Avion beats its own estimate as gold flows in Mali

Avion Resources (AVR-V) has managed to beat its own guidance, and in doing so it has furthered its remarkably turnaround from the doldrums of last November.

The Toronto-based company says it has reached commercial production roughly two months ahead of schedule at its Segala and Tabakoto gold project in Mali.

The secret to such success doesn’t lie in any grand event. Instead, the company credits its early production with a consistent, and problem-free build up from the time initial production began on February 17.

Supply for the mill is currently coming from oxide ore at the Segala pit and the company says the crusher and mill, which are operating at 1,800 tonnes per day, is on track to reach the target of 2,200 tonnes per day.

Total gold production for the year is expected to come in at 66,000 oz. at a cash cost of US$509 per ounce.

As of the end of March 31, 2009 the company had managed to turn out 6,211 oz of gold – again beating its own guidance of 5,200 oz. The cash cost for that production came in at just of US $423 per ounce.

Those lower cash costs were in part due to lower operating costs which were attributed to its policy of processing stockpiled ore while developing the Segala pit.

With all that good news it’s no wonder that the company’s shares furthered their recent steady climb as they were up 9% or 3 to 38 on roughly 1 million shares of trading in Toronto on May 6. Its shares had closed as low as 3 in November of last year.

The company’s success in driving to commercial production bodes well for its plans to expand the project to a 100,000 oz. per year mine by 2011. It is currently looking into increasing production throughput by adding to its crushing and grinding capacity. It says an engineering study will begin shortly.

Avion holds 80% of the Tabakoto and Segala with the government holding the remaining 20%. The company bought the projects from Nevsun in early 2008 for US$20 million.

The project sits 200 km south of Kayes.