announcement out on asx , page-79

For What it's Worth..

Although there may be a JORC compliant resource of >600k tonnes Cu in the ground, the grades aren't that spectacular: average at best. SP roared on initial news of high grade hits and, let's face it, we haven't hit those high notes since.

Market/Mining analysts all know that low grade producers need to produce at high rates to keep the average costs down: big mill and big mine (output). This readily translates into high Start-up and capital costs together with equally high operating costs.. Unless the grades improve rapidly then the potential profit / tonne Cu produced will be squeezed further.

Finding better grades at depth helps, however, it's the good grades near the surface which pay the way from initial small scale development and production to fully ramped up production later on. Unless AVB can use cash from development of near surface mineralisation to pay for further development at depth then it'll always be vulnerable to a take over by a cashed-up major player.


My guess is that release of the definitive Mine Plan and production schedule is being deferred until they have a better idea of where their future revenue is going to come from. It's one thing to mine the near surface high grade ore for DSO (that'll raise cash for further exploration and resource/reserve consolidation.. mb also provide leverage for a CR to build a plant and acquire capital mining equipment), mining average grade ores in large quantities and at depth is another altogether.. In order for low-medium (ie average) grade deep mines to be sustainable the orebodies need to be large and homogenous: we don't have this yet and so I think Management are still holding out for high grade finds at depth to ensure longterm profitability.. Lots of unknowns, so I think to say our production costs will be low is a little premature given the mineplan may not even be agreed upon for some time..

Rgds
BT