AVB 0.00% 16.5¢ avanco resources limited

The AVB Announcement is specific about being concerned with...

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    The AVB Announcement is specific about being concerned with listing rule 10.1

    http://www.asx.com.au/documents/rules/gn24_acquisition_and_disposal_of_assets.pdf

    On page 2 of the above :

    "Listing rule 10.1 is different in that it does not apply to all kinds of financial benefits but only to acquisitions or disposals of substantial assets by a Listed Entity to any person described... etc"

    It is "different" to 2E of the Corporations Act which deals with "..giving a financial benefit to one of its related parties."

    10.1 deals only with an ASSET.

    So AVB is transferring a substantial asset to Glencore, BlackRock Group, or Applan Natural Resources Fund... for cash.  That much seems probable.

    A "substantial asset" is greater than 5% of equity interest which is approx $140m, given AVB currently has no debt.. say 5% of $140m .. or $7m.

    1. I cannot see that future copper concentrate that only has a theoretical existence can be considered to be strictly a company asset in its own right under 10.1. It certainly does not appear on the balance sheet as a separate asset. A mine is different insofar as it is a package with tangible assets such as tenements, permits, machinery, designs and an implied future positive income stream of some unknown value. A tangible asset.

    If AVB for example were to come to an arrangement for concentrate forward sales at a discount to current market vaule .. cash today for promised delivery of concentrate at some future date, secured.. then it would be covered by Section 2E of the Corporations Act. This also requires shareholder approval, and an independent assessment. For example if AVB agreed to swap concentrate at 20c/lb for $50m today from Glencore, it would be considered to be giving a related party an absurd financial benefit.

    So if it was something to do with concentrate, major forward sales, I suggest it would be more in the nature of 2E which also aims to ensure no favouritism. A fair business transaction on Commercial terms. My own thoughts.

    "Hey we have forward sold concentrate to Glencore to finance the mine"
    "Yes but your mate Glencore is a related party so what price have you agreed to sell our concentrate for?" etc
    All this is not a matter for 10.1... it is dealt with under 2E.. as far as I can see.

    2. So.. what 10.1 asset does AVB have to flog that Glencore might be interested in??  I say Glencore because BR/Applan are investors. They do not want to buy a mine or a tenement from AVB.

    AVB has assets of cash... plus Plant and Equipment at $8m in Dec 2014.

    What else has AVB got valued at greater than $7m that Glencore/Xstrata might want? Tenements? no. Pedra Branca prospect? Defintely not.

    A very profitable incipient copper mine that is 6 - 9 months from production maybe? All permits, major equipment, designs, approvals.. everything.

    What else could it be?? Nothing. AVB has no other asset greater than $7m to flog.!

    I just cannot get away from the sale of a Big Asset under 10.1 and all that could be is Antas. Not 50% of it etc... the lot. Maybe in tranches with milestones .. now and first shipment perhaps ...as AVB does not want to be sitting on massive cash-in-bank.

    It simply all fits. Just seems inescapeable.  Directors are geo's, project managers, top explorers, lawyers.. not day to day mine managers.  

    Not wanting to get too far ahead though... what is a fair sale price for AN/AS?

    http://www.basinvest.ch/upload/pdf/Valuation_of_Metals_and_Mining_Companies.pdf

    It is complicated. AN/AS is a Development mine, albeit very advanced.

    Hartleys attach a "value" of about $95m to it, or 4c/share. That is a value for accounting, but not sale. For example if a large part of the $50m accrued Exploration costs were for AN/AS and profit is $50m/year and increasing... all $95m represents is your costs back plus one year profit for a 10yr mine.. No way.

    ... anyway.... getting too far ahead... an expert in the end will decide on a reasoned value... and the price will be determined from there by negotiation... IF.. IF it happens!!!  Quite a while to wait to find out.

    What such a sale IF it happens might do to the SP is interesting... but enough trying to second-guess.

    I have tried to be logical. If someone sees any other 10.1 ASSET that might be sold that I have missed then please say so.   Good Luck.  PP
 
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