Avion Resources Corp., 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.
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.