ST. PETER PORT, Guernsey, Aug. 14 /CNW Telbec/ -

Results

Avnel recorded net loss of $1,395,000 ($0.018 per share) for the three months ended June 30, 2009 compared to net loss of $2,102,000 ($0.03 per share) in the second quarter of 2008. Whilst revenue has increased by 42% in the second quarter of 2009 compared to the second quarter of 2008 due to higher gold sales volumes and prices, costs have increased by 27% due mainly to higher depreciation charges.

Revenue has increased to $4,738,000 in the second quarter of 2009 from $3,330,000 in the same quarter of 2008. Gold sales of 5,085 ounces increased in the second quarter of 2009 compared to 3,679 ounces sold in the second quarter of 2008. Average sales price increased from $903 per ounce in the second quarter of 2008 to $930 per ounce in the second quarter of 2009. Sales in the second quarter of 2009 included 750 ounces sold forward at $964 per ounce compared to sales in the second quarter of 2008 of 750 ounces at $948 per ounce.

Operations

Avnel's principal assets are an 80% indirect interest in Societe d'Exploitation des Mines d'Or De Kalana, S.A. ("SOMIKA") and a 90% indirect interest in the Fougadian exploration and exploitation permit (the "Fougadian Exploration Permit"), through its subsidiary, Avnel Mali SARL. The State of Mali holds the remaining 20% interest in SOMIKA and 10% interest in the Fougadian Exploration Permit. SOMIKA is the owner of a gold mine located in the southwest of Mali (the "Kalana Gold Mine") and is the holder of an exploration permit in respect of 387.4 kilometres squared in south western Mali (the "Kalana Permit"). Avnel's strategic objective, through SOMIKA, is to commercially exploit the underground reserves at the Kalana Gold Mine, and enhance the economics of the Kalana Gold Mine through the conversion of existing open pit mineral resources into open pit reserves and to increase the resource base of open pit resources.

The mineral reserves that can be mined from existing underground infrastructure are currently under review and Avnel has commenced addressing strategies for optimising the exploitation of its extensive resource base at and in the immediate proximity of the Kalana Gold Mine. See below under the heading " Kalana Main Project".

The Company announced by press release on August 11, 2009 that it had entered into an option agreement dated August 10, 2009 (the "Option Agreement") with IAMGOLD Corporation ("IAMGOLD") whereby IAMGOLD has the option to acquire up to an initial 51% indirect interest in the Company's 80% interest in SOMIKA and up to an initial 51% undivided interest in all of the loans made by Avnel to SOMIKA (the "Guernsey Loans") by spending US$11,000,000 on exploration activities over a three year period, subject to extension, and by delivering a resource calculation of at least 2 million ounces of gold as well as proceeding with a feasibility study. The principal focus of the exploration work to be done by IAMGOLD will be on the northern most part of the Kalana Permit area encompassing the Kalana Gold Mine. A copy of the press release announcing the Option Agreement can be found on the System for Electronic Document Analysis and Retrieval (SEDAR) and the company's website. Together with IAMGOLD, the Company believes that it will have the expertise, experience and funding to take the Kalana Main Project forward and, if successful, to a production decision for a bulk mining operation. The Company and IAMGOLD may also further explore the remainder of the 387.4 sq. km. Kalana Permit which is in a geologically prospective setting and on which the Company has had some initial exploration success.

The main details of the Option Agreement are as follows:

1. IAMGOLD paid Avnel a signing fee of US$1 million and will pay a

continuation fee of a further US$1 million in cash on the first

anniversary of the Option Agreement subject to IAMGOLD not

terminating the option.

2. IAMGOLD is required to spend US$11 million (net of fees and

overheads) within three years (subject to a one year extension) to

explore the potential for further gold mineralisation principally in

and around the area of the existing Kalana Gold Mine.

3. If IAMGOLD, on the completion of exploration, delivers a National

Instrument 43-101 compliant resource study establishing the existence

of not less than 2 million ounces of gold and a feasibility study

work plan to move forward with a feasibility study, it will have the

option to acquire a 51% indirect interest in Avnel's 80% interest in

SOMIKA and an undivided 51% interest in the Guernsey Loans. If

IAMGOLD funds the exploration costs within the required time period

but does not deliver the required resource study and feasibility

study work plan it will have the option to acquire a 25% indirect

interest in Avnel's interest in SOMIKA and an undivided 25% interest

in the Guernsey Loans.

4.