SUNSTONE METALS LTD — Interim / Quarterly Report 2021

Jul 22, 2021

23 JULY 2021

JUNE 2021 QUARTERLY ACTIVITIES REPORT

Bramaderos Gold-Copper Project, Ecuador (Sunstone 87.5%)

• Drilling continued on the Phase 2 program at the Brama gold-copper porphyry with the completion of holes BMDD008, the subsequent wedge hole BMDD008W1 from 347.1m, BMDD009, and commencement of BMDD010

• Assays from the upper part of BMDD008 to 347m and BMDD008W1 returned:

• 505.1m at 0.43g/t gold, 0.1% copper, (0.57g/t AuEq[1] ) and 25.8ppm molybdenum from surface, including

  • 216.9m at 0.61g/t gold, 0.11% copper, (0.77g/t AuEq) and 32ppm molybdenum, from 135.1m, including

    • 84.3m at 0.80g/t gold, 0.11% copper, (0.96g/t AuEq) and 42ppm molybdenum, from 179.7m

  • 113.4m at 0.37g/t gold, 0.15% copper, (0.58g/t AuEq) and 23.9ppm molybdenum, from 347.1m

• BMDD009 intersected a continuously veined porphyry system hosted by diorite in its upper 515m (Assays pending).

• Detailed soil geochemistry at Espiritu has defined several significant silver anomalous areas to the south-east for drilling

El Palmar Porphyry Copper-Gold Project, Ecuador (Sunstone to acquire 100%)

• The El Palmar porphyry copper-gold project in northern Ecuador is located on the same regional structure as the 2.7Bt Alpala copper-gold porphyry deposit (Cascabel Project), and 14km west of the 1Bt Llurimagua copper porphyry deposit

• Drilling at the El Palmar project in northern Ecuador is expected to start soon. Drilling equipment and support infrastructure are on site. Four drill pads have been prepared

• A ground magnetic survey has identified an outstanding drill target with a classic porphyry signature, while relogging and study of 3 historical drill holes, located on the margin of the newlydefined target, has identified the presence of chalcopyrite and bornite in typical porphyry alteration

Corporate Highlights

• A$12.2 million in cash at 30 June 2021

• ~A$11.95 million cash received during the quarter from sales of a portion of Sunstone’s shareholding in Copperstone Resources AB

• A further 8,093,660 shares sold subsequent to 30 June 2021 at an average price of 1.78 SEK per share for ~A$2.2 million cash with remaining 53,544,992 Copperstone shares valued at ~A$13.9 million (1.656 SEK per share)

1 - AuEq is calculated on a gold and copper basis only using metals prices as at 16th June 2021, being US$1,823/oz gold, US$4.32/lb copper using the formula: (gold grade in g/t) + 1.36 * (Cu grade in %). No metallurgical recoveries have been applied to exploration results (See ASX release dated 21st June 2021).

EXPLORATION AND DEVELOPMENT ACTIVITIES

Bramaderos Gold-Copper Project

The Bramaderos Project is located in southern Ecuador and is a joint venture with Cornerstone Capital Resources Inc. (“Cornerstone”, TSXV-CGP). Sunstone is manager of the joint venture and holds an 87.5% interest in the 4,959 hectare Bramaderos Project (Figures 1 and 2) through its subsidiary La Plata Minerales S.A. (“PLAMIN”) (see ASX announcements dated 10[th] April 2017, 28[th] August 2019, and 7[th] January 2020).

The project area has easy access provided by the sealed Pan American Highway that crosses the western part of the concession, has nearby available hydro-power, and gentle topography with an average elevation of around 1,100m above sea level. Porphyry gold-copper and epithermal silver-gold mineralisation outcrops at surface (Figures 1 and 2). The Sunstone team has worked previously with Cornerstone on other projects in Ecuador which have led to significant discoveries and shareholder value growth, and the Sunstone team will work towards repeating that success at Bramaderos.

Brama target:

Drilling continued at the Brama gold-copper porphyry target during the quarter. Holes BMDD008W1 and parent hole BMDD008 were completed and are located on the north-west side of the main Brama system (Figure 3). BMDD008 had intersected a strongly mineralised high-level intrusive breccia body located above the north-west edge of the main Brama system (see ASX announcement dated 22 April 2021). The BMDD008W1 wedge hole extended that intersection by 50m for a total intersection of 505.1m from surface (Figure 4) (see ASX announcement dated 21 June 2021) grading 0.43g/t gold, 0.1% copper, (0.57g/t AuEq1) and 25.8ppm molybdenum. This intersection very likely extends deeper, but still remains to be further tested in the area south and east of BMDD008W1 in similarly magnetic domains (Figures 3 and 4).

