SUNSTONE METALS LTD — Investor Presentation 2012

Oct 25, 2012

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AVALON MINERALS LTD
Investor Presentation
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October 2012
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1

AVALON MINERALS

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AVALON MINERALS
RUSSIA
Narvik
Kiruna
� Viscaria Cu-Fe Project Kiruna Fe Mine
Key Assets:
Malmberget Fe Mine
Aitik Cu Mine
• Norwegian
Viscaria Copper Project Sea
(100%) Lulea
FINLAND
Skelleftea
Ronnskar
• Cu-Pb smelter
Viscaria Regional
Umea Kokkola
Exploration Ostersund Zn smelter
NORWAY
Gulf of
• SWEDEN Bothnia
HoA to acquire
Pori
Discovery Zone from Cu refinery Harjavalta
Cu smelter
Falun Gavle
Hannans Reward Ltd Odda
Zn smelter Helsinki
Oslo
Karistad
Stockholm
ESTONIA
Mariestad Nykoping
Goteborg
Jonkoping
North
LATVIA
Sea
Halmstad
Kalmar
DENMARK
Baltic
Kristianstad
Sea LITHUANIA
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2

COMPANY SNAPSHOT

Capital Structure

330,873,602 shares Share Price: $0.085 Market Capitalisation circa A$28M Cash $2.2M

Share Register

Abu Sahid Bin Mohamed 15.03% Siew Mun Chuang 8.67% Galena Fund 6.02% Lim Heng Suan 5.33% JP Morgan Nom 5.20% Top 10 holders 49% of share capital

Share Price Chart

Board of Directors

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Share Price Volume Abu Sahid Bin Mohamed – Chairman
('000)
$0.16 12,000 Siew Mun Chuang – Deputy Chairman
$0.14
10,000
$0.12 Jeremy Read – Managing Director
8,000
$0.10
$0.08 6,000 Seng Han Garry Goh – Non Exec Director
$0.06
4,000
$0.04 Paul Niardone – Non Exec Director
2,000
$0.02
$0.00 0 Siew Mun Wai – Non Exec Director
Sep 11 Nov 11 Dec 11 Feb 12 Mar 12 Apr 12 May 12 Jul 12 Aug 12 Sep 12
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3

AVALON’S OBJECTIVES

• Minimum of 500% increase to shareholder value within a 2-4 year time period

• Increase Viscaria Project NPV to >$300M and IRR>30%

• Demonstrate ability to produce >25,000tpa of Cu

• Complete BFS and Permit Project for Development

• Select development path which maximises returns for shareholders

4

PROVEN MANAGEMENT AND TRACK RECORD

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Volume
Share Price
� ('000)
Jeremy Read (Managing Director) and Dr Quinton Hills
(Exploration Manager) appointed in early 2012 $2.00$1.80 80,00070,000
$1.60
60,000
$1.40
� Demonstrated track record of exploration success and $1.20 DML 400% return 50,000
increasing shareholder wealth in small-mid cap resource $1.00$0.80 40,00030,000
$0.60
companies: 20,000
$0.40
1. $0.20 10,000
Discovery Metals (DML.ASX)
$0.00 0
•
Founder and ex MD of DML 2003-2008;
•
Successfully secured the Boseto Project;
•
Oversaw the resource growth from 20Mt @
1.2% Cu to 103Mt @ 1.4% Cu and financing Volume
Share Price
('000)
feasibility studies;
$0.16 8,000
• Remains a Non-Executive Director; and MII 700% return
$0.14 7,000
• DML currently subject of a +$800m takeover $0.12 6,000
bid. $0.10 5,000
$0.08 4,000
2.
Meridian Minerals (MII.ASX) $0.06 3,000
• MD from 2009-2011; $0.04 2,000
$0.02 1,000
• Secured the Lennard Shelf Lead-Zinc
$0.00 0
Project; and
•
Successfully negotiated successful takeover
Dec 03 Dec 04 Nov 05 Nov 06 Oct 07 Oct 08 Sep 09 Sep 10 Aug 11 Aug 12
Feb 09 Aug 09 Nov 09 Feb 10 May 10 Sep 10 Dec 10 Mar 11 Jun 11 Oct 11
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• Successfully negotiated successful takeover by Chinese in late 2011.

