Ann: Quarterly Cashflow Report-AVB.AX, page-109

I received a flurry of phone calls early yesterday after the release of the quarterly.
Mostly panic from people reading ill informed comments on HC. (I think some forgot to take their pills before posting yesterday).

Was tied up in important activities so didn't actually get to read the report until after hours. Girded my loins expecting to read something dire given the phone calls but to my surprise what I read was;

Quarterly report for activities up until the end of March note that concentrate assays are already above targeted percentages, two weeks into production.

Copper recoveries are already approaching 90%,  two weeks into production.
Gold recoveries are already approaching 84%, two weeks into production.
Mill run rate averaged only 53 tonnes per hour when the target is 165 t/hr which means substantial increase was achieved in the next few weeks (to get the other 2750 tonnes of concentrate shipped off and money in the  bank).

On top of test concentrate of 250 tonnes sent out to smelter to confirm properties of our concentrate, that additional 2750 tonnes of concentrate has been shipped. Our annual target at the 12,000 tonnes of copper target is approximately 42,000 tonnes of concentrate.  This means that since the end of March production rates have been approaching targeted run rate.

Officially revealed that AN will be used to produce additional copper sourced from PB ore. Very inexpensive as there will be no plant costs and the production will go straight to the bottom line. I was reassured by the bragging of the Brazilian Secretary for Geology that they are very supportive of AVB's endeavours and would fast track applications etc. This approach means that PB will be part built within a year or so.

The resultant revenues which will aid in both exploration and the planning and building of PB's production facility will be flowing at some time next year. As this will involve building the ramp attack and starting to mine, the money required to fund PB will be reduced as it will already have been spent.

"Mine development box-cut, portal, ramp and sub-level access, will be the
same as is required for the full scale mine." p7

Additionally, as we will be mining, there will be no need for an expensive feasibility study, they will have actual production numbers. The eventual lump sum required to build the processing plant at PB will be significantly reduced.

"A detailed geotechnical study of PB East, together with an initial hydrological study was
concluded with highly encouraging results."

We can see from the above that they are already advanced with these plans.  The application to the DNPN to increase production at AN to  18,000 tonnes has more clarity. As does the reason I have a target of 18,000 tonnes production for mid-year next year in my valuation model

The other side benifit of this PB ore shipment to AN is that the reserves depletion at PB will be insignificant and the reserves at AN will be retained. Ultimately, I'd expect that satellite deposit drilling, Antas South and that pipe drilling below the pit floor will significantly increase reserves at AN and allow the continuation of mining at 18,000 tonnes for many additional years after the trucking from PB ceases.

Nice note of the potential "possibility of reductions to berm widths and the feasibility to mine double benches" ...this will lead to lower C1 costs.

Gold is up near US$1300 this morning Copper at US$2.28.
2000 ounces of Gold in the modest amount of concentrate already shipped, not bad for a by-product. US$2,600,000 even if Blackrock gets 24% of it.

Confirmation of A$26.4 million in the bank and money starting to flow. This means that not only did they bring the plant in 'within budget' but they were also considerably under budget. It is curious that they don't promote that fact more.

There has been a bit of discussion about mid year 2018 being options take-up time for directors and hence pay day for all. I also think that is sound thinking as grounds for the minimum payback but I also expect that many will be pleasantly surprised about where the board gets to.

Saw additional directors options for Colin Jones and Vern Tidy going on the agenda at AGM. I think Colin Jones has earned his in spades and it was long overdue. Not so sure about a director who has been on the board for a few months only?


Those who can ignore the headless chook brigade are on track to do well with this company IMO.
I am reassured that everything except 'communications' is very much on track.




The numbers look very positive for an 18,000 tonne production rate (even if we are not yet sure of exact costs) and these revenues will go along way towards building PB's real production facility, funding exploration etc. This dramatically reduces the risk of further capital raisings.