The results from holes BMDD008 and BMDD008W1 (Figure 4), further highlight the potential for Brama to host a substantial gold-copper porphyry system (Figure 3). The porphyry plus intrusive breccia zones, at this stage, cover a surface footprint of 350m x 150m, which the Company expects to expand with more drilling.

Drill hole BMDD009 was drilled in the east and central parts of the main Brama porphyry system (Figure 4). It was drilled from the east and towards a modelled deep magnetic anomaly that lies central to the 0.1% Cu contour depicted in Figure 3. BMDD009 intersected a continuously veined porphyry system hosted by diorite in its upper 515m, with visual chalcopyrite associated with intense stockwork veining. Assays are pending and are expected to be released in August along with BMDD010. The drill hole continued to test the deeper magnetic domain, that corresponds to the deeper target in BMDD008 and BMDD008W1 and encountered peripheral stockwork magnetite veinlets that likely explain the magnetic anomaly in the wall rocks south of the main mineralised intrusive body.

The long and well-mineralised sections of holes BMDD001, BMDD002, and BMDD009 indicate that the eastern sector of Brama is defined by strongly veined diorite with moderate magnetic character.

Drill Hole	From (m)	To (m)	Interval (m)	Au (g/t)	Cu (%)	Mo (ppm)	AuEq **(g/t)1 **
BMDD008W1	347.09	505.6	158.5	0.29	0.13	23.9	0.47
including	347.09	460.5	113.4	0.37	0.15	23.9	0.58
Combined
BMDD008+008W1	0.55	505.6	505.1	0.43	0.10	25.8	0.57
BMDD008	0.55	450.45	449.9	0.47	0.10	26.9	0.61
including	2.5	437.1	434.6	0.48	0.10	27.0	0.62
including	5.2	21.0	15.8	0.71	0.08	7.50	0.83
	135.1	437.1	302.0	0.54	0.12	30.4	0.71
including	135.1	264	128.9	0.68	0.10	36.2	0.82
including	179.7	264	84.3	0.80	0.11	42.1	0.96
	328	437.1	109.1	0.44	0.16	27.6	0.67

Table 1: Summary of intervals in drill hole BMDD008W1, and previously reported BMDD008 (see ASX announcements 22 April 2021 and 21 June 2021).

Gold equivalent values are included in Table 1 to enable comparison, in general terms in an early-stage exploration context, to other large lower-grade gold systems, and to other porphyry systems which are often reported in metal-equivalent terms and are invariably gold and copper deposits, with both metals being targeted by exploration.

Drill hole BMDD010 was completed in early July with assays expected in August. It tested several targets including:

• A magnetic anomaly around the eastern rim of the system, with a magnetic character similar to the mineralised intrusive breccia to the west

• The potential southwest extension of the high-grade pod intersected in holes BMDD001, BMDD02 and CURI-03, in the strongly veined diorite

• The potential continuity of high-grade mineralisation between BMDD001 and BMDD005/BMDD008/CURI13, i.e. the relationship between the stockwork mineralisation and the intrusive breccia mineralisation.

- Espiritu silver gold target:

Drill hole ESDD011 at the Espiritu silver-gold target was completed at the end of March, to a depth of 476.35m.

Assay results for holes ESDD010 and 011 are reported below. ESDD010 was drilled from the collar position of holes ESDD001 and 002, towards the northwest and under an extension of the anomalous silver in soil response. The hole intersected intervals of anomalous silver, gold, lead and zinc (Table 2) which generally correspond to areas of surface anomalism.

Hole ESDD011 intersected several narrow zones of anomalous silver, lead and zinc (Figure 6), and one more significant intersection (Table 2), which are interpreted to be the down dip extension of veining in holes ESDD005 and 006 (Figure 6).

Drill Hole	From (m)	To (m)	Interval (m)	Gold (g/t)	Silver (g/t)
ESDD010	1.15	2.00	0.85	0.06	10.44
	6.00	8.00	2.00	0.11	2.91
	23.70	33.00	9.30	0.04	3.80
	46.00	47.00	1.00	0.25	2.66
	56.00	60.00	4.00	0.12	3.82
	132.50	133.00	0.50	0.04	24.00
ESDD011	237.50	239.00	1.50	0.03	66.40
Includes	237.50	238.00	0.50	0.03	142.00

Table 2: Summary of significant intervals in drill holes ESDD010 and 011.