5

SWEDEN – ATTRACTIVE MINING DESTINATION

Infrastructure

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� 4km from mining centre of Kiruna (pop.
Railway
23,000)
Powerline
� Nearby smelters
Tenement
� Heavy haulage railway
� Ports – Narvik (ice free), Luleå
� Power (3c/Kwatt hour)
Sweden Sovereign Risk
� No. 2 on Resource Stocks World Risk
Survey
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• No. 7 on Fraser Institute Ranking for 20112012

• 26.3% company tax rate decreasing to 22% with NO royalties

6

VISCARIA COPPER PROJECT RESOURCE*

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A ZONE
21.6Mt @ 1.5% Cu
Inc. 9.5Mt @ 2.7% Cu
B Zone B ZONE
19.7Mt @ 0.8% Cu
A Zone
D Zone
D ZONE
14.8Mt @ 26% Fe
5.4Mt @ 0.9% Cu
TOTAL RESOURCE
46.6Mt @ 1.0% Cu
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19.7Mt @ 0.8% Cu D ZONE 14.8Mt @ 26% Fe 5.4Mt @ 0.9% Cu TOTAL RESOURCE 46.6Mt @ 1.0% Cu 520kt contained Cu.

• See slide 27 for the JORC Classification of Mineral Resources

7

VISCARIA PROJECT HISTORY

• World-class Iron Oxide Copper Gold (IOCG) and iron province.

• Discovered in the 1970’s.

• 15 years historical production from 1982 to 1997 at the A Zone via combined OP/UG operation (Outokumpu). Produced a 25% concentrate.

• Production of 12.5Mt of 2.3% Cu.

• AVI acquired Viscaria from Phelps Dodge in 2008.

• Previous focus solely on open pit potential with limited exploration done at depth.

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8

VISCARIA LAYOUT

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A Zone
Tailings Dam
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Processing
Plant Site
Power Line
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Portal
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9

EXPLORATION STRATEGY

• Understand controls on high grade (>2% Cu) mineralisation.

• Initial 2,000m drill program has identified resource growth potential exists.

• Scoping Study has outlined technical and economic viability of open pit and underground operations.

• Intensive drill program planned to commence at A and D Zones to double high grade (>2% Cu) mineral resources.

• Test high priority regional exploration targets.

• Fully permit project including environmental approvals.

10

SCOPING STUDY OUTCOMES*

• Project is viable at $3.25/lb Cu and US$150/t Fe pellets.

• ‘Base Case’ NPV of A Zone and D Zone open pits currently stands at US$61M.

• Three ‘development cases’ expected to be underwritten by resource growth following planned 25,000m drill program and have the potential to add up to ~$140m in value:

• ‘Development Case A’ - D Zone open pit extension increases NPV by US$50M

• ‘Development Case B’ - A Zone underground adds US$59M to NPV

• ‘Development Case C’ - D Zone underground adds US$28M to NPV

• Acquisition of Hannans Reward ‘Discovery Zone’ Mineral Resource:

• adds 4 years to mine life

• achieves copper production of 25,000tpa

• adds up to $100M to NPV

• Lower quartile C1 cash cost Cu producer after Fe credits (US$0.61/lb).

• Pathway defined to deliver project NPV of >$300M following upcoming drill program.

• 10% increase to Cu and Fe prices increases NPV to $442M.

• Refer to the Company’s ASX release dated 11 October 2012 detailing Scoping Study Results.

• Development Cases A, B, and C contain exploration targets - refer to slide 29.

11

SCOPING STUDY ANALYSIS (US$3.25/lb Cu, US$150/t Fe)

	Scenario	Base Case	Devt Case A	Devt Case B	Devt Case C	Devt Case D
	Tonnage and Grade	11.0 Mt @ 0.50% Cu 22.2% Fe	15.5 Mt @ 0.46% Cu 23.1% Fe	18.5 Mt @ 0.80% Cu 19.4% Fe	20.2 Mt @ 0.86% Cu 20.0% Fe	28.2Mt @ 0.7% Cu, 24.7% Fe
	Optimum Mining Rate
		2.1 Mtpa	3.0 Mtpa	3.3 Mtpa	3.1 Mtpa	3.5 Mtpa
	Mine Life	5.5 years	5.3 years	5.6 years	5.6 years	9.5 years
	Annual Copper Production
		9,400 t	13,500 t	26,200	25,500	24,800
	Annual Iron Production
		382,000 t	585,000	509,000	519,000	919,000
	Pre-Production Capex
		USD 144 M	USD 179 M	USD 201 M	USD 212 M	USD 193M
	Life-of-Mine Capex
		USD 155 M	USD 194 M	USD 315 M	USD 350 M	USD 369M
	C1 Cash Cost (net of Fe Credits)
		US$0.65/lb	US$0.47/lb	US$1.03/lb	US$1.03/lb	US$0.61/lb
	NPV10% REAL	USD 61 M	USD 111 M	USD 170 M	USD 198 M	USD 298 M
	NPV at Prices + 10%
		USD 114 M	USD 186 M	USD 272 M	USD 312 M	USD 442 M
	NPV at Prices - 10%
		USD 8 M	USD 37 M	USD 68 M	USD 84 M	USD 153M

