2024 Sunstone Metals Limited ABN 68 123 184 412
Contents 2 Chairman’s Review 4 Operating Review 15 Resource Statement 17 Tenement Schedule 18 Directors’ Report 22 Remuneration Report (Audited) 30 Auditor’s Independence Declaration 31 Corporate Governance Statement 35 Consolidated Statement of Profit or Loss and Other Comprehensive Income 36 Consolidated Statement of Financial Position 37 Consolidated Statement of Changes in Equity 38 Consolidated Statement of Cash Flows 39 Notes to the Financial Statements 59 Consolidated Entity Disclosure Statement 60 Directors’ Declaration 61 Independent Auditor’s Report 65 ASX Additional Information 67 Corporate Directory ABN 68 123 184 412
Sunstone Metals (ASX:STM) is an ASX-listed mineral exploration company with two world-class gold and copper assets in Ecuador. The porphyry projects at Bramaderos and El Palmar have the potential to evolve into multi-decade gold-copper mining centres. 1 Sunstone Metals Limited Annual Report 2024
Overview Chairman’s Review Pursuing resource growth and partnerships Dear Fellow Shareholders, The emergence of Limon as a potential high-grade initial open pit opportunity provides a pathway to unlocking the value of the potentially world-class Bramaderos Project. The past year has been pivotal for Sunstone as we have sought to take advantage of our significant gold and copper projects in the rapidly emerging mining jurisdiction of Ecuador. Solid progress has been made at both the Bramaderos and El Palmar Projects. As a result, we are looking to establish maiden Mineral Resources at both El Palmar and Limon (part of Bramaderos, complementing the Brama-Alba Resource of 2.7Moz). There have also been important changes at Board and Management level, with Patrick Duffy appointed Managing Director and CEO in April 2024, Neal O’Connor appointed Non-Executive Director in April 2024, and more recently the announcement in September 2024 to transition the Chair of the Board to Malcolm Norris. During the year, continued drilling at Limon revealed extensive gold and silver mineralisation across a very shallow epithermal system. Strategically, this is an important strategic step in unlocking the value both at Limon and the adjacent large-scale gold-copper-silver porphyry systems at Brama-Alba. The proposed strategy would be to develop Limon first as a lower capital cost operation, and provide the revenues and balance sheet to subsequently develop the large gold-copper porphyries at Brama-Alba and Melonal. Drilling at Limon during the period has further expanded the areas of known mineralisation. Although activities have been concentrated on the Central Shoot, encouraging trenching results at other areas within the broader Limon system suggest there may be a much larger mineralisation footprint at Limon. With exploration activities planned for Melonal, a highly prospective exploration target next to the established Brama-Alba mineral resource, the Bramaderos region is emerging as a significant gold-copper opportunity with a practical strategy to develop the at-surface epithermals to support the longer-term development of the extensive gold-copper porphyries which also occur at surface and extend to depth. On behalf of the Board of Directors, it is my pleasure to present the 2024 Annual Report for Sunstone Metals Limited (‘Sunstone’ or ‘Company’), and to thank all shareholders for your continued support of Sunstone. 2 Sunstone Metals Limited Annual Report 2024
Although activity at our El Palmar project in Northern Ecuador was limited to trenching and other surface sampling, it was pleasing to see the recent strong results from trenching. These have expanded the area of known shallow gold-copper mineralisation to an area of 600m by 600m. In particular, trenching at the T2 target, immediately to the east of the main T1 target, delivered epithermal gold mineralisation, which appears to sit above a large porphyry target, and correlates with results from hole EPDD024, which were announced in February 2023. At the T5 target just to the south of T1, trenching revealed a robust stockworked veined gold-copper porphyry system, which returned 30m at 1.18g/t gold, including a 2m interval at 10g/t gold and 0.11% copper. This combination of results, together with drilling already done at T1, gives us encouragement that the El Palmar project will present a significant gold-copper development opportunity. To the west of El Plamar, we believe the Verde Chico project contains the same level of prospectivity, particularly as it is contained in the same geological structure, the ‘Toachi Fault Zone’ as El Palmar, as well as the nearby giant Cascabel and Llurimagua copper-gold and copper-molybdenum deposits. Senior management changes during the year saw the Company appoint Patrick Duffy to the role of Managing Director and CEO. With Patrick’s experience with Xstrata and Glencore and more recently at Red 5 developing the King of the Hills mine from a development project into a successful mid-tier Australian gold producer, he provides incredible knowledge and experience to drive future growth and shareholder value. I’d also like to welcome Neal O’Connor to the Board, a highly experienced former Xstrata Copper executive. Neal’s legal background and experience in developing and operating mines and infrastructure across South America, as well as in mergers and acquisitions, provides critical complementary skills to the Board in maximising the future value of Sunstone’s high-quality advanced exploration properties and opportunities in Ecuador. Although it has been a difficult period for junior explorers in the broader market, with a noticeable reduction in market support for explorers, we have been able to progress Sunstone’s projects in Ecuador and are on the cusp of delivering the incredible scale and quality of both the Bramaderos and El Palmar Projects. Yours sincerely Graham Ascough Non-executive Chair Sunstone Metals Limited Company Highlights Establishing Limon as an Exploration Target of 0.9 to 1.7Moz of gold equivalent (within 30 to 44M tonnes at a grade of between 0.9 to 1.2g/t gold equivalent). Emerging strategy to establish Limon as a complimentary highergrade open pit opportunity that is a stepping stone to developing the large gold-copper porphyries at Brama-Alba, Melonal and others Expanding the known area of shallow goldcopper mineralisation at El Palmar through continued trenching Board and management transition with appointing highly-regarded new MD and CEO Patrick Duffy in April 2024 and Malcolm Norris to become Chair in October 2024. 3 Sunstone Metals Limited Annual Report 2024
