SUNSTONE METALS LTD — Investor Presentation 2016

Nov 15, 2016

DISCLAIMER

DISCLAIMER

To the maximum extent permitted by law, no representation, warranty or undertaking, express or implied, is made and, to the maximum extent permitted by law, no responsibility or liability is accepted by Avalon or any of its officers, employees, agents or consultants or any other person as to the adequacy, accuracy, completeness or reasonableness of this Presentation. To the maximum extent permitted by law, no responsibility for any errors or omissions from this Presentation whether arising out of negligence or otherwise is accepted.

This Presentation contains general information about Avalon Minerals Limited (Avalon) which is in the business of exploring for minerals which is a speculative and risky venture. It does not purport to contain all the information that a prospective investor may require. The Presentation should not be considered as an offer or invitation to subscribe for or purchase of any securities in Avalon and no agreement to subscribe for securities will be entered into on the basis of this Presentation. Potential investors should conduct their own investigation and analysis and should check the accuracy, reliability, and completeness of the information provided and obtain independent and specific advice from appropriate professional advisors.

FORWARD-LOOKING STATEMENTS

This Presentation includes certain statements that may be deemed "forward-looking statements". All statements in this Presentation, other than statements of historical facts, that address future activities and events or developments that Avalon expects, are forward looking statements.

Although Avalon believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, continued availability of capital and financing, and general economic, market or business conditions.

Investors are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in forward-looking statements.

FOCUSSED & UNDERVALUED

• → COPPER and GOLD
• → SECURE TENURE
• → OPERATING IN MINING DISTRICTS AND MINING COUNTRIES
• → GEOGRAPHIC FOCUS
• → HIGH QUALITY INFRASTRUCTURE IN PLACE
• → LOW MARKET CAPITALISATION

CORPORATE

TICKER	ASX:AVIFrankfurt:AL9
SHARE PRICE*	A$0.025
SHARES ON ISSUE	520.4 million
MARKET CAP	A$13M
CASH#	A$1.0M
52 WEEK TRADING	A$0.012 -$0.057

As at 11.11.16 - 30 day VWAP * As at 11.11.16 - unaudited #

Top 10 shareholders hold 55% of shares on issue

Board and management hold 3.3% and have participated in recent placements

European and UK shareholders total 43%

SUBSTANTIAL SHAREHOLDERS

NAME	%
Valbonne II	12.4%
Marilei International	8.2%
Potezna Gromadka	7.1%
Tan Sri Abu Sahid Bin Mohamed	6.5%

A HIGH QUALITY LEADERSHIP TEAM

ChairmanGraham Ascough	Resources executive. Broad global experience with large companies and building juniorsCurrent Musgrave, PNX Metals, Mithril; Previous Falconbridge-Noranda
CEO and Managing DirectorMalcolm Norris	Geologist and BusinessDevelopment. Track record of discoveryand growthPreviously SolGold, Intrepid, WMC Resources
General ManagerStudies and Technical ServicesRayRobinson	Mining Engineer. Has delivered many feasibility studiesPreviously PanAust,Intrepid
CFO & Company SecretaryGavin Leicht	Finance professional with significant experience in copperPreviously PanAust, Rio Tinto
General Manager -GeologyDr.Bruce Rohrlach	Geologist who hasplayed a key role in several significant discoveries and feasibility studiesPreviously SolGold, Intrepid, WMC Resources

GOLD AND COPPER FOCUS

Southern Finland Gold Project – multiple prospects, early results very encouraging

• Satulinmäki Prospect: large gold system, high grade zones within large low grade system
• Includes 147.0m at 0.8 g/t gold from 73m in SMDD007,
  • Including 23.5m at 3.3g/t from 143m
    • including 9.0m at 7.3 g/t from 147m
• First phase of drilling completed and delivered positive results
• Second phase being planned
• Viscaria Copper Project an advanced stage copper development opportunity with significant upside potential
  • Mineral Resource estimate 52.4Mt at 1.2% Cu 65% Measured and Indicated (Refer Annual Report released 16 August 2016, Mineral Resource Estimate table and the Competent Persons Statement at the end of this presentation)
  • Prefeasibility Study underway following positive outcomes from the April 2016 updated Scoping Study
  • Low risk copper development opportunity will add significant value within an increasing copper price environment
• Kietyönmäki Lithium Project a higher than average grade deposit
  • Diamond drilling returned 24.2m at 1.4% Li2O, including 9m at 2.0% Li2O
  • Next phase being planned

