Avion Gold Corporation
TSX VENTURE : AVR
OTCQX : AVGCF

Avion Gold Corporation

February 22, 2011 07:30 ET

Avion Confirms 2011 Production Forecast of 100,000 Ozs and Initiates 60,000 Metre Exploration Program

TORONTO, ONTARIO--(Marketwire - Feb. 22, 2011) - Avion Gold Corporation (TSX:AVR)(OTCQX:AVGCF) ("Avion" or the "Company") is pleased to provide an operational and exploration update and define some key milestones for 2011.

  • 2011 Gold Production estimated at 100,000 ounces;
  • Tabakoto underground commenced producing initial development ore, with full production at Tabakoto expected in Q1, 2012;
  • Ségala Main underground portal expected to commence in 2011 with full production expected in Q2, 2012;
  • 4,000 tonnes per day SAG mill delivery scheduled for Q4, 2011 with completion of 100% capacity upgrade in late Q1, 2012;
  • Initial Reserve statement for the Tabakoto Project expected in the beginning of Q2, 2011;
  • Step-out and in-fill drilling ongoing at Vindaloo Zone, Houndé Project, with mineralization now traced for 1,200 metres, double the strike length of the zone that was tested when the initial resource was calculated. Zone is still open; and
  • Drilling is planned at Avion's Kofi property to test a recent, new zone intercept of 83.7 metres grading 3.58 g/t Au.

John Begeman, Avion's President and Chief Executive Officer stated: "Avion is at an exceptional point in its evolution with profitable gold mining at Tabakoto, a planned 100% throughput expansion and abundant high quality exploration targets. We are pleased to be in a position to deliver shareholder value through production and exploration and anticipate a tremendous year of growth."

OPERATIONAL UPDATE

2011 Production

Gold production for the year is estimated at 100,000 ounces. Mill feed plans for 2011 include open pit mining at the Dioulafoundou deposit, underground development ore from the Tabakoto deposit and stockpile reclamation of ore from the Ségala open pit that was mined out in 2010. A small open pit located immediately south of the Tabakoto open pit, named the Tabakoto South pit, is also being mined to ensure an alternative source of mill feed. Underground development of the Tabakoto deposit has progressed to the point where the first cross-cut into the NE1 mineralized structure has commenced with initial delivery of development ore to the mill started.

Underground development of the Ségala deposit continues to progress as planned, with surface infrastructure nearing completion to enable the start of a portal near the bottom of the open pit in Q2, 2011.

Gold production is estimated at approximately 22,000 ounces during the first quarter of 2011, increasing to 27,000 ounces in the fourth quarter as the amount of development ore from Tabakoto underground increases.

Expansion plans

The doubling of process plant capacity remains on budget and on schedule for completion in Q1, 2012. As stated in its news release on January 5, 2011, Avion has ordered a SAG mill from Polysius Corporation and expects delivery at site in Q4, 2011. The Company is working with its EPCM contractor, GENIVAR Limited Partnership, to place orders for all of the equipment required to double plant capacity. A team of GENIVAR engineers is currently on site in Mali organizing civil and mechanical contractors to prepare for construction.

Reserve Statement

Avion is working towards providing its initial reserve statement with a guided completion in early Q2, 2011. Current open pit and underground Measured and Indicated mineral resources will be incorporated into the reserve model as well as new drill data expected from the Tabakoto NW1, Tabakoto NW2 and Djambaye II zones.

Open Pit Mining Equipment

Avion has purchased its own open pit mining equipment to decrease its reliance on contractors and in turn expects to lower open pit mining costs and increase equipment availability. The first batch of machines is expected on site by the end of the month, with a full fleet on site by April.

AVION EXPLORATION UPDATE FOR 2011

INITIAL EXPLORATION BUDGET - $10 MILLION 60,000 METRES

Avion has commenced a minimum US$ 10 million, approximately 60,000 metre, drill-focused exploration program at its Tabakoto, Houndé and Kofi Projects.

