iron ore update, page-2

CARAJAS IRON ORE
UPDATE
The Company is pleased to provide an up-date on Vale?s activities at
Avanco?s Iron Ore Project and to inform that the Company is currently
validating a resource estimate.
HIGHLIGHTS
 Vale has completed a maiden drill programme at the Trindade
North Iron Ore Project in Carajas, Brazil.
 15 diamond drill holes for 2,600m have been concluded and
exceeds the minimum drilling obligations.
 Significant widths of highly magnetic, magnetite rich,
Banded Iron Formation (?BIF?) have been intersected.
 Vale has received sufficient drill results to prepare a resource
estimate which is being validated by the Company.
 The BIF situated within Avanco?s tenement makes up the
southern portion of a much larger mineralised structure which
straddles the common Vale-Avanco tenement boundary.
 To facilitate any future exploitation of the iron ore, the
Company believes that practicalities will dictate that the Vale
and Avanco resources will have to be mined concurrently.
 Next month Vale will need to advance Avanco USD$600,000 to
retain the rights under the Option Agreement for an additional
12 months.
 The Vale-Avanco Iron Ore Agreement can potentially generate
payments in the order of USD$10m to USD$40m for the
Company.
As announced previously1, Vale have been granted exclusive exploration
rights and an Option to acquire the Trindade North Property.
Avanco has submitted the ?Final Exploration Report2? to the regulatory
authorities and approval is pending. In the interim and on the first
anniversary3 Vale is obliged advance Avanco USD$600,000 to retain the
Option.
AVANCO RESOURCES LIMITED
2
Current provisions of the ?Vale Iron Ore Option Agreement? include:
1- Vale must pay Avanco USD$600,000 to secure the Option for a
second year. To retain the Option for a third year, Vale must make
payment of USD$1,000,000 in August 2012.
2- On Avanco receiving total funds from Vale estimated at
USD$10,000,000 or more4, Vale will have earned the right to acquire
sole ownership of Trindade North. The total sum of all qualifying
payments is capped at USD$40,000,0005.
Tony Polglase
Managing Director




Nice