SUNSTONE METALS LTD — Share Issue/Capital Change 2013

Sep 30, 2013

1 October 2013

ISSUE OF SHARES

Avalon Minerals Limited (ASX: AVI) ('Avalon' or 'Company')

Further to the varied interim orders made by the Takeovers Panel on 27 September 2013 (as announced in Panel Media Release 'Avalon Minerals Limited – Further Variation of Interim Orders') (Interim Orders) Avalon is today proceeding with the issue of the following shares pursuant to pro rata entitlements under its rights issue which closed on 9 September 2013 (Relevant Shares):

• 111,841,380 fully paid ordinary shares to Tan Sri Abu Sahid Bin Mohammed;
• 72,701,435 fully paid ordinary shares to Dato Lim Heng Suan; and
• 27,760,833 fully paid ordinary shares to Dato Siew Mun Chuang.

The total funds raised by Avalon from the issue of the Relevant Shares is $2,123,036.

The balance of the rights issue shares shall continue to be dealt with in the manner outlined in the Interim Orders.

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

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

Avalon Minerals Limited

ABN

68 123 184 412

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of +securities issued or to be issued

212,303,648

Ordinary shares

• 2 Number of +securities issued or to be issued (if known) or maximum number which may be issued
• 3 Principal terms of the +securities (e.g. if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)

Fully paid ordinary shares

111006 (240293)

+ See chapter 19 for defined terms.

4	Do the +securitiesrank equallyin all respects from the +issuedate with an existing +classofquoted +securities?If the additional +securitiesdonot rank equally, please state:the date from which they dotheextenttowhichtheyparticipateforthenextdividend, (in the case of atrust,distribution)orinterest paymentthe extent to which they donot rank equally, other thaninrelationtothenextdividend,distributionorinterest payment	Ordinary shares – Yes, subject to thetemporary restrictions in paragraph 3 of thethe Interim orders made by the TakeoversPanel on 27 September 2013
5	Issue price or consideration	$0.01
6	Purpose of the issue(If issuedas consideration forthe acquisition of assets, clearlyidentify those assets)	Pursuant to the Interim orders made by theTakeovers Panel on 27 September 2013
6a	Is the entity an +eligibleentitythathasobtainedsecurityholder approval under rule 7.1A?If Yes, complete sections 6b – 6hin relation to the +securitiesthesubject of this Appendix 3B, andcomply with section 6i	No
6b	Thedatethesecurityholderresolution under rule 7.1A waspassed	N/A
6c	+securitiesNumberofissuedwithoutsecurityholderapproval under rule 7.1	N/A
6d	+securitiesNumberofissuedwithsecurityholderapprovalunder rule 7.1A	N/A

+ See chapter 19 for defined terms.

• 6e Number of +securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting)
• 6f Number of +securities issued under an exception in rule 7.2
• 6g If +securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation.
• 6h If +securities were issued under rule 7.1A for non‐cash consideration, state date on which valuation of consideration was released to ASX Market Announcements
• 6i Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements

N/A

N/A

N/A

N/A

N/A

7	+Issuedates	1 October 2013
	Note: The issue date may be prescribed byASX (refer to the definition of issue date inrule 19.12). For example, the issue date for apro rata entitlement issue must comply withthe applicable timetable in Appendix 7A.Cross reference: item 33 of Appendix 3B.
		Number	+Class
8	+classNumberandofall+securitiesquotedonASX+securities(includingtheinsection 2 if applicable)	615,064,263	Fullypaidordinaryshares

7 +Issue dates

+ See chapter 19 for defined terms.

Appendix 3B New issue announcement

			+Class
9	+classNumberandofall	Number212,303,648	Ordinary Shares
	+securitiesnot quoted on ASX
	+securities(includingthein	1,000,000	Optionsexercisable
	section 2 if applicable)		at40centsand
			expiring31January
			2014
		500,000	Optionsexercisable
			at30centsand
			expiring 1 July 2014
			Optionsexercisable
		26,000,000	at5centsand
			expiring3130
			September 2015
		10,000,000	Tranche1–vest
			upontheclosing
			priceoftheShares
			being $0.12 or morefor10consecutive
			ASX trading days
		15,000,000	Tranche3–vest
			upontheclosingpriceoftheShares
			being $0.30 or more
			for10consecutive
			ASX trading days
10	Dividend policy (in the case of a	No change

trust, distribution policy) on the increased capital (interests)

Part 2 - Pro rata issue

11	Issecurityholderapprovalrequired?
12	Is the issue renounceable or non‐renounceable?
13	+securitiesRatioinwhichthewill be offered
14	+Classof +securitiesto which theoffer relates

+ See chapter 19 for defined terms.

