ploise explayn, page-6

Homebrand,

You need to get out more often (e.g. turn up to the AGM) or at least pick up the phone).

Yes I attended the AGM where most of this was covered. I also spoke to 2 brokers who personally own the stock as do their clients. In addition I have read everything the company has ever published (3 times over at least) and then consulted a mining engineer and geologist (friends) for their opinions. However their opinions were basically sought on technical issues rather the value of the stock as I have been doing this for 30 years now so reckon I can spot a bargain when I see one.

Lets see if I can deal with your questions if not your opinions which are another matter.

There is cash at hand and its about $800K is my estimate and given nothing much has changed since the AGM.

Will they do a raising?

Assuming a JV is not bedded down in the next month, then they are most likely to do a small raising either just before the next drilling program or just after. Short odds is a $500K share purchase plan or maybe a renounceable or non-renounceable rights issue (their usual method). I think they want to drill the New Nickel targets before they go issuing too many more shares in the hope of the big kahoona. There is little to no chance of a placement so if you are worried about that you shouln't. It aint going to happen is my firm opinion.

So sitting on the sidelines will not achieve anything except missing out on your share of a small issue if they decide to do it before the next drilling program.

JV? Correct, there is no deal yet but there are several offers on the table. But until an offer is acceptable there wont be one. Mr. Wood drives a hard bargain I'm assured. And if one is done, it would require a cash payment of size to AVB from the company farming into the project (assume for 40%). If this was to happen in the next 30-60 days there would be no need to raise any cash at all.

You are correct that there are no reserves yet but this is pretty simple stuff. The HGZ is about 250M long or less and goes done to only 40 metres in depth. They need only 1000m of drilling to convert it to reserves. This is so small a program that they will couple it with the Nickel drilling so they only have to mobilise a rig once and thus justify the cost is my educated opinion.

The ore body is simple and close to the surface and there is unlikely to be any surprises with its conversion to reserves.

The PFS is well advanced. Read their announcements feller.

There is no BFS obviously, it would be impossible to do one yet given they are waiting on a few other things to get finished like the mining license, the conversion to reserves, the final flow sheet and decision on whether they go with a JV Partner and whether they build the plant first or just rip any high grade Chalcocite out and direct ship it to a smelter. Whatever option, the numbers are staggeringly good when compared to the pitiful market cap of the company.

The assets may be overseas but they are located in just about the best location on the planet. eg The "Carajas" The country is rated green (positive for investment) by the IMF and World Bank and you cannot move in the Carajas due to 95% of it being controlled by the Majors. Its the most sort after location in that part of the world. The number of major world class size discoveries located in the Caraja is staggering. And the infrastructure is brilliant.

I note your example of NKP and its not a good one. There are a bundle of negatives attached to that world class resource including the country, the lack of infrastructure, the black empowerment ownership (control) and the fact that its the most complex and expensive metal to mine and process and is also buried so far down its almost half way to China.

Try Mirabelas brilliant Nickel Sulphide discovery in Brazil and its massive market cap on the Oz market as a better example.

The mining license is expected to come through around March but this can vary depending on the local mines departments work flow.

The MD holds a Mechanical Engineering degree, an Electrical Engineering degree, A Metallurgical degree and a Metal Trade Qualification and has many years designing and commissioning plants for a range of miners and has done so of a number of years in Brazil. He also speaks Portuguese fluently and plans to return to reside in the country when its time to build the plant and commission it. Thus not only does he know every component in his minds eye he advises, those who care to enquire (and has stated in one of his) announcements that he can build what they need much cheaper using used equipement than if you used a design engineering firm and new plant like most others have too.
The bloke is a fair dinkum class act.

$US10M is about the capex for a 7,000 t metal output plant (Vat leach, SX-EW) using second hand gear cobbled together and skid mounted (my estimate based on research) and plus there is no need for external engineers to design it.

However when I modelled the future cash flow, I assumed a 50% over run just to be safe with my numbers.

Your comment:
I cannot see anywhere where the nickel WILL be drilled in January

My response:

Jan/Feb is more like it. But like I said you need to turn up to the AGM's or pick up the phone and get up to speed.

Your Comment:

"again you talk of "new" ground gravity and IP surveys. Where were these previously advised to the market?"

My Response:

Youre starting to embarrass yourself now. Try reading the announcement dated the 18th November 09. Then, if you bothered to turn up to the AGM, you would have heard that they were going to specifically use ground magnetics (Gravity & IP) so that they had high quality structural data as opposed to just flying over the ground, which for Nickel Sulphides, is far inferior. They already know they have a 5km x 1.5km structure; they now want high resolution fine detail backed up by close surface samples to line the rig up for drilling.

Excited management? Yes, I spoke to them at the AGM and Mr. Wood is a Nickel specialist and who was involved in the early identification of Mirabelas monster discovery in Brazil (when he was a consultant to Clough) seemed pretty fired up to me. He is as fired up about it as can be in my opinion of looking at fired up looking people (lol) AVB will I believe retain 100% ownership because they rate it so highly.

I asked and was told that the Gravity & IP would be completed by Christmas. Allow 2 weeks for processing and bingo its ready to be released. It will be sometime in the second half of January. It doesnt take a genius to work that out, just simple arithmetic based on how long these things take from past experience.

Based on how keen they are to get the copper finished and the desire to get back at that nickel ground, I think its a no brainer that they will at the same time as releasing the magnetic survey and soil sample results, give some sort of guidance about the next drill program which I reckon will be almost immediate.

Your comment about valuations is rubbish. There are quite a number of companies trading at market caps of $30M plus (e.g. GMR, EGO etc who have squat in terms of JORC resources or the equivalent for Oil & Gas). There are also a good many examples in the past where the market has taken some time to discover an undervalued asset and then re-price the stock once the market stopped being dumb.

All I can say is model this HGZ Copper over 4 years and shove lots of fat in for capex etc and then look at the bottom line. At current Copper prices this project will throw out post capex but pre local company tax, about $US90M (based on my modelling work but do your own of coutrse).

I mean, any moron can make a pile of cash out of 11.65% Copper sitting at surface so what will a high quality team like AVB do with it? Then they have the resource outside of the HGZ and then 5 or 6 nearby High Grade Targets they havent even got round to drilling. And thats just surface oxide targets, they haven't even started considering deeper sulphide targets.

Not my fault the market is oblivious to the bleading obvious.

Apart from the above all I can suggest is that you do some more work on the subject. Im not here to repost the companys announcements because you havent bothered to read them nor repeat what was discussed at the AGM because you cant be bothered turning up.

The phone aint that heavy either buddy, try picking it and calling them they are very approachable and only too willing to assist shareholders get up to speed.

I restate, the copper asset in my opinion is worth about 7-8 cents fully diluted but its the Nickel that could send the stock into orbit. But if the Nickel doesn't deliver then you will be seeing a pile of cash made from mining the copper 12 months out so bugger all downside is my view.

Short priced 5 bagger+ over 12 months based just on the copper asset being brought into production.

Long Priced 10+ bagger if Nickel delivers.

Remeber the first hole was almost ramdom and although the intersept was a whopping 130 metres it was very low grade but the grains in the core were very fine which means it is not where the high grade resides (large grain is where it accumulates in lower levels of the structure). But this time they will be going in on high grade targets.