Avion Gold Corporation

Avion Gold Corporation

April 17, 2008 07:56 ET

Avion Announces a Bought Deal Private Placement Financing of C$30 Million in Connection With Mali Acquisitions

TORONTO, ONTARIO--(Marketwire - April 17, 2008) -


Avion Resources Corp. ("Avion" or the "Company") (TSX VENTURE:AVR) is pleased to announce that it has entered into an agreement with a syndicate of underwriters led by Canaccord Capital Corporation and including Cormark Securities Inc., Macquarie Capital Markets Canada Ltd. and PI Financial Corp. (the "Underwriters"), which syndicate has agreed to purchase, on a bought deal private placement basis, 60 million subscription receipts (the "Subscription Receipts") at a price of C$0.50 per Subscription Receipt for aggregate gross proceeds of C$30 million (the "Base Offering"), in connection with the Company's planned acquisition of the Tabakoto and Segala gold projects in Mali (collectively the "Acquisition").

The Tabakoto project was previously a producing gold mine and has mine infrastructure and processing facilities in-place. Avion is purchasing the gold projects from Nevsun Resources Ltd., which has previously spent approximately US$90 million in capital expenditures to construct the mine and currently has a tax pool of over US$100 million. As consideration for the purchase of the 80% interest in the Mali Projects, Avion has agreed to make a cash payment of US$20 million. In addition, Avion will grant Nevsun a net smelter return royalty of 1.0%. Avion will have the option to buy out the net smelter royalty for US$2 million during the five years following the date of closing. Avion does not assume any interest-bearing debt as part of the proposed acquisition.

The Company has granted the Underwriters an option to increase the size of the Offering by up to 15% of the Subscription Receipts sold under the Base Offering (together with the Base Offering, the "Offering"), at the same price per Subscription Receipt.

Each Subscription Receipt will entitle the holder thereof to acquire at the Escrow Release Time (as defined herein), for no additional consideration and subject to adjustment, one unit of the Company (each a "Unit"). Each Unit will consist of one common share of the Company (a "Unit Share") and one half of one common share purchase warrant of the Company (each whole common share purchase warrant, a "Warrant", and collectively with the Unit Shares, the "Underlying Securities"). Each whole Warrant will entitle the holder thereof to subscribe for one additional common share of the Company (a "Warrant Share") at a price of $0.65 per Warrant Share for a period of 24 months after the date of the Closing (as herein defined). The Company agrees to use its best efforts to extend the term of the Warrants (the "Extension") for an additional period of twelve months (for a total term of 36 months from the date of the Closing) by (i) graduating to "Tier 1" status on the TSX Venture Exchange (the "TSX-V"), and (ii) obtaining all necessary regulatory approvals in connection with the Extension. Provided that the Escrow Release Time has occurred, each Subscription Receipt will automatically convert into Underlying Securities on the earlier of (i) the third business day after the date of issuance of a receipt from the Ontario Securities Commission for the Final Prospectus (as herein defined), and (ii) 4:30 p.m. (Toronto time) on the date that is four months and one day after the Closing Date (as hereinafter defined). A Subscription Receipt will only convert into Underlying Securities pursuant to the foregoing automatic conversion mechanism and will not be convertible upon any act by the holder.

The Company will use its best efforts to file a prospectus qualifying the distribution of the Underlying Securities in the jurisdictions of Canada in which Subscription Receipts are sold (the "Prospectus"). If a receipt for the Prospectus has not been issued prior to 4:30 p.m. (Toronto time) on July 15, 2008, each Subscription Receipt will thereafter entitle the holder to receive, on the conversion thereof, 1.05 Unit Shares, in lieu of one Unit Share, and one-half of one Warrant.

Avion plans to use the net proceeds of the Offering to fund the Acquisition, for exploration and development of the Mali gold projects and for general corporate and working capital purposes. The Acquisition is described in more detail in the press releases of Avion dated March 26, 2008 and March 31, 2008.

Upon the closing of the Offering, the gross proceeds will be deposited in escrow (the "Escrowed Funds"). The Escrowed Funds will be released from escrow to Avion (after deducting the Underwriters' commission and applicable expenses) immediately prior to the closing of the Acquisition (the "Escrow Release Time"), provided that the following conditions (the "Escrow Release Conditions") have been satisfied:

a) all conditions precedent to the closing of the Acquisition shall have been satisfied or waived to the satisfaction of the Underwriters, acting reasonably; and

b) to the extent required in accordance with applicable securities laws and the rules of the TSX-V, the Acquisition and the issuance of the Underlying Securities and Warrant Shares shall have been approved by the shareholders of Avion. Avion does not expect that shareholder approval is required to complete the Acquisition.

In the event that the closing of the Acquisition does not occur on or before 4:30 p.m. (Toronto time) on the first business day which is not less than 60 days after the Closing Date, the Escrowed Funds, plus any accrued interest earned thereon, shall be returned pro rata to each holder of the Subscription Receipts and the Subscription Receipts shall be cancelled.

The Offering is expected to close on or about May 7, 2008 (the "Closing Date").

The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary regulatory approvals, including the approval of the TSX-V.

About Avion Resources Corp.

Avion Resources is a Canadian-based exploration and development company focused on strategic acquisitions in Africa. Avion has a team of highly qualified geologists, as well as a strong operational team that is exploring various properties in the previously mentioned region. Avion currently has an exploration project in Ethiopia with a total land position of greater than 5,700 square kilometers.

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 completion of the proposed financing on the terms proposed, future financial or operating performance of the Company, the prospective mineralization of the properties to be acquired, the terms of acquisition, and the impact of the acquisition on Avion. 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: financing risks; 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.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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