# Avanco Resources Limited CentroGold resource update

- Link: https://www.directorstalkinterviews.com/avanco-resources-limited-centrogold-resource-update/412739841
- Published: 2017-11-14T07:38:15+00:00
- Author: Giles Arbor

**Avanco Resources Limited** (ASX:AVB) has lifted reported gold resources at its
CentroGold project in Brazil by 45% to 1.86Moz with the inclusion of a maiden JORC
estimate for the Chega Tudo deposit. Chega Tudo (0.58Moz at 1.6g/t) will be incorporated
into a forthcoming scoping study of the potential for a low-cost open-pit mine and
conventional carbon-in-leach recovery plant. The operation would be centered on 
the larger, higher-grade Cipoeiro deposit (1.29Moz at 2.0g/t), with ore from Chega
Tudo trucked 7km to the plant. Completion of the scoping study is now expected in
Q1 2018, with a prefeasibility study targeted by mid-2018. We see significant potential
in CentroGold, which is currently being ascribed little to no value by the market(
Avanco’s shares are trading at a heavy discount to our NAV estimate of A$0.18, most
of which is accounted for by our NPV estimates for the Antas copper-gold mine and
the Pedra Branca project). In our view, the main near-term catalyst for unlocking
value at the project will be a positive resolution to the outstanding permitting
issues, which Avanco is targeting for H1 2018.

**Chega Tudo maiden JORC-compliant resource:** Having reviewed the extensive historical
drilling and metallurgical database for Chega Tudo, Avanco has calculated a maiden
JORC (the Australian mineral resource reporting code) resource estimate for the 
deposit of 0.58Moz at an average grade of 1.6g/t. Some 74% of estimated total gold
is in the indicated category, with just 26% in the lower-confidence inferred category.
This differs from an historic NI 43-101 (the Canadian reporting code) resource for
the deposit of 1.04Moz at 1.4g/t, reflecting the application now of a higher, more
conservative cut-off grade (1.0g/t, versus 0.3g/t for the historic estimate).

**CentroGold project resources\* by deposit**

  |  **Deposit** |  **Category** |  **Tonnes (kt)** |  **Grade (g/t Au)** |  **Gold (koz Au)** |  
 |  Cipoeiro |  Indicated |  2.1 |  2.5 |  168 |  
 |  (Contact Zone) |  Inferred |  5.9 |  2.2 |  424 |  
 |  _ _ |  **_Sub-total_** |  **_8.1_** |  **_2.3_** |  **_592_** |  
 |  Cipoeiro |  Indicated |  10.8 |  1.7 |  597 |  
 |  (Blanket Zone) |  Inferred |  1.4 |  2.2 |  97 |  
 |   |  **_Sub-total_** |  **_12.2_** |  **_1.8_** |  **_694_** |  
 |  Chega Tudo |  Indicated |  8.2 |  1.6 |  425 |  
 |   |  Inferred |  3.1 |  1.5 |  152 |  
 |  ** ** |  **_Sub-total_** |  **11.3** |  **1.6** |  **577** |  
 |  **CentroGold total** |  ** ** |  **31.5** |  **1.8** |  **1,863** |

Source: Avanco Resources                                                        *
Calculated using >1.0g/t gold cut-off grade

**Investment view:** Avanco Resources Limited is trading at a significant discount
to our NAV estimate of A$0.18, which we see scope to increase as CentroGold advances(
we currently ascribe a nominal value to CentroGold of just A$0.02, an amount we 
expect to increase as we move to a DCF-based valuation on publication of the scoping
study). We think this discount should narrow as Avanco further optimises Antas and
progresses the CentroGold and Pedra Branca projects.

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