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from investinbrazil.biz

The transaction recognizes the significant exploration potential associated with the area and is subject to an option agreement with Xstrata. Under Avanco’s agreement with Xstrata, in the event Avanco discovers a copper resource with potential to support the production of 80, 0004 tons per annum of copper metal for a life-of-mine greater than 8 years, Xstrata can exercise the right to back-in up to 70% (this excludes pre-existing Rio Verde and Serra Verde tenure).

On exercising the back-in, Xstrata and Avanco will form a joint venture company on a 70/30 equity basis respectively. As part of the back-in conditions, Xstrata will, reimburse the Company two times the value of exploration expenditures and offer a favorable financing facility to assist Avanco in funding its contribution to project development capital.