Following yesterday’s VERY significant Ann. I thought it...

Following yesterday’s VERY significant Ann. I thought it appropriate to provide another opinion on plant commissioning… Having some experience myself, I believe Financing Stage 1 should be potentially closer as AVB moves a step closer to 1 mill ton of Cu equiv...

1. From the recent Quarterly Activities Report the second hand plant available in Brazil for “potential utilisation” has been “identified and earmarked” for purchase. Evaluation as per Ann. is in the process of being completed. The finance deal has to obviously be in place before AVB can proceed to negotiate the purchase of any plant equipment for AN, according to the AGM is in partly refurbished condition…

2. Before a finance deal can be completed a Pre-Feasibility Study [incorporating a mine plan and necessary approvals] will be complete and in place. According to MW and SM at the AGM the equivalent of a Preliminary Feasibility Study will be sufficient with fully scoped economic and production objectives completed. This means more infill drilling to prove up the Resource to a Reserve will not be 100% required. However, this may potentially be the very point; that may be holding up negotiations on other alternate sources of production plant financing. This may potentially mean proving up an ore reserve of sufficient recoverable copper that would guarantee payback to a potential source of finance. However this was not an issue “at all” mentioned at the AGM. IMO then the final scoping study should easily be converted to a PFS...

3. I believe a significant milestone will eventuate and occur alluding to this fact. These assets are too good for potential suitors not to come to the party… It has already been stated publicly the quality of sulphide ore at AN to be mined in Stage 1… Clean metallurgical recovery with no impurities and high 97% recovery rate of Cu. The economic scale of economies are small by comparison to 100-200k Cu Conc. or 350 t/hr or higher…but HIGHLY profitable with IRR of greater than 95% delivering a NPV on forward estimates of DCF by my calculations of between 50 to 60 million per annum for LOM of “5 plus years” net of all TCO…When evaluation of 2nd hand or near new Plant for suitability for purpose is completed and a purchase negotiated and completed; an Announcement should be released to inform us of this fact. Notwithstanding, the negative sentiment held by some here on HC; this should occur... This is an opportunity too good to be missed, considering the TCO on production may be VERY economic by industry standards…Mining AS at this STAGE 1 is simply not an economic consideration, as per AGM statements...why expensively complicate the AN production cycle and high sulphide recovery?

4. Once the purchase of the Refurbished Plant has been negotiated and completed it will need to be transported to AN for final refurbishment. AVB could build maintenance/fabrication capacity on-site, since we are only dealing with a pilot plant size…meaning 50-75 t/hr capacity meaning very cost effective on-site installation…At AN AVB will need to build a maintenance facility anyway for ongoing plant maintenance in RoM operations… So dismantling and transporting the pilot plant to site with Refurbished of float cells capable of 50-75t/h…then refurbished of potentially near new conditioner tanks and thickeners including steelwork and agitators with coarse and fine ore bins; jaw and cone crushers, ball mills, conveyors, dust collector and bag house, slurry and water pumps…the site works can easily be commenced by Wayne Phillips…He is very familiar with Plant 10x or more times this size, so concrete foundations for all the equipment and subsequent floor works can occur to match pre-established plant engineering specifications…

5. Construction of the footings for the plant can be commenced simultaneously while final refurbishment of the plant onsite occurs to save time and installation OPEX. This has been completed and has been potentially been delivered to site. Some dimensions will change a little along the way (pump/launder locations/dimensions are often changed at the last minute) and for perfectly good and expensive concrete plinths to be useless come the time to install the equipment. AVB will be obviously operating to a tight budget with very contingency allowed, hence it would be expected WP will monitor construction very closely avoiding any major slippage to time line schedules. Ball mill footings could be completed in advance of delivery to site but any delays to other civil engineering potentially adding 1 to 2 months to the Plant building and commissioning…

6. Construction of the pilot plant should be achieved in as little as 8-9 months, commensurate to its micro plant size. If this installation all goes to plan from the moment the concrete foundation are ready to receive equipment on them then commissioning should be able to commence in 10-12 months. Maiden Revenue stream should occur 3 months following Pilot Plant commissioning. Again assuming that mine engineering and mining has started following completed mine planning with mine roads constructed, waste rock dumps created, overburden stripped, ore stockpiled; tails dam design approved and constructed as per time line scheduling. Hence, meaning a major milestone Announcement for AVb. Again this is very familiar territory Wayne Phillips has completed throughout his illustrious career…

7. The mine building potentially should commence at the end of the 2nd quarter 2013 while Financing would need to be in place in place deal ideally at the end of the 1st quarter 2013 with the Pilot Plant purchased as per AGM discussions occurring near to simultaneously. Pilot Plant should already be dismantled and en route to the site refurbishment to facilitate completion of delivery on site potentially by end of 3rd quarter 2013. Several milestone Announcements should have potentially occurred as a precursor to final Pilot Plant commissioning. Again this is very familiar territory to Wayne Phillips. THAT IS WHY he was employed for this key and pivotal Stage 1 part of building AVB to Mid-tier Cu Mine Producer ….While TP critically oversees the overall linkage to and management of Stage 1 and 2, the overall exploration mix throughout all of AVB’s mine assets, Stage 1 plant and ancillary service management and future acquisition from potential offers as AVB’s Market Cap grows following a similar trajectory to SFR and others Mid-tier Miners of similar quality…There is hence, NO overlap of skills between WP and TP…..WP a big plant engineer and is definitely a specialist at what he does…

In conclusion, there is always minor slippage of schedules... Throwing more cash at Stage 1 should potentially not be required…as per Activities Report and connecting the necessary dots…but not an impossibilty... Second Hand Plant has already been ear-marked via evaluation oversight of the second hand plant…l would be of the opinion TP has already analysed this important Plant Acquisition very thoroughly understanding the condition and amount of work required to upgrade Plant if at all or complete necessary minimum maintenance to get plant up to operational standards…Knowing TP’s major mine experience there is no way this important acquisition would include “goosed” gear…and hence AVB is struggling to find a costly refurbishment capacity with costly over-runs; then mucking up delivery and installation schedules...TP has currently surrounded himself with high quality expertise…I would argue equal to or amongst the best I’ve seen..

AVB will be operating a tight budget with tight time-lines, the PFS (with mine plan) is on a critical path and hence management of the suitability, quotation, and delivery schedule of the pilot plant is a determinant to AVB success…so I would argue the finance deal will not be finalised without TP’s and potentially Clive Jones close scrutiny to the prospective Finance Deal… The recent Activities Report alluded to this fact but not stated…It remains to be seen whether the AGM aspirational Time Lines can be met but I am quietly confident given AVB’s major achievements over the last 12 months…

Dyor…