Introduction Sunstone Metals Limited (“Sunstone” or “Company”) is an ASX-listed mineral exploration company with two world-class gold and copper projects in Ecuador: – The Bramaderos Project is located in southern Ecuador and has a 10Moz+ Exploration Target for the gold-copper porphyry deposits (including a 2.7Moz-qu Mineral Resource at Brama-Alba) and 0.9-1.7Moz Exploration Target at the Limon gold-silver epithermal system. The current drilling activity is focused on progressing Limon to a Mineral Resource and represents a near-surface high-grade goldsilver development opportunity. – The El Palmar Project is located in northern Ecuador, 60km north-west of Ecuador’s capital Quito. The property sits on the regionally significant Toachi Fault Zone that hosts a number of world-class copper porphyry systems. The Project has both at-surface and deeper porphyry systems and drilling to date has demonstrated a pathway to a large starter open pit development opportunity. The Company anticipates releasing a maiden Mineral Resource estimate in late 2024. Strategy The porphyry projects at Bramaderos and El Palmar have the potential to evolve into multi-decade gold-copper mining centres. At Bramaderos, the Limon epithermal deposit has been prioritised as a potential near-surface highgrade gold-silver development opportunity. This strategy allows for a scalable operation to be established first before developing the much larger porphyry gold-copper-silver opportunities at Bramaderos. The Company continues to evaluate potential new opportunities to continue to grow our business in Ecuador where clear shareholder value can be demonstrated. It is also evaluating potential partnerships for its projects where this may maximise the value of the portfolio. Overview Operating Review Track Record The team at Sunstone has been involved in significant discoveries of porphyry and epithermal copper-gold mineralisation at Tujuh Bukit in Indonesia and Cascabel in Ecuador, and the successful development of the King of the Hills Gold Mine in Western Australia and Koniambo Nickel Mine and Smelter in New Caledonia. The Company continues to attract specialist resources executives and is well-placed to repeat that success at Bramaderos and El Palmar. Excellent infrastructure All projects are supported by established infrastructure close to power, road and rail infrastructure and ports. Community support The Board and Management Team take their responsibilities to the host communities seriously and have endeavoured to implement the highest ESG standards from Day 1. Sunstone released its inaugural Sustainability Report in 2023, which details the level of support and engagement with local communities and project stakeholders. 4 Sunstone Metals Limited Annual Report 2024
Project Overview Bramaderos Gold-Copper Porphyry Project (Sunstone 87.5%) The Bramaderos Project is ideally located immediately adjacent to the Pan American highway in Loja province, southern Ecuador, some 90km (1.5-hour drive) from the city of Loja. It is within close proximity to available hydroelectric power, supporting the economics of potential development opportunities. The project has gentle topography with an average elevation of around 1,100m above sea level. It is supported by nearby commercial airports and significant population centres including the regional city of Loja. The project employs members of the local communities and has ongoing community support. Brama-Alba target In 2023 the Company released an initial BramaAlba Mineral Resource Estimate (“MRE”), reported in accordance with the JORC Code 2012, of 156Mt at 0.53g/t AuEq (0.35g/t gold and 0.11% copper), for 2.7Mozs gold-equivalent. Preliminary pit optimisation was applied to the deposit to constrain the MRE and demonstrate its potential to be mined economically by open pit methods. In addition, an initial Exploration Target, reported in accordance with the JORC Code 2012, consists of between approximately 255 and 360Mt at a grade between 0.40 and 0.74g/t AuEq (gold + copper) for contained metal of between 3.3Mozs and 8.6Mozs AuEq. The Exploration Target range is in addition to the initial MRE (see Mineral Resource Estimate information on page 14). Overview Operating Review continued 5 Sunstone Metals Limited Annual Report 2024
Figure 1: The Bramaderos concession showing the location of Limon and other gold-copper porphyry (black outlines) and goldsilver epithermal targets (yellow outlines). The background image is gold-in-soil, highlighting the potential scale increase to be delivered with more drilling at Bramaderos across multiple targets. Drilling activity during 2024 has been focussed on the Limon gold-silver epithermal opportunity. Overview Operating Review continued 6 Sunstone Metals Limited Annual Report 2024
Overview 1 The gold equivalent calculation formula for epithermal gold-silver mineralisation is AuEq(g/t) = Au(ppm) + (Ag (ppm)/82). The prices used were US$1,800/oz gold and US$22/oz silver. Recoveries are estimated at over 90% for gold and 90% for silver from metallurgical studies. Limon The Limon Epithermal Target is a high-grade system covering 1.7km x 0.7km with mineralisation extending from surface to at least 250m deep. During November 2023, successful drilling programs (see results discussed below) resulted in an initial Exploration Target for the atsurface Limon epithermal discovery, reported in accordance with the JORC Code, of between approximately 30 and 44Mt at a grade between 0.9 and 1.2g/t AuEq (gold + silver) for contained metal of between 0.9Mozs and 1.7Mozs AuEq. Located 2.7km north-east of the Brama-Alba gold-copper deposit, the Limon opportunity is emerging as a potential strategy to deliver a lower capital