Hey Saltwater and Kalenn...Excellent posts...my previous calcs...

Hey Saltwater and Kalenn...

Excellent posts...my previous calcs were based on the hypothetical outcome of mining DSO first, so CAPEX of 10Mill was based on building only 1st and 2nd crushing circuit at AS for HGZ only...Thanks to my conversation with SWC, I now know that it will be a board decision based on consensus...so it appears from SWC discussion with SM, this will lead to building a US$50mill plant processing 600,000 tonne per annum at AN and feed AS's HGZ ore into the mix to increase and even up grades at AN...Good cost effective outcome IMO...if the pilot plant is modularised it can be incrementally added to, as mine developments expands to Pedro B...

So now based on more correct inputs...valuations can be made to assess DCF values for more accurate NPV... So if Vale completes the TN transaction and extension made to the Trial Mining Licence? AVB will be in business, within an 18 month time frame...

Net smelter returns [less 3% royalty] and revenue recovery of 95% of the copper price would then be expected [inclusive of transportation]...assuming then AVB aims at 15,000 tonne of concentrate per annum for first 2 years and with addition of Pedro Blanco ore...So AVB is hopeful that Vale will pay up by August this year minimum $1 Mill payment...with worst case scenario confident of contract of $ 20 to $30 Mill in August 2013...so Vale money triggers the Mine start-up or the CR can occur via the Smelter deal of cash for conc...

Either way AVB directors are very confident AVB will become a mine producer 18 months out...with the new Pedro holdings added, means that it is increasingly likely that AVB does have prospects of finding at least 2 large copper resources within 270,000 hectares of ML’s...So here goes my revised calculation for annual AN production taken from SWC’s input...this a rough guide [with some assumptions here] to the annualised values of AVB's joint operation over 10 years...

Assume 600,000 tonnes ore production per annum producing 15,000 tonnes of concentrate with addition of AS HGZ ore...for first 2 years with ramping of production in following years...$1500 per tonne OPEX to mine...Net Smelter Return of 95% of copper price...$8000 copper price av. over LOM for concentrate minus royalties...

Assume 50mill for CAPEX coming from sale of TN and/or smelter deal...
Assume 25% federal Brazil TAX [inclusive of tax deductions deprec’n; zone allowances etc]...Assume then... [US$8,000 average over life of mine per tonne] times 97% – $1500 [OPEX] times 15,000 tonne of concentrate for first 2 years... minus $55 million for plant pay back inclusive of 10% interest charges....

Then ramping up to...US$8000 x %97 – 1500 [OPEX] = times 30,000 tonne of conc. for next 2 years...
Then ramping up to...US$8000 x %97 – 1500 [OPEX] = times 50,000 tonne of conc. for each of the last 6 years of mine life, with the addition of Pedro Blanco ore...[figures inclusive of Au credits]

Assume we have metallurgical recovery at 95% plus we still have a total of 420,000 tonne of contained Cu in the ground or 490,000 tonne of payable Cu equiv. inclusive of Au credits…With the Cu price averaging above US$8000/tonne over the life of mine and assume TCO of US$1500/tn. inclusive of all Mining, Milling, General Admin... i.e. with life of mine operating costs of US$1.10/lb.…

A more accurate NPV valuation per share from the 1.0935 Billion fully diluted share base can be calculated using SFR’s discount rate of 8%...inclusive of all deductions... Assume interest charges on advances of loan made with the smelter at 10% over 2 years. So less $55M and a NPV of future project revenue streams over a now very conservative mine life of 10 years [since with the addition of Pedro B mine life would potentially double]... With SFR’s discount rate of 8% over 10 years, the projected cash flows are worth $1,174,329,840 today, being greater than the initial $50Mill paid...the resulting positive NPV [inclusive of ALL costs] is $1,124,330,000, which indicates that pursuing AVB’s projects with a IRR of better than 90% is very economic, with TCO potentially lower than calculated here...

This is equivalent to a NPV per share based on US$8000 per tonne from 390,000 tonne of Cu delivered to smelter over 10 years... being still a very healthy...
........AU $1.02 cents per share.....fully diluted...

Doesn’t matter which you look at it, these figures present a strong case for a multi-bagger outcome for AVB... as it develops to a mid tier miner 18 months out...
GLTA and DYOR...