4. vale fe drilling
whilst the drilling has now been underway for almost 3 months, the drilling results will be released at vale's discretion (see ann dated 15/04/11, p1 and footnote p2)
a quick perusal of the vale website indicates it is not a company that releases regular drilling updates, it has many operations (indeed, as of several weeks ago, there was no indication anywhere on their site of the deal with avanco - at least no indication that could be located)
for avanco it is all about whether drilling proves up a measured and indicated resource (such that a measured and indicated resource will trigger royalty payments to avanco)
as far as the vale deal is concerned, they are required by the end of august 2011, to have drilled at least 2,500m at trindade nth (where 5 rigs are currently drilling) and pay avanco us$600k for the second year of the option (see mar qrtly rep, dated 27/04/11, p 3)
the current level of drilling by vale is unknown beyond 5 rigs currently operating - how many metres are they drilling [scott thinks it may be 5,000m], how tight is the drill-spacing, is this merely exploratory, will it lead to a measured and indicated resource, or just an intial inferred or indicated and inferred, thus requiring further drilling to estimate a measured and indicated resource - don't forget vale has a potential 3 year option, we are only approaching the end of the first year
5. current drilling program
the anns relating to the current 50,000m drilling program are:
24/11/10 - "major drilling program commenced"
31/01/11 - "dec 2010 quarterly report" (rio verde antas sth 5 holes completed, 1 hole aborted, 2 holes in progress, 2 rigs, no assays)
02/03/11 - "carajas copper exploration update" (rio verde antas sth 14 holes completed, 2 rigs, assays for first 4 holes; serra verde pedro 2 holes completed, 1 rig, no assays)
13/04/11 - "rio verde drilling expanded" (rio verde antas sth 3 rigs, 16 holes core at lab; rio verde extension agua boa 1 rig; serra verde pedro 1 rig)
14/04/11 - "serra verde copper project drilling update" (serra verde pedro 9 holes completed, 1 hole in progress, 2 rigs, 1 holes core at lab)
27/04/11 - "mar 2011 quarterly report" (rio verde anatas sth 24 holes completed, 3 holes in progress, 18 holes core at lab, 2 holes core in yard; rio verde capivara 2 holes completed, core at lab; rio verde extension agua boa 1 hole in progress; serra verde pedro 10 holes completed, 1 hole in progress, 9 holes core at lab, 1 holes core in yard)
11/05/11 - "rio verde project high grade zone open along strike" (rio verde antas sth 24 holes completed, 3 holes in progress, assays for further 11 holes, 7 holes core at lab, 2 holes core in yard)
20/05/11 - "new copper discovery at the serra verde project" (serra verde pedro 20 holes completed, 1 hole in progress, assays for first 9 holes, 3 holes NSI, 8 holes core at lab, 3 holes core in yard)
total completed holes to date:
rio verde antas sth - 24 [1,827.05m = av 76.1m]
rio verde capivara - 2 [95.5m = av 47.8m]
serra verde pedro - 20 [2,156.5m = av 107.8m]
total - 46 [4,079.05m = av 107.8m]
total holes with assays received to date:
rio verde antas sth - 15 [15 of 15 holes confirmed cu intersections]
serra verde pedro - 9 [6 of 9 holes confirmed cu intersections]
total - 24 [21 of 24 holes confirmed cu intersections, ie approx 88% of holes drilled with assays received have confirmed cu intersected]
the total assay results reported thus far are:
ARVD-103, 60.4m, 2.1m @ 9.21% cu from 38.0m [incl 0.7m @ 23.72% cu from 39.4m]
ARVD-104, 44.1m, 18.7m @ 0.4% cu from 2.0m
ARVD-105, 70.0m, 11.0m @ 0.3% cu from 16.0m & 1.0m @ 18.83% cu from 57.4m
ARVD-106, 74.9m, 25.0m @ 0.2% cu from 9.0m, 5.0m @ 0.62% cu from 44.0m, 0.8m @ 18.98% cu from 62.0m & 1.2m @ 0.51% cu from 62.8m (originally ARVD-106 was aborted due to core loss and was replaced by ARVD-106A, which is now known as ARVD-106)
ARVD-107, 50.0m, 18.4m @ 0.58% cu from 0.6m & 13.0m @ 0.55% cu from 32.0m
ARVD-108, 74.1m, 27.35m @ 0.26% cu from 0.65m
ARVD-109, 106.3m, 41.2m @ 0.25% cu from 2.8m
ARVD-110, 141.6m, 14.2m @ 0.38% cu from 5.8m, 4.0m @ 0.54% cu from 51.0m, 0.6m @ 5.53% cu from 63.1m & 1.0m @ 1.28% cu from 104.0m
