AVB 0.00% 16.5¢ avanco resources limited

I have been giving this FML a lot of thought. The Quarterly is...

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    I have been giving this FML a lot of thought.

    The Quarterly is enormously helpful in Project Management terms for seeing things in perspective.

    So I have gone back to first principles to try and get a better handle.

    There exists "A Project". The Goal of that project is "First shipment of concentrate completed." Every "activity" dovetails to that goal. All activities feed into and onto a Critical Path. (CPM) On that time-path are a series of sequential Major Milestones.

    There are two major aspects that form PERT/CPM Plans.

    1. Procurement of capital equipment and, 2. Buildings and Works
    Procurement of long lead-time capital items has been addressed with orders placed and deposits made from ample company cash, and favourable deferred payment terms negotiated such that the procurement payment schedule is de-sensitised to any delay in Major funding caused by a delay in FML receipt.

    2. Buildings and works....

    The core Critical Path is :
    Complete Design of Building and Works. (ONIX)
    Complete preparation of Tender Documents.
    Call for and evaluate tenders.
    Place Contracts.
    Complete Buildings/Works.
    Complete Plant commissioning tests.

    The Major Milestones are defined such that any delay in achieving their completion translates directly to an equivalent delay in achieving the Project goal. eg. Delay placing construction orders by two weeks and your end date to ship concentrate goes out by two weeks as well. Early stages are vital.

    The FML affects only the Place Orders early critical activity. (setting aside the capital equipment procurement)

    So when does "Place orders" occur and thus at what point does the FML become a Holding Factor? The Quarterly gives guidance.

    With basic design 60% complete and detailed Engineering 20% complete on 31st July, I will assert that this step is scheduled for completion on 19th September. Prep of tender documents by 3rd October. Then allow 21 calendar days to receive quotations from selected tenderers. 24th October. Then assess tenders for one week and then require availability of funding to place Orders for Works. Thus I deduce that funds must be available on 31st October.

    Given that the bank has fully syndicated funding, then (worst case) it may require two weeks after receipt of last paperwork from AVB (FML and JORC) to actually release funds. Thus AVB requires the FML by (at least) two weeks prior to 31st October or 17th October. This is the KEY date.

    OVERVIEW

    The Quarterly gives an excellent Project Management overview. Clearly the major milestone of Commence Testing Plant requires major power supply, and pre-strip completed, labour trained and available... but here I am only addressing the significance of the "Receive FML" activity.

    So yes misterS, I am being tough on the DNPM. Absolutely. Putting on a Project Management hat, one is not paid to be tolerant and a nice guy.They have had weeks to complete what is only paperwork after all. I hate project activities over which I have no control, that are entirely in the hands of others and which threaten the Completion date. Some things I can lie, cheat, cajole, bribe and use tricks like overtime and weekend work to catch up... (and have). But FML and Electricity Supply make me agitated! I like lots of comfortable slack built in to their timing.

    AVB "anticipate" receipt of FML by 30th September, and if my timing is right they have built in a bit of slack... until 17th October to really receive it and remain on track. We will see!

    SUMMARY

    Using information supplied in the Quarterly, a critical date of 17th October by which the FML is needed can be reasonably deduced.

    After that date, any subsequent delay directly translates to threatened delays in the Completion date of the Antas North mine.

    The non-receipt of the FML is NOT a Holding Factor at present. What should be appreciated is that the Project is proceeding apace. It is not waiting around for some FML. Not at all.

    So whilst it is important, the DNPM still have 7 weeks to deliver it before it goes Critical. So looking for it now day to day is pointless... being obsessed with it is a waste of time. In the overall plan it is one of many factors. It is a tree in the forest... just like getting electricity made available on the required date!!!!!

    So doing this analysis makes me far more relaxed.

    With all my investment money in AVB, I need to understand things like the FML and see them in perspective. If FML does get critical (around the 17 October) then who knows what influence can be brought to bear to get it through. After all, Brazil (DNPM) and AVB really are all on the one team. (AVB makes money and governments spend it! haha)

    Putting dates to things I hope can help all to de-stress. I can put my tablets away now...

    Cheers, PP
 
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