AVBOB

It costs 1.5c to exercise an option. AVB is 7.4c now and AVBOB is 5.3c. So after exercising AVBOB into AVB, the total cost is 1.5c + 5.3c = 6.8c. If you sell AVB at 7.4c, you make 0.6c per share. The options do not need to be exercised until April 2012.

This is called arbitrage. If you only make 0.6c per share but you have bought a million of it, then you are looking at $6000 payment for keyboard exercise. Yes, I have just bought 200,000 of AVBOB at 5.3c and sold 100,000 AVB at 7.4c. This is only partial arbitrage but I don't have cash for a million shares :-(

Basically, today, I bought 100,000 AVBOB and after exercising it, I am still paying under 10c per share, ie 6.8c for a Cu bonanza. Again, I could be a fool. The other 100,000 (top-up) was bought for 4.9c yesterday morning after the good announcement and sold for 7.4c this afternoon. Only a fool would make $2,460 (after commissions, pre-tax) in one day for keyboard exercise :-)

AVB is next door to Vale's most lucrative Fe ore mine and the biggest in the world (I think). Say no more. Vale is going to pay AVB for royalty if Fe is found in that tenement and AVB does not have to pay for exploration.