cost standalone operation or a starter pit for the large-tonnage Bramaderos gold-coppersilver porphyry development. Several holes drilled during 2023-24 highlighted the significant potential of the Limon Central Shoot. Hole LMDD026 was reported on 3 July 2023 and returned 185m at 2.85g/t AuEq1 (2.67g/t gold and 15g/t silver) from 90m, including 31m at 12.93g/t AuEq1 (12.53g/t gold and 32.7g/t silver from 146m). This mineralisation extends through to surface and is representative of the very compelling Central Shoot. Current geological interpretations suggest that strong mineralisation occurs at Limon where structures of different orientation intersect one another, and where there is evidence of brecciation. Other holes drilled during the year include; – LMDD030 intersected 42m at 3.9g/t AuEq1 (3.37g/t gold and 43.3g/t silver) from 152m within 243m at 1.32g/t AuEq1 (1.11g/t gold and 16.9g/t silver) from 46m; – LMDD038 intersected 180.1m at 0.96g/t AuEq (0.87g/t gold and 7.7g/t silver) from 6m, including 88.1m at 1.50g/t AuEq1 (1.36g/t gold and 11.6g/t silver) from 98m, and including 5.0m at 6.27g/t AuEq1 (5.29g/t gold and 80.6g/t silver) from 102m, and 5.3m at 5.74g/t AuEq1 (5.41g/t gold and 27.4g/t silver) from 158m – LMDD040 intersected 269m at 1.05g/t AuEq1 (0.82g/t gold and 18.5g/t silver) from 74m, including 124m at 1.93g/t AuEq1 (1.54g/t gold and 31.8g/t silver) from 190m, and including 11.0m at 14.15g/t AuEq1 (12.33g/t gold and 149.3g/t silver) from 280m Trenching programs followed to further define mineralisation at surface to guide future drilling programs and to feed into, at the appropriate time, a maiden Mineral Resource estimate. These trenching programs delivered some very promising results such as 7.1m @ 3.0 g/t gold, and 2.8 g/t silver in ENE trending epithermal veins in LM-04; 18.0m at 4.8g/t gold and 6.1g/t silver, including a peak result of 2.0m at 32.9g/t gold and 29.5g/t silver in LM-05; 7.9m at 3.2g/t gold and 8.9g/t silver, also in LM-05 and open at the end of trench; and 2.0m at 5.9g/t gold and 1.0g/t silver in LM-06; 3.9m at 8.4 g/t gold and 191.8 g/t silver in LM-07b, including 1.9m at 16.2g/t gold and 376g/t silver; and 2.2m at 6.2g/t gold and 19.9g/t silver in LM-07. Interpretation of previous drilling, ongoing analysis of the process for moving from Exploration Target to an MRE, and the recent trenching results delivered into another round of drilling in mid2024. In August 2024, strong assay results from recent drilling in the Central Shoot reported 50.85m at 1.43g/t AuEq (1.01g/t gold and 34.0g/t silver) from 135.15m in hole LMDD051, and included 5m at 5.81g/t AuEq (3.38g/t gold and 199.4g/t silver). Hole LMDD051 also included high silver grade of 1,610g/t over 0.45m from 145m. Other highgrade results from the recent drilling program demonstrate that mineralisation extends into new areas and strengthens the geological model ahead of a resource estimate. Outstanding assays received during the year from trenching in the Western Target, including 3.9m @ 8.4g/t gold and 191.8g/t silver in trench LM-07b, highlight the potential for a significant extension of the mineralisation outside of the Central Shoot. Several of these additional targets within the broader Limon epithermal area are being worked up to drill status. Operating Review continued 7 Sunstone Metals Limited Annual Report 2024
Figure 2: The Limon epithermal gold-silver system in plan view, showing multiple mineralised structures in green. High-grade domains are at intersections of NE and WNW trending structures. New intersections in holes LMDD048-051 extend mineralisation on the western and eastern sides of the Limon epithermal system. Several additional targets have been defined based on gold-in soil and zincin-soil anomalies, and structural interpretation. See Figure 5 for a broader context within the very large Limon target area. In addition to the Limon Epithermal Target, trenching undertaken in 2018, followed by drilling during 2019 to 2022 discovered a well-mineralised gold-copper porphyry system at the Limon target, with 79m at 0.90g/t AuEq (0.52g/t gold, 0.19% copper, 9.4g/t silver) from 90m in LMDD010, including 34.7m at 1.26g/t AuEq (0.77g/t gold, 0.24% copper, 14.1g/t silver) from 94m. This discovery reinforces the concept of multiple gold-copper porphyry systems and gold-silver epithermal systems within the 50km2 Bramaderos concession. It highlights the potential for significant growth of mineral resources at higher grades. Overview Operating Review continued 8 Sunstone Metals Limited Annual Report 2024
Figure 3: Limon gold in soils map showing extensive anomalous gold over an area of up to 1.7km x 700m. The black-circled areas have seen partial drill testing. Red circled areas show the multiple epithermal gold-silver targets that remain to be drill tested. The area of recent soil sampling in the east, which returned a 3.18 g/t Au result, is circled in purple. The black dashed line shows the underlying Limon porphyry target outline. Overview Operating Review continued 9 Sunstone Metals Limited Annual Report 2024
Figure 4: Location of the El Palmar project (and Verde Chico property) relative to the Llurimagua and Cascabel Alpala and TandayamaAmerica deposits, and the Toachi fault system which is considered important for the localisation of porphyry copper-gold-molybdenum mineralisation in northern Ecuador. El Palmar Copper-Gold Porphyry Project – Northern Ecuador (Sunstone 74.5% - acquiring up to 100%) El Palmar is located in northern Ecuador, 60km north-west of Ecuador’s capital Quito. Sunstone is acquiring 100% of the El Palmar project and currently holds 74.5% under the Staged Acquisition Agreement (following a payment of USD$300,000 in July 2024). The agreement was originally signed on 12th August 2020, with an Amendment signed in June 2024 to enable Sunstone to acquire the outstanding percentage by 30 June 2026 The property sits on the regionally significant Toachi Fault Zone, the same regional structural belt that hosts the 2.66Bt Alpala copper-gold porphyry deposit grading 0.25g/t gold and 0.37% copper, and the 0.53Bt Tandayama-America deposit grading 0.19g/t gold and 0.24% copper within the Cascabel project (see www.solgold.com.au for details), and is in close vicinity of the 1Bt Llurimagua copper-molybdenum porphyry deposit grading 0.89% copper and 0.04% molybdenum (Figure 4). Overview Operating Review continued 10 Sunstone Metals Limited Annual Report 2024
