Avion triples Hounde resource to 1.6M oz. gold

In less than two years, Avion Gold (AVR-T) has turned a group of early stage mineral concessions in Burkina Faso into a 1.6-million-oz. gold project, with management convinced of its further potential for growth.

Acquired for 10.3 million shares in early 2010 from fellow West Africa-focused gold miner Avocet Mining (AVM-L), Avion’s Hounde project has since seen 19,800 metres of drilling in 109 core and reverse circulation holes. An updated National Instrument 43-101-compliant resource estimate on Dec. 21 pegged the project’s open-pit indicated gold resources at 13.4 million tonnes grading 2.07 grams gold per tonne, containing 893,000 oz. gold at a 0.5-gram-gold cut-off grade. In-pit inferred resources similarly stand at 10.7 million tonnes grading 2.07 grams gold, containing 712,000 oz. gold for a total of 1.60 million oz. gold across all categories.

Avion’s success at Hounde is in line with its strategy of acquiring gold projects from Africa-focused mid-cap gold miners selling non-core projects and then rapidly exploring and advancing them. Avion’s Tabakoto gold mine in Mali, for example, was acquired from Nevsun Resources (NSU-T, NSU-N) in May 2008 for $20 million. After acquiring the past-producing mine, Avion embarked on a rapid exploration and development campaign and is now undertaking a plant expansion to bring throughput at the mine from 2,000 tonnes per day to 4,000 tonnes per day. It produced 21,687 oz. gold last quarter at cash costs of $806 per oz.

At Hounde, the entire resource is currently made up of the Vindaloo zone, a group of closely spaced gold-mineralized structures that represent the southern 2.6 km of the open-ended 4.25-km-long Vindaloo trend. Additional drilling in 2012 will explore the deposit along trend and fill in those areas where there is insufficient information for resource calculation. The zone has been tested to a maximum depth of 270 metres, with open-pit resources modeled to a maximum depth of 300 metres, while individual lenses of gold mineralization measure up to 35 metres wide.

Five other early stage zones at the Hounde project lie within 20 km of Vindaloo. Initial drilling at the Bouere zone, a nearby artisanal mining site, returned 47.6 metres of 3.84 grams gold over a wide zone of artisanal workings, as well as 10 metres averaging 5.97 grams gold on a separate artisanal trend. The four other zones have seen a few holes each, returning several promising intercepts such as 17 metres grading 4.86 grams gold at Douhoun, 8.5 metres of 2.18 grams gold at Diosso South, 33 metres grading 0.55 gram gold at Grand Espoir and 13 metres grading 9.24 grams gold at Kueredougou.

John Begeman, Avion’s president and CEO, said in a prepared statement: “The increase in resources at Hounde exceeded our expectations as well as the guidance Avion provided to the market. This project just keeps getting better for Avion as we look forward to a PEA to be completed by mid-2012.”

Don Dudek, Avion’s senior vice-president of exploration, commented: “As we drill we continue to find additional gold mineralization both along and across strike. As a result, management believes that there is a good chance to further increase the open pit mineral resources.”

Avion is a Forbes & Manhattan group company, run by the Toronto-based banker and financier Stan Bharti.

At presstime on Dec. 21, shares of the company traded for $1.62, within a 52-week range of $1.26-$2.57.