OK let’s face it, on the surface the BR funding deal looks like...

OK let’s face it, on the surface the BR funding deal looks like the deal of the century for BR.

Just some quick calculations suggest AVB is giving up $3.6m each year for stage 1, and approx $10.6m each year for stage 2 (assuming same copper price and metallurgical recovery).

It’s a little unfortunate that the economics of Stage 1 will be knocked about a bit by these new royalties, but at least when they do finally publish Stage 2’s NPV for the first time, there shouldn’t be any annoying subsequent reductions in project economics to deflate the market’s expectation.

The glass half full approach would say that we have stage 1 $12m funding in the bag (albeit with CP’s needing to be satisfied before the funding is released), but I would imagine that once the CP’s are satisfied there will be a significant re-rating coming.

The glass half empty approach would say we have many millions of $$$ to spend before we get the $12m.. As osr1986 referred to earlier, I also feel that there is a placement coming to BR shortly which will allow AVB to further advance AN, PB, and also its regional exploration.

This placement will serve to put another substantial shareholder on its register which can only be a good thing. For those longer term shareholders will know, should there be a placement, then Glenstrata is able to participate in it to the extent that it remains at its 15% shareholding. A quick and dirty calculation suggests that if BR is placed 10%, then X would dilute to 13.6%. A punter would say that Glenstrata is too occupied in other areas to focus too much attention on AVB. But I could be wrong!

The only thing which is difficult to estimate is WHEN a placement might occur. Would it be BEFORE the funding is certain, or AFTER?

Logic would say that it will be BEFORE (so BR don’t pay as much for its shares), but I’m not so sure if BR can be buying AVB at the moment due to negotiations going on in the background.

Whichever way you want to cut it, $3.7m at the end of July won’t go far.

I am confident that a placement to BR would be a fantastic signal to the market that this show is on the road.

Oh, and BTW, I get the warm and fuzzies when I read the final line of the ann ”… Management believe the Company has entered a transformational phase.”

This is the biggest hint yet that the stars are aligning.

All IMHO.

HB