Avion Gold Corporation

Avion Gold Corporation

August 12, 2009 13:48 ET

Avion Gold: Continued Strong Performance From Segala Q2 Production of 11,000 Ounces at Expected Cost Less Than US$ 550/oz(i)


TORONTO, ONTARIO--(Marketwire - Aug. 12, 2009) - Avion Gold Corporation (TSX VENTURE:AVR) ("Avion" or the "Company") is pleased to announce that it produced approximately 11,000 ounces of gold in the second quarter of 2009 at an expected cash cost per ounce of gold of less than US$550/oz(i). The average realized price for the second quarter was US$927.38/oz compared to the average London fix for the quarter of US$ $922.18/oz. This marks the first full quarter of gold production for the company at its Segala gold mine in Mali, West Africa.

Production at the project began in mid February and since then the Company has produced 17,205 ounces of gold at an expected cash cost of less than US$480/oz. The average realized gold price year to date has been US$927.05 compared with the average London fix of US$915.18 over the same period. Production for 2009 is forecast to be 55,000 ounces at an expected cash cost of less than US$540/oz.(i)

Commenting on the Q2 2009 results, Avion's President and CEO, Mr. John Begeman stated, "These results continue to build upon the impressive start up we have achieved at our Segala gold mine since production commenced in mid February. During 2009 we have achieved the following benchmarks:

- Restart of the mill and gold plant on schedule;

- Development of the Segala pit for mining in February;

- The successful merger with Dynamite Resources to regain original ownership of the Segala property in May;

- 93.5% overall recovery in the mill vs. 90% budgeted to date;

- Milling throughput rate at budget to date; and

- 2009 Exploration Program in progress - 11,000 meters drilled through June (results pending hole logging and sampling)

We look forward to building on this early success and developing Avion Gold Corporation into a significant African gold producer."

As a result of the strong operational start up and the continued exploration success in expanding the resource, the Company believes that a 100% capacity upgrade is warranted. To accomplish this goal, Avion is conducting grinding tests with Starkey and Associates Inc. of Oakville, Ontario in Canada, to determine if a SAG mill could be used, and has contracted Lycopodium Minerals Pty Ltd in Australia to develop the plan for the process plant capacity upgrade.

In addition, Avion is analyzing the potential to increase production through the application of heap leach technology on the lower grade mineralization. Leach studies have commenced with the first batch of samples being sent for testing to Dawson Metallurgical Laboratories in Utah, USA; Avion's initial testing of non-oxidized Segala low grade samples (grading approximately 0.6 g/t Au) indicated recoveries in a 24 hour bottle roll test of assay pulps ranging from 61% to 84.5%. Currently Avion employs a cut-off grade of 1.2 g/t Au. Material grading from 0.5 to 1.2 g/t Au is being stockpiled in the event that leaching is profitable. Avion plans to complete these studies before year-end.

Despite the strong start to the year, Avion believes there are a number of areas where further improvements can be made. During the second quarter the Company continued to work on improving the availability of the mining contractor's equipment. The extraction of the higher grade mineralization near surface by the Orpailleur (artisanal miners) negatively impacted production, however as mining progresses downwards the effect of this will disappear. In addition, better understanding of grade control and the mineralization from practical experience gained this year will potentially assist in improving the operating performance going forward.

Projected production to year end is now estimated at 55,000 ounces gold as compared to 66,000 ounces as previously forecast. Expected cash costs are estimated to be approximately US$540/oz(i) to year-end compared to the previous forecast of US$505/oz.

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

About Avion Gold Corporation

Avion is a Canadian-based gold company focused in West Africa. The Company holds 80% of the Tabakoto and Segala gold projects in Mali. Gold production at these projects has commenced, with approximately 55,000 ounces of production forecast for 2009 rising to 101,400 ounces in 2012. Avion has a highly skilled management team, with a focus on growth and consolidation within West Africa. Avion expects to publish a full set of financial statements for the Company on or about August 27, 2009 with a conference call to discuss results, the date and time of which is to be determined prior to the release.

Cautionary Notes

This press release contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes, but is not limited to, statements with respect to the effect of the results on the future financial or operating performance of the Company, the prospective mineralization of the properties, planned exploration programs, anticipated production schedule and terms. 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; acquisition risks; and other risks of the mining industry. 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.

(i) All amounts for Q2-2009 and 2009 YTD are preliminary and based on initial end of period estimates. Final adjustments may be required. Estimates for cash costs do not include royalties payable.


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