Avion Gold Corporation
OTCQX : AVGCF
TSX : AVR

Avion Gold Corporation

January 26, 2011 08:30 ET

Avion Announces New Discovery-3.84 g/t Au Over 47.6 Metres

Exploration Success Continues at Hounde Property, Burkina Faso

TORONTO, ONTARIO--(Marketwire - Jan. 26, 2011) - Avion Gold Corporation (TSX:AVR)(OTCQX:AVGCF) ("Avion" or "The Company") is pleased to announce the results of 24 diamond drill holes that have tested six target areas at the Houndé Project in Burkina Faso. The Houndé Property hosts the Vindaloo Zone which contains an estimated Indicated mineral resource of 883,000 tonnes grading 2.33 g/t Au totaling 63,000 ounces gold and an Inferred mineral resource of 5,725,000 tonnes grading 2.97 g/t Au totaling 547,000 ounces gold. Subsequent drilling has extended the Vindaloo zone 300 metres to the north and 100 metres to the south. 

Highlights of the new 2010 drill intercepts are as follows:

  • 2.18 g/t Au over 8.5 metres in hole H-10-10 at Diosso South Zone
  • 1.55 g/t Au over 6.2 metres in hole H-10-13 at Diosso South Zone
  • 1.01 g/t Au over 12.1 metres in hole H-10-15 at Diosso South Zone
  • 11.90 g/t Au over 1.2 metres in hole H-10-17 at Diosso South Zone
  • 21.13 g/t Au over 4.0 metres in hole H-10-19 at Kueredougou Zone
  • 3.84 g/t Au over 47.6 metres in hole H-10-41 at Bouéré Zone
  • 6.24 g/t Au over 10.5 metres in hole H-10-42 at Bouéré Zone
  • 0.55 g/t Au over 33.7 metres in hole H-10-37 at Grand Espoir Zone
  • 2.63 g/t Au over 5.3 metres in hole H-10-39 at Douhoun Zone
  • 7.80 g/t Au over 3.4 metres in hole H-10-40 at Douhoun Zone
  • 6.66 g/t Au over 3.0 metres in hole H-10-44 at Vindaloo Zone
  • 2.84 g/t Au over 3.0 metres in holes H-10-44 at Vindaloo Zone

Avion completed three additional follow-up holes in the Vindaloo area and first pass drill programs over the Diosso South, Kueredougou, Bouéré, Douhoun and Grand Espoir artisanal areas (see Figure 1). Drilling at the Bouéré target has led to an exciting new discovery. Significant mineralization was intersected at all of the other targets. A summary of significant drill intercepts is attached at the end of the news release.

John Begeman, Avion's President and CEO, stated: "This new discovery at Bouéré has given Avion yet another place to grow the Houndé project. I am especially looking forward to the re-start of drilling in February and the flow of new drill results."

Technical Details

Bouéré Zone

Avion discovered an exciting new zone of gold mineralization at the Bouéré artisanal site, which is located approximately 14 kilometres northwest of the Vindaloo Zone (see Figure 2). Hole H-10-41 tested a wide zone of artisanal workings and intersected 3.84 g/t over 47.6 metres. A nearby hole, H-10-42, which tested a separate artisanal trend and followed up on a historic intercept of 5.97 g/t Au over 10.0 metres, returned 6.24 g/t Au over 10.5 metres. These two holes are approximately 150 metres apart. Additional drilling and perhaps IP geophysical surveys are being planned over this area.

Vindaloo Zone

The Vindaloo Zone has now been traced for 1,000 metres along strike, to approximately 200 metres depth and is open to the north, south and to depth (see Figure 2). Hole H-10-44 appears to have intersected the Vindaloo zone near surface; two holes drilled below hole H-10-44 (H-10-45 and H-10-46) intersected a fault zone, which appears to have offset the zone. The Vindaloo zone correlates exceptionally well with a 3,400 metre long geophysical anomaly (induced polarization resistivity) that has only been tested for 1,000 of the 3,400 metres of its strike length. Parallel, untested geophysical anomalies, of similar character, occur both east and west of this target trend on the Houndé Project. Additional IP surveys are being carried out in the Vindaloo area in advance of further drilling.

Kueredougou Zone

Avion tested the Kueredougou zone with five holes, one of which returned 21.13 g/t Au over 4.0 metres (see Figure 3). This zone lies in the middle of the southern concession block. Historic drill intercepts from this zone returned highlight intercepts of 83.35 g/t Au over 4.0 metres and 9.24 g/t Au over 13.0 metres. The Keuredougou zone correlates extremely well with an open ended induced polarization (IP) chargeability geophysical anomaly that has been traced for approximately three kilometres (see figure) along strike. Drilling has tested about a third of the geophysical anomaly. The IP survey has also identified at least six additional geophysical anomalies that require review. The Keuredougou zone is hosted by a sheared, intensely sericite-, carbonate- and sulphide-altered mafic fragmental at the contact between massive mafic flows and more fragmental volcanic rocks.

