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