All data from Espiritu are under review to plan the next phase of exploration. This will likely include drilling at Espiritu Southeast (Figure 5) where Espiritu style veining is present at surface and corresponds with a cluster of zinc and silver-in-soil anomalies over a strike length of 400m. It will also look to test recently identified outcropping areas of epithermal alteration within the Bramaderos project.

- El Palmar Porphyry Copper Gold Project

The highly prospective El Palmar copper-gold porphyry project is located 60km north-west of Ecuador’s capital Quito and is well serviced by local roads. Travel time to site from Quito is approximately 3 hours. The property sits on the regionally significant Toachi Fault Zone, in the vicinity of the 1Bt Llurimagua copper-molybdenum porphyry deposit, and in the same regional structural belt that hosts the 2.6Bt Alpala copper-gold porphyry deposit within the Cascabel project (see ASX announcement dated 12 August 2020, figures 1 and 7).

Logistical preparation is well advanced for the commencement of drilling at El Palmar. Sunstone will undertake a Phase 1, 2,000m drilling program in the September Quarter. Initial drilling will target the upper 400m of the system.

Sunstone has identified a compelling copper-gold porphyry target based on the outstanding results of a ground magnetic survey and is supported by a review of historical drill holes which confirmed the presence of a gold and copper porphyry system, with mineralisation starting from surface, containing chalcopyrite and bornite within typical porphyry alteration assemblages.

Processing of recently collected ground magnetic data has defined a large anomaly with a diameter of ~700m exhibiting features consistent with a large porphyry system (Figures 8, 9, and 10). Importantly, the historical drilling completed by Codelco in 2012 was on the margins and away from the newly defined magnetic anomaly, and into country rock (see ASX announcement dated 6th May 2021).

The first drill hole is planned to test the magnetic anomaly west of known mineralisation from historical drilling and to drill under the highest-grade gold in surface rock chips, where values up to 2.24g/t gold and 0.3% copper have been recorded.

In parallel with drilling preparations, a soil sampling program is underway using handheld augur drills to drill through the thin veneer of younger cover (up to 8m thick) to sample the underlying weathered bedrock. This initial program will cover the entire magnetic anomaly and is expected to take 8 weeks to complete.

Equity position in Copperstone Resources AB

As announced on 20 May 2021, Sunstone completed an off-market sale of 70 million Copperstone Resources AB (‘Copperstone’) shares at 0.80 SEK per share (~A$0.123 per share) for A$8.6 million cash. In addition, Sunstone had also sold 12,626,268 shares on-market at an average price of 0.866 SEK per share for a further A$1.7 million. The combined sales of 82.56 million shares at an average price of 0.81 SEK generated A$10.3M in cash.

Subsequent to that announcement Sunstone has sold a further 9,755,861 shares during June 2021 at an average price of 1.031 SEK per share for a further ~A$1.6 million in cash.

Sunstone held 61,638,652 shares in Copperstone Resources as at 30 June 2021, with further sales of 8,093,660 shares subsequent to 30 June 2021 at an average price of 1.78 SEK per share for ~A$2.2 million cash. The remaining 53,544,992 Copperstone shares are currently valued at ~A$13.9 million (1.656 SEK per share).

Southern Finland Gold Portfolio

During the December quarter Sunstone executed an Asset Sale Agreement (“Agreement’) with Dragon Mining Limited (“Dragon”) for Dragon to acquire the Exploration Permit application (ML2018:0082), which fully surrounds Dragon’s Jokisivu gold mine. In accordance with the terms of the Agreement, Dragon paid Sunstone A$75,000 upon execution of the Agreement. During the June quarter, a further payment of A$75,000 was received from Dragon upon the expiration of 6 months from the date of the Agreement (refer to ASX Announcement dated 28 January 2021).

Southern Finland Lithium Portfolio (Sunstone 83.6%)

During the June quarter Sunstone signed a Letter of Intent to divest its Finland Lithium project, including the Kietyönmäki lithium occurrence, to Canadian Securities Exchange-listed United Lithium Corp (‘CSE:ULTH’).

The Finland Lithium project is a joint venture between Sunstone, which has an 83.6% interest, and TSXV-listed Nortec Minerals, which holds a 16.4% interest. ULTH will acquire both joint venture parties’ interests.

The LoI allows for a 75-day exclusivity period during which a definitive agreement is to be negotiated, and due diligence undertaken.

Consideration payable to Sunstone on closing and signing of the Definitive Agreement is C$420,000 cash and 420,000 shares in United Lithium, currently valued at C$331,800 (C$0.79 per share as at 30 June 2021), which converts to approximately A$808,000.

