1) The TML is key to allowing a contract or MoU with Vale to be enacted on and for mining operations at TN for the magnetite to commence. Whether Vale do that by proxy (and AVB collect a royalty) or whether AVB do it directly through contract mining and sell at the mine gate is open to conjecture.. my guess would be for the former. Whatever, following an environmental impact study this could commence fairly quickly. Vale would likely do all of this themselves: mining operations could start imminently as I suspect all preparations will have been made in advance of the TML being issued.
2) The TML also gives a green light to mining the HGZ material which is near surface (ie within ~40-60m) and selling at the mine gate to Xstrata (or whoever) or possibly for any nearby plant to toll treat. This is mining in its simplest form and should raise sufficient cash quite quickly to finance other capital and operational expenditures. You don't really nead much by way of a PreFeasibility Study to accomplish this, merely a pit design and environmental impact study and other risk assessments. AVB have had the drill results from the HGZ for 14 months now and will have modelled the area to some extent and probably come up with a pit design and revenue forecast too. The TML is the green light for this to proceed at a moments notice. If negotiations re an offtake agreement with someone are successful then there's nothing to stop mining operations of the HGZ copper starting at the same time (remember, he did use the word 'concurrently' at the AGM and he's a guy who chooses his words very carefully).
I see both of these scenarios as highly likely given ATP will want to maximise AVB's short term revenue as his operational costs start to increase quite rapidly (engineering staff and other overheads), and free himself from the dependence on income from Vale who may only mine TN at their leisure depending on market conditions. Also, with the possibility of another impending global banking crisis he may look to profiting from the relatively high Cu price whilst he can.. would have been better to have the TML six months ago.
Anybody have a take on how TakeOver talks might be affected if we were already in production of the copper (ie ore sold at mine gate?) I would think it would make AVB a more expensive target as it would be easier for the Board to reject a hostile bid.. Something else to consider is that, although ATP has been very forthcoming with information at the AGM, he will have been very circumspect with regard to his real intentions in respect of schedule. Whilst you might think the info he gives out is for the benefit of shareholders, it's also for the benefit of competitors and suitors too.. whilst all his described or alluded plans whill have been made in good faith he could change his timing strategy at a moment's notice. Seriously folks, we could be mining far sooner than anyone thinks...
Hope this helps..
BT
AVB Price at posting:
10.5¢ Sentiment: LT Buy Disclosure: Held
