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Avalon Minerals intersects copper mineralised ironstone in Sweden

Published: 13:20 20 Apr 2015 BST

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Avalon Minerals (ASX:AVI) first diamond drill hole for 2015 has intersected a copper mineralised ironstone dominated sequence at the Viscaria Copper Project, located in northern Sweden.

Within the altered and ironstone sequence several intervals containing visible chalcopyrite have been recorded.

Assays are expected to be returned within three weeks.

Viscaria is located in the infrastructure rich Kiruna region, which is home to the world’s largest underground iron ore mine called Kiirunavaara that is operated by LKAB (owned by the Swedish Government).

Kiirunavaara has been in production since 1899 and has already had more than a billion tons of magnetite extracted.


Drilling sequence

The sequence in hole VDD183 is from 530 metres to 600 metres, and contains four main copper mineralised intervals.

Drilling targeted high grade copper mineralisation outside the existing resource and down plunge from the previously drilled hole VDD166, which intersected 5.9 metres at 1.5% copper and 13 metres at 1.6% copper.

A second hole is underway 230 metres to the south, targeting a similar depth.

Malcolm Norris, managing director, commented:

“This is an encouraging start to our drilling program and defines significant mineralisation approximately 120m away from previous drilling, and outside of the area of our resource estimates.

"The width of the mineralised domain is as predicted and suggests a thickening with depth.

"We are also looking forward to drilling at Nihka, and to advancing several other robust exploration targets in the immediate vicinity of Viscaria.”


Nihka

Planning is also underway to complete a ground magnetics survey over several targets in the Viscaria area.

The first area to be covered will be the Nihka target and the processed magnetic data will assist with targeting diamond drill holes.

Diamond drilling at Nihka is expected to commence in late April or early May, and is following up a bedrock copper anomaly partly co-incident with a 900m x 300m magnetic anomaly.

Copper anomalism is open along strike and currently has been defined over >600m.


Infrastructure rich

Viscaria is located in an infrastructure rich region, which includes being next to the town of Kiruna, which has a population of 20,000 and a skilled workforce.

There is also a sealed national highway to mine gate, along with electrified rail (Public Access).

Power is low cost at around 8c/kWh with abundant supply. There is a local smelter within 350 kilometres by rail, with multiple port location options also within 350 kilometres by rail.


Analysis


Viscaria is strategically located within a world-class mining province in Sweden, which has low sovereign risk. The area has been declared an area of national interest for mining.

The region hosts the world’s largest underground iron ore mine called Kiirunavaara, and is well supported by infrastructure which Avalon will be able to leverage off.

Avalon though will focus its efforts on copper, targeting a high-grade resource of 10 to 12 million tonnes at between 1.2% and 2.5% copper, which could be from both open-pit and underground.

A Scoping Study is in progress and assessing a copper-only start up.

This could allow a copper only project with a much lower CAPEX of around $100 million.

Assays are pending from the company's first hole of 2015 and are expected in around three weeks.

A second hole is underway with exploration news flow to continue in the near term.

Avalon will also drill at Nihka, and several other robust exploration targets in the immediate vicinity of Viscaria.

Valuation:

Avalon recently received a tax incentive of net A$1.54 million, taking the company’s unaudited cash position to around A$3.4 million.

With 178 million shares on issue, that equates to $0.019 in cash per share.

Avalon last traded at just $0.026, providing an Enterprise Value circa $1 million.

The company is therefore lightly capitalised and leveraged to exploration success.



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