverable iron tonnes.

Table 12: October 2012 D Zone Mineral Resource for Copper reported above a 0.4% Cu cut-off grade


Mineral Resource Category	TONNES (Mt)	Cu (%)	Copper Metal (t)
Indicated	3.5	0.9	33,000
Inferred	1.9	0.8	15,000
Indicated + Inferred	5.4	0.9	48,000

Table 13: October 2012 D Zone Mineral Resource for Iron reported above a 15% Mass Recovery cut-off

Mineral Resource	TONNES	Fe	Mass	Contained	Estimated
Category	(Mt)	(%)	Recovery (%)	Iron (Mt)	Recoverable *Iron (Mt)**
Indicated	9.5	25.9	31.3	2.5	2.1
Inferred	5.3	25.6	30.8	1.4	1.1
Indicated + Inferred	14.8	25.8	31.1	3.9	3.2

*Estimated Recoverable Iron = Tonnes x Mass Recovery x Fe % in concentrate (69% Fe) and is based on DTR test work at a 75 micron grind size.

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EXPLORATION/DRILLING

D Zone Mineral Resource Extension Drill Program

On 28 May 2013, the Company announced the final assay results from the recently completed drill program at the D Zone Prospect on the Viscaria Project.

All six drill holes intersected copper and iron mineralisation, extending the area of known mineralisation by up to 50m along strike to the south and 150m down plunge. The objective of the D Zone drill program was to significantly extend the copper-iron mineralisation, which has been achieved, increase the known Mineral Resources and deliver on the potential increases to the project Net Present Value as outlined in the October 2012 Scoping Study.

VDD0171 was drilled into the southwest extremity of the D Zone Prospect. This drill hole was designed to test how far the D Zone mineralisation could be extended along strike to the southwest. The success of VDD0171 indicates that the mineralisation within the D Zone Prospect further extends laterally and has not been closed off in this area.

In contrast, VDD0174 was drilled into the northeast extremity of the D Zone mineralisation. This drill hole was designed to test how far the D Zone mineralisation could be extended to the northeast. The result of VDD0174 indicates that the D Zone mineralisation does not extend laterally to the northeast and has been closed off in this area.

VDD0172, VDD0175, VDD0177 and VDD0178 were all drilled into the central part of the D Zone mineralisation. The success of VDD0172, VDD0175, VDD0177 and VDD0178 follows the success of the previously announced drill holes VDD0160, VDD0167, VDD0150, VDD0151 and VDD0153 in this area. These drill holes were planned to delineate the upper margin of the north eastern, relatively thick and moderately plunging, high grade copper-iron mineralisation zone. The success of these drill holes indicates that this plunging, high grade copper-iron mineralisation zone extends at least 150m further down plunge. There is no indication that this mineralisation is diminishing at depth and in fact, the mineralisation is increasing in copper grade with depth.

The details of the geochemical assay data for these drill holes are shown in Table 14.

Table 14: Drill hole details and assays results.

Hole	Easting (RT90, m)	Northing (RT90, m)	Azi. (°)	Dip (°)	From (down hole m)	To (down hole m)	Interval Width (down hole m)	% Cu	% Fe	% CuEq	End of Hole (m)
					36.00	60.00	24.00	0.8	8.5	1.0	120

VDD0171	1,680,248	7,536,770	134.3	-55	74.00	113.00	39.00	0.9	14.1	1.1
					including:
					80.00	94.71	14.71	1.5	14.2	1.7

					213.00	261.00	48.00	0.4	16.2	0.6

					including						272
VDD0172	1,680,580	7,537,276	134.3	-55	214.00	221.30	7.30	0.6	25.4	1.0
					also including:
					252.00	261.00	9.00	0.9	13.2	1.1

VDD0174	1,681,010	7,537,633	130.3	-54.6	169.00	173.05	4.05	0.2	21.2	0.6	225
					and
					198.00	201.00	3.00	0.6	4.4	0.6

