Avion Gold Corporation

Avion Gold Corporation

October 07, 2010 02:00 ET

Avion Closes Acquisition of the Hounde Group Concessions in Burkina Faso

TORONTO, ONTARIO--(Marketwire - Oct. 7, 2010) - Avion Gold Corporation (TSX VENTURE:AVR)(OTCQX:AVGCF) ("Avion") and Avocet Mining PLC (AIM:AVM) ("Avocet") are pleased to announce that they have closed Avion's previously announced acquisition of a 100% interest in the Hounde Group concessions ("Hounde") in Burkina Faso (see Avion news releases dated January 29, 2010 and July 5, 2010).

In consideration for 100% of the Hounde assets, Avion has issued Avocet 10,300,000 shares of Avion.

This very large property lies within a new emerging gold camp, along more than 60 kilometres of the same geological package that hosts SEMAFO's Mana Mine to the northeast, which has Reserves of 1.77 million ounces, Measured and Indicated resources of 0.52 million ounces of gold and anticipated 2010 production of over 235,000 ounces. ACC Resources Ltd.'s ("ACC") Dossi zone is adjacent to the east of the Hounde Group, and is estimated to contain approximately 1 million ounces of non 43-101 compliant Au resources (as per ACC's corporate web site).

Avion has conducted an airborne magnetic and radiometric survey over the entire property. As well, Avion has completed 21 holes totaling approximately 3,900 metres of drilling that tested the Vindaloo zone and targets at the southern end of the property. A resource estimation of the Vindaloo zone is in progress. Drilling will resume in mid-October with an additional 3,000 to 4,000 metres of drilling planned. Metallurgical testing will commence once all assay results have been received. This property has never been subjected to a regional type exploration survey. Avion believes that the chance for the extension of known zones and the discovery of additional zones is high, when considering the abundance and strike extent of the known zones and untested artisanal mining areas.

Don Dudek, Avion Senior Vice President, Exploration stated: "The Hounde acquisition not only provides Avion with an excellent strategic position south of Semafo's Mana project it also provides a new platform for growth. Avion has gotten off to a great start on the Hounde property, first through the expansion of the Vindaloo zone and secondly by the identification of an extensive, largely untested trend of artisanal workings and gold-in-soil anomalies that extends for more than 25 kilometres along strike. We strongly believe that we will both define extensions to the Vindaloo zones and discover new zones on the property."

The mining industry in Burkina Faso is growing at a fast rate due to a combination of a stable elected democratic government, good prospective 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 enjoys an income tax rate of 20% or a corporate profits tax of 20% for mining companies. There is a three-year tax holiday during construction 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. In addition, two of the eight Houndé concessions, which include the Vindaloo zone, are subject to a 2% NSR on gold production and certain back-in rights to Barrick Exploration Africa Limited.

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. 

About Avion Gold Corporation

Avion is a Canadian-based gold mining company focused in West Africa that holds 80% of the Tabakoto and Segala gold projects in Mali. Gold production commenced at these projects in 2009 with just over 51,000 ounces produced. 2010 production is estimated to be between 75,000 and 85,000 ounces of gold. Production sustainability is supported and enhanced by an aggressive 2010 drill program over an approximately 600 km2 exploration package that both surrounds and is near to the Company's existing mine infrastructure. Additionally, the 1,670 km2 Hounde exploration property in Burkina Faso, is returning good results from an ongoing exploration program. These properties are the subject of an approximate US$ 12 million dollar, 60,000 metre plus, drill-focused exploration program in 2010, which management expects, based on results to date, to add new resources and future opportunities for Avion. Avion continues to progress towards its longer term goal of 200,000 ounces of gold per year and is preparing to mine underground at the Segala and Tabakoto deposits. 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 acquisition 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.


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