From Today's Mining News.Early cash flow likely for Avoca Paul...

From Today's Mining News.

Early cash flow likely for Avoca

Paul Garvey
Wednesday, 21 March 2007

WESTERN Australian gold developer Avoca Resources – buoyed by yesterday's release of a positive research note from analysts at Goldman Sachs JBWere – has identified a potential source of early cash flow and high-grade ore production.


Visible gold from Avoca's first drill hole at the Higginsville gold project in Western Australia.

Avoca carried out an 18-hole drill program from the under-development underground decline at Trident, within Avoca's Higginsville gold project in WA.

That program returned better results of 3.9m at 18.4 grams per tonne gold and 1m at 30.6gpt, while a hole drilled from surface returned 4m at 7.2gpt. Visible gold was spotted in two additional underground drillholes for which assays are yet to be received.

All the latest intersections lie between the Poseidon South decline and the Trident reserve, which Avoca said was likely to have positive implications for Trident's development.

"Both the underground drilling and the surface drilling has confirmed the presence of economic drill intersections on several different veins in the region outside the Trident mining reserve, lying between the Poseidon South pit and the Trident deposit," Avoca managing director Rohan Williams said.

"The intersections will likely lead to the delineation of near-term stoping opportunities and early cash flow."

The zones identified during the latest drilling could effectively be mined as the decline moves towards Trident's 791,000oz resource base.

Yesterday, GSJBW analyst Stephen Gorenstein cited the exploration potential of Higginsville as a key factor in his Outperform/Buy recommendation for Avoca.

In his report, Gorenstein said Avoca was trading at a "significant discount to its peers on nearly every multiple".

"We believe that once funding for the Trident development is secured the market will turn its attention to Avoca's strong production growth, its relatively low valuation multiples and its strong exploration potential," he said.

Shares in Avoca dropped 1c to $1.315 yesterday, but had added 4.5c in morning trade today.