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VDD0175	1,680,538	7,537,310	130.5	-55	319.00	338.00	19.00	0.7	24.9	1.1	379.25
						including
					330.00	338.00	8.00	1.4	22.5	1.7

VDD0177	1,680,450	7,537,245	128.3	-55.8	349.00	364.00	15.00	0.7	27.5	1.1	396
						including
					349.00	354.00	5.00	1.1	30.1	1.6

					179.00	187.35	8.35	0.6	26.2	1.1	205
VDD0178	1,680,730	7,537,340	130.3	-62.8		including
					182.80	187.35	4.55	1.1	26.9	1.6

On 2 May 2013, the Company announced assay results for the previous four drill holes of the drill program from the D Zone Prospect on the Viscaria Project.

All four drill holes intersected thick, high grade copper-iron mineralisation that has extended the area of known mineralisation by up to 150 metres down dip and 100 metres down plunge.

VDD0166 and VDD0169 were drilled in the northeast of the D Zone Prospect and VDD0163 was drilled in the southwest. As discussed in previous announcements, these drill holes were designed to follow up on excellent drill intersections that appear to delineate two southwest plunging, relatively thick, high grade copper-iron mineralisation in these areas.

The success of VDD0166 and VDD0169 follows the success of the previously announced drill holes VDD0128, VDD0129, VDD0138, VDD0147, VDD0156 and VDD0157 in the northeast of the D Zone Prospect. These drill holes further delineate a relatively thick, up to 82 metres, moderately plunging, high grade copper-iron mineralisation zone by extending it at least 100 metres further down plunge. At this stage, there is no indication that the D zone Cu-Fe mineralisation is diminishing at depth. In fact, the mineralisation is increasing in copper grade with depth.

The success of VDD0163 follows the success of previously announced drill holes VDD0152, VDD0155 and VDD0161 in the southwest of the D Zone Prospect. This drill hole indicates that the second relatively thick, moderately plunging, high grade copper-iron mineralisation zone also extends at least 100 metres further down plunge. As for the northeast high grade plunging zone, the recent drilling indicates that the southwest high grade zone is also increasing in copper grade at depth.

Drill hole VDD0167 was drilled into the central part of the D Zone Prospect in between the two high grade plunging, zones of copper-iron mineralisation. The purpose of this drill hole was to test the down plunge extent of previously intersected copper-iron mineralisation of moderate thickness and grade (16-18 metres thick down hole at approximately 1% CuEq) encountered in drill holes VDD0150 and VDD0151. Mineralisation in this area also appears to be significantly increasing in grade with depth. The deeper drill hole VDD0167 intersected 15.8m @ 1.2% CuEq, compared with the up plunge drill hole VDD0150, which intersected 15.4m @ 1% CuEq*.

The details of the geochemical assay data for these drill holes are shown in Table 15.

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Table 15: Drill hole details and assays results

Hole	Easting (RT90, m)	Northing (RT90, m)	Azi. (°)	Dip (°)	From (down hole m)	To (down hole m)	Interval Width (down hole m)	% Cu	% Fe	% CuEq	End of Hole(m)
					351.00	406.00	55.00	0.5	23.0	1.1	414.00
							including
					351.00	356.00	5.00	1.1	28.3	1.6
VDD0163	1,680,176	7,536,967	134	‐56			also including
					397.00	406.00	9.00	1.1	25.7	1.5
							including
					399.19	403.00	3.81	1.8	29.9	2.3

VDD0166	1680662	7537462	133	‐56	384.00	466.00	82.00	0.5	22.7	0.9	471
							including
					384.00	390.30	6.30	0.8	37.0	1.4
							also including
					425.08	431.00	5.92	1.5	42.3	2.1
							also including

					447.00	460.00	13.00	1.6	29.9	2.1

					207.2	223	15.8	0.8	21.5	1.2	282.00
							Including
VDD0167	1,680,513	7,537,196	133	‐58.7	207.2	213	5.8	1.3	28.9	1.8
							and
					218	223	5	1.1	27.1	1.5

