Avion Gold Corporation
TSX VENTURE : AVR

Avion Gold Corporation

August 31, 2009 11:00 ET

Avion Announces Second Quarter 2009 Financial Results

A GREAT START FOR THE NEW AFRICAN GOLD PRODUCER STUDYING EXPANSION OPPORTUNITIES UNHEDGED AND DEBT FREE

TORONTO, ONTARIO--(Marketwire - Aug. 31, 2009) - AVION GOLD CORPORATION ("Avion" or the "Company") (TSX VENTURE:AVR) today announces its financial results for the second quarter of 2009.

Commenting on the Q2 2009 results, Avion's President and CEO, Mr. John Begeman stated, "These results continue to build upon the impressive start up we have achieved at our Segala gold mine since production commenced in mid February. We look forward to building on this early success and developing Avion Gold Corporation into a significant unhedged African gold producer.

As a result of the strong operational start up and the continued exploration success in expanding the resource, the Company believes that a 100% capacity upgrade is warranted. To accomplish this goal, Avion is conducting grinding tests to determine if a SAG mill could be used, and has contracted Lycopodium Minerals Pty Ltd in Australia to develop the plan for the process plant capacity upgrade. In addition, the Company is analyzing the potential to increase production through the application of heap leach technology on the lower grade mineralization. Leach studies have commenced and Avion plans to complete them before year-end."

Complete interim financial statements and related Management's Discussion and Analysis are filed under the Company's profile on www.sedar.com. All amounts are in Canadian dollars unless otherwise indicated.

Q2 2009 Financial Highlights:

- Commercial production was achieved on May 1 at the Segala gold project in Mali.

- For the 2nd quarter, The Company produced approximately 11,000 ounces at a cash cost per ounce of US$ 516/oz which is in line with previous guidance provided in the press release dated August 12, 2009.

- Year to date, Avion has produced approximately 17,203 ounces of gold at a cash cost of US$ 455/oz which is in line with previous guidance provided in the press release dated August 12, 2009.

- The average realized price achieved year to date per ounce was US$ 927.05 compared with the average London fix US$ 915.18 over the same period. The average realized price achieved in the quarter ended June 30, 2009 was US$ 927.38 compared with the average London fix US$922.18 over the same period.

- The Company reported a net loss of $0.7million ($0.00 per share - diluted) for the quarter ended June 30, 2009 compared to a net loss of $0.8million (loss of $0.03 per share) for the quarter ended June 30, 2008.

- Revenue for the quarter ended June 30, 2009 was $6.8 million compared to nil for the second quarter of last year.

- Operating cash flow before the working capital adjustment for the quarter ended June 30, 2009 was $1.0 million.

- Net working capital as at June 30, 2009 was $13.9 million (including cash and cash equivalents of $7.8 million) compared to $0.3 million as at November 30, 2008.



2009 Quarterly Operations Production and Financial Data

----------------------------------------------------------------------------
----------------------------------------------------------------------------
Q1-2009 Q2-2009
----------------------------------------
----------------------------------------
Pre- Pre- Production
production production (May-June)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Statistics:
----------------------------------------------------------------------------
Tonnes ore mined 103,048 84,449 116,015
----------------------------------------------------------------------------
Average grade (g/t) 2.15 1.93 2.43
----------------------------------------------------------------------------
Tonnes ore milled 76,000 54,300 128,300
----------------------------------------------------------------------------
Average Recovery 92.80% 89.50% 95.95%
----------------------------------------------------------------------------
Gold ounces:
----------------------------------------------------------------------------
Produced 6,211 2,847 8,145
----------------------------------------------------------------------------
Sold 4,900 3,026 6,177
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Metal Sales Revenue(2):
----------------------------------------------------------------------------
Average Au price (US$/oz) $ 926.41 $ 893.79 $ 943.84
----------------------------------------------------------------------------
CAD/US exchange rate 1.21 1.22 1.16
----------------------------------------------------------------------------
Gold revenue $ 5,473,524 $ 3,292,005 $ 6,754,104
----------------------------------------------------------------------------
Silver revenue $ - - $ 18,002
----------------------------------------------------------------------------
Total metal revenue $ 5,473,524 $ 3,292,005 $ 6,772,106
----------------------------------------------------------------------------

----------------------------------------------------------------------------
Costs of Production (USD$)
----------------------------------------------------------------------------
Cash operating costs $ 2,158,444 $ 815,784 $ 4,860,760
----------------------------------------------------------------------------
Cash cost per ounce produced(1) $ 348 $ 287 $ 597
----------------------------------------------------------------------------

----------------------------------------------------------------------------
----------------------------------------------------------------------------

----------------------------------------------------------------------------

----------------------------------------------------------------------------
Commercial Production Metal Sales
Revenue(2):
----------------------------------------------------------------------------
Average Au price (US$/oz) $ 943.84
----------------------------------------------------------------------------
CAD/US exchange rate 1.16
----------------------------------------------------------------------------
Total metal revenue 6,772,106
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cost of sales 4,828,327
----------------------------------------------------------------------------
Royalties 201,314
----------------------------------------------------------------------------
Depreciation, depletion, and
amortization 709,280
----------------------------------------------------------------------------
Gross profit 1,033,185
----------------------------------------------------------------------------
Net earnings (loss) (2,204,758)
----------------------------------------------------------------------------
Basic and diluted earnings (loss per
share) $ (0.02)
----------------------------------------------------------------------------
USD Cash Cost of sales per ounce
sold 675
----------------------------------------------------------------------------
----------------------------------------------------------------------------