ARVD-111, 69.0m, 23.0m @ 0.56% cu from 22.0m [incl 5.05m @ 1.12% cu from 29.95m] & 6.0m @ 0.46% cu from 50.0m
ARVD-112, 70.5m, 27.6m @ 0.65% cu from 3.7m & 9.0m @ 0.99% cu from 41.0m
ARVD-113, 74.5m, 38.0m @ 1.53% cu from surface [incl 3.0m @ 2.82% cu from 20.0m]
ARVD-114, 71.8m, 6.5m @ 0.38% cu from 21.5m, 1.85m @ 28.17% cu from 59.7m & 2.45m @ 0.54% cu from 61.55m
ARVD-115, 61.2m, 6.0m @ 0.45% cu from 11.0m, 1.2m @ 0.44% cu from 20.0m & 0.8m @ 26.75% cu from 21.2m
ARVD-116, 101.3m, 2.75m @ 3.6% cu from 91.95m [incl 0.5m @ 14.31% cu from 91.95m]
ARVD-117, 60.35m, 3.9m @ 6.05% cu from 43.1m [incl 0.7m @ 17.63% cu from 43.1m] & 1.4m @ 1.87% cu from 93.3m
ASVD-01, 70.3m, 4.0m @ 0.16% cu from 20.0m
ASVD-02, 117.4m, 4.0m @ 1.31% cu from 72.95m, 0.8m @ 0.77% cu from 78.95m & 1.0m @ 0.79% cu from 82.0m
ASVD-03, 81.0m, 2.5m @ 2.86% cu from 46.25m
ASVD-04, 96.0m, 2.0m @ 0.35% cu from 11.0m
ASVD-05, 132.5m, 10.8m @ 1.84% cu from 100.2m [incl 3.15m @ 5.65% cu from 107.85m (incl 0.75m @ 18.94% cu from 108.85m)]
ASVD-06, 91.0m, 1.0m @ 7.28% cu from 60.0m, 1.9m @ 0.92% cu from 63.0m & 2.53m @ 1.38% cu from 72.07m [incl 0.93m @ 3.26% cu from 72.07m]
ASVD-07, 90.6m, NSI
ASVD-08, 124.8m, NSI
ASVD-09, 105.6m, NSI
some points of note about the current drilling:
a) after the very reliable 2010 34-hole diamond core drilling program contract had been completed (see ann dated 21/09/10 - "recently completed"), avanco 'let the drilling contractor go', who moved on to other work with their experienced crew and reliable rig/s, avanco began planning a 10,000m follow-up drilling program (see 2010 sep qrtly rep, dated 29/10/10), avanco were then approached by institutional investors, the $20m placement/funding was agreed to and carried out (see ann dated 08/11/10 - on the provisio stated above that the major drilling program was to commence asap [conversation with management]), and then the 50,000m drilling program commenced (see ann dated 24/11/10 - "drilling has commenced") - due to the rapid nature of the change in drilling program, the urgency of commencement, and the unavailability of the preferred drilling contractors, avanco had to do with drilling contractors who were not experienced with the antas sth hgz and with rigs that were not ideally suited to the program (resulting in a very slow start to the drilling program), thankfully avanco have now been able to harness their preferred drilling contractors, who have recently become available
b) the wet season was particularly severe - the local para state rag, o liberal, ran stories and editorials detailing the significant flooding in and around parauapebas (eg, "heavy rains cause flooding and damage in parauapebas", 12/03/11; "heavy rains punish parauapebas" - '… besides the urban areas, many rural communities were affected by the flooding …', 17/03/11)
c) the recent NSR(no significant result)/NSI(no significant intercept)'s recorded at serra verde (ASVD-07 - ASVD-09) are not uncommon during exploratory drilling, indeed both avanco's 2008 and 2010 drilling programs returned NSI's (eg 2 of 34 holes drilled in the 2010 antas sth hgz drilling program were reported as 'no significant value' (see sep 2010 qrtly rep, p6, dated 29/10/10), and the 2008 rc/diamond core programs at antas sth reported at least 12 NSI's)
d) the high grade intercepts are continuing and being encountered outside the current hgz at rio verde antas sth, as well as at the new serra verde pedro copper discovery:
1.85m @ 28.17% cu from 59.7m (ARVD-114, hgz extension)
0.8m @ 26.75% cu from 21.2m (ARVD-115, hgz extension)
0.7m @ 23.72% cu from 39.4m (ARVD-103, hgz)
0.8m @ 18.98% cu from 62.0m (ARVD-106, hgz)
0.75m @ 18.94% cu from 108.85m (ASVD-05, new potential hgz serra verde pedro discovery)
1.0m @ 18.83% cu from 57.4m (ARVD-105, hgz)
0.7m @ 17.63% cu from 43.1m (ARVD-117, hgz extension)
0.5m @ 14.31% cu from 91.95m (ARVD-116, hgz extension)
1.0m @ 7.28% cu from 60.0m (ASVD-06, new potential hgz serra verde pedro discovery)
0.6m @ 5.53% cu from 63.1m (ARVD-110, potential new hgz at antas sth)
10 of 24 holes (approx 41.6%) with assays reported resulting in intersections greater than 5.0% cu
/cont'd