requirements for funding, page-5

Poet,

I have copied the bits out of the Quartely that are about cash and drilling. I read they have achieved their target for contained copper at PB and are happy but still exploring other regions. I don't see any scaled back exploration and thank God their not drilling 600m diamond holes at PB and hitting dust. I think it was the best move to cease drilling and continue to explorer because that's what they do best.

With the Stage II resource believed to already exceed that required to support the 30,000<35,000tpa of copper production objective, drilling is being scaled down.

The Company’s concept of staged developments combined with on-going resource growth across its substantial land position makes for a compelling story to assist financing. Avanco envisages perusing timely cash-flow from Stage I to underpin Stage II financing.

In perusing the least dilutive financing option for Stage I, debt financing is being advanced and with indicative term sheets having been received and further submissions expected. Additionally, a select group of South American
and international banks are evaluating the project with a view of providing credit-approved term sheets in coming weeks. With drilling scaling down and cash at bank of ~Au$5.5m13, Avanco remains well funded and able to negotiate from a position of technical and financial strength.

Avanco’s search for a third deposit commenced strongly with a maiden programme at Sao Jorge consisting of 3 diamond drill scout holes (Sao Jorge is situated within Avanco’s Western Leases). All holes intersected a wide mineralised corridor with multiple zones of economic copper-gold which is interpreted as being part of a major mineralised system. Further drilling is highly justified within the corridor and along strike.

Drilling has since commenced at the Serraria Prospect(located northeast of Pedra Branca). Historical drilling results from Serraria undertaken by a previous major explorer intercepted significant widths and grade including:

79.00m at 0.50% Copper from 13.00m9 SERR-FD01
Inc. 16.00m at 1.18% Copper from 76.00m9

66.00m at 0.77% Copper from 72.00m9 SERR-FD02
Inc. 38.00m at 1.18% Copper from 72.00m9