Other than the exclusivity period the Letter of Intent is non-binding and if a definitive agreement is not reached or due diligence is not completed prior to the end of the exclusivity period Sunstone will retain its 83.6% ownership in the project unencumbered.

Tenements

There were no changes in tenements during the quarter.

Corporate

Financial Commentary

The Company’s unaudited cash position for 30 June 2021 was A$12.2 million. The Quarterly Cashflow Report (Appendix 5B) for the period ending 30 June 2021 provides an overview of the Company’s financial activities.

Exploration expenditure for the reporting period was $1.99 million primarily related to the Bramaderos and El Palmar Projects.

Corporate and other expenditure (including property, plant, and equipment) amounted to $544,000. The total amount paid to directors of the entity and their associates in the period (item 6.1 of the Appendix 5B) was $116,000 and includes salary, superannuation, and directors’ fees.

During the quarter $11.95 million was received from the sale of a portion of the shares held in Copperstone.

Sunstone held 61,638,652 shares in Copperstone Resources valued at approximately $11.6 million (1.21 SEK per share) as at 30 June 2021.

Subsequent to 30 June 2021, there were further sales of 8,093,660 shares at an average price of 1.78 SEK per share for ~A$2.2 million cash. The remaining 53,544,992 Copperstone shares are currently valued at ~A$13.9 million (1.656 SEK per share).

As the Company is an exploration entity there is not yet any sales revenue being generated from sale of products. To date Sunstone has primarily funded its activities through issuance of equity securities and it is expected that the Company will be able to fund its future activities through further issuances of equity securities, in addition to the potential sale of Copperstone shares as referred to above.

Shareholder Information

As at 30 June 2021, the Company had 2,209,987,646 fully paid ordinary shares on issue and 2,129 shareholders.

Notes Specific – June 2021 Quarter ASX Announcements

The following announcements, which relate to information in this Quarterly Report, were lodged with the ASX during the Quarter. Further details (including JORC 2012 Code Reporting Tables, where applicable) for the results summarised above can be found in the announcements:

Brama - Drilling intersects 505m of mineralised porphyry	21/06/2021
A$10.3 million from part sell down of Copperstone investment	20/05/2021
El Palmar copper gold porphyry - compelling drill target	06/05/2021
Sunstone agrees to sell Finland Lithium project	05/05/2021
Brama drillhole - 450m gold-copper intersection from surface	22/04/2021

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Figure 1: Location of Bramaderos and El Palmar projects, Ecuador

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Figure 2: Bramaderos concession showing the location of the 6 porphyry gold-copper targets and the Espiritu epithermal silver-gold-lead-zinc target.

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Figure 3: Brama gold-copper porphyry plan view showing higher grade gold domains within a broad lower grade copper halo covering 700m x 500m. Also showing locations and results for holes BMDD008 and W1, locations for completed holes 9 and 10, and hole-in-progress BMDD011.

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Figure 4: Brama cross section showing geological model and relationship between stockwork veined diorite mineralisation and intrusive breccia hosted mineralisation.

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Figure 5: Status of the broader Espiritu target area with infill soil geochemistry highlighting multiple anomalies for followup.

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Figure 6: Cross section showing drill holes ESDD005, 006, and ESDD011.

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Figure 7: Location of the El Palmar project relative to the Llurimagua and Cascabel Alpala deposits, and the Toachi fault system.

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Figure 8: RTP image of the El Palmar ground magnetic data showing the large ~700m diameter anomaly (in magenta) that is consistent with the signature of a porphyry system. The first drill hole planned at El Palmar - EPDD001 - is being collared just east of the historic EPD-02 collar and will be drilled towards the NNW. Other prepared drill collars are shown in yellow. Historical drill holes EPD-01 – 03 have copper assays plotted down hole – blue, green, and yellow show Cu <0.1%, red and magenta show Cu >0.1%

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Figure 9: Interpretation of Figure 8 showing the main El Palmar target and a satellite target based on interpretation of magnetics data and supporting datasets.

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Figure 10: 3-D model of the El Palmar magnetic target sliced on the plane of the proposed drilling. Surface rock chip and soil sampling results are shown at surface above the magnetic target.

