Avion Gold Corporation

Avion Gold Corporation

September 16, 2008 10:07 ET

Avion Resources Announces New Mining Strategy With Aim to Restart Production in Q1 2009 at the Segala and Tabakoto Gold Projects, Mali

- New Executive Appointment Strengthens Avion Management Team -

TORONTO, ONTARIO--(Marketwire - Sept. 16, 2008) - Avion Resources Corp. ("Avion Resources" or "the Company") (TSX VENTURE:AVR), today announced that the Company's Board of Directors have approved a new mining strategy for the Segala and Tabakoto gold projects, located in Mali, West Africa. The Company will focus on the Segala project during the first phase of the new mining strategy. Avion Resources plans to commence mining operations at Segala, which has a 43-101 compliant resource, with two years of open-pit production (at a projected low-strip ratio), followed by underground mining. The Company believes that the new plan will realize robust, earlier-than-expected cash flow from operations, as Avion Resources anticipates production to begin at Segala in mid-February 2009. The new strategy is to mine near-surface mineral resources to minimize waste stripping and then proceed to underground mining.

Avion Resources considers the Segala deposit, with a 43-101 compliant, measured and indicated resource, to be less geologically complex, as compared to the Tabakoto deposit, which in turn is expected to reduce mining costs. Initial mining at Segala will focus on the free-digging saprolite; historic metallurgical testwork on the un-weathered mineralization indicates that it is softer than at Tabakoto, which means that higher plant throughput can be achieved when milling Segala mineral resources compared to Tabakoto.

Avion Resources plans to commence a shallow continuation of the existing open-pit at Tabakoto concurrently with the Segala underground mining operation to supplement plant feed. Underground mining at Tabakoto is also being planned and is projected to follow the shallow open-pit operation. By the fourth year of the new production plan, Avion Resources plans to employ only underground operations at both Segala and Tabakoto, which is expected to eliminate high waste stripping costs. Concurrent with mining and as a follow-up to exploration success in 2008, exploration will continue to be carried out for new open pit and underground resources; this work is expected to be funded from cash flow.

"The new mining strategy approved by the Board demonstrates the success Avion has achieved to date at Segala and Tabakoto," commented Stan Bharti, Chairman of the Board. "Since the acquisition of these projects, Avion's team has worked diligently to execute an exploration and evaluation program that will move the company to the next stage and support our vision of becoming a near-term, low-cost, gold producer. The Board is pleased to announced that Avion is not only on its way to reaching this goal, it will do so earlier than expected, with the Segala deposit expected to commence production in mid-February 2009."

In addition to the new mining strategy, the Company's Board of Directors is pleased to announce the appointment of John Begeman to the position of President and CEO. Mr. Begeman is a mining engineer with over 30 years of mining experience. He is currently the President and CEO of Valencia Ventures Inc. and was previously the Chief Operating Officer of Zinifex Canada Inc. (formerly Wolfden Resources Inc.). In addition, he has served as Vice President, Western Operations of Goldcorp Inc. Mr. Begeman replaces Rene Bharti who will remain with the Company as Vice President, Corporate Development and Director. Mr. Begeman has served as a director of the Company since May 2008.

Avion Resources will be issuing 1,550,000 options under the stock option plan of the Company to various directors, officers and consultants of the Company. The options shall vest quarterly over a period of two years and are subject to regulatory approval. The options will be exercisable at the closing price of the common shares of the Company on September 19, 2008, which is yet to be determined, and will expire five years from the date of grant.

Tabakoto and Segala Projects History

Nevsun Resources Ltd. ("Nevsun"), the former owner of the Tabakoto and Segala projects, published a NI 43-101 compliant mineral resource estimate for the Mali Projects in 2004. Based on these estimates and their feasibility study, Nevsun commenced mining operations at Tabakoto expecting 3.36 million tonnes of ore (assuming a gold price of $350/oz) would be processed at a rate of 650,000 tonnes per year, with a grade of 5.26 g/t of gold, to a depth of 210 metres at a 2.0 g/t gold cut-off grade. The Segala open-pit was to contribute 3.98 million tonnes grading 2.99 g/t yielding 382,505 oz Au to the mill after mining at Tabakoto was completed. According to the plan, the Tabakoto mine was expected to yield approximately 567,544 ounces of gold at an average waste-to-ore ratio of 15.4:1 with ore and waste totaling 52 million tonnes. When these open pit plans were developed none of the technical reports presented options for underground mining.

During production, Nevsun recovered approximately 100,000 ounces of gold at an average grade of 3.41 g/t of gold, representing an approximate 35% shortfall in expected ore grades at Tabakoto. As well costs per ounce were higher than expected. In March 2007, Nevsun management concluded that in accordance with industry practice, a provision was required for impairment of the entire value of the Tabakoto property of $81,373,865. In September 2007, Nevsun announced that the Tabakoto Mine would be placed on care and maintenance. Stockpile ores were processed during the following two months and Nevsun completed the sale process for the Mali Projects to Avion on May 20, 2008.

Avion purchased the fully-permitted Tabakoto and Segala deposits for US$20 million and a 1% NSR. This included all infrastructure, including a 2,100 tonne per day process plant, diesel generators, camp accommodation, tailings dam and office buildings.

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. Avion Resources has not completed a feasibility study on the Mali gold projects and there is no certainty the proposed operations will be economically viable.

About Avion Resources Corp.

Avion Resources is a Canadian-based exploration and development company focused on strategic acquisitions in Africa. Avion has a team of highly qualified geologists, as well as a strong operational team that is exploring various properties in the previously mentioned region. Avion currently holds 80% of the Tabakoto and Segala gold deposits in Mali, and 100% of an exploration project in Ethiopia that has a total land position of 4,400 square kilometers.

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 new mining strategy on the Company; projections regarding the timing of production and the elements of the mining strategy. 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.

Should you wish to receive Company news via email, please email info@avionresources.com and specify "AVR News" in the subject line.


Contact Information

  • Avion Resources Corp.
    Rene Bharti
    Vice President, Corporate Development
    (416) 861-5913
    Email: info@avionresources.com