Diosso South Zone

The Diosso South zone returned intercepts of up to 2.18 g/t Au over 8.5 metres (see Figure 3). The Diosso South zone lies near the south central part of the southern block of the Houndé concessions. Previous drill holes intersected the Diosso South zone for 500 metres along strike to approximately 65 metres depth. Highlights of the six historic holes that intersected the Diosso south zone include 3.44 g/t Au over 14.0 metres and 2.72 g/t Au over 20.0 metres. The Diosso South zone is hosted by sericitized and quartz veined mafic volcanic rocks and appears to be part of the same shear zone system that hosts the Kueredougou zone.

Douhoun Zone

The Douhoun zone is located approximately 14.5 kilometres north-northwest of the Vindaloo zone (see Figure 2). The Douhoun zone has been traced by drilling for 400 metres along strike and is open to the north, south and to depth. Previous drilling has returned intercepts to 4.86 g/t Au over 17 metres. Avion's drilling returned 2.63 g/t Au over 5.3 metres in hole H-10-39 and 7.80 g/t Au over 3.4 metres in hole H-10-40 at Douhoun Zone. The zone is a quartz vein/quartz breccia system hosted by a mixture of mafic volcanics and intrusions. The Douhoun zone is open along strike and to depth with clear evidence of parallel and cross-cutting zones of mineralization.

Grand Espoir Zone

The Grand Espoir zone lies approximately 16.8 kilometres northwest of the Vindaloo zone (see Figure 2). Previous rotary air blast holes in the area returned up to 2.26 g/t Au over 12.0 metres. Avion completed four follow-up holes in this area with one hole returning a wide zone of gold mineralization with an intercept of 0.55 g/t Au over 33.7 metres. The Grand Espoir area is underlain by a mixture of felsic intrusion and mafic volcanic breccia.

Don Dudek, Avion's Senior Vice President Exploration stated: "The new Bouéré discovery and the validation of historic zones, along with previous drill results, demonstrate many different, potentially economic settings for gold mineralization on the Houndé Property. Instead of just one zone to drive the Houndé project forward it now seems that Avion may be able to develop a gold camp where developing mineral resources in several different zones seems possible."

Avion's procedures for handling core have been presented in previous news releases (See for example Avion News Release dated May 13, 2010). Three samples that contained greater than 30 g/t Au have been capped at 30 g/t Au in the significant results table at the end of the release. True widths are not presented in this release as more information is required before estimated true widths are determined. However, true widths may be as low as 40% of the drill widths that are presented.

Don Dudek, P.Geo., the Senior Vice President, Exploration of the Company and a qualified person under National Instrument 43-101, has reviewed the scientific and technical information in this press release. 

Mining in Burkina Faso

The mining industry in Burkina Faso is growing at a rapid rate due to a combination of a stable elected democratic government, excellent geology and a competitive fiscal regime. Currently six gold mines are in production or development in Burkina Faso (Essakane – IAMGOLD Corporation, Mana - SEMAFO, Inata – Avocet Mining PLC, Youga - Etruscan Resources Inc., Taparko – High River Gold Mines Ltd., Kalsaka – Cluff Gold PLC). In 2011, it is expected that Burkina Faso will become the fourth largest gold producing country in Africa. The country has legislated low taxes, with an income tax rate of 20% and a corporate profits tax of 20% for mining companies. There is a three-year tax holiday that includes relief from VAT and custom duties during construction and reduced customs duties of 7.5% during mining operations. The government is entitled to a 10% free carried interest and a reasonable 3% Royalty on gold production.

About Avion Gold Corporation

Avion is a Canadian-based gold mining company focused in West Africa that holds 80% of the Tabakoto and Ségala gold projects in Mali. Gold production commenced at these projects in 2009 with just over 51,000 ounces produced. 2010 production was 87,660 ounces of gold. Production sustainability has been supported and enhanced by an aggressive 2010 drill program over an approximately 500 km2 exploration package that both surrounds and is near to the Company's existing mine infrastructure. The current mineral resources estimate for the Tabakoto project demonstrates several sources of excellent grade open pit and good grade underground mineral resources thus providing significant flexibility for Avion's future mining plans. Additionally, the 1,670 km2 Houndé exploration property in Burkina Faso has returned promising results. These properties have been the subject of an approximate US$ 12 million dollar, approximate 70,000 metre, drill-focused, exploration program in 2010. Avion continues to progress towards its medium term goal of 200,000 ounces of gold per year and a longer term goal of organic growth through development of its exploration properties. The Company is developing an underground mine at the Tabakoto deposit, and is preparing to mine underground at the Ségala deposit. 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 of the drilling results on the Company; statements with respect to the development potential and timetable of the Hounde project; 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 those 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.