TENEMENT SCHEDULE

At the end of the quarter, the Company holds the following tenements:

Gold-Copper Tenements – Ecuador

Tenement Holder	Tenement Name	Location	Status	Sunstone Ownership
La Plata Minerales S.A.	Bramaderosˆ	Loja, Ecuador	Granted	87.5%
Golden Exploration Ecuador S.A.	Los Mandariyacus (El Palmar)@	Imbabura, Ecuador	Granted	0%

Lithium Tenements – Finland

Tenement Holder	Tenement Name	Location	Status	Sunstone Ownership
Litiumloydos Oy	Tammela*	Somero, Finland	Granted	83.6%
Litiumloydos Oy	Ojalankulma*	Somero, Finland	Application	83.6%

ˆSunstone announced on 7 January 2020 that the terms of the Earn-in Joint Venture with TSX-V listed Cornerstone Capital Resources (TSXV:CGP) had been amended to provide Sunstone with an immediate 87.5% interest and Cornerstone with a loan carried 12.5% interest in La Plata Minerales S.A. (PLAMIN) the holder of the Bramaderos concession.

@ Sunstone announcement 12 August 2020 regarding a Staged Acquisition Agreement for the El Palmar project.

*Subject to earn-in joint venture with Nortec Minerals Corp. Sunstone signed an LOI during the June 2021 quarter to divest its interest in the Finland Lithium project.

Competent Persons Statement

The information in this report that relates to exploration results is based upon information reviewed by Dr Bruce Rohrlach who is a Member of the Australasian Institute of Mining and Metallurgy. Dr Rohrlach is a full-time employee of Sunstone Metals 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 2012 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr Rohrlach consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

DIRECTORY

SUNSTONE METALS LIMITED ABN 68 123 184 412

Web site: www.sunstonemetals.com.au Email: info@sunstonemetals.com.au

Stock Exchange Listing

Australian Stock Exchange

ASX Code: STM

Investor Information Contacts:

Mr Gavin Leicht - Company Secretary Sunstone Metals Limited Tel: 07 3368 9888 Email: gleicht@sunstonemetals.com.au

Shareholder Enquiries:

Registered Office:

Share registry matters should be directed to:

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

9 Gardner Close Milton Queensland 4064 Phone: 07 3368 9888 Fax: 07 3368 9899

Issued capital:

Ordinary shares: 2,209,987,646 (STM) (at 30 June 2021)

Directors:

Company Secretary:

Graham Ascough – Non-Executive Chairman Gavin Leicht Malcolm Norris – CEO/Managing Director Stephen Stroud - Non-Executive Director

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

Sunstone Metals Limited T: 07 3368 9888 E: info@sunstonemetals.com.au www.sunstonemetals.com.au

TABLE 1 – Section 1: Sampling Techniques and Data

Criteria	JORC Code explanation	Commentary
Sampling techniques	• Nature and quality of sampling (e.g. cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as downhole gamma sondes, or handheld XRF instruments, etc.). These examples should not be taken as limiting the broad meaning of sampling.	• The results announced here are from soil samples and drilling samples. The drill core sampling was carried out using half core, generally at 1m intervals and where appropriate sampled to 0.3m intervals.
	• Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.	• Soil samples were taken on a grid basis • Core recovery was good, and core aligned prior to splitting.
	• Aspects of the determination of mineralisation that are Material to the Public Report. In cases where ‘industry standard’ work has been done this would be relatively simple (e.g. ‘reverse circulation drilling was used to obtain 1 m samples from which 3 kg was pulverised to produce a 30 g charge for fire assay’). In other cases, more explanation may be required, such as where there is coarse gold that has inherent sampling problems. Unusual commodities or mineralisation types (e.g. submarine nodules) may warrant disclosure of detailed information.	• The drill samples from Espiritu were dried, crushed to 70% passing 2mm, Split 1000g and pulverised to 85% passing 75microns. A 20g portion of this sample was used for multi-element analysis (IMS-230) and a 30g sample for Fire Assay Au (FAS-111).
Drilling techniques	• Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g. core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).	• The Espiritu target area has not been drilled by any phases of historical exploration. • Current drilling by Sunstone is diamond core drilling and has drilled to various depths up to 301m. The diamond core was drilled delivering either HTW (70.9mm) or NTW (56mm) core. Drill core is oriented usinga Reflex ACT II tool for bottom of hole.
Drill sample recovery	• Method of recording and assessing core and chip sample recoveries and results assessed.	• Diamond core recovery data for the Espiritu drilling was measured for each drill run and captured in a digital logging software package. The data has been reviewed and core recovery was approximately 100% throughout.
	• Measures taken to maximise sample recovery and ensure representative nature of the samples.	• Core recovery at Espiritu was good, no extra measures were taken to maximise sample recovery.
	• Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.	• No relationship between sample recovery and grade has been established.
Logging	• Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.	• Drill samples were logged for lithology, weathering, structure, mineralogy, mineralisation, colour, and other features. Logging and sampling were carried out according to Sunstone’s internal protocols and QAQC procedures which comply with industry standards.
	• Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc.) photography.	• Drill samples are logged for lithology, weathering, structure, mineralogy, mineralisation, colour, and other features.
	• The total length and percentage of the relevant intersections logged.	• The drill holes are logged in full, from start to finish of the drill hole.
Sub-sampling techniques and sample preparation	• If core, whether cut or sawn and whether quarter, half or all core taken.	• Half core was used to provide the samples that were submitted for assay. Quarter core samples were taken ~1 in every 28 samples for duplicate sampling. The remaining core is left in the core trays.
	• If non-core, whether riffled, tube sampled, rotary split, _etc. and whether sampled wet or dry. _	• Standard soil, rock chip samples, and channel samples.
	• For all sample types, the nature, quality and appropriateness of the sample preparation technique.	• Surface and drill core samples from Espiritu were sent to the LAC y Asociados Cia. Ltda. Sample Preparation Facility in Cuenca, Ecuador for sample preparation. The standard sample preparation for drill core samples (Code PRP-910) is: Drying the sample, crushing to size fraction70%<2mmand splitting the sample to a250g