Figure 5: Plan map showing the drilling to date at the T1 target at El Palmar, the location of recent trench results, and the relative locations of the T1-T2-T5 porphyry-epithermal cluster. Operating Review continued Sunstone has identified five porphyry gold-copper targets, with mineralisation extending from surface at the T1, T2 and T5 targets covering an area of 600m by 600m, and mineralisation at depth for the T3 and T4 targets. Trenching results returned in July 2024 continue to enhance the potential for a significant Mineral Resource. Assays expanded the shallow mineralisation adjacent to the T1 target while providing further evidence for deeper, larger porphyry deposits. Strong stockwork-hosted porphyry gold-copper mineralisation has been uncovered by trench P7-3e at the T5 target immediately south of the large T1 target (sampling intersected 30m at 1.18g/t gold, including a 2m interval of 9.99g/t gold and 0.11% copper). At the same time, porphyry-related epithermal mineralisation was also identified in trench P7-1 at the T2 target, located immediately east of the large T1 target (trench sampling intersected 13.0m at 0.47g/t gold in trench P7-1e and 8.0m at 0.82g/t gold in trench P7-1f, which correlated well with drill hole EPDD024). Overview 11 Sunstone Metals Limited Annual Report 2024
Verde Chico Project Sunstone is acquiring the Verde Chico Project through a Staged Acquisition Agreement signed on 23 September 2022. Verde Chico is located to the west of Sunstone’s El Palmar gold-copper porphyry discovery and quadruples Sunstone’s land position to 3,672ha in this highly prospective copper-gold belt. The Verde Chico project was explored by the Rio Tinto group (then called RTZ) in 1992-1995, and by Canadian junior Balaclava Mines in 1998. No exploration has been undertaken on the land since 1998. The historical exploration identified a 1.1kmlong gold-in-soil anomaly that is open to the north and south, and which includes several high-grade gold-bearing veins at surface and wide lowergrade zones of gold mineralisation in some drill holes. A total of 12 trenches for 683m were opened and sampled following mineralised structures. A total of 28 drill holes for 4,436m were drilled by RTZ and Balaclava. Historical exploration comprised regional stream sediment sampling, soil sampling, limited geophysics (CSAMT), trench sampling, and diamond drilling. The soil sampling by Rio Tinto, which defined the >1.1km long gold-in-soil anomaly, is coincident with a CSAMT resistivity anomaly. This area was drilled at several locations and returned significant intervals of gold mineralisation including 68.5m at 1.05g/t gold from surface in hole RVC-08, including 1m at 11.3g/t gold from 40.5m. Overview Operating Review continued 12 Sunstone Metals Limited Annual Report 2024
Sustainability Activities Sunstone is committed to building its Environmental, Social, and Governance (ESG) credentials. Through our actions, we can make our operations safer, our decision-making more transparent, our communities increasingly resilient and our environmental stewardship stronger. In short, how we can improve our business. In November 2023 we published our first sustainability report which marks an important milestone in our efforts to provide greater transparency regarding our ESG performance. More significantly, it serves as a benchmark against which we can identify opportunities for improvement and measure future progress. We firmly believe that responsible mining can be transformative for the development of communities in Ecuador, and we are committed to being a part of this positive change. Our prioritisation of local employment and procurement is one element of change that has significant indirect benefits, such as supporting the growth of the formal economic sector in rural areas, and the greater participation in the local economy, benefitting local businesses. We have also continued to invest in communities’ infrastructure, health, education, and business development through joint initiatives with local organisations and authorities to address local needs. Sunstone remains committed to respecting and protecting human rights and ensuring early, transparent, and inclusive consultation and engagement with landowners and communities related to our activities. This includes incorporating their views into our decision-making and developing long-term partnerships. We are conscious of our responsibility to safeguard Ecuador’s natural heritage. We are committed to maintaining high standards of environmental management, which is reflected in our consistently strong environmental compliance. We also strive to maximise our positive impact on the environment through reforestation activities and by contributing to research and data collection about local species. Sunstone has continued its efforts to provide a safe, healthy and diverse workplace, which is essential to being able to attract and retain employees of the highest calibre. Our health and safety performance, as well as the representation of women within our technical teams, are steps in the right direction within our ESG strategy. Sustainability highlights: – 99.6% Ecuadorean personnel in Ecuador – 86% Local personnel – 33% Female professional personnel – 95% Procurement spend in Ecuador – 0 Major environmental non-compliances – 0 Environmental incidents To read more about our commitment to sustainability, our ESG performance and case studies, refer to Sunstone’s inaugural Sustainability Report which was published in November 2023. Material Business Risks The business of the Group is a mineral exploration company in the porphyry copper-gold space. Exploration activities involve various inherent risks, including the risk that exploration may be unsuccessful or the risk that laws may change in various jurisdictions in which we operate, that could have a negative impact, resulting in potential impairment in the value of the tenements, limiting access to capital, diminishing the cash reserves of the Group and possible relinquishment of the tenements. The Group undertakes regular detailed risk assessments to identify risks to the business and develop mitigation strategies. Overview Operating Review continued 13 Sunstone Metals Limited Annual Report 2024