Summary of New Significant Drill Holes Results*
 
Hole From To Length Au g/t Zone
  (m) (m) (m)    
H-10-10 47.0 51.4 4.4 2.54 Diosso Sud
H-10-10 75.4 76.8 1.4 1.84 Diosso Sud
H-10-10 87.0 95.5 8.5 2.18 Diosso Sud
H-10-11 155.0 157.3 2.3 2.99 Diosso Sud
H-10-12       NSV Diosso Sud
H-10-13 110.1 111.2 1.0 15.0 Diosso Sud
H-10-13 115.3 121.5 6.2 1.55 Diosso Sud
H-10-13 152.0 153.1 1.1 1.99 Diosso Sud
H-10-13 169.8 171.1 1.3 1.65 Diosso Sud
H-10-14 93.6 102.2 8.6 0.31 Diosso Sud
H-10-15 79.2 91.4 12.1 1.01 Diosso Sud
H-10-15 103.4 104.6 1.3 2.99 Diosso Sud
H-10-15 118.0 121.2 3.2 4.74 Diosso Sud
H-10-16 154.4 154.7 0.3 3.32 Diosso Sud
H-10-17 130.9 132.1 1.2 11.90 Diosso Sud
H-10-18 127.0 131.0 4.0 1.19 Kueredougou
H-10-18 189.0 190.1 1.1 1.70 Kueredougou
H-10-18 193.4 193.9 0.6 2.61 Kueredougou
H-10-19 130.0 132.7 2.6 1.12 Kueredougou
H-10-191 136.4 140.4 4.0 21.13 Kueredougou
H-10-19 147.5 148.5 1.0 1.83 Kueredougou
H-10-20 156.0 157.0 1.0 1.89 Kueredougou
H-10-21 107.0 107.7 0.8 1.98 Kueredougou
H-10-35       NSV Grand Espoir
H-10-36 99.28 100.65 1.37 0.91 Grand Espoir
H-10-37 37.00 38.55 1.55 1.11 Grand Espoir
H-10-37 58.00 91.70 33.70 0.55 Grand Espoir
H-10-38       NSV Grand Espoir
H-10-39 26.50 28.00 1.50 2.61 Douhoun
H-10-39 35.00 37.00 2.00 1.78 Douhoun
H-10-39 77.50 78.50 1.00 1.20 Douhoun
H-10-39 81.50 81.90 0.40 1.29 Douhoun
H-10-39 92.29 94.60 2.31 2.83 Douhoun
H-10-39 110.06 111.08 1.02 9.26 Douhoun
H-10-39 215.70 221.00 5.30 2.61 Douhoun
H-10-40 55.00 58.41 3.41 7.80 Douhoun
H-10-412 53.85 101.40 47.55 3.84 Bouéré
  incl. 53.85 65.72 11.87 4.70 Bouéré
  incl. 74.00 79.24 5.24 16.46 Bouéré
  incl. 80.50 83.30 2.80 2.08 Bouéré
  incl. 89.40 95.00 5.60 2.44 Bouéré
  incl. 99.20 101.40 2.20 4.03 Bouéré
  incl. 122.74 123.60 0.86 3.00 Bouéré
H-10-423 51.00 61.49 10.49 6.24 Bouéré
H-10-42 77.50 79.00 1.50 1.51 Bouéré
H-10-43 93.00 93.63 0.63 2.64 Koho South
H-10-44 33.90 36.90 3.00 6.66 Vindaloo
H-10-44 49.00 52.00 3.00 2.84 Vindaloo
H-10-45       NSV Vindaloo
H-10-46 209.02 209.50 0.48 1.91 Vindaloo
* true widths are not known with certainty
1 H-10-19 capped at 30 g/t Au - intercept is 17.88 g/t Au over 4.0 metres
2 H-10-41 capped at 30 g/t Au - intercept is 2.98 g/t Au over 47.6 metres
3 H-10-42 capped at 30 g/t Au - intercept is 5.99 g/t Au over 10.5 metres

To view Figure 1 "Hounde Group Concessions", please visit the following link - http://media3.marketwire.com/docs/avr10126.pdf

To view Figure 2 "Hounde Group (North) Concession", please visit the following link - http://media3.marketwire.com/docs/avr20126.pdf

To view Figure 3 "Hounde Group (South) Concession", please visit the following link - http://media3.marketwire.com/docs/avr30126.pdf

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