Avion Gold Corporation
TSX VENTURE : AVR
OTCQX : AVGCF
PINK SHEETS : AVGCF

Avion Gold Corporation

May 19, 2010 15:13 ET

Avion Expansion Schedule on Track

Letter of Intent Entered Into for Tabakoto Underground Development

TORONTO, ONTARIO--(Marketwire - May 19, 2010) - Avion Gold Corporation (TSX VENTURE:AVR)(OTCQX:AVGCF)(PINK SHEETS:AVGCF) ("Avion") is pleased to announce that it has signed a Letter of Intent with Byrnecut Offshore Pty Ltd ("Byrnecut"), a large international mining contractor based in Perth, Australia, to begin underground development of the Tabakoto deposit in Mali, West Africa. It is expected that portal development at the bottom of the existing Tabakoto open pit will commence in Q3, 2010. Contract negotiations are underway to finalize the terms and conditions of the agreement.

Avion has also received a cost estimate report on the Tabakoto plant expansion that supports yearly production of 200,000 ounces of gold per year, subject to completion of a technical report once new mineral resource models are generated based on the 2010 exploration program and development of the Tabakoto underground mine (please see Avion press release dated January 28, 2010, that provided an update on operations and expansion plans). Avion has produced approximately 22,400 ounces of gold to the end of April (please see Avion press release dated May 6, 2010), with a production target of 75,000 – 85,000 ounces of gold in 2010. The production target for 2011 is 100,000 ounces of gold.

The cost estimate report, by an Australian engineering firm, recommends that the Company install a 4,000 tonnes per day semi-autogenous grinding ("SAG") mill. The Company has also determined that keeping the existing cone crushers and ball mill as a separate circuit will allow for less down time during construction, greater flexibility when operating in the future, and the potential to further increase gold production. With these assumptions, the estimated cost of the expansion, using all new equipment, has been estimated at $57 million. The opportunity exists to procure used equipment, and source from alternative suppliers, in an effort to reduce capital costs. Detailed engineering is now planned, with the first step to engage an Engineering, Procurement, Construction Management ("EPCM") firm. The intent is to quickly verify the size of the proposed grinding equipment and place orders for a SAG and a ball mill.

Avion recently raised gross proceeds of $28,842,000 in a financing, as described in a press release issued on May 10, 2010. A substantial portion of the funds have been allocated to underground development and process plant expansion. Cash flow from operations is expected to provide a significant amount of the funds required for the upgrade.

Additionally, the Company has received final reports for all of the leach and gravity gold recovery test work that has been performed on Segala and Tabakoto sub-grade and low grade mineralized material. The results of this test work will be considered in the final design configuration of the expanded plant. The test work indicated that a significant amount of gold, even in the sub-grade mineralization, can be recovered using a gravity circuit, with recoveries between 72% and 87%, depending on the grind size. Heap leach test work studies were halted once it became evident that gravity gold recoveries were as high as those that might be expected by leaching.

It is estimated that mill source feed will be derived from underground sources at Segala and Tabakoto. However management believes that recent exploration success at the Dioulafoundou and Djambaye II zones and the announced acquisition of Axmin's Kofi Project, have the potential as alternative feed sources for the Tabakoto mill. Continued exploration, in 2010 has the potential to firm up these prospective alternative ore sources. Subsequent studies would then evaluate which ore source would provide the best return in the short term.

In making this announcement, President and CEO, John Begeman stated, "Significant progress has been achieved this year towards our targeted production rate of 200,000 ounces of gold per year in 2012. We are very pleased to demonstrate that we are on track to do so".

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 increase production to an annual rate of 200,000 ounces of gold 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 forecast production on the Company and the likelihood of completing a definitive agreement with Byrnecut on time or at all, 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.

NEITHER THE TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.

Contact Information

  • Avion Gold Corporation
    John Begeman
    President & Chief Executive Officer
    (416) 8615884
    info@aviongoldcorp.com