SCOPING STUDY ESTIMATES POTENTIAL 4 YEAR FREE CASH FLOW OF APPROXIMATELY US$ 60.4 MILLION AT US$ 750/OZ AU GOLD PRICE
SEGALA AND TABAKOTO GOLD PROJECTS, MALI
TORONTO, ONTARIO -- (Marketwire) -- 12/12/08 -- Avion Resources Corp. ("Avion" or "the Company") (TSX VENTURE: AVR), today announced the results of a series of technical studies and a scoping study to complement its mining strategy to restart production at the Segala and Tabakoto gold projects in Mali (West Africa). Highlights of the studies include:
- Measured and Indicated mineral resource estimate of approximately 4,338,000 tonnes grading 3.50 g/t Au totaling 489,000 ounces
- Inferred mineral resource estimate of 4,072,000 tonnes grading 3.46 g/t Au totaling 452,600 ounces
- Projected two years of open-pit production at Segala with a 4:1 waste to ore ratio, followed by underground mining
- Projected US$10.34 million in free cash flow in 2009 on a project basis with a cumulative estimated free cash flow of approximately US$ 60.37 million over the four year plan based on a US$750/ounce gold price
As a first part to this strategy Avion commissioned a mineral resource estimate with P & E Mining Consultants Inc. which resulted in a Measured and Indicated mineral resource estimate on the Tabakoto and Segala properties of approximately 4,338,000 tonnes grading 3.50 g/t Au totaling 489,000 ounces of gold (see tables) and an additional Inferred mineral resource estimate of 4,072,000 tonnes grading 3.46 g/t Au totaling a further 452,600 ounces. Please see chart at end of the release for details of estimate. These resources estimates differ from those previously referenced by Nevsun Resources Ltd. as Avion has limited the scope of the Tabakoto resource review, where the bulk of the previous resources were defined, until an updated geological model can be developed. In addition Avion's resource consultant has determined that more of the Segala resource should be classified as Inferred as compared to previous studies.
Avion in conjunction with Mr. Milko Rivera, P. Eng. and Tim Mann, P. Eng., independent consultants, has developed a scoping study using only the estimated Measured and Indicated resources, for an initial four year mine plan, which contemplates commencing mining operations at Segala and to a lesser extent at Tabakoto. The scoping study contemplates two years of open-pit production at a 4:1 waste to ore ratio, followed by underground mining at Segala. Cost data used in the scoping plan were derived from two years of mining experience at the Tabakoto Mine, plus current quotes for services and an estimated cost for the 5 km haul road to Segala (see figure at end of release). The Company projects that the new plan could provide approximately US$10.34 million in free cash flow in 2009 on a project basis with a cumulative estimated free cash flow of approximately US$ 60.37 million over the four year plan based on a US$750/ounce gold price and including the capital required to initiate underground production. In total, the scoping plan indicates that over the four year period, Avion could produce 320,000 ounces of gold at an estimated life of project cash cost of US$467/oz. The above scenario is based upon the following assumptions and parameters:
- Capital costs as of January 1, 2009 of US$4.5 million, which Avion plans to fund through an operating loan with working capital to be sourced as deemed appropriate
- Mining rates varying from 2,070 tonnes per day at start-up to 2,466 tonnes per day for both open pit and underground at full production
- Gold recoveries of 90% with a conventional gravity/CIL plant with 65% of gold recovered by gravity
- Open pit ore recoveries of 95% and underground ore recoveries of 85% with dilution varying from 0 g/t Au to 0.6 g/t Au dependent on the plan for that part of the mineral resource
- All environmental and mining permits are currently in place
- Underground mechanized long hole retreat mining will commence in Q4 2010
- UG equipment will be leased
In conjunction with mining Avion would endeavor to complete sufficient drilling to support the conversion of Inferred resources to Measured and Indicated resources and thus potentially extend the projected life of the plan presented in the scoping study.
The newly estimated mineral resources and scoping study will be presented in a technical report that will be filed under the profile of the Company on SEDAR (www.sedar.com).
Tabakoto and Segala Projects
As reported on September 15, 2008, the Company along with Segala Project partner, Dynamite Resources Ltd., plans to focus on the Segala project during the first phase of a new mining strategy. Avion plans to commence mining operations at Segala with a projected 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 and earlier-than-expected cash flow from operations; Avion plans to commence production to begin at Segala in mid-February 2009. The strategy is to mine near-surface mineral resources with minimum waste stripping and then proceed to underground mining.
"Management is excited about the new Segala and Tabakoto mining strategy developed and presented in September 2008.
