The exciting bit about this announcement is the continuation of management efforts to build a substantial landholding in the Carajas and form strong relationship with the majors. AVB is punching above its weight in one of the premier mining regions of Brazil.
The guts of the Xstrata relationsip is as follows: 1. In the event Avanco discovers a copper resource with potential to support the production of 80,0004 tonnes per annum of copper metal for a life-of-mine greater than 8 years, Xstrata can exercise the right to ?back-in? up to 70% (this excludes pre-existing Rio Verde and Serra Verde tenure). 2. On exercising the ?back-in?, Xstrata and Avanco will form a joint venture company on a 70% - 30% equity basis respectively. 3. As part of the back-in conditions, Xstrata will, reimburse the Company two times the value of exploration expenditures and offer a favourable financing facility to assist Avanco in funding its contribution to project development capital.'
So AVB mgt must be reasonably confident of a 80k tpa copper mine with an 8 year 'life of mine'. I'll leave it to the mining boffins to comment further but they use a cut-off of 0.75% cu. Also the pre finance committment is very promising.
To re-iterate Xstrata is a world class diversified global miner and joins Vale on AVB's project book. Fantastic.
The annoucnement talks about a 14km cup strike that has had extensive exploratory work preformed and is cherry ripe for drilling. I say 'goodo' and its a nice follow on from the previously announced copper/palladium target.
6 drill rigs are about to go hammer and tong.
What more could you want from a junior really?
Anyway hope this does not upset the sensibilities of posters but I am bullish this stock. Happy to hear all valid positives/negatives from the posters with a genuine view. I agree you need to drill it out and find economic copper/credits to give it long-term value after all.
For all those 'this is worth 5c, mgt is rubbish' low content emotive flamers, please give me some research and I will take your views seriously.
AVB Price at posting:
12.5¢ Sentiment: LT Buy Disclosure: Held
