ferrets stock to watch: avoca resources ltd

Ferret's Stock to Watch: AVOCA RESOURCES LIMITED
08:50, Thursday, July 05, 2007

GOLD EXPLORER READY TO BECOME A PRODUCER AT HIGGINSVILLE

Sydney - Thursday - July 5: (RWE Aust Business News)
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OVERVIEW
********

Avoca Resources Ltd (ASX:AVO) yesterday reported a stunning
result between the Poseidon South open pit and the Trident mining
reserve.

It is part of the key project at Higginsville in Western
Australia following the company's discovery of the 800,000-ounce
high-grade Trident deposit which is moving into production this year.

The Higginsville resource base stands at 1.1 million ozs and
growing (following the recent Apollo discovery).

Avoca's team of highly credentialed professionals is focused on
optimising value from existing projects, while maintaining a pipeline of
high-quality exploration assets.

Yesterday the company released the results from a 26-hole
underground diamond drilling program targeting high-grade mineralisation
between the Poseidon South open pit (more than 285,000oz produced) and
the 581,000oz Trident mining reserve.

Many of the drill holes intersected the characteristic steep
west-dipping and flat east-dipping vein sets evident in the Poseidon
South area.

A 10-hole underground drilling program was completed to test for
high-grade Athena style mineralisation south of the current 284,000oz
resource, and beneath the Poseidon South pit.

Several intersections, including some very high-grade results,
were intersected at the targeted ore positions.

Best results were:

* 6.0m @ 148g/t gold from 100m in TUG053 including 0.90m @ 959g/t
gold;

* 5.5m @ 25.6 g/t gold from 63.8m in TUG033 including 0.75m @
175g/t gold;

* 5.0m @ 7.6 g/t gold from 23m in TUG034;

* 6.0m @ 6.7 g/t gold from 147m in TUG032;

* 1.5m @ 5.6 g/t gold from 66.5m in TUG051;

* 0.8m @ 6.4 g/t gold from 30.55m in TUG052.

All intersections show the characteristic Athena-style
mineralisation being gold-bearing laminated vein arrays, and are
associated with either of the Athena 40 and Athena 30 surfaces.

The shoots define a flat, northerly plunge which provides high
ounces per vertical metre, and therefore a favourable geometry for
mining.

Meanwhile the company has already issued letters of intent to
award contracts to Australian Contract Mining Pty Ltd (ACM) for the
development and haulage contract for the Trident underground gold mine at
Higginsville.

The contract is for 26 kilometres of underground development over
a four-year period, and for the haulage of all ore and waste during this
period totalling about 5.4 million tonnes.

Avoca completed an open tender process for the Trident
underground contract and invited eight underground mining contractors to
participate.

GR Engineering Services Pty Ltd will look after for the
engineering, procurement and construction (EPC) of a new 1 Mtpa
Higginsville CIL treatment plant.

The treatment plant, which will be a standard Western Australian
gold processing facility comprising a three-stage crushing circuit, ball
mill, gravity concentrator, leach circuit, elution and stripping circuit,
will be located immediately south of the Trident deposit.

The EPC contract is also referred to as a "turn-key" project
providing Avoca with a guaranteed maximum price for the construction and
commissioning of the treatment plant.

GRES and Avoca have agreed that any cost savings achieved below
the guaranteed maximum price of $48.6 million (including contingencies)
will be shared between Avoca and GRES on a 50/50 basis.

It is anticipated the plant will be commissioned in June 2008,
and orders for long lead items including the 1 Mtpa ball mill have
already been placed.

SHARE PRICE MOVEMENTS
*********************

Shares of Avoca Resources yesterday rose 3c to $1.365. Rolling
high for the year is $1.60 and low 72.5c. The company has 209.1 million
shares on issue with a market cap of $286.6 million.

The 2007 calendar year has been a momentous one for Avoca
Resources.

On May 1, the company set up the framework which has already
proved successful.

It reached agreement with Chalice Gold Mines Ltd (ASX:CHN) to
acquire 100 per cent of Chalice's Chalice and Higginsville project and,
subject to completion of final documentation, with Resolute Ltd (ASX:RSG)
and Marapana Gold Pty Ltd (together Resolute) to acquire M15/348, a key
and centrally located tenement within the Higginsville goldfield.

The acquisitions completed the consolidation of the Higginsville
and Chalice goldfields, and together with existing project tenure,
provides Avoca with a significant and strategic control of one of Western
Australia's premier developing gold mining districts.

Avoca now controls 2,016sqkm of highly prospective tenure
between the world-class St Ives (over 15 million oz) and Norseman (over 6
million oz) gold mining districts.

Avoca considers the acquisition will provide it with an excellent
opportunity to grow its existing 1.1 million ounce resource base by
adopting the same exploration strategy it used in discovering the Trident
deposit following the acquisition of Higginsville in 2004.

The high-grade Chalice underground Inferred Resource of 460,000
tonnes @ 5.31 g/t gold for 79,000 oz will be the subject of detailed
technical studies with a view to developing it as Avoca's second
underground gold mine in the district.

The M15/348 tenement is a granted mining lease measuring 5sqkm in
size and contains the southern half of the Poseidon South open pit and
lies immediately north of the Fairplay open pit.

In return for acquiring M15/348, Avoca has agreed to assume all
the environmental liabilities for the Higginsville gold project,
including the replacement of the Higginsville site's performance bonds
totalling $2.5 million.

The acquisition of M15/348 provided Avoca with excellent
exploration potential for the discovery of additional resources including
100 per cent of any underground resources found below the Poseidon South
open pit (produced 285,000 ounces of gold in the 1990s);

Avoca is using its detailed geological understanding of the
Trident deposit to immediately assess the Chalice underground Inferred
Resource of 460,000 tonnes @ 5.31 g/t gold for 79,000 ozs (above a 3 g/t
cut off grade, JORC estimate of 2002) for resource extensions.

Avoca believes the Chalice underground deposit could become
Avoca's second underground gold mine in the district.

BACKGROUND
**********

Avoca Resources Ltd joined the Australian Stock Exchange list on
April 15, 2002.

Since listing, Avoca has developed from a junior greenfields
explorer into an emerging producer with a portfolio of high-quality
exploration assets, both wholly owned and in joint venture with a number
of reputable international mining houses.

The company's Higginsville project will build the framework for
realising a sustainable 100,000 ozs per annum production profile.

It will provide the cashflow to not only replace resources, but
also to reinvest in the company's significant exposure to greenfields
exploration success.

Avoca's team of directors and senior management have extensive
experience and expertise in exploration, project assessment, development,
corporate and financial management.

Avoca Resources will pursue only those projects that demonstrate
the potential to add significant shareholder value.

The projects that do not meet the company's stringent criteria,
or those beyond the company's financial means, will either be joint
ventured or relinquished.

ENDS

Copyright © 2007 RWE Australian Business News. All rights reserved.