Note 18. Share-based payments (a) Issue of Options and Performance Rights The fair values of the options and performance rights have been determined by an external party using a Trinomial Lattice model for options which defines the conditions under which employees are expected to exercise their options after vesting in terms of the share price reaching a specified multiple of the exercise price, and a Monte Carlo simulation for performance rights. Share price volatility has a powerful influence on the estimation of the fair value of an option and performance right, much of the value of which is derived from its potential appreciation. The more volatile the share price, the more valuable the option. Volatility for the fair value of the options has been determined by the external party performing the valuation using the historical 3 year volatility. The tables below outline the key details for all options and performance rights outstanding as at 30 June 2023: Options: Grant Date Options Outstanding Expiry Date Value per Option Total Value Exercise Price Share price at Grant Date Share Volatility Risk Free rate of return 3 November 2021 12,000,000 2/11/2024 $0.0310 $372,000 $0.100 $0.068 131% 0.69% 12,000,000 $372,000 Weighted Average remaining life 1.3 years Performance Rights: Grant Date Rights Outstanding Expiry Date Value per Right Total Value Vesting Condition Share price at Grant Date Share Volatility Risk Free rate of return Performance Rights: 31 Oct 2022: Tranche 1 9,333,335 31/10/2025 $0.0183 $170,800 $0.090 $0.031 131.4% 3.37% 31 Oct 2022: Tranche 2 9,333,333 31/10/2025 $0.0249 $231,933 TSR $0.031 131.4% 3.37% 31 Oct 2022: Tranche 3 9,333,332 31/10/2025 $0.0154 $143,733 $0.135 $0.031 131.4% 3.37% 28,000,000 $546,467 Weighted Average $ $0.0195 $0.031 Weighted Average remaining life 2.3 years The tables below outline the movements for share-based payments options and performance rights during 2023: Options: Grant Date Beginning Balance Granted during year Exercised during year Lapsed Balance at end of year Vested and Exercisable 31 October 2019 8,000,000 – – (8,000,000) – – 2 November 2021 12,000,000 – – – 12,000,000 12,000,000 Total 20,000,000 – – (8,000,000) 12,000,000 12,000,000 53 Sunstone Metals Limited Annual Report 2023
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