SUNSTONE METALS LTD — Investor Presentation 2016

Apr 4, 2016

5[th] April 2016

AVALON MINERALS – INVESTOR UPDATE

Highlights

• Updated work on the Viscaria Copper Project Scoping Study delivers greater confidence in the 2.0 Mtpa Target Case;

• Mining Inventory increased with expanded pit design, and incorporation of Exploration Potential from D Zone;

• ESIA and permitting progressing;

Avalon Minerals Ltd (ASX: AVI) (‘Avalon’ or ‘Company’ ) has progressed work on a 2.0Mtpa Target Case for the contemplated development of the Viscaria Copper Project in Sweden (see ASX announcement 18/12/2015).

This is presented in the attached updated Corporate Presentation. The results of this work demonstrate that a 2.0Mtpa project delivering greater than 20,000t copper in concentrate per annum is a viable development scenario.

Increased mining inventory has come from an expanded open pit and an increased degree of confidence in exploration potential from holes drilled at the end of 2015, but not included in the 2015 mineral resource estimate.

Detailed reappraisal of all drilling data has also identified significant opportunities for improved project metrics, such as additional copper mineralised zones in the footwall and hangingwall of A and B zone orebodies, and improved understanding of the structural model and geometry for the A, B and D Zone orebodies.

Operating and Capital costs have been carefully benchmarked providing a high level of confidence in input parameters.

The Environment and Social Impact Assessment (ESIA) activities are continuing and provide critical input into the environmental permitting required to allow for development.

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

Mr Malcolm Norris Managing Director Avalon Minerals Ltd Tel: 07 3368 9888

Email: malcolm.norris@avalonminerals.com.au

April 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 forwardlooking 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.

1

AVALON MINERALS – SIMPLE STORY

1. Copper development company 2. Updates to Viscaria Scoping Study deliver robust 21,000tpa producer for minimum 9 years

2. Single high quality asset focus - Viscaria 4. Supported by outstanding infrastructure - Kiruna 5. Low sovereign risk - Sweden 6. Highly competent team in place to deliver project If you believe in copper then Avalon represents a compelling investment opportunity

As energy becomes greener approx. 3 - 5 times more copper per megawatt will be required (source - Atalaya Mining Nov 2015)

While a conventional car contains 15kg of copper on average, hybrid cars contain 30-40kg, and a full electric vehicle, 60kg (source – m2m.riotinto.com)

2

COPPER – SUPPLY, DEMAND, FORECASTS

==> picture [485 x 423] intentionally omitted <==

Viscaria production forecast to come on line at tightening of supplydemand, and consensus forecast price increase

Develop in the lead-up to a supply shortfall

Copper price up 5% YTD

3

CORPORATE

TICKER ASX:AVI Frankfurt:AL9 SHARE PRICE* A$0.015 SHARES ON ISSUE 378,353,560 MARKET CAP A$5.3M CASH[#] A$1.2M 52 WEEK TRADING A$0.014 - $0.035

As at 29.03.16 - 30 day VWAP * As at 29.03.16 - unaudited[#]

Top 10 shareholders hold 70% of shares on issue Board and management hold 3.5% and have participated in recent placements

European and UK shareholders total 50%

SUBSTANTIAL SHAREHOLDERS

NAME	%
Valbonne II	17.1%
Marilei International	9.9%
Tan Sri Abu Sahid Bin Mohamed	8.9%
Potezna Gromadka	8.5%
Wyntorc SA	5.5%

4

VISCARIA COPPER PROJECT

==> picture [214 x 120] intentionally omitted <==

PROJECT SITE

==> picture [217 x 115] intentionally omitted <==

KIRUNA TOWN

==> picture [216 x 117] intentionally omitted <==

==> picture [201 x 117] intentionally omitted <==

LOW COST HYDRO POWER

PUBLIC ACCESS ELECTRIC RAIL

5

KIRUNA AND VISCARIA LOCATION MAP

==> picture [763 x 424] intentionally omitted <==

----- Start of picture text -----

Viscaria
Kiruna
LKAB
Copper orebodies
shown in orange
----- End of picture text -----

6

VISCARIA COPPER: EXPANDED SCALE

• Delivering increased project scale to an average annual production rate of between 20,000 – 30,000 tonnes copper in concentrate

• Increased mining inventory through low technical risk drilling of an exploration target (see slide 11) will be undertaken on D Zone orebody extensions

• Extending the currently defined shoots at D Zone has already delivered success in drill holes VDD 195 and 196 (slide 11, and refer ASX Announcements dated 8 and 18 December 2015).

