getting the $12m is the key

Read the details of the deal this morning then reflected it on a bit throughout the day. Have spent the last hour reading all the posts since yesterday.....

I think the next key data point for the market will be the $12m number. How do they get it and from where?

Of the 4 "conditions precedent" specified in the ASX release, AVB gave indications 2 had been/are being dealt with. On another - bank due-diligence, AVB have no control but barring some complete meltdown in financial markets/commodities/Brazillian recession or the like, I would preseume that box will be ticked.

That leaves "AVB to contribute with a minimum balance of $12m".

I think AVB may have perceived they needed to get this news "out there" as there was growing expectation that they communicate SOME progress on SOME level. Ideally, they would probably have liked to announce that the $12m raise/contribution was a done deal, too before coming to market but anyway....

So, to get the $58m, they need to stump up the $12m - that's the way I see it. But no surprises there, that's normal.

I still think the $12m will be done by a CR, possibly after they build some price momentum by releasing a resource upgrade which (I think) was alluded to in the AFR yesterday.

If they do the CR via a Rights Issue (rather than an SPP or Insto placement) it means shareholders won't be diluted (i.e. by ALL shareholders taking up ALL their entitlements,equally the status quo remains...hence no dilution....although the stock price still has to work much harder to get back to historical price levels because the equity raise increases the Mkt Cap but not the share price).

And by doing a Rights Issue, it means AVB (TP) are true to their word to say dilution would be minimal.

As a variation, if the company raises the $12m partly through a Rights Issue and partly through a private placement, then SOME dilution will occur to the holders who miss out on the piece of the pie that is given to those in the private placement. But again...that is normal practice at this end of the market. I would expect AVB are working hard on that component as we speak.

In summary, the things to watch for next - in my opinion - would be another resource statement, followed by a CR. Given the AFR news inferred a resource upgrade was on the way, it is likely the two could be announced together.

This is merely my musings out loud, and a $12m CR is certainly doable, even in this environment.

Coop