"There is a similar, yet slightly larger, story going on in Para state with fellow-Australian listed developer Avanco Resources.
Having acquired Carajás’ second largest land tenement (second only to Vale), the copper-focused company has successfully drafted a mine plan at its Antas North project and funded the $60 million build.
This financing was backed by the likes of BlackRock, Appian Natural Resources and Greenstone Resources, pedigree institutions on the lookout for high returns.
Avanco plans to produce 11-12,000t/y of copper concentrate and 7,000oz/y of gold from the mine, with first concentrate planned for March. It also hosts a 6 million tonne resource at an impressive 2.45% copper grade.
As Avanco’s land holding would indicate, though, the company could be a lot bigger in the future.
This future potential includes the Pedra Branca underground copper project, which the company acquired from Xstrata back in February 2012. It has already shown off high copper and gold grades from several rounds of drilling with an inferred resource of 560,000t of copper, 500,000oz of gold and 1.04 million ounces of silver being defined.
An updated and upgraded resource was likely to come out shorty, according to managing director Tony Polglase. Then, a scoping study could follow in the December quarter, which could consider a number of options to pursue, he said.
“By the end of the year we would then be in a position to tell the shareholders we have settled on one mining plan and we will continue spending money on it. That will then be fully documented in a prefeasibility study by the end of March,” he told Mining Journal.
The publication of such a study could bring about “warp speed change” to the company’s market valuation, according to Polglase, suggesting Pedra Branca could be close to three times the size of Antas North.
And there was even more potential for the company beyond this, which it could capitalise on with cash flow from Antas North when it comes into production, Polglase said. “We’re sitting in the best copper region of Brazil and there is a chance that with time we will find a very large copper deposit ourselves,” he said. The company has already discovered mineralisation at Nova Esperança, west of Pedra Branca, an extension to the east of Pedra Branca East (extension) and the Sucurui and Sao Jorge prospects."
AVB Price at posting:
6.9¢ Sentiment: Buy Disclosure: Held
