announcement out on asx , page-99

Hi Kalenn,
Hope you slept eventually...

It's important that when you look at the average costs and profitability of other copper producers you also take into consideration; their size; open pit vs UG; orebody type/shape and then finally; RoM (mill feed) grades. Only when all of these line up can you be sure of comparing apples with apples rather than apples with.. pencil sharpeners.. Comparing AVB with OZ Minerals' 100,000tpa Cu Prominent Hill project is a bit ambitious at this stage.. PH was their flagship operation even before the Co collapse during the GFC and about as World Class as it gets (I applied for the GM role there a few years back..).

Cogs: MYG looks, on face value, to be fairly reasonable (good grades and moderate resource/reserve, shares not overdiluted as yet); however, I'd be concerned at why they are diversifying into other projects and areas before they get the Deflector project into production and +ive cashflow. ie they'd be better spending ALL their energy developing Deflector and increasing the resource/reserve. Would expect them to have ~ 50tph plant so processing costs per oz should be reasonable; looks a safe bet if it wasn't for the other projects (liabilities at this stage).

Simonhh.. Agreed, always good to know what else is going on in the region, nonetheless it's always dangerous to draw assumptions from that knowledge. What appears to be the case in one 'nearby' project does not definitively 'mean' anything elsewhere.. it 'might' infer a set of similar conditions: 'definitively', it does not.

5% dilution during mining is ambitious at best and usually relevant to operations where homogenous and large orebodies are being exploited. I'd go for 15% average dilution even if mining department do their jobs properly.. In our case I'd prepare for worse.

Rather than look at other projects and try optimistically to infer direct implications to AVB projects, I prefer to look only at the info AVB have released about their projects and consider this against my own international mining experience. The information I'm considering on Pedro Branca is that which is clearly detailed on p7 of their 911 (!?) Ann.. there you see a long skinny vertical mineralised zone: nothing ambivalent about that. This infers the mine model type together with all the restrictions and associated problems I discussed earlier.

Further to my earlier observations I must also point out that they carefully use the words 'Mineralised Zone' and not 'Orebody'. Mineralisation only becomes ore when it can be mined and processed at a profit. The Prefeasability Study and determination of Cut-Off grade will shrink the described mineralised zones down to even smaller, skinnier, discontinuous orebodies, all of which will need to be accessed via declines through the adjacent country rock to avoid sterilisation. At the grades reported in this area so far I don't see much profit to be made as the mining costs will be high and the extraction and processing rates limited.

"El Teniente and Chhuque biggest underground and open cut lower grade mines in the world"... indeed.. operative words being 'open cut' and 'biggest': cheap and high volume extraction and processing costs/tonne ore due to economies of scale.

Another thing to consider about the potential gold recovery is that ores produced will be copper ores (as opposed to gold ores with copper) and the plant will be set up to produce copper; grind size will be the largest possible to maximise throughput at optimum recovery rates (for copper). If the liberation size for gold is different then, as it's essentially a copper project and it is unlikely the plant can be optimised for both metals simultaneously, then the gold recoveries will suffer.

Apologies if this doesn't fit in with the day-trading pumpers posting regularly on here but I figured there's be others of you out there who might be interested to listen..

'Peace Out'... etc

BT