VDD0169	1680696	7537487	135	‐55	357.00	434.10	77.10	0.5	19.1	0.8	480
							including
					357.00	364.00	7.00	1.2	27.7	1.7
							also including:
					395.00	405.00	10.00	0.8	26.4	1.2
							also including:
					428.00	434.10	6.10	1.6	45.8	2.3

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Drilling/Exploration - Regional

During the quarter, exploration drilling commenced at the Tjärro Prospect (‘ Tjärro’ ), with the first assay results announced on 4 June 2013. Tjärro is considered one the most prospective copper-gold regional prospect closest to Avalon’s flagship Viscaria Project in northern Sweden. Tjärro is situated approximately 20km northeast of the Viscaria Project and is part of Avalon’s 720km² exploration tenement package.

Drill hole TD005 intersected 11.85m @ 0.4% copper and 0.2g/t gold from 91.15m, including 2.85m @ 0.7% copper and 0.5g/t gold (Table 16). This hole was drilled approximately 200 metres along strike of historic drilling results including: 15m @ 1.3% Cu from 80m, including 8m @ 1.7% Cu; 17m @ 1% Cu, including 7m @ 1.4% Cu; and 34.45m @ 0.6% Cu & 0.4g/t Au from 85.15m, including 3.6m @ 1.6% Cu & 1.2g/t Au. The results from drill hole TD005 and the historical drilling indicate that the Tjärro prospect contains copper and gold mineralisation over hundreds of metres of strike and at shallow depths.

Avalon is planning on conducting ground geophysical surveys, in order to determine the full strike extent of the coppergold mineralisation at Tjärro. It is anticipated that the geophysical data will be able to give indications as to where the copper-gold mineralisation is strongest and how the mineralisation varies along strike and at depth. Further drilling will be targeted provided the geophysical data generates additional targets.

Table 16: Drill hole details and assays results.

					From	To				End of
Hole	Easting (RT90, m)	Northing (RT90, m)	Azi. (°)	Dip (°)	(down hole m)	(down hole m)	Interval Width (down hole m)	% Cu	g/t Au	Hole (m)
TD005	1,696,825	7,555,457	270	‐50	91.15	103.00	11.85	0.4	0.2	198.1
						including:
					91.15	94.00	2.85	0.7	0.5

Bankable Feasibility Study

The BFS of the Viscaria Copper-Iron Project commenced in October 2010 and remains suspended pending funding arrangements.

Approvals

a) MEC

The Mining Exploitation Concession (MEC) for the Viscaria Project was submitted to the Bergsstaten (Mines Department) in April 2010 and was significantly amended in early 2011 following submissions from the city of Kiruna. The Bergsstaten approved the MEC for Viscaria in two licences; Viscaria K3 and Viscaria K4. The two MEC’s granted cover the D zone and the southern area of the A Zone and B Zone mining areas.

A third MEC application (Viscaria K7) remains under consideration by Bergsstaten pending an amendment to the Kiruna town planning act to allow for the grant of a mining lease which includes the power generation windmills and a power line affected by the northern parts of A Zone and B Zone. Avalon has commenced the process to have the amendment to the Kiruna town planning act ratified by the Kiruna Kommun, hence allowing the MEC K7 to be granted.

The granting of the MEC is a precursor to consideration by the regulator of the Environmental Impact Assessment and permits access to the historical underground mining openings to check present day geotechnical conditions and groundwater levels.

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b) Environment Impact Assessment

The Environment Impact Assessment (EIA) was submitted to the Environmental Court of Sweden (ECS) in April 2011. Following the suspension of the BFS, the Company sought suspension of consideration of the EIA by the ECS for up to 12 months to reduce expenditure. A response from the ECS to the request is yet to be received. Avalon is currently making preparations to resubmit the EIA before the end of 2013.

CORPORATE

Strategic Review Process

On 12 June 2013, the Company announced that it had commenced a Strategic Review Process to determine how best to fund the future development of the Viscaria Copper Project in Sweden and maximise shareholder value.