15	+Recorddatetodetermineentitlements
16	Willholdingsondifferentregisters(orsubregisters)beaggregatedforcalculatingentitlements?
17	Policy for deciding entitlementsin relation to fractions
18	Names of countries in which theentity has security holders whowillnotbesentnewofferdocuments
	Note: Security holders must be told how theirentitlements are to be dealt with.Cross reference: rule 7.7.
19	Closingdateforreceiptofacceptances or renunciations
20	Names of any underwriters
21	Amount of any underwriting feeor commission
22	Namesofanybrokerstotheissue
23	Feeorcommissionpayabletothe broker to the issue
24	Amountofanyhandlingfeepayabletobrokerswholodgeacceptances or renunciations onbehalf of security holders
25	Iftheissueiscontingentonsecurityholders'approval,thedate of the meeting
26	Date entitlement and acceptanceform and offer documents will besent to persons entitled
27	If the entity has issued options,andthetermsentitleoptionholderstoparticipateonexercise,thedateonwhichnoticeswillbesenttooptionholders

+ See chapter 19 for defined terms.

Appendix 3B New issue announcement

28	Date rights trading will begin (ifapplicable)
29	Date rights trading will end (ifapplicable)
30	Howdosecurityholdersselltheir entitlements in full througha broker?
31	How do security holders sell partof their entitlements through abrokerandacceptforthebalance?
32	How do security holders disposeof their entitlements (except bysale through a broker)?
33	+Issuedate

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of +securities (tick one)
• (a) +Securities described in Part 1
• (b) All other +securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35	If the +securities are +equity securities, the names of the 20 largest holders of theadditional +securities,and the number and percentage of additional +securitiesheld by those holders
36	If the +securities are +equity securities, a distribution schedule of the additional+securitiessetting out the number of holders in the categories1 ‐ 1,0001,001 ‐ 5,0005,001 ‐ 10,000
	10,001 ‐ 100,000100,001 and over
37	A copy of any trust deed for the additional +securities

+ See chapter 19 for defined terms.

	Entities that have ticked box 34(b)
38	Number of +securitiesfor which+quotationis sought
39	+Class+securitiesofforwhichquotation is sought
40	Do the +securitiesrank equally inall respects from the +issuedatewith an existing +classof quoted+securities?
	+securitiesIftheadditionaldonot rank equally, please state:the date from which they dotheextenttowhichtheyparticipateforthenextdividend,(inthecaseofatrust, distribution) or interestpaymentthe extent to which they donot rank equally, other than inrelation to the next dividend,distributionorinterestpayment
41	Reason for request for quotationnowExample: In the case of restricted securities, endof restriction period(ifissueduponconversionofanother +security,clearly identifythat other +security)
42	+classNumberandofall+securitiesquotedonASX+securities(includingtheinclause 38)	Number	+Class

+ See chapter 19 for defined terms.

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX's absolute discretion. ASX may quote the +securities on any conditions it decides.
• 2 We warrant the following to ASX.
  • The issue of the +securities to be quoted complies with the law and is not for an illegal purpose.
  • There is no reason why those +securities should not be granted +quotation.
  • An offer of the + securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any +securities to be quoted and that no‐one has any right to return any +securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the +securities be quoted.
• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the +securities be quoted.
• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: Date: 1 October 2013

Print name: Roslynn Shand

Company Secretary

== == == == ==

+ See chapter 19 for defined terms.

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

Rule 7.1 – Issues exceeding 15% of capitalStep 1: Calculate "A", the base figure from which the placementcapacity is calculated
Add the following:
Number of fully paid +ordinary securities•issued in that 12 month period under anexception in rule 7.2
Number of fully paid +ordinary securities•issued in that 12 month period withshareholder approval
Number of partly paid +ordinary•securities that became fully paid in that12 month period
Note:•Include only ordinary securities here –other classes of equity securities cannotbe added•Include here (if applicable) thesecurities the subject of the Appendix3B to which this form is annexed•It may be useful to set out issues ofsecurities on different dates as separateline items
Subtract the number of fully paid +ordinarysecurities cancelled during that 12 monthperiod
"A"

+ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
Multiply "A" by 0.15
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
Insert number of +equity securities issuedor agreed to be issued in that 12 monthperiod not counting those issued:
•Under an exception in rule 7.2
•Under rule 7.1A
•With security holder approval under rule7.1 or rule 7.4
Note:•This applies to equity securities, unlessspecifically excluded – not just ordinarysecurities•Include here (if applicable) thesecurities the subject of the Appendix3B to which this form is annexed•It may be useful to set out issues ofsecurities on different dates as separateline items
"C"
Step 4: Subtract "C" from ["A" x "B"] to calculate remainingplacement capacity under rule 7.1
"A" x 0.15
Note: number must be same as shown inStep 2
Subtract "C"
Note: number must be same as shown inStep 3
Total ["A" x 0.15] – "C"
	[Note: this is the remaining placementcapacity under rule 7.1]

+ See chapter 19 for defined terms.

Part 2

Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
0.10
Note: this value cannot be changed
Step 3: Calculate "E", the amount of placement capacity under rule7.1A that has already been used

+ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remainingplacement capacity under rule 7.1A
"A" x 0.10
Note: number must be same as shown inStep 2
Subtract "E"
Note: number must be same as shown inStep 3
Total ["A" x 0.10] – "E"
	Note: this is the remaining placementcapacity under rule 7.1A

+ See chapter 19 for defined terms.