positive pre feasibility on chalice

POSITIVE PRE-FEASIBILITY ON CHALICE
UNDERGROUND GOLD MINE
Avoca Resources Limited (Avoca) is pleased to announce that it has completed a pre-feasibility study on the recently upgraded Chalice underground inferred resource of 741,000t @ 5.2 g/t gold for 123,000 ounces (above a 3 g/t gold lower cut off) as announced to the market on 30 September 2008.

Avoca will commence a surface drilling program aimed at converting the existing inferred resource to an indicated resource prior to completing a full feasibility study which, if shown to generate sufficient returns,will enable Avoca to develop its second underground gold mine in the Higginsville district.
Avoca’s Managing Director, Mr Rohan Williams noted that “Avoca’s team has done an excellent job in substantially advancing the project acquired in July last year by completing a drilling program that resulted in a 58% increase of the underground resource, undertaking a pre-feasibility study that showed a detailed feasibility is warranted and commencing that full feasibility, all in 15 months.”
Based on current resources, the pre-feasibility study estimates a mining inventory of 815,000 tonnes @ 4.7
g/t gold for 123,000 ounces. Cost assumptions are based on current Higginsville mining costs. Revenue assumes an $AUD gold price of $1000 per ounce.
Following a pre-production capital program of mine dewatering and rehabilitation, annual production profiles over a 3.5 year production period are between 150,000t and 350,000t per annum giving rise to between 25,000oz and 60,000oz per annum. The project will serve as a satellite ore supply to the Higginsville treatment plant which is located 30km to the east.
Based on the assumptions used in the pre-feasibility study, the Chalice underground gold project provides a
robust IRR in excess of 50%.
Level 1, 31 Ventnor Ave
West Perth WA 6005
PO Box 1156, West Perth WA 6872
Telephone: (08) 9226 0625
Facsimile: (08) 9226 0629
Email: [email protected]
29 October 2008 Avoca Resources Limited Page 2 of 2
Chalice Pre-feasibility Study Assumptions
The pre-feasibility study of the Chalice underground gold project used the following assumptions:
• An 18 month de-watering and underground mine rehabilitation capital program prior to production.
When operated by a previous owner, a small underground operation mined 218,642t @ 5.5 g/t gold for
38,591oz using a 6m x 6m in-the-wall ramp access within the Chalice pit. Existing underground decline
development provides access to the 1170 level, 20m above the top of the underground resource.
• Underground capital development will be a 5.5m x 5.5m 1 in 8 decline.
• Ore development will be along 25m sub-levels. Stoping will be up-hole retreat bench stoping. Mining
dilution is at 10% and assumes a zero grade.
• Estimated production based on current resource is 815,000 tonnes @ 4.7 g/t gold for 123,000 ounces.
• All ore is trucked to the Higginsville treatment plant. Recovery at 96%.
• All mine personnel and contractors to be sourced from, and reside at, the Higginsville operational site.
Minimal infrastructure capital is required at Chalice as the project will be a true satellite deposit to the
Higginsville plant.
• The pre-feasibility assumes no further resource addition from ongoing exploration at Chalice. Avoca is
confident that the Chalice resource will continue to grow as the current resource is: (i) open at depth,
and (ii) based only on mineralisation located beneath the existing underground workings below the 1150
level. Additional mineralisation is known to exist above the 1150mRL, and below the open pit.
• Indicative cash operating costs are $AUD 570 per ounce.
• IRR in excess of 50% using AUD$1000 per ounce gold price.
Yours faithfully,
AVOCA RESOURCES LIMITED