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Aviva all the way: From a west Kenya core focus to Western Australia

When you invest or partner with Aviva Corporation Ltd; an ASX-listed (ASX: AVA) resource development company headquartered in Perth, Western Australia, you get a truly lucrative blend of first rate management and technical team expertise and a superb package of rocks with optimum potential for exploration success. The company looks to be somewhat undervalued today, but make no mistake, it won?t be long before the market better reflects exactly what it on offer. This issue TABJ delves into what Aviva is about; a standout core focus asset ?exploring for gold and base metals at its West Kenya project, and its interests in two coal-based energy assets ?the Mmamantswe project in Botswana and the Coolimba power and coal project in Western Australia.

The West Kenya project

According to Lindsay Reed, Managing Director and CEO at Aviva, the company plans to drill its West Kenya gold and base metals joint venture project (with Lonmin Plc?s wholly owned subsidiary AfriOre) aggressively in October this year. Aviva had been aware of the 2,800 square kilometres project, situated in the highly prospective Ndori Greenstone belt, for three years leading up to its 2010 acquisition of interest. It is one of only a few non-platinum projects Lonmin continued to hold leading up to this time, as despite the company?s focus on PGM?s the project geology was undeniably attractive and the landholding very large.

?The license situation allows us to hold most of that for the next two to three years. There are some small reductions at the end of this year but for the most part we will hold the whole landholding which is extremely important in the exploration phase because it hadn?t had any of the comprehensive region work,? Reed explains.

?Nobody had stood back and flown all of the airborne magnetic, airborne radio-metrics, electromagnetic surveys. Nobody had done a comprehensive map of the geo tech-tonics.?

That is, until now. Aviva has been building upon some good mapping of the geology, and previous geochemistry and lithology work to put together all of the existing occurrences of gold and base metals and look at where the best areas are. Reed says that this comes down to the structure and geochemistry of the host rocks. Aviva has been able to do this because of both the large, almost entirely prospective land package of rocks and having the time to go in depth and capitalize all of the costly surveying required to cover such an expanse.

?And of course, it had been very underexplored for 20 years. Walking into this greenstone belt in Kenya is like walking into Western Australia 40 years ago or walking into Tanzania 20 years ago, in terms of the modern technology being applied to it,? Reed adds.

?We?ve flown the airborne radio-metric and aeromagnetic surveys with an aeroplane. We?ve also flown a smaller area around the base metals with a heli-born VTEM survey and they?ve been completed.?

As we went to press Aviva was analysing this data. The company has some preliminary results back and more were on the way. Identified gold and base metal targets are lined up for drilling in October. Reed says that in terms of the wider bulk of the project, Aviva planned to generate its top 20 targets out of 100 and focus on and a large RC and ramp drilling programme in the first half of 2011 totalling 20,000 metres.

?We?ve got people on the ground now doing mapping, geophysical work and tectonical work getting ready for the drill programme,? he says.

?In Kenya, the real game if you want to go for exploration and have a chance of winning, is like scratch and win ?you?re more likely to with more ground. I think that?s the theory with our big ground holding. It gives us the opportunity to scratch 20 or 30 times rather than if you get a smaller license in Western Australia and that?s all that?s really available to anybody.?

As Aviva?s work in West Kenya continues to create as many opportunities to win on that ground and capitalize on its knowledge base as possible, the company is also busy with its coal-based energy projects.

The energy projects explained

It has been about six years since Aviva began pursuing the Coolimba power and coal project and three years since its Botswana project commenced. Coolimba, approved for a 450 megawatt base load and 360 megawatt gas fired facility, begins with Western Australian power generation needs for which the area is rather constrained.

?We saw a need to take this deposit and put the power station there, and also to put a gas-fired power station at the same point because the infrastructure leads into this point of Coolimba,? Reed says.

?Highways run to it, power lines run to it, gas pipelines run to it and power lines run out ?an ideal location for a power precinct for north of Perth. That doesn?t exist at the moment, power is south of Perth. There are many mining companies starting up projects north of Perth who need this power.?

Aviva tendered into the state government energy procurement process, and amidst doing so a retroactive change of policy from private power generation to government power generation took place. Tender for new capacity was no longer available to anyone which proved to be a setback for Coolimba, but by no means the end of the project.

?The options then were really only to progress the project and continue the approvals process which we?ve done entirely in-house from drilling proposals to mine plans, feasibility studies, community consultation and more ?and now the minister has approved our project,? Reed says.

?Then we could present it to someone who is interested in supplying power to those mining projects. On September 22, we announced that we?ve nominated a proponent with strong connections into China that is looking to take on the project and develop it in a staged manner.?

Under this plan, Coolimba will be the same project conducted instead in different stages and steps to supply the mining projects in the mid-west. Aviva has signed an exclusivity agreement with the company which gives them until the end of January to finalise a deal. When finalised, such a deal would deliver to Aviva A$1.25 million on signing and a further A$11 million reimbursement of expenditures when the power station hits financial close, as well as retaining an economic interest in the project which Reed says offers another attractive component to the deal.

?That being the case it isn?t a primary focus for Aviva, that?s why we shifted into West Kenya, and Botswana follows on from Coolimba,? Reed notes.
?[Botswana] is at the same stage as Coolimba about a year ago and it?s a two-thirds approved power station with a coal resource and everything including water and infrastructure ready to go.?

Aviva is proposing a 10 million tonnes per annum coal mine, to support a 1,000 megawatt (two sets of 500 megawatts) integrated power station with potential for expansion into export sales. Reed says the company is waiting for South Africa to release its integrated resource plan which deals with their long-term power needs.

?The power is needed, it?s just a question of whether there?ll be a regulatory policy framework set up that is capable of facilitating the development of projects like ours,? he says.

?West Kenya really builds on all of the experience we have in-house ?taking things from exploration and all the way to approval stage ?and we have that African experience from working in Botswana. We?re not going there cold and green.?

This mirrors Aviva?s exploration strategy going forward perfectly: to make for large projects where the company?s skill set can add value.

Aviva all the way

Aviva has a lot to look forward to in the coming months, beginning with predicted positive base metal drilling results from the Bumbo deposit, which Reed says could be delivered as early as November and definitely by the end of the year.

?Next year we?ll be looking for positive gold results out of a couple of the targets we?ve outlined. Obviously we?d love to finalise the detailed agreement on the Coolimba power station and move on from that stage lock in a lot of value there for our shareholders,? he says.

?Then if the opportunity arises we?d like to do the same for Botswana and lock in some value there. Our main targets in the next 12 to 18 months are the detailed exploration work in West Kenya and locking in on Coolimba to get value for our shareholders.?

The West Kenya project is an undeniably strong, large and underexplored land package. Aviva is experienced in both the African locale, its native Western Australia, and in terms of technical and management expertise. The company has a history of sticking with its projects and taking them all the way, an unfaltering focus on investors and a good track record of partnerships.

?We?ve done deals with some of the largest power producers and mining companies in the world, individual prospectors ?we can do it all,? Reed says.

?If you?re looking as someone to come and invest into a package of ground somewhere else, we?re open to conversations along those lines.?
Aviva is one of those attractive exploration companies that really does it all and does it all well.