Overview Operating Review continued Bramaderos Mineral Resource The initial Mineral Resource estimate (MRE), from the Brama-Alba target, reported in accordance with the JORC Code2 is 156Mt at 0.53g/t AuEq (0.35g/t gold and 0.11% copper), for 2.7Mozs AuEq3 (see Table 1 below for more detail). Preliminary pit optimisation was applied to the deposit to constrain the MRE and demonstrate the potential to be mined economically by open pit methods. In addition to this MRE, the Bramaderos project has a porphyry Exploration Target reported in accordance with the JORC Code. It consists of between approximately 255 and 360Mt at a grade between 0.40 and 0.74g/t AuEq3 (gold + copper) for contained metal of between 3.3Mozs and 8.6Mozs AuEq3 (see Table 2). Further, an initial Exploration Target for the Limon epithermal gold-exploration target was developed during the year in accordance with the JORC code consists of 0.9Moz to 1.7Moz AuEq within 30 to 40Mt at a grade of 0.9 to 1.2g/t AuEq4 (see Table 3). Table 1 - Mineral Resource estimate at various cut-off grades Cut Off AuEq (g/t) Tonnage (Mt) AuEq (g/t) AuEq (Moz) Au (g/t) Au (Moz) Cu (%) Cu Metal (Kt) Ag (g/t) Ag Metal (Moz) 0.2 176 0.50 2.8 0.33 1.9 0.10 180 1.2 7.0 0.3 156 0.53 2.7 0.35 1.8 0.11 169 1.3 6.5 0.4 117 0.59 2.2 0.40 1.5 0.12 138 1.4 5.1 0.5 75 0.68 1.6 0.46 1.1 0.13 97 1.4 3.5 The company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement for the Mineral Resource estimate and Exploration Target referred to above and, that all material assumptions and technical parameters underpinning the estimates continue to apply and have not materially changed. The company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement. The potential quantity and grade of the Exploration Target is conceptual in nature as there has been insufficient exploration to estimate a Mineral Resource for the target area reported. It is uncertain if further exploration will result in the estimation of a Mineral Resource for an Exploration Target. 2 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edition. Prepared by: The Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC). 3 The gold equivalent calculation formula for porphyry gold-copper-silver mineralisation is AuEq(g/t) = (Au grade x Au price x Au recov / 31.1035) + (Ag grade x Ag price x Ag recov / 31.1035) + (Cu grade x Cu price x Cu recov / 100)) / (Au price x Au recov / 31.1035). The prices used were US$1,800/oz gold and US$9,500/t copper and US$22/oz silver. Recoveries are estimated at 89% for gold, 85% for copper, and 60% for silver based on metallurgical studies. In Sunstone’s opinion all the elements included in the metal equivalents calculation have reasonable potential to be recovered and sold. 4 The gold equivalent calculation formula for epithermal gold-silver mineralisation is AuEq(g/t) = Au(ppm) + (Ag (ppm)/82). The prices used were US$1,800/oz gold and US$22/oz silver. Recoveries are estimated at over 90% for gold and 90% for silver from metallurgical studies. 14 Sunstone Metals Limited Annual Report 2024
Overview Operating Review continued Table 2 - Bramaderos porphyry exploration target Tonnage (Mt) Minimum Grade Maximum Grade Metal Content (AuEq Mozs) Exploration Target Min Max Au (g/t) Cu (%) Au Eq (g/t) Au (g/t) Cu (%) Au Eq (g/t) Min Max Brama-Alba (excluding MRE areas) 70 100 0.2 0.1 0.35 0.6 0.12 0.8 0.79 2.57 Melonal 150 200 0.25 0.1 0.4 0.5 0.12 0.7 1.93 4.50 Limon 35 60 0.33 0.1 0.5 0.6 0.12 0.8 0.56 1.54 TOTAL 255 360 0.40 0.74 3.3 8.6 Table 3 - Limon epithermal gold exploration target Tonnage (Mt) Minimum Grade Maximum Grade Metal Content (AuEq Mozs) Exploration Target Min Max Au (g/t) Cu (%) Au Eq (g/t) Au (g/t) Cu (%) Au Eq (g/t) Min Max Central Shoot 20 31 0.8 12.0 0.9 1.1 15.8 1.2 580 1,200 Domain surrounding Central Shoot 5 7 0.8 12.0 0.9 1.1 15.8 1.2 145 270 Anomaly A 1.7 2 0.8 12.0 0.9 1.1 15.8 1.2 50 75 Anomaly B 1.7 2 0.8 12.0 0.9 1.1 15.8 1.2 50 75 Anomaly C 1.7 2 0.8 12.0 0.9 1.1 15.8 1.2 50 75 TOTAL 30 44 0.9 1.2 875 1,700 - Due to the effect of rounding, the total may not represent the sum of all components 15 Sunstone Metals Limited Annual Report 2024
Mineral Resource Estimation Governance Statement All Mineral Resource estimates reported by Sunstone Metals Limited are prepared by independent, qualified mining industry professionals and in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (the JORC Code) 2012 Edition. Competent Persons named by the Company are Members of the Australasian Institute of Mining and Metallurgy and qualify as Competent Persons as defined in the JORC Code. The Competent Persons have reviewed Sunstone’s sampling and Quality Control and Quality Assurance (QA/QC) practices to ensure samples are representative and unbiased; and that assay results are obtained with the appropriate level of confidence. Sunstone also produces internal Mineral Resource estimates synchronously with, but independent of, the Mineral Resource estimates calculated by the qualified mining industry professionals as an audit of the external result. The tables above set out Mineral Resources for 2024, with no change to the overall tonnes and grade or Mineral Resource classification from the Initial Mineral Resource reported 13 December 2022. The potential tonnage, grade and quantity of an Exploration Target is conceptual in nature. There has been insufficient exploration to estimated a Mineral Resource for the target area reported. It is uncertain if further exploration will result in the estimation of a Mineral Resource. Competent Persons Statement The information in this report that relates to exploration results is based upon information reviewed by Dr Bruce Rohrlach who is a Member of the Australasian Institute of Mining and Metallurgy. Dr Rohrlach is a full-time