12

DEVELOPMENT CASES – RESOURCE EXTENSIONS

			Mineral Resource Extension
		Tonnage and Grade
	Parameter			How
		11.0 Mt @ 0.5% Cu,22.2% Fe
	Base Case
		15.5 Mt @ 0.46% Cu,23.1% Fe	4.5 Mt @ 0.38% Cu,25.4% Fe	D Zone +300m strike,35m depth
	Development Case A
				Extend A Zone underground 300- 500m depth
		18.5 Mt @ 0.80% Cu, 19.4% Fe	3.0 Mt @ 2.5% Cu
	Development Case B
		20.2 Mt @ 0.86% Cu,20.0% Fe	1.75 Mt @ 1.6% Cu,26% Fe	Extend D Zone below 175m depth
	Development Case C
		28.2 Mt @ 0.70% Cu,24.7% Fe	8 Mt @ 0.3% Cu, 36.8% Fe	Discovery Zone Acquisition
	Development Case D

13

D ZONE EXTENSIONS (DEPTH AND STRIKE)

• Open Pit:

• Objective is to extend resource 300m along strike and 35m down dip.

• Resource base will increase from 9.6Mt to 14.1Mt.

• Underground:

• Objective is to extend resource a further 150m further down dip.

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CuEq, 6.4m @ 2.4% CuEq
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500m

*See slide 28 for actual assay results used to calculate Copper equivalent (CuEq)

14

D ZONE CROSS-SECTION (Copper and Iron)

� Open at depth, displaying extension potential.

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VDD0129
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15

*See slide 28 for actual assay results used to calculate Copper equivalent (CuEq)

A ZONE DRILLING HAS INDICATED OPEN AT DEPTH

• A Zone Extensional Drilling – 2 holes, 2 high grade intersections

• Potential for additional mineralisation

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16

� Discovery Zone acquisition

EXPLORATION STRATEGY

• Binding HoA signed with Hannans Reward for total payment of $4m subject to completion of due diligence

• • Current JORC of 10.9Mt @ 0.3% Cu and 38.7% Fe*

• 10kms (trucking distance) from Viscaria

• • Potential to add up to $100m in value and bring overall project potential NPV to $300m#

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• Extend proposed mine life to 9.5 years

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See slide 27 for the JORC Classification of Mineral Resources.
# See ASX release dated 11 October 2012 detailing Scoping
Study Results.
17
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DISCOVERY ZONE MINERALISATION SIMILAR TO D ZONE

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Discovery Zone Cu-Fe

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D Zone Cu-Fe

18

HIGHLY COMPETITIVE C1 CASH COST PROFILE

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� T
CASES B & D
US$1.03/lb
BASE CASE US$0.65
CASE D US$0.61
CASE A US$0.47
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19

REGIONAL EXPLORATION TARGETS

• Viscaria Regional Exploration • 720km² tenure, 100km of cumulative strike

• Heli-EM to define drill targets • High quality targets defined

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Viscaria
10km
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20

DEVELOPMENT TIMELINE

	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences	Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Initial Drill Program ✔ Scoping Study ✔ Major Drill Program to increase High Grade Copper Resources Drill Program to test Regional Targets Complete BFS Finance Project Construction Production Commences
		Q3 2012	Q4 2012	Q1 2013	Q2 2013	Q3 2013	Q4 2013	Q1 2014	Q2 2014	Q3 2014	Q4 2014	Q1 2015	Q2 2015	Q3 2015	Q4 2015	Q1 2016	Q2 2016
	Initial Drill Program		✔
	Scoping Study		✔
	Major Drill Program to increase High Grade Copper Resources
	Drill Program to test Regional Targets
	Complete BFS
	Finance Project
	Construction
	Production Commences

21

OBJECTIVES FOR UPCOMING DRILL PROGRAM

• Increase D Zone resource base by 4.5Mt to 15.5Mt

• 3Mt @ 2.5% Cu defined at A Zone (underground mining)

• Assess underground mining potential at D Zone

• Increase mine life to +10 years

• Confirm mineral resources to underpin +US$300M project NPV

• Test best regional exploration targets

• 25,000m of drilling, budget $10M

• Set to commence in November 2012, complete by June 2013

22

SUMMARY

• Objective is to achieve +500% value creation within 2-4 years

• Management with proven track record

• Sweden a Top 10 mining destination with excellent infrastructure

• Clear pathway defined, potential to increase Viscaria Project NPV to +$300M

• Low risk Mineral Resource extension drill program defined

• Acquisition of the Discovery Zone Cu-Fe Mineral Resource has the potential to add $100M in value

