Avanco Resources reported last week that Brazilian iron ore heavyweight Vale had signed an option to acquire its Trindade North prospect for up to $40 million. Avanco Resources is an Australian Listed Brazil focused mining firm. Under the terms of the signing, Vale has been granted exclusive exploration rights for up to 3 years and the right to subsequently acquire sole ownership of the project, Avanco said in a statement.

Trindade North is located near Vale's world-scale N4-N5 iron ore mine in the Carajas mineral belt of northern Brazil, Avanco said. Vale will pay Avanco $350,000 in the first year, $600,000 in the second and $1 million in the third, as well as a royalty for measured and indicated iron ore resources certified in the period, earning it the right to wholly acquire the project after 3 years.

The total value of the qualifying payments are estimated at more than $10 million and capped at $40 million. If other minerals are encountered, the partners will renegotiate terms, with Vale having the right of first refusal. Trindade North comprises a single exploration license spanning 4,966 hectares that is almost surrounded by Vale tenements.

Tony Polglase, Avanco executive director said the agreement provides Avanco with the cash flow needed to develop its Rio Verde and Serra Verde copper projects and its Touro nickel project in the same region. It also retains the Trindade South iron ore prospect.

Avanco last week said a decision on whether to commence mining at Rio Verde was due before 2010 year-end, and it was evaluating the potential of mining remnant high grade copper from an abandoned open pit at Serra Verde to provide additional ore feed for the proposed Rio Verde copper concentrator plant.

Avanco is a Brazilian focused exploration and development company listed in December 2007 on the Australian Securities Exchange. The company is developing the high grade Rio Verde Copper Project and exploring for nickel sulphides at the Touro Nickel Project. Both projects are located in the world class Carajas Mineral Province in northern Brazil.

The Carajas region is by virtue of the known mines and recent discoveries, regarded as one of the most prospective mineral provinces in the world for the discovery of copper-gold and nickel ores. The Company has four Carajas exploration properties and is actively seeking to increase its presence in the region.

2 Jan 2011.