	Criteria	JORC Code explanation	Commentary
			portion by riffle or Boyd rotary splitter. The 250g sample is then pulverised to >85% passing 75 microns and then split into two 50g pulp samples. Then one of the pulp samples was sent to the MS Analytical Laboratory in Vancouver (Unit 1, 20120 102nd Avenue, Langley, BC V1M 4B4, Canada) for gold and base metal analysis. • The sample preparation is carried out according to industry standard practices using highly appropriate sample preparationtechniques.
		• Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.	• Sunstone used an industry standard QAQC programme involving Certified Reference Materials “standards” and blank samples, which were introduced in the assay batches. • Standards (Certified Reference Materials) or analytical blanks were submitted at a rate of 1 in 28 samples. Field duplicates were also taken at a rate of approximately 1 in 28 samples. • The check or duplicate assay results are reported along with the sample assay values in the final analysis report.
		• Measures taken to ensure that the sampling is representative of the in-situ material collected, including for instance results for field duplicate/second-half sampling.	• For diamond core, the routine sample procedure is to always take the half/quarter core to the right of the orientation line (looking down hole) or the cut line (in cases where the orientation line was not reliable). • Once assay results are received the results from duplicate samples are compared with the corresponding routine sample to ascertain whether the sampling is representative.
		• Whether sample sizes are appropriate to the grain size of the material being sampled.	• Sample sizes are considered to be appropriate for the style of sampling undertaken and the grainsize of the material, and correctly represent the style and type of mineralisation at the exploration stage.
	Quality of assay data and laboratory tests	• The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.	• Sunstone uses a fire assay gold technique for Au assays (FAS-111) and a four acid multi element technique (IMS-230) for a suite of 48 elements. FAS- 111 involves Au by Fire Assay on a 30-gram aliquot, fusion and atomic absorption spectroscopy (AAS) at trace levels. IMS-20 is considered a near total 4 acid technique using a 20g aliquot followed by multi- element analysis by ICP-AES/MS at ultra-trace levels. • This analysis technique is considered suitable for this style of mineralisation.
		• For geophysical tools, spectrometers, handheld XRF instruments, etc., the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.	• Handheld XRF data are used as a guide to areas of potential mineralisation and samples from these areas are sent for laboratory analysis as described above.
		• Nature of quality control procedures adopted (e.g. standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (i.e. lack of bias) and precision have been established.	• Standards, blanks and duplicates are inserted ~1/28 samples. The values of the standards range from low to high grade and are considered appropriate to monitor performance of values near cut-off and near the mean grade of the deposit. • The check sampling results are monitored, and performance issues are communicated to the laboratoryif necessary.
	Verification of sampling and assaying	• The verification of significant intersections by either independent or alternative company personnel.	• Procedure checks have been completed by the Competent Person for exploration results for this announcement.
		• The use of twinned holes.	• Twin holes have not been drilled in these areas.

