Avion Gold Corporation

Avion Gold Corporation

May 20, 2010 09:30 ET

Avion Announces First Quarter 2010 Financial Results


TORONTO, ONTARIO--(Marketwire - May 20, 2010) - AVION GOLD CORPORATION ("Avion" or the "Company") (TSX VENTURE:AVR) (OTCQX:AVGCF)(PINK SHEETS:AVGCF)today announces its financial results for the 1st quarter of 2010.

Commenting on the Q1 2010 results, Avion's President and CEO, Mr. John Begeman stated, "The first quarter presented the Company with some unforeseen challenges and I am extremely proud of the efforts of our team in resolving them such that we can look forward to meeting our production guidance for 2010 of 75,000 – 85,000 ounces."

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 United States dollars unless otherwise indicated. The key facts are summarized below:

  • For the 1st quarter, the Company produced approximately 15,716 ounces at a cash cost per ounce of $886. The cash costs were negatively affected by a previously announced slump in the Segala pit which delayed access to the planned higher grade ore. This situation was temporary and has now been rectified. The Company is forecasting substantially lower costs for the rest of the year and anticipates averaging $650 per ounce for the remaining three quarters of the year. Cash costs do not include royalties.
  • During the 1st quarter, the Company sold 17,298 ounces of gold at an average realized price of $1,123 per ounce, which was higher than the average London fix $1,109 over the period.
  • The Company reported a net loss of $545,740 ($0.00 per share - diluted) for the quarter ended March 31, 2010 compared to a net loss of $1,241,360 (loss of $0.01 per share) for the quarter ended March 31, 2009.
  • Gold revenue for the first quarter ended March 31, 2010 was $19.4 million compared to nil for the comparable quarter last year.
  • Operating cash flow before the working capital adjustment for the first quarter ended March 31, 2010 was $5.6 million.
  • Net working capital as at March 31, 2009 was $20.5 million (including cash and cash equivalents of $8.3 million).
  • Avion announced a 100% increase in the Measured and Indicated Resources and a 38% increase in grade in the Segala Main deposit.

Andrew Bradfield P.Eng., the Chief Operating Officer of the Company, and a qualified person under National Instrument 43-101, has reviewed the scientific and technical information in this press release.

About Avion Gold

Avion is a Canadian-based gold mining company focused in West Africa. The Company holds 80% of the Tabakoto and Segala gold projects in Mali. The longer term goal of the Company is to ramp production to 200,000 ounces in 2012. Avion has a highly skilled management team, with a focus on growth and consolidation within West Africa.

Cautionary Notes

The ability of Avion to increase production to 200,000 ounces of gold per year has not been the subject of a feasibility study and there is no certainty that the proposed expansion will be economically viable.

This press release contains "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking information includes, without limitation, statements regarding the impact and timing of the results on the Company,; statements with respect to the development potential and timetable of the Mali projects; the future price of gold; the estimation of mineral resources; conclusions of economic evaluation (including scoping studies); the realization of mineral resource estimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. 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; ability to successfully integrate the purchased properties; foreign operations risks; other risks inherent in the mining industry and other risks described in the annual information form of the Company which is available under the profile of the Company on SEDAR at www.sedar.com. 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.

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.

Mining and processing expenses (USD) 11,409,422
Pre-production costs capitalized (USD) -
Inventory movements and adjustments 2,512,881
Total cash operating costs (USD) 13,922,303


Contact Information

  • Avion Gold Corporation
    John Begeman
    President & Chief Executive Officer
    (416) 861-5884