employee of Sunstone Metals 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”. Dr Rohrlach 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 Mineral Resources are based on the information compiled by Mr Aaron Meakin. Mr Aaron Meakin is a full-time employee of ERM Australia Consultants Pty Ltd and is a Member and Chartered Professional of the Australasian Institute of Mining and Metallurgy. Mr Aaron Meakin has sufficient experience 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 the Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code). Mr Aaron Meakin consents to the disclosure of the information in this report in the form and context in which it appears. The information in this report that relates to Exploration Targets 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 Sunstone Metals 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. Overview Operating Review continued 16 Sunstone Metals Limited Annual Report 2024
Operating Review continued TENEMENT SCHEDULE Gold-Copper Tenements – Ecuador Tenement Holder Tenement Name Location Status Sunstone Ownership Bramaderos S.A. BramaderosA Loja, Ecuador Granted 87.5% Bramaderos S.A. Bramaderos 02 Loja, Ecuador Granted 87.5% Bramaderos S.A. Cueva de Leon Loja, Ecuador Granted 87.5% Golden Exploration Ecuador S.A. Los Mandariyacus (El Palmar)B Imbabura, Ecuador Granted 74.5%B Compania Minera Verde Chico CIA Ltda Verde ChicoC Imbabura, Ecuador Granted 0% Notes A: Sunstone announced on 7 January 2020 that the terms of the Earn-in Joint Venture with TSX-V listed Cornerstone Capital Resources (subsequently merged with SolGold PLC) had been amended to provide Sunstone with an immediate 87.5% interest and SolGold with a loan carried 12.5% interest in Bramaderos S.A. (formerly named La Plata Minerales S.A.) the holder of the Bramaderos concession. B: Sunstone announcement 12 August 2020 regarding a Staged Acquisition Agreement for 100% of the El Palmar project. Sunstone acquired a further 4.5% of El Palmar following an instalment payment in July 2024. Sunstone can acquire the remaining 25.5% by 30 June 2026. C: Sunstone announcement 21 June 2022 regarding a Letter of Intent to acquire 100% of the Verde Chico Project, located to the west of Sunstone’s El Palmar gold-copper porphyry discovery in northern Ecuador, through a Staged Acquisition Agreement, signed 23 September 2022, from the Verde Chico Group. Overview 17 Sunstone Metals Limited Annual Report 2024
Your Directors present their report on Sunstone Metals Ltd (“Sunstone” or “Company”) and the entities it controlled (“Consolidated Entity” or “Group”) for the financial year ended 30 June 2024. Directors The following persons were Directors of Sunstone Metals Ltd any time during the financial year and up to the of this report: Mr Graham Ascough Non-executive Chair Mr Patrick Duffy CEO & Managing Director (appointed 15 April 2024) Non-Executive Director (appointed 8 November 2023 until 14 April 2024) Mr Malcolm Norris Executive Director – Exploration (appointed 15 April 2024) CEO & Managing Director (until 14 April 2024) Mr Stephen Stroud Non-Executive Director Mr Neal O’Connor Non-Executive Director (appointed 16 April 2024) Principal activities During the period, the principal activities of the Group consisted of mineral exploration and evaluation. Dividends No dividends were paid or recommended to be paid to members during the financial period. Review of operations Refer to the Operating Review contained in the Annual Report for further discussion regarding the Group’s operations. A summary of consolidated other income and results is set out below: 2024 $ 2023 $ Interest and other income 125,798 238,186 Profit/(loss) before income tax (2,293,242) (1,880,048) Income tax expense – – Profit/(loss) attributable to members of Sunstone Metals Limited (2,293,242) (1,882,932) Profit/(loss) attributable to non-controlling interests – 2,884 Earnings per share 2024 cents 2023 cents Basic earnings per share (0.1) (0.1) Financial Performance During the year ended 30 June 2024 the Group incurred a loss of $2,293,242 (2023: loss of $1,880,048). The increase in the loss compared with prior year is largely due to a loss of $167,916 on the revaluation of shares in NewPeak Metals Ltd and United Lithium Corp (2023: gain of 487,967). Interest income also declined, with $125,798 earned in the current year (2023: $238,186), with the reduction attributable to lower cash balances held during the year compared with prior year. Employee benefits expense reduced to $1,380.280 (2023: $1,852,515) largely due to a reduction in the non-cash share based payments expense for employee performance rights to $169,160 (2023: $359,359). Financial Position The Group’s non-current assets increased from $69,375,409 at 30 June 2023 to $82,866,040 at 30 June 2024, and the Group’s current assets decreased from $10,675,454 at 30 June 2023 to $3,121,402 at 30 June 2024 primarily due to the reduction in cash and cash equivalents associated with expenditure incurred on the Bramaderos and El Palmar Projects in Ecuador. At the end of the financial period, the Group had cash balances of $2,669,044 (2023: $10,306,546) and net assets of $83,915,712 (2023: $78,143,644). Total liabilities amounted to $2,071,730 (2023: $1,907,219) and included trade, other payables, lease liabilities and provisions. During the year, the Group had an increase in contributed equity of $8,281,677, after fees, for the placements in December 2023 and May 2024. Directors’ Report 18 Sunstone Metals Limited Annual Report 2024
