quarterly summary, page-29

Some steady progress reported for the quarter. Few things too minor to warrant an announcement by themselves so are mentioned in the quarterly.... generally positive.

some minor thoughts....

1. Mine Finance : I tend to think $25 - $50m is a lot of money and before anyone commits to lending it, they want to be certain of the economics. Hence the drawn-out studies, reports and studies of studies. Plus it is a competitive market, money is in short supply, and AVB is likely just another jorc'd hopeful in the queue for finance... in the hands of those who may choose to go slower than what one might like. I had wanted Xstrata to boldly step in but perhaps they were eyeing off cheap shares as part of the deal and AVB said No Go to that?? Who knows. It will happen one day. Just a matter of grinding through it all. Weeks? yeah, maybe...

2. General good news on Power availability (Application to reserve supply), and DNPM regulatory framework. Approval of resource suggests the requisite Exploration Report (proven resource) has been approved.

3. Exploration and Working Capital : this is of more concern than the Mine Finance. $5.5m (less $300k for Conceicao) = $5.2m At $2m/quarter they have 7.8months of cash left. This extends the No Money in bank date from early October to Christmas. (AVB office party at Macdonalds again this year). Achieved by a slowing down of drilling ($2.3m down to $1.7m), plus a shallower and less expensive drill program. How many rigs working? Slowing the drilling activity is not a particularly positive thing with AVB's big portfolio of tenements. I believe AVB are counting on the Vale money to support drilling, but as the actual timing of this is uncertain, life slows down. That is no cause for celebration, considering AVB's extensive tenements that have to be maintained.

4. Trindade North. "irregularities"? haha Yes indeed. In order to see the full TN picture (not supplied in this quarterly) one needs to go to the Brazil DNPM site and the Legal site and cross-relate the two. It is a very long story but is mostly all there for researching if inclined. Noteworthy is the fact that the royalty due to AVB from Vale is apparently conditional ONLY on the amount of JORC iron found.

See AVB Announcement 19th August 2010, para 4 key provisions.

TP has already indicated that there is at least $10m (total) for AVB as a condition precedent for Vale purchase. The more drilling Vale does the more it pays AVB, so there is an incentive to get away with drilling a lesser amount. On the other hand, if you do not drill much you risk having your (AVB's) Exploration Report rejected by DNPM.... who then may choose to put TN up for public grabs. Ouch! The Brazil Mining Code only authorises the holder of the tenement to carry out exploration, and nobody else, so not sure how the DNPM felt about Vale being there calling the shots and paying the drillers...... My theory is AVB gets its $'s regardless(!) of TN problems (sorry.. irregularities!).

It is just getting Vale to open its wallet. Only AVB knows the politics of all that, how things stand. Very touchy.

5. Westerly Properties. Like any new program it will be hit and miss until the deposit starts to take some definition.

6. PB Drilling. In terms of return for dollar, further drilling here is marginal. It is not up for mining any time soon, and the market does not respond to small % increases in JORC. So you go look elsewhere to probe for new big deposits. IMO latest PB drilling is OK but no earth-shaker, with the exception of 13-33. Hopefully, now they can see their way clear (in ALL respects) to attacking Nova Esperanca.

7. Latest Drilling Results. No map supplied to facilitate locating latest PB drilling.! So have to copy an earlier map and get to work plotting. Pretty poor form in my view. Lazy again. Where are 13-30 to 13 - 38 ?
Drill metres : (730 + 878 + 534)/2 + 617 +597 +484 +550 +644 = 4000m PB
500m regional Total 4500m this quarter.

8. JORC Upgrade : It is the "return" on the money you spent drilling. You have to show a "return" or value for expenditure. Unfortunately the market could not care if it is 800k or 900k. t Cu. AN seems more prospective.

9. New Project : previously alluded to but nothing tangible mentioned.

10. Secondhand concentrating equipment purchase. Nothing said. No $deposit placed by AVB or it would show in the accounts. Maybe it is sold by now?

It is $MONEY$ that holds the key. (as always)

Mine Finance. Exploration/Admin funding. Two very separate boxes.

When both are resolved.... then it is GO GO Avanco. Full steam ahead. Release the brakes. THEN release share price too....

Vale money holds the Key... the Major Major game changer. It just HAS to happen. AVB needs $15m min. to maintain its exploration rate over the next 2 - 3 years, or simply stop drilling which is always an option I suppose.

IMO AVB is a well managed steady company, operating in a civilised country (with no rebels to speak of).

Graduating from explorer to producer results in a major re-rate of the $/lb Cu value. That is partly because the transition does not come easy..... and it obviously isn't at present for AVB.

Anyway.... seems to be a fairly neutral/good report.... as one might expect.

Pretty cool really... if you like copper :)