Sunstone Metals : El Palmar - more outstanding drill intersections AMENDED

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29 NOVEMBER 2021

Amended Announcement

Sunstone Metals Ltd (ASX: STM) is hereby lodging an amended version of the ASX announcement dated 25 November 2021, with the references to gold equivalents removed at the request of ASX to satisfy the requirements of the JORC Code, Clause 50, which states "Reporting on the basis of metal equivalents is not appropriate if metallurgical recovery information is not available or able to be estimated with reasonable confidence."

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29 NOVEMBER 2021

El Palmar gold-copper discovery, northern Ecuador

Third hole delivers more outstanding wide intersections of gold and copper mineralisation

Mineralisation now intersected over 300m long zone and from surface

Key Points

• Assays from hole EPDD003 include:
• • 105.09m at 0.75g/t gold and 0.20% copper from 32m
  • Within 259.56m at 0.41g/t gold and 0.14% copper from 10.4m
• Assays now show significant grades and widths of gold and copper porphyry mineralisation in five holes (EPDD001-EPDD003, and historic holes CED01 and 02) across a 300m long zone, which remains open, on the south side of the El Palmar magnetic complex
• Drill holes EPDD004, 005, and 006 have been completed (assays pending), and hole EPDD007 is underway. All holes are mineralised from shallow depths
• The latest assays provide more firm evidence that El Palmar is a substantial gold-copper porphyry discovery
• Results support Sunstone's view that only the upper portion of a porphyry system has been drilled so far, and this likely extends to considerable depth, and a second drill rig is mobilising to site to test the depth extent
• The scale of the opportunity at El Palmar is increasing with soil sampling completed, and results pending, over two satellite targets within a 1km radius of the discovery holes
• At the high-grade Alba gold target on the Bramaderos Project in southern Ecuador, drilling of the second hole is set to start this weekend
• Sunstone is well funded with ~A$19mill in cash and equities to implement this exciting exploration program across 2 projects

Sunstone Metals Ltd (ASX: STM) is pleased to announce more outstanding assays which confirm that the El Palmar deposit in northern Ecuador (Figure 4) is a significant gold-copper porphyry discovery.

Sunstone is acquiring a 100% interest in the El Palmar Project and currently holds 51% under the Staged Acquisition Agreement signed on 12 August 2020 (see ASX announcement dated 12 August 2020).

This announcement is an amended version of the ASX announcement dated 25 November 2021, with the references to gold equivalents removed at the request of ASX to satisfy the requirements of the JORC Code, Clause 50.

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The project is located in northern Ecuador in the vicinity of the 1.0Bt Llurimagua copper-molybdenum porphyry deposit, and in the same regional structural belt that hosts the 2.6Bt Alpala copper-gold deposit within the Cascabel project (Figures 1 & 2).

The El Palmar results reported in this release comprise all assays from drill hole EPDD003 and the previously unreported assays from portions of EPDD002.

Drill holes EPDD004, 5 and 6 have now been completed (assays pending), and hole EPDD007 is in progress (Table 2). All holes are mineralised from shallow depths.

Drill Hole	From (m)	To (m)	Interval (m)	Au (g/t)	Cu (%)	Mo (ppm)	Ag (g/t)
EPDD001	11.30	492.15	480.85	0.41	0.15	3.40	0.74
incl	52.35	215.90	163.55	0.71	0.20	1.39	1.14
incl	66.90	96.80	29.90	0.73	0.20	0.70	1.06
incl	147.25	163.30	16.05	0.80	0.20	1.36	2.69
EPDD002	4.7	34	29.30	0.18	0.06	1.3	0.57
	250.00	463.75	213.75	0.48	0.22	3.84	1.58
incl	250.00	417.50	167.50	0.58	0.26	3.54	1.81
incl	252.00	274.00	22.00	1.06	0.33	3.87	1.49
and	388.75	398.00	9.25	1.22	0.19	4.38	6.92
EPDD003	10.44	270.00	259.56	0.41	0.14	1.77	0.80
incl	31.91	137.00	105.09	0.75	0.20	1.14	0.89
incl	46.10	106.10	60.00	0.89	0.21	0.97	0.91

Table 1: Mineralised intervals in holes EPDD001 (previously reported), EPDD002, and EPDD003

Sunstone MD Malcolm Norris said it was clear the Company had made a major discovery at El Palmar.

"These results are very good and continue to support our view that El Palmar is a substantial discovery," Mr Norris said. "This is a big system and has huge potential. It is early days, but importantly every hole has been mineralised.

"We are increasing our understanding of the geology and the controls on mineralisation, and we are continuing to deliver good grades and widths with mineralisation that starts from surface.

"We are now drilling hole seven. In early December, we plan to have a second drilling rig on the project that will drill the deep magnetic targets.

"We are seeing some evidence that the first seven holes are defining the upper parts of a large porphyry system with multiple mineralising intrusions emplaced into wallrocks. Given this, we are increasingly excited about the deep targets and the potential for the mineralisation to have a vertical extent of more than 1km."

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Mr Norris said surface soil sampling results from two of the highest-priority satellite porphyry targets were expected before the end of this year. These results could further grow the potential of the project.

Sunstone is also preparing to drill the high-grade Alba gold target at Bramaderos in southern Ecuador, with a five-hole, 2,000m program starting this weekend.

El Palmar Technical Discussion

Geological logging of holes EPDD001 to 006 has identified an extensive porphyry system with multiple phases of intrusive rocks, and local areas of epithermal overprint. At least three porphyry mineralising episodes hosted by high-level dioritic intrusives have been identified, with mineralisation extending into the wallrock intrusions (Figures 1 & 2).

Assays now show significant grades and widths of gold and copper porphyry mineralisation in five holes (EPDD001-EPDD003, and historic holes CED01 and 02) across a 300m long zone, which remains open, on the south side of the El Palmar magnetic complex. This is a substantial area of consistent mineralisation in the southern portion of the broader magnetic anomaly (Figures 1 & 2). Drill holes EPDD004 and 005 have partially tested the northern portion of the anomaly. With each drill hole the mineralisation area is being expanded.

The degree of veining is variable and includes multiple phases of quartz and quartz-sulphide veins, and multiple phases of copper-sulphide bearing magnetite veins. Chalcopyrite continues to be the dominant copper sulphide, with some associated bornite, and minor hypogene covellite and chalcocite.

The El Palmar auger soil sampling program has resumed and is covering several additional targets to the southeast, northeast, and northwest of the main El Palmar target to bring these to the drill testing stage (Figure 1). Some infill sampling has also been undertaken over the main target area. The 2 closest satellite targets, to the immediate southeast and northeast have been soil sampled and results are expected in December. The southeast area has had some historical rock chip sampling and 25 samples over a strike length of 60m, on the margin of a coincident bullseye magnetic anomaly, returned an average of 0.33g/t gold and 0.12% copper.

Sunstone's cash and equity investments remain strong at ~$19m, allowing expanded exploration activities at both El Palmar and Bramaderos.

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Figure 1: RTP magnetics image showing the circular magnetic anomaly being targeted with drilling by Sunstone. Holes EPDD001, EPDD002, EPDD003, EPDD004, EPDD005 and EPDD006 have been completed, and hole EPDD007 is in progress. Prepared drill collars to allow for future drilling are shown as black dots. Also shown are three historical drill holes (CED01- 03, drilled by Codelco), which drilled away from the Sunstone defined target area (see ASX announcement dated 12th August 2020 for details of historical drilling results).