Events occurring after reporting date Except as noted below, no matter or circumstance has occurred subsequent to year end that has significantly affected, or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group or economic entity in subsequent financial periods. – On 9 September 2024, the Group announced a capital raise of $2,500,000 via a Placement. The Group received $2,232,500 (net of broker fees) on 13 September 2024. $130,000 relating to Director participation will be received following the AGM in October 2024 (subject to shareholder approval). On 9 September 2024, the Group also announced a Share Purchase Plan to raise approximately $2,000,000. – On 1 July 2024, the Group paid US$300,000 to increase ownership in Gold Exploration Ecuador S.A. (the company which holds the El Palmar project) to 74.5%. Significant changes in the state of affairs Other than those matters discussed in this report, no significant changes in the state of affairs of the Group occurred during the financial period. Likely developments and expected results The Group will continue exploration and development activities. The Group assesses commercial opportunities for corporate growth, including the acquisition of interests in projects, as they arise. Due to the unpredictable nature of these opportunities, developments could occur at short notice. Environmental regulations The Group is subject to the environmental laws and regulations imposed under the Environmental Codes in the jurisdictions in which it operates. The Group is currently engaged in exploration activities which are governed by conditions or recommendations imposed through the granting of a licence or permit to explore. Compliance with these laws and regulations is regarded as a minimum standard for the Group to achieve. There were no known breaches of any environmental laws or regulations during the year. Information on Directors The Directors of the Company at any time during or since the end of the financial year were: Mr Graham Ascough BSc, PGeo, MAusIMM Independent Non-Executive Chair: Appointed 29 November 2013 Special responsibilities Member of the Audit and Financial Risk Committee Experience and expertise Mr Ascough is a senior resources executive with more than 30 years of industry experience evaluating mineral projects and resources in Australia and overseas. He is also currently non-executive Chairman of ASX listed companies: Geopacific ResourcesMetals Limited and Black Canyon Limited, and non-executive director of Patronus Resources Limited. Mr Ascough, a geophysicist, has had broad industry involvement playing a leading role in setting the strategic direction for companies, completing financing and in implementing successful exploration programmes. He is a member of the Australasian Institute of Mining and Metallurgy and is a Professional Geoscientist of Ontario, Canada. Mr Ascough has served as a director of several companies listed on the Australian Securities Exchange in recent years, including Musgrave Minerals Limited. Previously, he was the Australasian Manager of Nickel and PGM Exploration at the major Canadian resources house, Falconbridge Limited, which was acquired by Xstrata Plc in 2006. Other directorships of listed companies in the past three years Patronus Resources Limited (appointed 11 September 2024) PNX Metals Limited (formerly Phoenix Copper Limited) (appointed December 2012; PNX Metals Limited was delisted from the ASX on 12 September 2024); Black Canyon Limited (appointed 25 August 2013; Company listed on ASX 5 May 2021) Geopacific Resources Limited (appointed 7 November 2023) Musgrave Minerals Limited (appointed 26 May 2010 until 29 September 2023) 19 Sunstone Metals Limited Annual Report 2024
Mr Patrick Duffy B.Com, CA CEO and Managing Director: Appointed 15 April 2024 Independent Non-Executive Director: Appointed 8 November 2023, ceased 14 April 2024 Experience and expertise Mr Duffy was appointed Managing Director and CEO of Sunstone Metals in April 2024 and brings extensive international leadership, mine development, financial and governance expertise. Most recently Mr Duffy held the roles of both Chief Corporate Development Officer and Chief Financial Officer for Red 5 Limited (ASX: RED) and was a key member of the Company’s leadership team that has established Red 5 as a successful multi-billion dollar Australian gold producer through the development, construction and production ramp up of the 5.5Mtpa King of the Hills (KOTH) Gold Mine in Western Australia. Mr Duffy began his career with Ernst & Young and has since had broad leadership and executive roles in the international resource sector. He was CFO for the development of Xstrata’s US$6 billion Tampakan Copper and Gold Project in the Philippines and was Director - Strategy & Performance for the construction and production ramp up of Glencore Xstrata’s US$7 billion Koniambo Nickel Project in New Caledonia. He has worked extensively across Asia and the Pacific with mining and steel companies and established a successful Hong Kong-based management consulting company. Other directorships of listed companies in the past three years Nil Mr Malcolm Norris MSc, MAppFin, FAusIMM Executive Director – Exploration: Appointed 15 April 2024 CEO and Managing Director: Appointed 1 April 2014, ceased 14 April 2024 Special responsibilities Member of the Audit and Financial Risk Committee Experience and expertise Mr Norris is a senior mining industry professional with extensive experience in business management, mineral exploration, development of new business opportunities and asset transactions. His roles have covered a wide range of commodities, geographic locations and management of global portfolios of projects in both large and small organisations. Mr Norris holds an MSc in Geology and a Masters in Applied Finance. He has more than 35 years of industry experience including 23 years with WMC Resources, followed by executive roles with Intrepid Mines and SolGold. Other directorships of listed companies in the past three years Nil Mr Stephen Stroud BBus.Acc, GDip.AppFin, CPA Independent Non-Executive Director: Appointed 6 September 2017 Special responsibilities Chair of the Audit and Financial Risk Committee Experience and expertise Mr Stroud is an experienced CPA qualified corporate finance executive with over 20 years experience advising across all aspects of corporate finance. He advises boards and management teams across a broad range of transactions including public and private equity raisings, debt/hybrid debt, Initial Public Offerings, mergers & acquisitions, sell-downs and restructures both in Australia and overseas. Mr Stroud is Co-Head, Melbourne - Corporate Advisory with Morgans Financial Limited, with a key focus on the small-mid cap market listed space on the ASX working across a broad range of sectors including IT, retail, FMCG, healthcare, metals and mining, energy, property and general industrials. Mr Stroud possesses strong relationships across buy and sell side clients across Australia, Asia, UK and North America. Other directorships of listed companies in the past three years: Nil Directors’ Report continued 20 Sunstone Metals Limited Annual Report 2024