	Criteria	JORC Code explanation	Commentary
		• Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.	• Sunstone sampling data were imported and validated using Excel.
		• Discuss any adjustment to assay data.	• Assay data were not adjusted. Core loss intervals are assigned assayvalues of zero wherepresent.
	Location of data points	• Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.	• Sample co-ordinates are located by GPS and for trench samples measured along the length of the trench.
		• Specification of the grid system used.	• Ecuadorprojectionparameters: Parameter Value Reference Ellipsoid International 1924 Semi Major Axis Inverse Flattening (1/f) Type of Projection UTM Zone -17S (Datum PSAD56) Central Meridian: -81.0000 Latitude of Origin 0.0000 Scale on Central Meridian 0.9996 False Northing 10000000 False Easting 500000
			Parameter	Value
			Reference Ellipsoid	International 1924
			Semi Major Axis
			Inverse Flattening (1/f)
			Type of Projection	UTM Zone -17S (Datum PSAD56)
			Central Meridian:	-81.0000
			Latitude of Origin	0.0000
			Scale on Central Meridian	0.9996
			False Northing	10000000
			False Easting	500000
		• Quality and adequacy of topographic control.	• The topographic control was compared against published maps and satellite imagery and found to be goodquality.
	Data spacing and distribution	• Data spacing for reporting of Exploration Results.	• The drill core samples were collected from two diamond drill holes from the Espiritu target, and with samplelengthgenerallyranging between0.3-1m.
		• Whether the data spacing, and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.	• The data from these samples does not contribute to any resource estimate nor implies any grade continuity.
		• Whether sample compositing has been applied.	• No sample compositing was done.
	Orientation of data in relation to geological structure	• Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.	• Drilling orientations were appropriate for the interpreted geology providing representative samples.
		• If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.	• No sampling bias is expected at this stage. There has been no historical drilling on this target.
	Sample security	• The measures taken to ensure sample security.	• Sunstone sampling procedures indicate individual samples were given due attention. • Sample security was managed through sealed individual samples and sealed bags of multiple samples for secure delivery to the laboratory by permanent staff of the joint venture. • MS Analytical is an internationally accredited laboratory that has all its internal procedures heavily scrutinised in order to maintain their accreditation. MS Analytical is accredited to ISO/IEC 17025 2005 Accredited Methods.
	Audits or reviews	• The results of any audits or reviews of sampling techniques and data.	• Sunstone’s (and previously Cornerstone’s) sampling techniques and data have been audited multiple times byindependent miningconsultants during

Criteria	JORC Code explanation	Commentary
		various project assessments. These audits have concluded that the sampling techniques and data management are to industry standards. • All historical data has been validated to the best degreepossible and migrated into a database.

TABLE 1 – Section 2: Exploration Results

Criteria	JORC Code explanation	Commentary
Mineral tenement and land tenure status	• Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.	• The Bramaderos Exploration Concession is located in the Loja Province of southern Ecuador. The concession was granted to La Plata Minerales S.A. (“PLAMIN”) in January 2017. PLAMIN is a subsidiary of Sunstone Metals Ltd. The concession is subject to a Joint Venture between Cornerstone Capital Resources Inc. and Sunstone Metals Ltd. There are no wilderness areas or national parks or areas of environmental significance within or adjoining the concession area. There are no native title interests.
	• The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.	• The Bramaderos Exploration Concession was granted to La Plata Minerales S.A. (“PLAMIN”) in January 2017. PLAMIN is now a subsidiary of Sunstone Metals Ltd. The Bramaderos Concession is subject to a Joint Venture between Sunstone Metals and Cornerstone. Sunstone has an 87.5% interest in the JV.
Exploration done by other parties	• Acknowledgment and appraisal of exploration by other parties.	• The historic exploration at Bramaderos was completed by various groups over the period 1970-1984, 2001-2002 and 2004-2007. Most of the readily available historic data has been acquired and compiled into databases and a GIS project. Exploration by other parties has included stream sediment surveys, geological mapping, rock chip sampling (888 samples) and grid-based soil sampling (1324 samples), trenching and channel sampling (17 trenches), ground magnetic surveys (31 line kilometres), electrical IP surveys and diamond drilling (10426m). • No significant historical exploration has been undertaken in the Espiritu target area.
Geology	• Deposit type, geological setting and style of mineralisation.	• The deposit style being explored for includes intrusion- related and stockwork hosted porphyry Au-Cu systems plus epithermal gold-silver-polymetallic veins. The setting at Espiritu is a volcanic arc setting of Cretaceous age intrusions.
Drill hole Information	• A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: a. easting and northing of the drill hole collar b. elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar c. dip and azimuth of the hole d. down hole length and interception depth e. hole length.	• Details of the samples discussed in this announcement are in the body of the text. • See Figures 1-3 for the location of soil sampling, drilling, and trenching activities at Espiritu, and nearby areas.
	• If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.	• Information included in announcement.

