The transaction recognizes the significant exploration potential associated with the area and is subject to an option agreement with Xstrata. Under Avanco’s agreement with Xstrata, in the event Avanco discovers a copper resource with potential to support the production of 80, 0004 tons 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).
On exercising the back-in, Xstrata and Avanco will form a joint venture company on a 70/30 equity basis respectively. As part of the back-in conditions, Xstrata will, reimburse the Company two times the value of exploration expenditures and offer a favorable financing facility to assist Avanco in funding its contribution to project development capital.
AVB Price at posting:
9.9¢ Sentiment: Hold Disclosure: Held