Mr Neal O’Connor LLB, GAICD Independent Non-Executive Director: Appointed 16 April 2024 Experience and expertise Mr O’Connor is a lawyer with global leadership experience of a top four global mining company, with extensive experience in the development and operation of mines and related infrastructure, including across South America. He has extensive experience in the resource industry and brings an added focus on Corporate Transactions, Corporate Governance and Risk Management to the Board. Mr O’Connor was formerly General Counsel and Company Secretary and an Executive Committee member of Xstrata Copper (2003 – 2013), the largest business unit of global mining company Xstrata Plc. Mr O’Connor is currently a Non-Executive Director of Mitchell Services Limited (ASX: MSV) and a Director of Wesley Medical Research Institute Foundation. He was previously a Non-Executive Director of Stanmore Coal Limited. (ASX: SMR) and Non-Executive Director of Maas Group Holdings Limited (ASX: MGH). His prior legal roles include General Manager Legal M.I.M. Holdings Limited and in private practice with Pinsent & Co Solicitors, London (now Pinsent Masons LLP) and Mallesons Stephen Jacques, Brisbane (now King Wood Mallesons). Other directorships of listed companies in the past three years: Mitchell Services Limited (appointed October 2015) Maas Group Holdings Limited (ceased August 2022) Company Secretary Mr Gavin Leicht (appointed 28 April 2015, ceased 30 June 2024) B.Com, FGIA Mr Leicht has over 25 years experience in various financial roles, including 20 years in senior financial positions in the resources sector in Australia and overseas with Rio Tinto Limited and PanAust Limited. Mr Leicht holds a Bachelor of Commerce degree from the University of Newcastle. He is a Fellow of the Governance Institute of Australia and has also been a Member of the Australian Society of Certified Practising Accountants, and the Finance & Treasury Association. Mr Lucas Welsh (appointed 1 July 2024) B.Com, CA, MBA, GAICD Mr Welsh is a Chartered Accountant with over 25 years experience in senior finance roles in the resources sector with operations in Australia and overseas with WMC Resources and St Barbara Limited. Mr Welsh previously worked in the Transaction Services department at PwC. Mr Welsh’s experience includes capital and debt raisings, treasury, taxation, financial reporting, procurement, risk management, governance and transformation. Meetings of Directors The number of meetings of Directors (including meetings of Committees of Directros), and the number of meetings attended by each of the Directors of the Company during the financial year was: Meeting of Directors Audit and Financial Risk Committee Eligible to attend Attended Eligible to attend Attended Mr Graham Ascough 10 10 2 2 Mr Patrick Duffy 6 6 1 1 Mr Malcolm Norris 10 10 2 2 Mr Stephen Stroud 10 10 2 2 Mr Neal O’Connor 3 1 – – Further details of the operation of all Committees are contained in the Corporate Governance Statement. 21 Sunstone Metals Limited Annual Report 2024
Remuneration Report (Audited) Key management personnel The remuneration report outlines the Director and executive remuneration arrangements of the Group in accordance with the requirements of the Corporations Act 2001 and its Regulations. For the purposes of this report, key management personnel (KMP) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any Director (whether executive or otherwise) of the Company. For the purposes of this report, the term “executive” encompasses the Chief Executive Officer, General Managers and the Chief Financial Officer & Company Secretary of the Group. Key management personnel during the year and at the date of this report (unless otherwise stated) are: Non-Executive Directors Mr Graham Ascough Non-Executive Chair Mr Stephen Stroud Non-Executive Director Mr Neal O’Connor Non-Executive Director (appointed 16 April 2024) Mr Patrick Duffy Non-Executive Director (appointed 8 November 2023, ceased 14 April 2024; appointed CEO and Managing Director 15 April 2024) Executives Mr Patrick Duffy CEO & Managing Director (appointed 15 April 2024) Mr Malcolm Norris CEO & Managing Director (until 14 April 2024) Executive Director – Exploration (appointed 15 April 2024) Mr Gavin Leicht Chief Financial Officer & Company Secretary (ceased 30 June 2024) Mr Lucas Welsh Chief Financial Officer & Company Secretary (appointed 1 July 2024) Mr Ray Robinson General Manager Studies & Technical Services Dr Bruce Rohrlach General Manager Geology The remuneration report is set out under the following main headings: A Principles used to determine the nature and amount of remuneration B Details of remuneration C Executive contractual arrangements D Share-based compensation A Principles used to determine the nature and amount of remuneration The Group’s executive reward framework is designed to reward performance for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and seeks to conform to market best practice for delivery of rewards. The Board considers the following key criteria for good reward governance practices in determining executive rewards: – competitiveness and reasonableness – acceptability to shareholders – performance linkage/alignment of executive compensation – transparency – capital management. The Group has structured an executive remuneration framework that aims to be market competitive and complimentary to the reward strategy of the Group. Alignment to shareholders’ interests: – focuses on exploration success and project development as the creation of shareholder value and returns – attracts and retains high calibre executives. Directors’ Report continued 22 Sunstone Metals Limited Annual Report 2024
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