Avion Gold Corporation

Avion Gold Corporation

August 11, 2011 07:00 ET

Avion Intersects 2.91 g/t Au Over 54.1 Metres and 3.03g/t Au Over 41.5 Metres, at Vindaloo, Hounde Property, Burkina Faso

All Zones Open With Potential for Further Discoveries

TORONTO, ONTARIO--(Marketwire - Aug. 11, 2011) - Avion Gold Corporation (TSX:AVR)(OTCQX:AVGCF) ("Avion" or the "Company") is pleased to announce additional results from the 2011 drill program in the Vindaloo zone area, Houndé Project, Burkina Faso (see Figure 1). Significant gold mineralization was intersected 350 meters and 800 metres north of the Vindaloo zone resource area (see Avion News Release dated October 26, 2011) and within the resource area. Additionally, drilling demonstrated extensions to the Madras and Madras NW zones with both of these zones remaining open in all directions.

Highlights of the current drill program include the following intercepts:

  • 2.91 g/t Au over 54.1 metres at Vindaloo zone extension;
  • 1.57 g/t Au over 30.7 meters at Vindaloo zone extension;
  • 3.03 g/t Au over 41.5 metres at Vindaloo zone;
  • 0.43 g/t Au over 58.0 metres at Koho zone;
  • 1.30 g/t Au over 14.0 metres – Vindaloo zone northern extent;
  • 1.60 g/t Au over 17.0 metres at Madras NW zone.

Vindaloo Zone

Drilling to the north of the Vindaloo zone resource model, which ends at section 50200 N, has intersected significant gold mineralization in holes drilled 350 metres and 800 metres north of section 50200N. Hole H-11-38, located on section 50550N, intersected 1.57 g/t Au over 30.7 metres and hole H-11-38, located on section 51000N, intersected 2.91 g/t Au over 54.1 metres (see Figure 2). Both holes intersected thick zones of quartz-pyrite stockwork mineralized gabbro intrusion with much higher gold values and greater widths than nearer surface holes that intersected less well mineralized mafic volcanics. Drilling to date has shown that the host gabbro intrusion varies in width both along strike and to depth.

John Begeman, President and CEO of Avion stated: "The potential of the Vindaloo gold system has continued to expand as we have increased the area tested by our first pass drill program. As a result, management believes that Avion has discovered a significant gold mineralized system that will justify the initiation of a Preliminary Economic Assessment later this year."

Further gold mineralization was intersected at the interpreted northern end of the Vindaloo system in hole RH11-65 which returned 1.3 g/t Au over 14.0 metres. This hole was drilled because the previous hole, RH11-25, which returned 1.86 g/t Au over 17.0 metres, was stopped in mineralization due to technical reasons. Therefore, the intercept in hole RH11-65 demonstrates the presence of a wider zone of gold mineralization than noted previously.

The Vindaloo zone was also extended for another 100 metres to the south with an intercept of 4.2 g/t Au over 2.9 metres in hole H-11-16. With this hole, it appears that the Vindaloo mineralized system can tentatively be traced for approximately 3.7 kilometres along strike and remains open in all directions.

Infill drilling of the Vindaloo zone returned an intercept of 3.03 g/t Au over 41.5 metres near the northern end of the deposit. Infill drilling completed to date has intersected the Vindaloo zone where expected. Assay results are pending for most of the in-fill holes.

Madras and Madras NW zones

Additional gold mineralization has been intersected at both the Madras and Madras NW zones with intercepts of 1.26 g/t Au over 31.9 metres in hole H-11-07 and 1.60 g/t Au over 17.0 metres in hole RH11-29. Both the Madras and Madras NW zones are open along strike. More drilling will be required to determine the extent of these two northern zones, which extend north off of the geophysical survey area.

Koho Zone

A hole, drilled into the Koho zone, located 300 meters east of the Vindaloo zone, has returned another wide intercept of low grade gold mineralization with an intercept of 0.43 g/t Au over 58.0 metres in hole RH11-35. Other previous 2011 holes into this zone include 0.46 g/t Au over 111.0 metres and 0.48 g/t Au over 21.0 metres. While the gold grades intersected to date are relatively low, management believes that the presence of such a large gold-bearing system, so close to the Vindaloo zone is encouraging. Drill, soil and geophysical data suggest that this trend can be traced for at least 3.0 kilometres.