SOUTHERN FINLAND GOLD PROJECT

• 2,400km2 held under exploration reservation, and a JV with Nortec Minerals
• Supported by infrastructure
• Can operate all year round
• Historical exploration by the Finnish Geological Survey has identified multiple gold occurrences
• Initial drilling by Avalon delivered excellent results from Satulinmäki including visible gold

SATULINMÄKI GOLD

• Very early days, very strong discovery potential
• High grade zones
• Visible gold
• Local high grade veins
• All within a large gold system that is several hundred meters long

SATULINMÄKI GOLD

• Mappable structures deliver rich suite of target areas
• Historical mapping of arsenopyrite supports larger gold target areas
• Avalon to complete 3-D Induced Polarisation to map sulphides and alteration associated with gold

SATULINMÄKI GOLD

Next phase of work

• Induced Polarisation to map sulphides and alteration
• Drilling to further define system
• Test areas that have seen no previous drilling

• A high quality copper project in a strengthening copper price environment
• A copper development opportunity in a mining district
• Development permitting in progress

PROJECT SITE PUBLIC ACCESS ELECTRIC RAIL

KIRUNA TOWN

LOW COST HYDRO POWER

An advanced stage copper development opportunity with significant upside potential

• Mineral Resource estimate 52.4Mt at 1.2% Cu 65% Measured and Indicated (Refer Annual Report released 16 August 2016, Mineral Resource Estimate table and the Competent Persons Statement at the end of this presentation)
• Prefeasibility Study underway following positive outcomes from the April 2016 updated Scoping Study
• Low risk copper development opportunity will add significant value within an increasing copper price environment
• Very significant exploration upside

• Strong results from VDD 195 21.5m at 1.5% Cu, including 3m at 2.3% Cu and, 9.9m at 2.2% Cu

drilled outside of the area of the mineral resource estimate demonstrates that the northern shoot will grow

• This hole was drilled below VDD 193 which intersected 26.7m at 2.6% Cu
• Similarly, strong results from VDD 196 13.8m @ 1.4% Cu, including 5.3m @ 2% Cu

drilled outside of the area of the mineral resource estimate demonstrates that the southern shoot will grow

• … and geophysical modelling of the host magnetite indicates that this copper orebody will grow …….

• An incredibly compelling upside opportunity
• D Zone copper host is 50-70% magnetite – simple process to model host to deliver orebody geometry
• 3-D and plate modelling of magnetic data demonstrates very clearly that the orebody is significantly larger than currently drilled
• And we have demonstrated in our 2015 results that we know where to drill

• AND …. A & B Zones will deliver more copper as well
• There is more copper within the open pit development scenario than the historical mineral resource estimate suggests
• This is confirmed by Avalon drilling from 2014 (VDD 182) and detailed reviews of historical drill holes
• Multiple mineralised horizons defined
• Previous owner did not assay mineralised zones that were visually assessed to be <2% copper

• Mine scale orebody extensions have low technical risk
• Exploration success can be delivered within 5km
• A rich portfolio of near mine targets to add to the scale of the project

KIETYONMAKI LITHIUM DEPOSIT

Drill assay results from KMDD001

From(m)	To (m)	Interval(m)	Li2O (%)	Nb2O5(ppm)	Ta2O5(ppm)
14.00	15.00	1.00	0.60	131.80	111.36
17.88	60.00	42.12	1.05	73.55	75.95
17.88	42.05	24.17	1.44	85.43	91.82
29.00	38.00	9.00	1.99	92.44	99.51
60.67	65.71	5.04	0.18	29.76	19.29
97.50	100.50	3.00	0.39	107.33	128.21

• Next stages of work being planned
• Upside potential requires testing with grid drilling in belts of mapped pegmatites
• High grade system confirmed