The Strategic Review Process will consider the following aspects of the Viscaria Copper Project and Avalon:

Funding requirements for the Viscaria Copper Project to complete a Bankable Feasibility Study;
Opportunities to capture value from the Viscaria Copper Project;
Potential joint venture arrangements;
Project and commodity focus of Avalon;
Strategic partnerships; and
Company funding arrangements.

The Company will assess all options to fund a Bankable Feasibility Study for the Viscaria Copper Project, including bringing on board a strategic shareholder or partner to provide the necessary funding. This assessment was commenced subsequent to funding arrangements as announced on 15 April 2013 not proceeding. The process is expected to take some 2 to 3 months to complete.

Funding

On 5 June 2013, the Company announced the completion of a further placement to raise A$1.15M (before costs at a price of 1.5 cents per share to institutional and cornerstone investors in the Company;

On 24 April 2013, the Company announced the completion of a placement to raise A$1.25 million (before costs) at a price of 5 cents per share to support the continued exploration and advancement of its flagship Viscaria Copper-Iron Project in northern Sweden. Foster Stockbroking Pty Ltd acted as Lead Manager to the placement and shares were issued to institutional and cornerstone investors in the Company.

The funding from the placements will be primarily applied to progress work at the Viscaria Copper-Iron Project in northern Sweden and for general working capital.

Cash Resources

As at 30 June 2013, the Consolidated Entity had cash reserves of $1.18M.

Shareholder Information

At 30 June 2013, the Company had 562,017,007 fully paid ordinary shares on issue and approximately 994 shareholders.

==> picture [596 x 95] intentionally omitted <==

ABOUT AVALON

Avalon is an ASX listed mineral exploration company with high quality assets in Sweden, one of the leading metal producing countries in the European Union.

Avalon’s flagship asset is the Viscaria Copper-Iron Project located 1,200km north of Stockholm where the Company has delineated a global resource of 54.9 million tonnes of copper mineralisation at 1.1% Cu, containing 609,000 tonnes of copper and 25.6 million tonnes of iron mineralisation at 26.4% Fe, containing 5.7 million tonnes of recoverable iron.

The Viscaria Project is surrounded by established infrastructure, lying immediately adjacent to LKAB’s Kirunavaara Iron Ore operation and in close proximity to high-capacity rail and ports.

ABOUT SWEDEN

Sweden has a 1,000 year mining history, is the largest producer of iron ore in the European Union and is a leading producer of base metals (copper, zinc, lead) and precious metals (gold and silver).

There are excellent discovery opportunities, with much of the country underexplored by modern standards. Furthermore, Sweden possesses a world-class geological database and favourable minerals legislation, is politically and economically stable and has mining know-how, highly trained personnel and excellent infrastructure.

Sweden has recently been ranked by the Fraser Institute as the second best country (behind Finland) for developing mineral projects.

For further information please visit www.avalonminerals.com.au or contact:

Mr Jeremy Read – Managing Director Avalon Minerals Limited T: 07 3368 9888 E: [email protected] www.avalonminerals.com.au www.twitter.com/avalonminerals

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==> picture [596 x 95] intentionally omitted <==

*Copper Equivalent Formula

% CuEq = % Cu + ((%Fe x Fe price US$/tonne x Fe recovery)/(Cu price US$/tonne x Cu recovery)) Cu price US$/tonne = $7,163.00 (US$3.25/lb)

Cu Recovery = 90%

Fe price US$/tonne = $144.93 (calculated from US$100 Net Price per tonne of magnetite concentrate containing 69% Fe) Fe Recovery = 70%

Results from extensive metallurgical test work completed by Avalon Minerals Limited indicate that both copper (Cu) and iron (Fe) have a reasonable potential to be recovered from the D Zone Mineral Resource contained within the Viscaria Project.