A summary of significant intercepts in attached at the end of this news release.

Don Dudek, Avion's Senior Vice President Exploration stated: "It's obvious to Avion's exploration team that the current drill program will need to be expanded further in order to provide enough information for the continued definition of new mineral resources. Additional holes are being planned so that at a minimum, there are 2 holes per 100 metre section, along the inferred 3.7 kilometre Vindaloo trend and now also for the Madras and Madras NW trends."

In the initial drilling program, step-out holes were positioned every 100 to 400 metres along the Vindaloo, Koho, Madras and Madras NW mineralized trends. In addition, a series of parallel resistivity and resistivity anomalies were tested. To date, 124 holes have been completed with results returned for 85 of these holes. A program to infill the Vindaloo zone commenced in early July with about 13% of the initial, approximately 12,000 metre program completed. Two core rigs are dedicated to the in-fill program. More drill holes are being planned as results are being received and an expanded drill program will likely be proposed. Additional IP surveys are planned to the north and south of the Vindaloo area to provide drill targeting guidance for future drill programs.

Avion's procedures for handling reverse circulation drill chips comprise initial splitting of the rock chips from one metre drill length samples into 2.0 kilogram samples, as well as description and logging into a database. NQ-size, core assay samples are sawn in half with half of the core submitted for analyses; the length of the core samples depends on logged geological controls with samples varying from 0.3 metres to 2.0 metres in length. All assay samples were delivered to the SGS-Xral laboratory in Ouagadougou, Burkina Faso and Kayes, Mali. Assay standard samples are inserted every 25th sample and duplicate reverse circulation from every 20th sample are sent in as a separate sample to double check the assays from these intervals. This sampling procedure was initiated and periodically reviewed by Avion's Senior Vice President, Exploration, Don Dudek, P. Geo. The assay samples are then crushed to 3 millimetres with a riffle split if required, to 1.5 kilograms and the entire sample milled in a LM2 mill to a nominal 95% passing 75μm. All the preparation equipment is flushed with barren material prior to the commencement of the job and all sample bowls are scraped clean with a scratch pad. Gold values were determined by Fire Assay and AAS with a 50 gram nominal sample weight. In order to ensure that local, exceptionally high grade assays are not overly represented in assay composites, Avion is also presenting assay composites, with high grade samples capped at 30.0 g/t Au.

Don Dudek, P.Geo., the Senior Vice President, Exploration of the Company and a qualified person under National Instrument 43-101, has reviewed and approved 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 current 5% 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 approximately 51,290 ounces produced. 2010 production was 87,630 ounces of gold. Production sustainability will continue to be supported and enhanced by an aggressive 2011 drill program over an approximately 600 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. On July 5, 2011 Avion announced its initial proven or probable mineral reserve estimate of 7.24 million tonnes grading 3.92 g/t Au totaling 913,100 ounces of gold at the Tabakoto Project. Additionally, the 1,670 km2 Houndé exploration property in Burkina Faso continues to return promising results. These properties are subject to a current US$ 13 million dollar, approximate 75,000 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 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

