cash holds the key to riches

I know the word Capital Raising is not popular in all places. But forewarned is also forearmed. Rather than shuffle it under the mat as being a distasteful subject, a good discussion I believe can take the emotion out and puts some facts in, so the impact is lessened.

Here are a few idle thoughts on the subject...... considering there are only three reporting quarters of cash left... ouch!

I suggest another $20m. Could be more but unlikely less. At current consumption, this is 2 years worth of cash. 2 years cash will see them through until income from mining comes good. That is.... 2 years.

It is almost entirely for exploration. Exploration is NOT covered by any future Mine Specific finance.

Another raising of $20m through :

1. A placement . (1.1billion shares on issue)

The Bell Potter Boys were Lead Managers last time, and it was massively over-suscribed. It is an expensive way to raise money. $1.2m of the $20m siphoned off in Placement fees ... fully 6%!

X shares x 0.07 = $ 20,000,000

285million shares @7c

1.1 / 1.385 = 80% thus a 20% dilution factor of prior holdings.

OR

2. Rights issue. again at 7c need 285m shares, thus a 1 for 4 at 7c, renounceable ... plus the inclusion perhaps of a "free" renounceable option, which AVB has done before, as a sweetener. The irrepressible AVBOB's or BOB's.

Option 1. is attractive, because it strengthens the company enormously.. and while one can grumble about the dilution, it takes no money out of the wallet and if(!) the SP settles at around the same then the benefits of a higher market cap and consequent potential for further SP rise are excellent.

Option 2 means there is an extra $1m in the bank after the exercise, but it means coughing up lots of cash, which is fine if you have got it.... which I don't! Also Directors are hit too. Tradeable options are nice.

Of course all the above will be negated by the Vale Deal being finalised, and at least $20m coming through. The full details of the Vale Agreement were not disclosed so it is impossible to see what leverage AVB has in terms of sale price and finalisation date. Certainly the spirit of the Agreement when it was signed was that the progression would be to an immediate sale when drilling revealed what was there.

Any Legal Agreement has :

1. the Fixed terms and
2. the Spirit of the agreement.

One could easily assert that the spirit is not for Vale to see what iron is there and then string Avanco out to some indeterminate time that suits themselves for settlement. Keep AVB hanging on. Waiting for a phone call. Goodwill is so important in keeping doors open for further dealings.... and TP once made the comment about another very interesting iron find somewhere. If you know what is there and price can be readily negotiated then you pay up. No humbug, or shilly-shallying.

So I suggest AVB would be well within their rights to politely knock on the door and say Hey we are getting short of the folding stuff and strongly wish to avoid a capital raising so let's in good faith settle this purchase now.

Before, Vale could say ..well you have $10m in the bank, so what's the rush. It will only sit there earning a bit of interest... no big deal. Not now.

A persuasive scenario to bring it back to the table.

Anyway I know the above discussion is assertive, but it is Opinion, a starting point for discussion, and a flagging of something coming up which is not necessarily negative.
As to possible timing..... ? it is anyone's guess but it cannot be too far off.

Letting the cash run down too much makes the Market nervous and depresses any potential issue price.