TABAKOTO PROJECT - MALI

NEW TARGETS TO BE TESTED COMBINED WITH RESOURCE DEVELOPMENT

A core drill has started at the Tabakoto project with a focus on the high grade cross-structures below and proximal to the Tabakoto Pit. A second drill (RC rig) is scheduled to arrive soon. This rig will focus on the Djambaye II zone with a goal to develop additional open pit Measured and Indicated resources and to test numerous cross-structure targets that have been developed on the property.

HOUNDÉ PROJECT - BURKINA FASO

VINDALOO ZONE STRIKE LENGTH NOW AT 1.2 KM AND OPEN

Avion plans to test four major target areas that have been developed on the Houndé Property with at least 15,000 metres of drilling. Drilling has commenced at the Vindaloo zone (883,000 tonnes Indicated Mineral Resources at 2.23 g/t Au totaling 63,000 ounces and 5,725,000 tonnes Inferred Mineral Resources at 2.97 g/t Au totaling 547,000 ounces) with a core drill testing for extensions of the Vindaloo zone both to the north and south, along strike, and the RC drill doing in-fill holes at 50 metre centers. Current drilling has doubled the strike length of the Vindaloo zone from the initial resource estimate area of approximate 600 metres of strike (from Avion drilling). Geophysical data (IP chargeability), soil sample data and artisanal activity, suggest the Vindaloo mineralized trend may be up to 3.5 kilometres long. Five additional, parallel, geophysical (IP) and artisanal targets lie both east and west of the Vindaloo trend; limited drill testing of three of the five targets has returned good gold values in all holes with a best intercept of 2.53 g/t Au over 18.3 metres (Madras Zone). IP geophysical surveys are also being carried out over the Kari Pomp area, located approximately 10 km to the west where drilling returned numerous gold-bearing intercepts with one hole returning 31.59 g/t Au over 5.5 metres. Follow-up drill holes and IP surveys are planned at Bouéré (3.84 g/t Au over 47.6 metres) and Grand Espoir (0.55 g/t Au over 33.7 metres), new target areas located approximately 14.0 and 16.8 kilometres northwest of the Vindaloo zone, respectively.

KOFI PROJECT - MALI

2011 DRILLING TO FOLLOW UP ON NEW ZONE INTERCEPT OF 84 METRES OF 3.58 G/T AU

An approximate 15,000 metre drill program is scheduled to commence at the Kofi property in April. Avion's management is extremely pleased with the initial drill program results from the Q4, 2010 drill program which returned extensions of the known zones with intercepts to 6.05 g/t Au over 27.0 metres and the discovery of a new, open zone of mineralization that returned 3.58 g/t Au over 83.7 metres (hole C-10-006).

Don Dudek, Avion's Senior Vice President, Exploration, stated: "Most of the known mineralized zones are open-ended with numerous model-driven drill targets developed at Tabakoto and its two exploration projects, Houndé and Kofi. Recent site visits at Randgold's Loulo and Gounkoto projects and Semafo's Mana Project demonstrated, in management's opinion, how similar the character of the mineralized zones on the Avion Properties are to these prolific camps and further drives home the value of Avion's Kofi and Houndé Projects. As we test the known zones and build internal capacity, management believes that it is reasonable to think that Avion will be able to justify an increase in the 2011 exploration budget beyond its initial budgeted program."

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 Ségala gold projects in Mali. Gold production commenced at these projects in 2009 with just over 138,660 ounces of gold produced to date. 2010 production is estimated to be 100,000 ounces. Production sustainability has been supported and enhanced by an aggressive drill programs 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 are the subject of an approximate US$ 10 million dollar, approximate 65,000 metre, drill-focused, exploration program in 2011. 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 open pit mining at the Dioulafoundou and Tabakoto South Deposits and 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 results on the Company; statements with respect to the development potential and timetable of the Tabakoto, Kofi and Houndé 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 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.

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