SUNSTONE METALS LTD - Investor Presentation 2012

ASX: AVI

15 August 2012

PRESENTATION

VISCARIA COPPER PROJECT

Attached is an investor presentation by the Company’s Managing Director, Mr Jeremy Read, on the Viscaria Copper Project in Sweden.

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

Mr Jeremy Read - Managing Director Mr James Harris Avalon Minerals Limited Professional Public Relations Tel: 07 3368 9888 Tel: 08 9388 0944 Em: [email protected] Mob: 0400 296 547 www.twitter.com/avalonminerals Em: [email protected]

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AVALON MINERALS LTD
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A MINERAL EXPLORATION &
MINING PROJECT DEVELOPMENT
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OF COPPER AND IRON ORE
ASSETS IN NORTHERN SWEDEN
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RUSSIA
Narvik
Kiruna
AVALON MINERALS
Viscaria Cu-Fe Project
Kiruna Fe Mine
Malmberget Fe Mine
Aitik Cu Mine
Norwegian
Sea
 Assets Lulea
FINLAND
Skelleftea
Ronnskar
 Cu-Pb smelter
Viscaria Copper Project
Umea Kokkola
Zn smelter
Ostersund
NORWAY
Gulf of
 SWEDEN Bothnia
Viscaria Regional
Pori
Cu refinery Harjavalta
Exploration Cu smelter
Gavle
Falun
Odda
Zn smelter Helsinki
Oslo
Karistad
Stockho ml
ESTONIA
Mariestad Nykoping
Goteborg Jonko p in g
North
LATVIA
Sea
Halmstad
Kalmar
DENMARK
Baltic
Kristianstad
Sea LITHUANIA
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COMPANY SNAPSHOT

Capital Structure

330,873,602 shares
Share Price: $0 . 08
Market Capitalisation circa A26$M
Top 10 holders 49% of share capital

Share Register

Abu Sahid Bin Mohamed 15.85%
Siew Mun Chuang 9 . 06%
Galena Fund 6.42%
JP Morgan Nom 4 . 75%
Brookman Resources 3.12%
Pershing Australia 1 . 99%

Administrative

Listed on ASX , Code AVI
Head Office – Brisbane, Australia
Sweden Office Lulea
Spectral Investments 1.99%
Flue Holdings 1 . 32%
Osiris Capital 1.21%
Slade Technology 1 . 12%

AVALON’S OBJECTIVES

Minimum of 500% increase to shareholder value within a 2-4 year time period
Double currentl defined hi h rade co er Mineral Resources y g g pp
D emons ra e v a t t i bilit f t th h l ti on o f BFS y o pro ec j roug comp e
Permit Project for development including environmental approvals
Select development path which maximises returns for shareholders

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SWEDEN - EXCELLENT INFRASTRUCTURE AND MINING REGULATION

Infrastructure

4km from mining centre of Kiruna (pop. 23,000)
Nearby smelters

Railway Powerline Tenement

Rail – heavy haul
Ports – Narvik (ice free), Luleå
Power (3c/Kwatt hour)

Mining Regulation

Sweden 7[th] Globally (Fraser Institute 2011-2012)
Western Australia ranks 12[th]

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26.3% company tax rate
2 of 3 Mining Exploitation Concessions already granted

VISCARIA COPPER PROJECT

A ZONE

21.6Mt @ 1.5% Cu
• Inc. 9.5Mt @ 2.7% Cu

B ZONE

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B Zone
•
19.7Mt @ 0.8% Cu
A Zone
D Zone
D ZONE
•
11.9Mt @ 0.6% Cu &
24% F e
•
Inc. 3.2Mt @ 1.2% Cu
TOTAL
•
53.8Mt @ 1.0% Cu
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See slides 25, 26 and 27 for the JORC Classification of the Mineral Resources

PREVIOUSLY OPERATED VISCARIA COPPER MINE (A ZONE)

World-class Iron Oxide Copper Gold (IOCG) and Iron province
Discovered in the 1970’s
15 years historical production from 1982 to 1997 (Outokumpu)
Production of 12.5Mt of 2.3% Cu

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VISCARIA COPPER PROJECT

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A ZONE

21.6Mt @ 1.5% Cu

B ZONE

19.7Mt @ 0.8% Cu

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VISCARIA COPPER PROJECT

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Tailings Dam
(2 year capacity)
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Processing
Plant Site
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Power Line
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Portal
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EXPLORATION STRATEGY