	Criteria	JORC Code explanation	Commentary
	Data aggregation methods	• In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (e.g. cutting of high grades) and cut-off grades are usually Material and should be stated.	• Weighted averages were calculated over reported intervals according to sample length. • No grade cut-offs were applied.
		• Where aggregate intercepts incorporate short lengths of high-grade results and longer lengths of low-grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.	• No aggregating of intervals undertaken at this stage.
		• The assumptions used for any reporting of metal equivalent values should be clearly stated.	• Metal equivalents are not presented.
	Relationship between mineralisation widths and intercept lengths	• If the geometry of the mineralisation with respect to the drill-hole angle is known, its nature should be reported.	• Figures 2 - 10 shows the interpreted strike orientation of the mineralised lodes based on mapping and interpretation of detailed magnetic data.
		• If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (e.g. ‘down hole length, true width not known’).	• True widths of mineralised lodes are not known at this stage.
	Diagrams	• Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported. These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.	• See Figures 2 - 10 for maps showing distribution of samples.
	Balanced reporting	• Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.	• Figures 2 - 10 above show the current interpretations of geology.
	Other substantive exploration data	• Other exploration data, if meaningful and material, should be reported) including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.	• Figures 2 - 10 above show various datasets that are being used to identify target areas and to guide current and future drilling.
	Further work	• The nature and scale of planned further work (e.g. tests for lateral extensions or depth extensions or large- _scale step-out drilling). _	• The planned exploration program is outlined in the quarterly report.
		• Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.	• See Figures2 - 10which show areas for further exploration.

Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Name of entity SUNSTONE METALS LIMITED ABN Quarter ended (“current quarter”) 68 123 184 412 30 JUNE 2021

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) exploration & evaluation (if expensed) (b) development (c) production (d) staff costs (e) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	(309) (243) 20 12	(1,550) (647) 20 152
	(544)	(2,024)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) entities (b) tenements (c) property, plant and equipment (d) exploration & evaluation (if capitalised) (e) investments (f) other non-current assets	(0) (0) (1,987)	(242) (0) (6,144)

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
2.2 Proceeds from the disposal of: (a) entities (b) tenements (c) property, plant and equipment (d) investments (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	11,949	4,153 27 12,708
	9,962	10,502
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities
	0	0
4. Net increase / (decrease) in cash and cash equivalents for the period
4.1 Cash and cash equivalents at beginning of period 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	2,749 (544) 9,962 0	3,686 (2,024) 10,502 0

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of period	(1)	2
	12,166	12,166
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	2,129 10,037	2,540 209
	12,166	2,749
6. Payments to related parties of the entity and their associates 6.1 Aggregate amount of payments to related parties and their associates included in item 1 6.2 Aggregate amount of payments to related parties and their associates included in item 2 Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must and an explanation for, such payments
		Current quarter $A'000
		116
		include a description of,

Director fees and Managing Director salary.

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 7.1 Loan facilities 7.2 Credit standby arrangements 7.3 Other (please specify) 11,619 0 7.4 Total financing facilities 11,619 0 7.5 Unused financing facilities available at quarter end 11,619 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	11,619	0
	11,619	0
Shares in Copperstone Resources AB listed on Nasdaq First North Sweden (COPP B). 61,638,652 shares at 1.21 SEK per share (remaining shares and closing share price as at 30 June 2021) valued at 11.6 million. Copperstone share price has increased significantly post 30 June 2021 and as at date of this report is 1.656 SEK per share. Subsequent to 30 June 2021, there were further sales of 8,093,660 shares at an average price of 1.78 SEK per share for ~A$2.2 million cash. The remaining 53,544,992 Copperstone shares are currently valued at ~A$13.9 million (1.656 SEK per share).

8. Estimated cash available for future operating activities	8. Estimated cash available for future operating activities	$A’000
8.1 Net cash from / (used in) operating activities (Item 1.9) 8.2 Capitalised exploration & evaluation (Item 2.1(d)) 8.3 Total relevant outgoings (Item 8.1 + Item 8.2) 8.4 Cash and cash equivalents at quarter end (Item 4.6) 8.5 Unused finance facilities available at quarter end (Item 7.5) 8.6 Total available funding (Item 8.4 + Item 8.5) 8.7 Estimated quarters of funding available (Item 8.6 divided by Item 8.3)		(544) (1,987) (2,531) 12,166 11,619 23,785
		9
8.8 If Item 8.7 is less than 2 quarters, please provide answers to the following questions: 1. Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?
	Answer: N/A

Answer: N/A

1. Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer: N/A

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 5B

Mining exploration entity or oil and gas exploration entity quarterly cash flow report

1. Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer: N/A

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: ........23 July 2021......................................................

Authorised by: ....Gavin Leicht – Company Secretary......................... (Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, 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. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 5B (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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