Competent Persons Statement

The information in this report that relates to Mineral Resources and exploration targets is based upon information reviewed by Mr Jeremy Read BSc (Hons) who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Read is a full time employee of Avalon Minerals Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Read consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The Mineral Resource estimate for the D Zone Prospect was compiled and prepared by Matthew Readford (MAusIMM) of Xstract Mining Consultants who is a Competent Person as defined by the Australasian Code for the reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) 2004 Edition and who consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The mineral resource estimate for the Discovery Zone is effective from 13 January 2012 and has been prepared by Mr Thomas Lindholm, MSc of GeoVista AB, Luleå, Sweden acting as an independent “Competent Person”. Mr Lindholm is a Fellow of the Australasian Institute of Mining and Metallurgy (Member 230476). Mineral resources of the Rakkuri iron deposits have been prepared and categorised for reporting purposes by Mr Lindholm, following the guidelines of the JORC Code. Mr Lindholm is qualified to be a Competent Person as defined by the JORC Code on the basis of training and experience in the exploration, mining and estimation of mineral resources of gold, base metal and iron deposits.

The Scoping Study results were compiled and prepared by Tim Horsley (MAusIMM) of Xstract Mining Consultants who is a Competent Person as defined by the Australasian Code for the reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code) 2004 Edition and who consents to the inclusion in this report of the matters based on the information in the form and context in which it appears.

The Scoping Study referred to in this announcement is based on low level technical and economic assessments and is insufficient to support Ore Reserves or to provide assurance of an economic development case at this stage or to provide certainty that the conclusions of the Scoping Study will be realised.

Open Pit Mining Scenario includes some material from Inferred Mineral Resources and therefore, exploration drilling and re-estimation may result in changes to the economically minable portion of the resources.

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Company Directory

AVALON MINERALS LIMITED ABN 68 123 184 412

Web site: www.avalonminerals.com.au Email: [email protected] Stock Exchange Listing

Australian Stock Exchange – ASX Code: AVI

Investor Information Contacts:

Mr Jeremy Read - Managing Director Avalon Minerals Limited Tel: 07 3368 9888 Mob: 0409 484 322 Em: [email protected]

Shareholder Enquiries:

Share registry matters should be directed to:

Computershare Investor Services Phone: 1300 850 505 Website: computershare.com.au

Registered Office:

Level One 65 Park Road Milton Queensland 4064 Phone: 07 3368 9888 Fax: 07 3368 9899

Issued capital:

Ordinary shares: 562,017,007 (AVI)

Directors:

Crispin Henderson – Chairman Jeremy Read – Managing Director Dato Philip Siew – Deputy Chairman Edward Siew – Non-Executive Director Paul Niardone – Non-Executive Director Gary Goh – Non-Executive Director

Company Secretary:

Roslynn Shand

Appendix 5B Mining exploration entity quarterly report

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

	ABN 68 123 184 412 Consolidated statement of cash flows	Quarter ended (“current quarter”) 30 June 2013	Quarter ended (“current quarter”) 30 June 2013
		30 June 2013

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 1.3 Dividends received 1.4 Interest and other items of a similar nature received 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	Current quarter $A’000		Year to date (12 months) $A’000
	‐ (2,520) ‐ ‐ (506) ‐ 14 ‐ ‐ ‐		‐ (10,572) ‐ ‐ (2,398) ‐ 117 ‐ ‐ ‐
	(3,012)		(12,853)
Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	‐ ‐ (7) ‐ ‐ ‐ ‐ ‐ ‐		‐ ‐ (260) ‐ ‐ ‐ ‐ ‐ ‐
	(7)		(260)
	(3,019)		(13,113)

See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 1

Appendix 5B Mining exploration entity quarterly report

Appendix 5B Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward)	(3,019)	(13,113)
Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 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 Net financing cash flows	2,395 ‐ ‐ ‐ ‐ (80)	14,256 ‐ ‐ ‐ ‐ (707)
	2,315	13,549
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	(704) 1,880 ‐	436 740 ‐
	1,176	1,176

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

1.23 1.24	1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
			113
			‐
1.25 Explanation necessaryfor an understandingof the transactions Director’s remuneration. 113 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 Nil 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest Nil		Explanation necessaryfor an understandingof the transactions
		Director’s remuneration.	113
	Nil
	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest
	Nil

See chapter 19 for defined terms.