Understand controls on High Grade (>2% Cu) mineralisation
Scoping Study to determine NPV of combined Open Pit and Under round Minin O eration g g p
Drill intensive p ro g ram at A, D Zones to double Hi g h Grade ( >2% Cu) Mineral Resources
Fully permit project including environmental approvals
Test high priority regional exploration targets

SUCCESSFUL INITIAL 2012 DRILL PROGRAM

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

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SUCCESSFUL INITIAL 2012 DRILL PROGRAM

D Zone Extensional Drilling
Hole VDD0128
8.1m @ 2.2% CuEq (1.5% Cu & 39.2% Fe) from 189.9m, including 5.1m @ 2.8% CuEq (2.1% Cu & 42% Fe)
8.0m @ 2.1% CuEq from 216.0m (1.5% Cu & 33% Fe) including 6.4m @ 2.4% CuEq (1.8% Cu & 34.5% Fe)
68m @ 1 0% CuEq* (0 6% Cu & 28 2% Fe) from 189 9m. . . . * See slide 28 for e uth C Eq formu al

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D ZONE OPEN PIT

Wider and higher grade copper intersections than outlined from PFS resource model
68m @ 1.0% CuEq (0.6% Cu & 28.2% Fe)
• 19 . 8m @ 1 . 9% Cu • 38m @ 1.6% Cu
Drilling to follow high grade shoots down plunge

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2.5% Cu

1.5-2.5% Cu

500 m

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0.5-1.5 % Cu
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CURRENT ESTIMATE OF VALUE OF OPEN PIT RESOURCES

	Mineral Resource Open Pit Tonnes (Mt) Mine Life (Years) Grade (Eq Cu%) Strip Ratio Processing Rate (Mtpa) NPV (US$M) A Zone 2.8 1.9 1.2 7.8 1.5 54 D Zone 6 3 4 2 1 3 4 9 1 5 115 . . . . . TOTAL 9.1 6.1 1.2 5.3 1.5 169

Assumptions

Cu Price – US$3.25/lb 2 . Fe Price – US$95 . 1/t 3. Exchange Rate – US$1 = €0.75

VALUE OF UNDERGROUND TO BE ADDED

FURTHER VALUE CREATION – D ZONE EXTENSION

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300m STRIKE EXTENSION
35m DEPTH EXTENSION
+$50M NPV

FURTHER VALUE CREATION – A ZONE MINERALISATION

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$250
3.5% Cu
3.0% Cu
$200
2.5% Cu
$150 2.0% Cu
1 5% C. u
$100
2.5Mt @ 2.5% Cu
$50
adds $80-100M
$-
2.5Mt @ 2% Cu
Resource Mt
adds $40-50M
$(50)
0.5 1.0 1.5 2.0 2.5 3.0
in ($M)
sh Marg
Ca
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CLEAR PATHWAY TO ADDING $80-150M IN VALUE

METAL PRODUCTION SCENARIO

 A Zone Open Pit

500 , 000tpa @ 1 . 35% Cu
6,7500t of Cu in concentrate
D Z one pen t O Pi
1,000,000tpa @ 0.5% Cu and 25% Fe
5,000t of Cu in concentrate
252,000t of Fe in concentrate
Open Pit Copper Production
11,750t of Cu in concentrate

UPSIDE

500,000tpa @ 2.5% Cu from underground at A and/or D Zone
12,500t of Cu in concentrate (doubles copper production)

UNDERGROUND – OPEN PIT SCOPING STUDY

Refine estimate of open pit mining inventory by incorporating new drilling results at D Zone
Finalise current estimate of underground mining inventory by estimating underground mineable material at A, B and D Zones
D eterm ne opt mum m n ng sc i i i i h e d u e etween open p t an l b i d un d ergroun d
Sensitivity analysis Copper Price vs Mining Inventory at US$2.75, 3.00, 3.25, 3.50/lb Cu
Determine mining rate to maximise NPV
Overall Project NPV including CAPEX estimate

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PROJECT DEVELOPMENT TIME LINE

Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
Q1
Q2
2012
2012
2013
2013
2013
2013
2014
2014
2014
2014
2015
2015
2015
2015
2016
2016
Initial Drill Program
✔
S
i
St d O
cop ng
u y pen
Pit/Underground
Major Drill Program
to increase High
Grade Copper
Resources
Drill Program to test
Regional Targets
Complete BFS
Finance Project
Construction
Production
Commences

REGIONAL EXPLORATION TARGETS

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Viscaria Regional Exploration
720km² tenure, 100km of cumulative strike
Heli-EM To Define Drill Targets
Preliminary data received
Final data and interpretation in Sept
Priority Prospect Tjärro
Anomalous Cu and Fe, 7km long target
Geologically similar to Viscaria D Zone
• 8m @ 1.7% Cu
15m @ 1.3% Cu

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HELI-EM TARGETS CLOSE TO A AND D ZONE RESOURCES

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D ZONE
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1000m
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STRONG NEWS FLOW

August
Assay results for final D Zone drill hole
- Preliminary targets from Heli EM regional survey
September
D Zone Mineral Resource Upgrade
Results of Underground / Open Pit Scoping Study
Final results of Heli-EM Survey
October
A Zone Mineral Resource Upgrade
Viscaria drill program to extend Mineral Resources at A and D Zones

CONCLUSIONS

Viscaria Copper Project contains high grade Copper Mineral Resources (9.4Mt @ 2.7% Cu )
Objective is to create shareholder value by:
Doubling the >2% Cu Mineral Resources
Fully permit project
C l t BFS omp e e
Implement combined open pit / underground mining operation
Sweden 7[th] best mining destination globally
Successful initial 2012 drill program completed at A and D Zones extended areas of >2% Cu mineralisation
Open Pit / Underground Scoping Study underway to determine best way to maximize MPV
Clear pathway identified to potentially add $80-150M in project value

CONTACT

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

www.avalonminerals.com.au

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CLASSIFICATION OF MINERAL RESOURCES – A ZONE

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CLASSIFICATION OF MINERAL RESOURCES – B ZONE

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CLASSIFICATION OF MINERAL RESOURCES – D ZONE

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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.

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 A, B and D 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 .

AI assistant

SUNSTONE METALS LTD — Investor Presentation 2012

65870_rns_2012-08-14_6c31a217-2ac0-4f2d-aae3-ebb5cf826cb7.pdf

PRESENTATION

VISCARIA COPPER PROJECT

COMPANY SNAPSHOT

Capital Structure

Share Register

Administrative

AVALON’S OBJECTIVES

SWEDEN - EXCELLENT INFRASTRUCTURE AND MINING REGULATION

Infrastructure

Mining Regulation

VISCARIA COPPER PROJECT

A ZONE

B ZONE

PREVIOUSLY OPERATED VISCARIA COPPER MINE (A ZONE)

VISCARIA COPPER PROJECT

A ZONE

B ZONE

VISCARIA COPPER PROJECT

EXPLORATION STRATEGY

SUCCESSFUL INITIAL 2012 DRILL PROGRAM

SUCCESSFUL INITIAL 2012 DRILL PROGRAM

D ZONE OPEN PIT

CURRENT ESTIMATE OF VALUE OF OPEN PIT RESOURCES

Assumptions

VALUE OF UNDERGROUND TO BE ADDED

FURTHER VALUE CREATION – D ZONE EXTENSION

FURTHER VALUE CREATION – A ZONE MINERALISATION

CLEAR PATHWAY TO ADDING $80-150M IN VALUE

METAL PRODUCTION SCENARIO

 A Zone Open Pit

UPSIDE

UNDERGROUND – OPEN PIT SCOPING STUDY

PROJECT DEVELOPMENT TIME LINE

REGIONAL EXPLORATION TARGETS

HELI-EM TARGETS CLOSE TO A AND D ZONE RESOURCES

STRONG NEWS FLOW

CONCLUSIONS

CONTACT

CLASSIFICATION OF MINERAL RESOURCES – A ZONE

CLASSIFICATION OF MINERAL RESOURCES – B ZONE

CLASSIFICATION OF MINERAL RESOURCES – D ZONE

ADDITIONAL INFORMATION AND ATTRIBUTION

Copper Equivalent Formula

Competent Persons Statement

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SUNSTONE METALS LTD Investor Presentation 2012