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16.5¢ avanco resources limited

Ann: Extension of Time to Hold AGM, page-117

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Kinzu

833 Posts.

19/04/15

10:14

Post #: 15113579
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Originally posted by PoetPlus ↑

That's good research Kinzu.. I usually read all the posts but skipped a few because there were so many. The Cockatoo Coal is an excellent illustration. Contracts to sell future concentrate to a significant shareholder is covered by 10.1 for sure The COK offtake deal secures sale of future production and makes no reference to pre-sale or mine finance. Examples of mine funding through presale or a charge over future sales can certainly be found on google search.

So for AVB it is either :

1. Sale of AN/AS AN is likely too small and boring for Glencore, BUT it is a very strategic foothold into Carajas copper mining, the way of the future. Look out Vale, here we come. Who knows.

2. Glencore takes some future concentrate and advances AVB cash... a pre-sale... but does Glencore really want a few tons of concentrate from AN? What would it do with it after all? Where is their own nearest smelter? Just a nuisance? or would it just let AVB sell to a local smelter and Glencore takes the money. Are Glencore financiers for small mines normally? Is it a hassle they do not particularly want?

3. The BR Crew are fed up with the dithering and are stepping up to the plate but are demanding some "company 10.1 asset" in return...

Then :

3.1 Could it be BR that will finance the whole deal now and the 10.1 asset is not necessarily the concentrate but their good old Royalty thing. The asset is the Cu/Au in the ground? (Funny that the previous agreement involving $12m of mineral asset did/does not require shareholder ratification).

What if BR says it will extend our (proposed) Agreement right now from $12m to say $50m

$12m equals = 2% NSR on copper, 25% on Gold, 2% all other metals on AN, PB and ALL other future mines (NE?) constructed on AVB's current tenements.

by extension of four(4)..

$50m equals = 8% Cu, 100% Au, 8% all other metals on Everything!!! Ouch.

THAT would be a very hard sell to Shareholders. 10.1 approval needed for sure. BR does like Royalties though.

3.2 BR could take a charge over the future concentrate sale... say 70% of annual concentrate sales value to progressively pay off debt. (It does not want physical concentrate) BUT does this constitute a sale of an asset, or just a promise for AVB to pay back a loan from future company profits? In which case 10.1 is possibly not invoked.

Thus BR provides remaining AN mine funds, secured by future sales of Cu-concentrate. No royalty. Deal is on excellent terms for BR. It does not involve selling concentrate (which is as Kinzu rightly indicates is a 10.1 asset) to BR, only a proportion of profit from sales to pay off loan..

Depending on how much coffee I have had, I favour different answers!

AVB needs to claw back most funds already employed so that at mine start up AVB still has say $18m in the bank, and does not have to struggle.

Incidentally the Parapenema smelter has in the past indicated an interest in taking shares in small copper mines to secure feed stock, the ones the big guys were not interested in... but of course they are not significant shareholders in AVB so..

This is a great thread, very informative and very thought provoking. Thanks to all contributors.. very enjoyable.

Expand

Blackrock wan't a major shareholder prior to the royalty deal. They bought in after the deal so no 10.1 required.

Whatever the deal is, shareholders can vote on it. One would think Appian, Blackrock or Glencore would protect each of their own interests against whatever one of them proposes.

AVB Price at posting: 8.3¢ Sentiment: Buy Disclosure: Held
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