Appendix 5B Page 2

17/12/2010

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

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

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	(400)
	‐
	‐
	(636)
Total	(1,036)

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as	Current quarter	Previous quarter
shown in the consolidated statement of cash flows)	$A’000	$A’000
to the related items in the accounts is as follows.
5.1 Cash on hand and at bank	1,176	1,880
5.2 Deposits at call	‐	‐
5.3 Bank overdraft	‐	‐
5.4 Other (provide details)	‐	‐
Total: cash at end of quarter(item 1.22)	1,176	1,880

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter
	Nil
	Nil

See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 3

Appendix 5B Mining exploration entity quarterly report

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 per security (see note3) (cents)	Amount paid up per security (see note3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter

7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases Placement Performance Rights Issued (c) Decreases through returns of capital, buy‐ backs	562,017,007	562,017,007
	21,075,000 76,103,496		.05 .015
7.5 +Convertible debt securities (description) 7.6 Changes during quarter

7.7 Options (description and conversion factor) Performance Rights 7.8 Issued during quarter Options Performance Rights 7.9 Exercised during quarter Performance Rights 7.10 Expired during quarter	1,000,000 500,000 300,000 6,000,000 7,800,000 12,200,000 9,750,000 15,550,000	Nil Nil Nil Nil Nil Nil Nil Nil	Exercise price 40 cents 30 cents 40 cents 5 cents 5 cents 5 cents Nil Nil	Expiry date 31/01/2014 1/07/2014 27/04/2015 30/09/2015 30/09/2015 30/09/2015 5/06/2019 5/06/2019



7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

See chapter 19 for defined terms.

Appendix 5B Page 4

17/12/2010

Appendix 5B Mining exploration entity quarterly report

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.

==> picture [87 x 38] intentionally omitted <==

Sign here: ............................................................ Date: 31 July 2013 (Company Secretary)

Print name: Ros Shand

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.

== == == == ==

See chapter 19 for defined terms.

17/12/2010 Appendix 5B Page 5

AI assistant

SUNSTONE METALS LTD — Interim / Quarterly Report 2013

65870_rns_2013-07-30_1edc7815-9426-4260-9775-d987bb280a54.pdf

AVALON MINERALS LTD JUNE 2013 QUARTERLY REPORT

HIGHLIGHTS

- - Viscaria Copper Iron Project, Sweden (Avalon 100%)

Corporate

Scoping Study on Viscaria Copper Project Open Pit Mining Scenario

Price Sensitivity

Cost and Revenue Assumptions

Comparison with previous Open Pit Mining Scenario result

Review of Costs and Revenue Assumptions

Potential Value Opportunities and Risks

Mine design

D Zone Underground Mining Potential

Scheduling and stockpiling

Processing

Discovery Zone

Satellite deposits

D Zone Mineral Resource Upgrade

Comparison with D Zone Mineral Resource reported prior to 2012-2013 Winter drill program

EXPLORATION/DRILLING

D Zone Mineral Resource Extension Drill Program

Drilling/Exploration - Regional

Table 16: Drill hole details and assays results.

Bankable Feasibility Study

Approvals

a) MEC

b) Environment Impact Assessment

CORPORATE

Strategic Review Process

Funding

Cash Resources

Shareholder Information

ABOUT AVALON

ABOUT SWEDEN

*Copper Equivalent Formula

Competent Persons Statement

Company Directory

AVALON MINERALS LIMITED ABN 68 123 184 412

Investor Information Contacts:

Shareholder Enquiries:

Registered Office:

Issued capital:

Directors:

Company Secretary:

Appendix 5B

Mining exploration entity quarterly report

Avalon Minerals Limited

Financing facilities available

Estimated cash outflows for next quarter

Reconciliation of cash

Changes in interests in mining tenements

Issued and quoted securities at end of current quarter

Compliance statement

Notes

More from SUNSTONE METALS LTD

SUNSTONE METALS LTD Interim / Quarterly Report 2013