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
H-11-07 76.0 82.0 6.0 2.67 2.67 Madras NW
H-11-07 134.0 135.9 0.4 1.05 1.05 Madras NW
H-11-07 154.2 155.1 0.9 1.28 1.28 Madras NW
H-11-07 193.5 194.4 0.9 8.57 8.57 Madras NW
H-11-08 62.7 63.7 1.0 1.25 1.25 Madras
H-11-08 144.5 146.9 2.5 2.51 2.51 Madras
H-11-08 222.7 223.8 1.1 1.22 1.22 Madras
H-11-08 228.0 229.3 1.3 1.76 1.76 Madras
H-11-16 121.1 125.2 4.2 2.7 2.86 2.86 Vindaloo
H-11-35 36.0 40.0 4.0 0.62 0.62 Vindaloo
H-11-35 122.0 123.0 1.0 0.70 0.70 Vindaloo
H-11-36 197.0 198.0 1.0 26.30 26.30 Vindaloo
H-11-37 28.8 29.5 0.7 0.5 0.59 0.59 Vindaloo
H-11-37 63.5 65.0 1.5 1.0 0.51 0.51 Vindaloo
H-11-37 103.0 105.0 2.0 1.3 0.50 0.50 Vindaloo
H-11-37 122.0 164.0 41.5 27.0 3.03 3.03 Vindaloo
H-11-38 70.0 70.6 0.6 1.63 1.63 Vindaloo
H-11-38 130.9 131.2 0.3 0.97 0.97 Vindaloo
H-11-38 147.3 178.0 30.7 1.57 1.57 Vindaloo
H-11-38 205.6 207.0 1.4 1.90 1.90 Vindaloo
H-11-39 62.9 117.0 54.1 2.91 2.91 Vindaloo
H-11-39 120.1 134.0 11.9 0.46 0.46 Vindaloo
H-11-39 154.7 156.0 1.3 2.86 2.86 Vindaloo
H-11-40 138.0 140.3 2.3 0.73 0.73 Vindaloo
H-11-40 145.4 150.0 4.6 3.16 3.16 Vindaloo
H-11-40 161.0 161.3 0.3 4.83 4.83 Vindaloo
RH11-25 89.0 90.0 1.0 1.26 1.26 Vindaloo
RH11-25 98.0 124.0 26.0 1.35 1.35 Vindaloo
RH11-26 13.0 14.0 1.0 1.18 1.18 Madras area
RH11-26 45.0 46.0 1.0 4.14 4.14 Madras area
RH11-26 58.0 59.0 1.0 2.95 2.95 Madras area
RH11-26 77.0 78.0 1.0 19.30 19.30 Madras area
RH11-26 87.0 88.0 2.0 1.92 1.92 Madras area
RH11-26 123.0 124.0 3.0 1.04 1.04 Madras area
RH11-27 NV NV IP Target
RH11-28 61.0 65.0 4.0 1.44 1.44 Madras NW
RH11-28 81.0 82.0 1.0 1.00 1.00 Madras NW
RH11-29 38.0 55.0 17.0 1.58 1.58 Madras NW
RH11-30 NV NV Madras?
RH11-31 NV NV IP Target
RH11-32 NV NV IP Target
RH11-33 NV NV IP Target
RH11-34 NV NV IP Target
RH11-35 22.0 80.0 58.0 0.43 0.43 Koho
RH11-44 NV NV IP Target
RH11-45 3.0 7.0 4.0 3.07 3.07 Vindaloo
RH11-47 NV NV IP Target
RH11-48 NV NV IP Target
RH11-53 NV NV Vindaloo
RH11-56 NV NV IP Target
RH11-57 199.0 200.0 1.0 1.07 1.07 IP Target
RH11-61 NV NV IP Target
RH11-62 NV NV IP Target
RH11-65 50.0 60.0 10.0 0.66 0.66 Vindaloo
RH11-65 96.0 110.0 14.0 1.27 1.27 Vindaloo
RH11-66 34.0 37.0 3.0 3.29 3.28 Vindaloo
RH11-66 50.0 57.0 7.0 0.79 0.79 Vindaloo
RH11-66 104.0 108.0 4.0 2.6 1.61 1.51 Vindaloo
RH11-66 129.0 131.0 2.0 37.00 15.55 Vindaloo
RH11-67 109.0 110.0 1.0 0.7 1.80 1.80 Vindaloo
* Estimated true lengths are supplied when enough information has been received. A good rule of thumb is that true lengths are 60% to 70% of the length of the intercept.
** Assays capped at 30 g/t Au

To view "Figure 1", please visit the following link: http://media3.marketwire.com/docs/Vindaloo_Area_811.pdf

To view "Figure 2", please visit the following link: http://media3.marketwire.com/docs/Hounde_Group_811.pdf

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