-----------------------------------------------------------------
-----------------------------------------------------------------
Q2-2009 YTD-2009
-----------------------------
-----------------------------

-----------------------------------------------------------------
-----------------------------------------------------------------
Operating Statistics:
-----------------------------------------------------------------
Tonnes ore mined 200,464 303,512
-----------------------------------------------------------------
Average grade (g/t) 2.22 2.20
-----------------------------------------------------------------
Tonnes ore milled 182,600 258,600
-----------------------------------------------------------------
Average Recovery 94.03% 93.67%
-----------------------------------------------------------------
Gold ounces:
-----------------------------------------------------------------
Produced 10,992 17,203
-----------------------------------------------------------------
Sold 9,203 14,103
-----------------------------------------------------------------

-----------------------------------------------------------------
Metal Sales Revenue(2):
-----------------------------------------------------------------
Average Au price (US$/oz) $ 927.38 $ 927.05
-----------------------------------------------------------------
CAD/US exchange rate 1.18 1.19
-----------------------------------------------------------------
Gold revenue $ 10,046,109 $ 15,519,633
-----------------------------------------------------------------
Silver revenue $ 18,002 $ 18,002
-----------------------------------------------------------------
Total metal revenue $ 10,064,111 $ 15,537,635
-----------------------------------------------------------------

-----------------------------------------------------------------
Costs of Production (USD$)
-----------------------------------------------------------------
Cash operating costs 5,676,544 7,834,988
-----------------------------------------------------------------
Cash cost per ounce produced(1) $ 516 $ 455
-----------------------------------------------------------------

-----------------------------------------------------------------
-----------------------------------------------------------------

-----------------------------------------------------------------

-----------------------------------------------------------------
Commercial Production Metal Sales
Revenue(2):
-----------------------------------------------------------------
Average Au price (US$/oz) $ 943.84 $ 943.84
-----------------------------------------------------------------
CAD/US exchange rate 1.16 1.16
-----------------------------------------------------------------
Total metal revenue 6,772,106 6,772,106
-----------------------------------------------------------------
-----------------------------------------------------------------
Cost of sales 4,828,327 4,828,327
-----------------------------------------------------------------
Royalties 201,314 201,314
-----------------------------------------------------------------
Depreciation, depletion, and
amortization 709,280 709,280
-----------------------------------------------------------------
Gross profit 1,033,185 1,033,185
-----------------------------------------------------------------
Net earnings (loss) (2,204,758) (2,204,758)
-----------------------------------------------------------------
Basic and diluted earnings
(loss per share) $ (0.02) $ (0.02)
-----------------------------------------------------------------
USD Cash Cost of sales per ounce
sold 675 675
-----------------------------------------------------------------
-----------------------------------------------------------------

(1) See cautionary note on non-GAAP Statements

(2) Metal sales revenue includes all revenues achieved since the
commencement of production in Q1 2009. These revenues were credited to
captialized operation costs prior to the commencement of commercial
production on May 1, 2009. Commercial sales revenue includes all revenue
achieved since commercial production commenced on May 1, 2009.


About Avion Gold Corporation

Avion is a Canadian-based gold company focused in West Africa. The Company holds 80% of the Tabakoto and Segala gold projects in Mali. Gold production at these projects has commenced, with approximately 55,000 ounces of production forecast for 2009 rising to 101,400 ounces in 2012. Avion has a highly skilled management team, with a focus on growth and consolidation within West Africa.

Cautionary Non-GAAP Statements

Avion believes that investors use certain indicators to assess gold mining companies. The indicators are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared with GAAP. "Cash flow from operating activities before changes in non-cash working capital" is a non-GAAP performance measure which could provide an indication of the Company's ability to generate cash flows from operations, and is calculated by adding back the change in non-cash working capital to "Cash provided by (used for) operating activities as presented on the Company's consolidated statements of cash flows. "Cash cost per ounce produced" is a non-GAAP performance measure which could provide an indication of the mining and processing efficiency and effectiveness at the Mine. It is determined by dividing the relevant mining and processing costs excluding royalties by the ounces produced in the period. There may be some variation in the method of computation of "cash cost per ounce produced" as determined by the Company compared with other mining companies. In this context, "ounces produced" in-process and dore inventory along with ounces of gold sold in the period. "Cash costs per ounce produced" may vary from one period to another due to operating efficiencies, waste to ore ratios, grade of ore processed and gold recovery rates in the period.

The following table provides a reconciliation of mining and processing costs per the financial statements and cash operating for the purposes of calculating cash costs per ounce produced in USD.



June 30, 2009 June 30, 2009
3 months ending 7 months ending
USD USD
Mining and processing expenses (CAD) 4,828,327 4,828,327
CAD / USD exchange rate 1.18 1.19
Mining and processing expenses (USD) 4,091,803 4,057,418
Pre-production costs capitalized (USD) 815,784 2,974,228
Inventory movements and adjustments 768,957 803,342

Total cash operating costs (USD) 5,676,544 7,834,988


Cautionary Notes

This press release contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes, but is not limited to, statements with respect to the effect of the results on the future financial or operating performance of the Company, the prospective mineralization of the properties, planned exploration programs, anticipated production schedule and terms. Generally, forward looking information can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: general business, economic, competitive, geopolitical and social uncertainties; the actual results of current exploration activities; acquisition risks; and other risks of the mining industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE

Contact Information