• Drill holes VDD 195 and 196 have delivered in the range 0.5 – 1 million tonnes at 1.3 – 1.8% Cu. Drilling of approximately 6,600m is expected to deliver in the range of 2.5-3 million tonnes at similar grades. This drilling is planned for H2, 2016.

• Expansion and combination of the A and B Zone open pits based on pit optimisation modelling has added to the mining inventory (see slides 10, 14 & 15).

• Approximately 4% of the total production target mining inventory is categorized as Inferred Mineral Resource (D Zone Underground – see slides 10 and 24). There is a low level of geological confidence associated with inferred mineral resources and there is no certainty that further exploration work will result in the determination of indicated mineral resources or that the production target itself will be realised.

• The potential quantity and grade of an exploration target is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that the production target itself will be realised.

7

VISCARIA COPPER: UPDATES TO 2015 SCOPING STUDY

• At the expanded scale of 2.0Mtpa the project is less sensitive to copper price and at $2.75/lb Cu delivers a robust return of 20% IRR

• At Target Case 2.0Mtpa the project delivers average annual net operating profit of US$66 million. For comparison, the base case delivered US$33 million.

• Viscaria is a tangible asset that will deliver Cu at an all in sustaining cost of <US$2.00/lb (current Cu price US$2.25/lb)

• Capital costs have been benchmarked, and are low because existing infrastructure is already in place (see slide 23)

• High grade A Zone underground represents significant further upside beyond the targets stated above

• The Viscaria orebodies are open to the north, south and at depth, and there are strong indications of additional ore horizons

8

VISCARIA COPPER: UPDATES TO 2015 SCOPING STUDY

The 2015 Scoping Study confirmed the project description to begin ESIA process (Refer ASX Announcement 14 December 2015)

	2015 Scoping Study	Target Case A and Expanded Case	Target Case A and Expanded Case
Process plant size	1.2Mtpa scenario	2.0Mtpa scenario	3.0Mtpa scenario
Strip ratio (LOM)	5.8	6.0	8.4
Process	Crush, grind and copper flotation plant
Recovery rates	90.2%	90.2%	90.2%
Copper Production LOM Average per annum	107kt 12kt	200kt 21kt	260kt 30kt
Mine life	Minimum eightyears, open	Minimum nineyears, open	Minimum nineyears
Development capital Site Infrastructure Underground	US$87m (A$119m) US$15m (A$20m)	US$115m US$15m	US$145m US$15m
Sustaining capital (LOM) Site Infrastructure Underground	US$10.6m (A$14m) US$20.0m (A$27m)	US$14m US$35m	US$18m US$35m
Cash operating cost LOM C1 LOM AISC	US$1.86/lb (A$2.54/lb) US$2.10/lb (A$2.87/lb)	Targeting <US$2.00/lb
Copperprice	US$3.25/lb(A$4.45/lb)	US$3.00	US$3.00
Exchange rate AUD : USD	0.73	0.73	0.73
NPVpre-tax(7%)	US$74m(A$102m)	Targeting >US$150 mill
IRRpre-tax(%)	22%	Targeting >28%
Paybackperiod	3.7years	<4years	<4years
Capital intensity	US$7,335/t cup.a.	~US$5,750	~US$5,100

9

VISCARIA COPPER: MINERAL RESOURCE ESTIMATES AND MINING INVENTORY

Mineral Resource	Tonnes (Mt)	Tonnes (Mt)	Grade (% Cu)	Grade (% Cu)
A Zone# B Zone# D Zone Open Pit D Zone Underground Total (93% Measured and Indicated)	21.6 19.7 3.1 8.0 52.4		1.5 0.8 0.8 1.4 1.2
Mining Inventory	Tonnes (Mt) 2015	Tonnes (Mt) 2016	Grade (% Cu) 2015	Grade (% Cu) 2016
A Zone Open Pit@ B Zone Open Pit@ Combined A & B Zone Open Pit^ D Zone Open Pit@ D Zone Underground@^ Exploration target^ Total	2.6 2.0 1.6 3.8 10.0	8.0 1.6 5.0 3.0-4.0 18.0	1.3 0.7 0.9 1.5 1.2	0.9 0.9 1.5 1.3-1.8 1.2

• 2015 JORC Mineral Resource estimate

2014 JORC Mineral Resource estimate, based on initial work completed in Nov 2011; 0.4% COG all considered to be open-pittable

@ 2015 Scoping Study Mining Inventory

• ^ 2016 updated target Mining Inventory

10

D ZONE: EXTREMELY CONFIDENT IT WILL BE LARGER

Clear message from 2015 – orebody is getting better as we go deeper

The northern target zone has the potential to deliver 3-5Mt of mineralised rock, at grades comparable to those seen in VDD 195 (21.5m @ 1.5% Cu)

Similarly the southern target zone has the potential to deliver 1-3Mt of mineralised rock, at grades comparable to VDD 196 (13.8m @ 1.4% Cu)

… and geophysical modelling of the host magnetite indicates that even more extensive target zones exist …….