• High quality regional exploration targets to be tested

• Aggressive drill program set to commence to define additional resource

• Abundant news flow

23

CONTACT

Jeremy Read jeremy.read@avalonminerals.com.au Mobile: +61 409 484 322 ASX Code: AVI

www.avalonminerals.com.au

24

APPENDIX: SCOPING STUDY ECONOMIC PARAMETERS

	Parameter	Unit	Value
	Overallpit slope angle	Degrees	55
	Copper Price	US$/t	US$7,165
	Magnetite Price	US$/t	US$150
	Mining Cost(ore)	US$/t	US$4.55
	Mining Cost(waste)	US$/t	US$4.55
	Mining Recovery	%	95%
	Mining Dilution	%	5%
	Metallurgical Recovery	% Cu	90%
		% Fe	76%
	Concentrate Grade	% Cu	25%
		% Fe	69%
	Processing Costs	US$/t ore	US$12.04
	Admin Costs	US$/t ore	US$D3.08
	Copper Con Freight	US$/DMT	US$15.75
	Payable Copper	% Cu contained	98%
	Payable Magnetite	% Fe contained	98%

25

APPENDIX: PRICE OF FE PELLETS

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26

MINERAL RESOURCES

	Resource Name	JORC Classification	Tonnes (t)	Cu Grade (%)	Cu Metal (t)
	A Zone*	Measured	14,439,000	1.66	239,000
		Indicated	4,690,000	1.22	57,000
		Inferred	2,480,000	1.03	26,000
		Subtotal	21,609,000	1.49	322,000
	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	19,650,000	0.76	150,000
	D Zone Cu Resource	Indicated**	3,500,000	0.94	32,900
		Inferred**	1,870,000	0.80	14,960
		Subtotal	5,370,000	0.89	47,860
	Overall Cu	Total	46,629,000	1.01	519,860

	Resource Name	JORC Classification	Tonnes (t)	Fe Grade (%)	Fe Mass Recovery (%)	Fe Metal (t)
	D Zone Fe Resource	Indicated***	9,470,000	25.90	31.3	2,964,110
		Inferred***	5,320,000	25.60	30.8	1,638,560
	Overall Fe	Total	14,790,000	25.80	31.1	4,602,670

• 2011 Mineral Resources for A Zone and B Zone are reported above a cut-off grade of 0.4% Cu. ** 2012 Copper Mineral Resource for D Zone above a cut-off grade of 0.4% Cu.

*** 2012 Iron Mineral Resource for D Zone above a cut-off grade of 15% Fe Mass Recovery.

27

ADDITIONAL INFORMATION AND ATTRIBUTION

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 indicates that both copper (Cu) and iron (Fe) have a reasonable potential to be recovered from the mineral resource contained within the Viscaria Project.

Assay Results

VDD0128: 68.5m @ 0.6% Cu and 28.2% Fe (1.0% CuEq) from 177m.

8.1m @ 1.5% Cu and 39.2% Fe (2.1% CuEq) from 189.9m (down hole) including 5.1m @ 2.1% Cu and 42.0% Fe (2.8% CuEq) 8.0m @ 1.5% Cu and 33.0% Fe (2.0% CuEq) from 216.0m (down hole) including 6.4m @ 1.8% Cu and 34.5% Fe (2.3% CuEq)

VDD0129 : 88.3m @ 0.4% Cu & 22% Fe (0.7% CuEq), from 229.7m including:

16.3m of 0.5% Cu and 24.4% Fe (0.9% CuEq) from 229.7m (down hole) including 5.0m @ 1.0% Cu and 30.6% Fe (1.5% CuEq) 17.0m of 1.3% Cu and 23.3% Fe (1.6% CuEq) from 300.0m (down hole) including 9.0m @ 1.8% Cu and 23.0% Fe (2.1% CuEq)

28

ADDITIONAL INFORMATION AND ATTRIBUTION

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 Stefan Mujdrica (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 A and B Zones was compiled and prepared by Dr Bielin Shi (MAusIMM, MAIG) of CSA Global Pty.Ltd. 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 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 mineral resource estimate for the Discovery and Tributary Zones 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 Base Case includes material from Inferred Mineral Resources and therefore, exploration drilling and re-estimation may result in changes to the economically minable portion of the Mineral Resources. Development Cases A, B and C includes material that has not yet been discovered or defined and is considered an exploration target. JORC – Exploration Targets

it is common practice for a company to comment on and discuss its exploration in terms of target size and type. The information relating to exploration targets should not be misunderstood or misconstrued as an estimate of Mineral Resources or Ore Reserves. hence the terms Resource(s) or Reserve(s) have not been used in this context. the potential quantity and grade is conceptual in nature, since there has been insufficient work completed to define them beyond exploration targets and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

29