Closed with a market cap of $13m...deduct their cash, so you...

Closed with a market cap of $13m...deduct their cash, so you have an enterprise value of just $8.5m.

Very good response to the ASX.....often you see companies respond in a very muted fashion to these ASX speeding ticket....eg "we offer no reason for price rise"

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Anyway details again presented of the Vale deal...one things for sure, Vale know the Carajas better than anybody. It would seem most unlikely Vale would undertake a drill program,in the heart of the Carajas(on Avanco land) without a good chance of success.

Likewise Vale are not going to pay out US$40m to a company that only has a TOTAL worth of less than $10m.

Even moderate success, say just 20mt of FE, probably means Vale would walk......But this would present an outstanding opportunity for AVB. The inland port is some 150km from this deposit, and has been built by the Brazil governemnt, specifically for this type of export.

In fact, $2 billion local iron ore company, Mt Gibson Iron started with their 1.5mtpa operation at Tallering Peak....which only ever had reserves of about 20mt.

Just 1mtpa of iron ore export PA, would generate about $25m annual profit....but even 1mt PA means alot of work and preparation....anyway see what happens with the Vale deal.
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The iron ore deal,as good as it is..... may rank only third in term of its worth to Avanco....to explain:

In the last month or so....I would suggest, even management of copper companies, have been surprised at the apparent shortages quickly developing in the copper market. Comments, probably you have already read from industry heavyweights, Japan China...all suggesting real concerns over copper supply.

AVB on limited drilling has discovered a surface copper IOCC deposit on their land in the Carajas.... total JORC indicated and inferred resources 8mt@ .83% copper. AVB is a very small company, on a shoestring budget.... say this deposit is open alone strike in all directions. 5 or 6 other prospective locations exist on their property.

Not included in the JORC (its channel sampling, are these results).

Channel sampling from the historic open cut has returned high grade copper, with better results including:

4.5m at 16.50% copper and 4.1g/t gold

4.3m at 8.92% copper and 48.4g/t gold

9.6m at 3.44% copper and 3.29/t gold

9.0m at 5.81% copper and 4.48/t gold

2.0m at 7.77% copper

2.0m at 7.02% copper


They have chosen one of these 6 locations for another, somewhat more extensive drilling program...starting now.

I suggest the potential for a major Vale quality copper IOCC, may rank as the companies no 2 worth project.

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From the company:

"By virtue of the known mines and recent discoveries within region, the Carajas is regarded as one of the most prospective provinces in the world for the discovery of copper-gold, nickel and iron ore deposits. World class Carajas copper deposits include Salobo, Igarape, Bahia, Alemao, Sossego, and Cristalino. These deposits are described geologically as iron-oxide- copper-gold (IOCGs) magnetite/hematite breccia zones hosted by continental volcanics, sediments and intrusive rocks. It is clear that mineral occurrences located on the Company's properties show many of the traits of IOCG deposits including hydrothermal alteration, sulphide assemblage, metal association, style of mineralisation and geophysical response."
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Clearly the head project for the company...is its surface copper JORC 250,000 tons @ 11.6%

The company has presented a feasibility study on the 8th Feb 2010 for this project. Start up costs of which...for direct shipment of this high grade depsoit is $2m.

The study suggest $85m free cash flow over 6 years....I have adjusted for cureent spot copper.

This is a $13 m company