11

D ZONE: EXTREMELY CONFIDENT IT WILL BE LARGER

N D Zone D Zone copper host is orebody; black 50-70% magnetite – dashed line simple process to model D Zone Magnetic host to deliver orebody model; green, blue, geometry yellow domains 3-D and plate modelling of magnetic data demonstrates very clearly that the orebody is larger than currently drilled VDD196 VDD195 Target Area, positive test with VDD 195, And we have extends to depth demonstrated in our 2015 results that we know where to drill Target area at southern D Zone with multiple magnetic bodies – first test VDD 196

12

D ZONE: 2015 MINE PLANNING

==> picture [568 x 425] intentionally omitted <==

Mine planning will be modified to capture deeper and new shoots, for example those expected in the vicinity of VDD 196

And that will deliver >0.9% Cu cut-off material shown in yellow

This will contribute to increased mining inventory

13

A & B ZONE COMBINED OPEN PIT: MORE TONNES AND IMPROVED STRIP RATIO

==> picture [313 x 271] intentionally omitted <==

Historical mining targeted >2% Cu only Very significant open pit opportunities

Red areas of >2% Cu have been partly mined, but all other mineralised areas will contribute to resource growth

14

A & B ZONE: SIGNIFICANT UPSIDE IN EXPANDED OPEN PITS

There is more copper within the expanded open pit than the historical resource estimate suggests

This is confirmed by Avalon drilling from 2014 (VDD 182) and detailed reviews of historical drill holes

==> picture [38 x 16] intentionally omitted <==

----- Start of picture text -----

Current pit
outline
----- End of picture text -----

Exploration Target for A&B Zone open pit is 10 -15 million tonnes at 0.7 – 1.3% Cu.

Area outlined in purple is sparsely drilled but contains copper, and more positive results will modify open pit planning

Multiple mineralised horizons defined

Potentially significant upside between A and B Zones

15

MUCH MORE COPPER IN THE DISTRICT

==> picture [451 x 425] intentionally omitted <==

Mine scale orebody extensions, low technical risk Exploration success within 5km

A rich portfolio of near mine targets to add to the scale of the project

16

STAKEHOLDER ENGAGEMENT AND PERMITTING

AVALON IS COMMITTED TO STRONG COMMUNITY ENGAGEMENT AS THE VISCARIA DEVELOPMENT PROGRESSES

==> picture [586 x 394] intentionally omitted <==

----- Start of picture text -----

Area of
Development Focus
Area of National
Interest for Minerals
----- End of picture text -----

The proposed development area is in a window surrounded by multiple land use areas

The key issues are

• a strong mining heritage

• water

management

• reindeer herding

• Natura 2000

• recreation

The ESIA process has commenced

17

A HIGH QUALITY LEADERSHIP TEAM

==> picture [109 x 114] intentionally omitted <==

==> picture [100 x 114] intentionally omitted <==

==> picture [100 x 114] intentionally omitted <==

==> picture [95 x 116] intentionally omitted <==

==> picture [107 x 116] intentionally omitted <==

Chairman Resources executive. Broad global experience with large companies and building juniors Graham Ascough CEO and Managing Director Geologist and Business Development. Track record of discovery and growth Malcolm Norris General Manager Mining Engineer. Studies and Technical Services Has delivered many feasibility studies Ray Robinson CFO & Company Secretary Finance professional with significant experience in copper Gavin Leicht General Manager - Geology Geologist who has played a key role in several significant discoveries and feasibility studies Dr. Bruce Rohrlach

18

PLANNING TO DELIVER

==> picture [407 x 26] intentionally omitted <==

----- Start of picture text -----

2015 2016 2017
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
----- End of picture text -----

STUDIES AND EXPLORATION

Exploration (discretionary) Scoping Study Updated Scoping Study Accelerate Feasibility Study

PERMITTING

ESIA Baselines

ESIA Assessments and Application ESIA review to approval

FUNDING

Drilling to expand Resource - A$3 mill Drilling and Feasibility Studies - A$7 mill ESIA - A$2.5 mill (pre & post submittal) Exploration discretionary - A$1.5 mill Corporate - A$1 mill/year