AVALON MINERALS

• COPPER and GOLD
• SECURE TENURE
• OPERATING IN MINING DISTRICTS AND MINING COUNTRIES
• GEOGRAPHIC FOCUS
• HIGH QUALITY INFRASTRUCTURE IN PLACE
• HIGH QUALITY TEAM
• LOW MARKET CAPITALISATION

VISCARIA D-ZONE

Assay results from eleven diamond drill holes were received during the 2015-2016 year and significant intersections are included in the table to the right (refer to ASX announcements dated 2 July 2015, 15 July 2015, 11 August 2015, 2 September 2015, 21 September 2015, 20 October 2015, 30 November 2015, 8 December 2015 and 18 December 2015 - The Company confirms that it is not aware of any new information that materially affects the information provided in the previous announcements):

• VDD186 149.45m at 0.38% Cu from 392m including 13.3m at 1.68% Cu from 506.7, including 9.4m @ 2% Cu and an additional high grade zone of 3.55m @ 2.75% Cu from 527.55m.
• VDD187 17.9m at 1.2% Cu from 252.6m including 6.2m at 1.7% Cu from 257.4m.
• VDD188 6.85m at 0.7% Cu from 270.7m, including 1.4m at 1.5% Cu from 271.7m.
• VDD189 10.3m at 1.3% Cu from 500m including 4.6m at 2.0% Cu from 501m.
• VDD190 26.5m at 1.1% Cu from 532.6m including 8.4m at 1.7% Cu from 536.8m.
• VDD192 21.8m at 1.4% Cu from 471.2m including 7.4m at 1.9% Cu from 471.7 and 6.5m @ 1.5% Cu from 486.6m.
• VDD193 – 26.7m at 2.6% Cu from 564.6m including 6.6m at 3.5% Cu from 565.4m; 5.2m at 2.9% Cu from 573.0m, and 6.9m at 2.6% Cu from 584.4m.
• VDD193W 39.6m at 0.8% Cu from 318m including 4.5m at 2.0% Cu from 320m; and 4.3m at 2.4% Cu from 353.3m.
• VDD194 5.45m at 0.6% Cu from 606.3m including 1.95m at 1.25% Cu from 609.8m.
• VDD195 – 2.8m at 2.5% Cu from 713.65m and 21.5m at 1.5%Cu from 737.6m including 3.0m at 2.3% Cu from 737.6; and 9.9m at 2.2% Cu from 745.6m.
• VDD196 – 13.8m at 1.4% Cu from 557.9m including 10.4m at 1.6% Cu from 557.9m, including 5.25m at 2.0% Cu from 559.5m.

MINERAL RESOURCE ESTIMATE

Table: Currently Defined Mineral Resource for Copper reported on the Viscaria Project (JORC 2012)

Resource Name	Classification	Tonnes (t)	Cu Grade (%)	Cu Metal (t)
A Zone	Measured	14,439,000	1.7	240,000
	Indicated	4,690,000	1.2	57,200
	Inferred	2,480,000	1.0	25,500
	Subtotal	21,609,000	1.5	322,700
B Zone	Measured	123,000	1.3	1,600
	Indicated	4,118,000	0.7	29,700
	Inferred	15,410,000	0.8	118,700
	Subtotal	19,651,000	0.8	149,000
D Zone	Indicated	10,360,000	1.21	125,000
	Inferred	780,000	1.56	12,200
	Subtotal	11,140,000	1.23	137,200

Total	52,400,000	1.2	608,900

COMPETENT PERSONS STATEMENT

Competent Persons Statement

The information in this report that relates to exploration results and exploration targets and results is based upon information reviewed by Mr Malcolm Norris who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr Norris 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 2012 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Mr Norris consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Refer to Annual Report released 16 August 2016 for the Competent Persons Statement in relation to the estimates of mineral resources. The Company confirms that it is not aware of any new information or data that materially affects the information and all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed.

The information in this report that relates to the updated D Zone Mineral Resource estimate is based on the information compiled by Chris Grove who is a Member of the Australasian Institute of Mining and Metallurgy and is a full time employee of Measured Group Pty Ltd. Measured Group is an independent mining consultancy who have been engaged by Avalon Minerals Limited to perform geological consulting on a fee for service basis. Mr Grove has sufficient experience that is relevant to the style of mineralisation being considered and to the activity being undertaken 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. Mr Grove consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.