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
AVB Price at posting:
9.7¢ Sentiment: Buy Disclosure: Held