==> picture [436 x 222] intentionally omitted <==

==> picture [11 x 100] intentionally omitted <==

----- Start of picture text -----

Decision to Mine
----- End of picture text -----

TARGET TIME FRAMES

• Scoping Study Copper Project - December 2015

• Updated Scoping Study - Q4, 2016

• Decision to Build and construction start in late 2017

• Copper production 2019 – correspond with increase in copper price

19

AVALON MINERALS – CONSIDER AN INVESTMENT DECISION BASED ON RISK AND A 3-5 YEAR TIME FRAME

General Risk – Low

• Sweden, low sovereign risk

• Kiruna, a mining district

• • Viscaria Project

• 3 approved exploitation (mining)concessions

• ESIA in progress leading to environmental permitting

• High quality team

• Supportive major shareholders limiting investment risk

Technical Risk – Low

• 2015 drilling program very successful

• • Strong upside case for delivery of additional resources and mining inventory

• D Zone growth potential very obvious

• A & B Zone combined open pit

• A Zone underground not yet pursued but known resources

• Development area exploration success

• • 64% of current resources in M&I category

Development Risk – Low

• 2015 Scoping Study (SS) demonstrated viable project

• 2015 SS clearly shows that a 2Mtpa operation is required and that the Mining Inventory must be increased

• Road, Rail, Town, Airport, Sea Ports - all existing

Production Risk – Low

• Forecast higher copper prices at expected time of production

• Best infrastructure support of any copper development opportunity globally

• Low cost hydro power

• High quality concentrate

• • Local equipment manufacturers and contractor/consultant groups

20

APPENDICES

21

VISCARIA COPPER – 2015, DELIVERED TO GOALS

• Ownership 100% ownership retained

• Completed 8,000m of diamond drilling at D Zone in 2015

• Strongly outperformed historical results and delivered confidence

Drilling

• Outstanding results such as VDD 193, 26.7m at 2.6% Cu including 6.6m at 3.5% Cu

• Recent drilling results ‘as good as A Zone’ – the former mine

• Copper only Scoping Study completed in December 2015

Scoping Study and ESIA

• Underpinned by new D Zone Mineral Resource Estimate delivered in November

• Small open pits on A, B and D Zones + Underground at D Zone

• • Outstanding infrastructure

• Low technical risk geology and mineralogy

• Upside and scale increase needs to be delivered in 2016 Updated Scoping Study

• ESIA underway – critical path to permitting

22

VISCARIA – DON’T UNDERESTIMATE THE VALUE OF LOCATION AND EXISTING INFRASTRUCTURE

Mining infrastructure is in place adjacent to the world’s largest underground magnetite mine and iron pellet manufacturing facility

• Airport

• Mining town with mining contractors

• Low cost hydro power

• Highway access

• Electric rail access

• Multiple port options

All of these facilities deliver

• Lower Capital Costs

• Lower Operating Costs

• Reduced implementation risk

23

VISCARIA COPPER – MINERAL RESOURCES

Viscaria Copper Project Mineral Resource Estimates Summary – Nov 2015

Resource Area	Location	Classification	Tonnes (Mt)	Cu Grade (%)	Contained Cu (kt)
A Zone	Open Pit	Measured	14.44	1.7	240.0
		Indicated	4.69	1.2	57.2
		Inferred	2.48	1.0	25.5
		Subtotal	21.61	1.5	322.7
B Zone	Open Pit	Measured	0.12	1.3	1.6
		Indicated	4.12	0.7	29.7
		Inferred	15.41	0.8	118.7
		Subtotal	19.65	0.8	149.0
D Zone	Open Pit	Indicated	3.11	0.81	25.2
		Inferred	0.01	0.32	0.02
		Subtotal	3.11	0.81	25.2
	Underground	Indicated	7.26	1.37	99.8
		Inferred	0.78	1.57	12.2
		Subtotal	8.03	1.39	111.9
Overall Cu		Total	52.4	1.2	608.9

24

COMPETENT PERSONS STATEMENT

Competent Persons Statement

The information in this report that relates to 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.

The information in this report that relates to the A Zone and B Zone Mineral Resources are based on the information compiled by Dr Bielin Shi who is a Member of the Institute of Mining and Metallurgy and is a full time employee of CSA Global Pty Ltd (CSA). CSA are an independent mining consultancy who have been engaged by Avalon Minerals Limited to perform geological consulting on a fee for service basis. Dr Bielin Shi 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. Dr Shi consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to the 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.

25