Avion Gold is off to a good start in Burkina Faso

Avion Gold (AVR-V, AVGCF-O) has completed an initial resource estimate for the Vindaloo zone of its recently acquired Hounde property, about 250 km southwest of Burkina Faso’s capital, Ouagadougou, and says it believes the overall grade of mineralization is similar to Semafo‘s (SMF-T) nearby Mana mine.

Avion acquired Hounde from Avocet Mining (AVM-L) earlier this year and quickly turned out a resource estimate. At a 1 gram gold per tonne cut-off grade, the Vindaloo zone contains indicated resources of 883,000 tonnes grading 2.23 grams gold per tonne for contained gold of 63,000 ounces. Inferred resources add 5.73 million tonnes grading 2.97 grams gold per tonne for contained gold of 547,000 ounces.

The gold price used in the estimate was the June 30 two-year trailing average of US$1,027 per oz. Gold recovery was estimated at 92% and mining costs were calculated at US$2.75 per tonne of ore and US$1.50 per tonne of waste. Processing and general and administrative costs added up to US$30 per tonne. Pit optimization slopes were 50 degrees.

The Vindaloo zone is one of eight mineralized zones on the property, and is open along strike and to depth and has been defined by about 23 drill holes. The trend of mineralization associated with the Vindaloo zones can be traced over 2,500 metres along strike (through drilling, soil survey data and magnetic surveys).

Avion has intersected gold mineralization along a 500-metre strike length to a depth of about 200 metres from surface, with drillhole step-outs of 75 to 100 metres horizontally and vertically.

In addition to its progress at the Vindaloo zone, Avion has also identified an extensive, largely untested trend of artisanal workings and gold-in-soil anomalies extending for more than 25 km along strike.

Avion says it believes mineralization at its 1,670 sq. km. Hounde property “displays similar characteristics” with Semafo’s Mana mine, 60 km to the northeast. The two properties are located in the same geological belt.

The Vindaloo zone is near the contact between an intensely sericite- and silica-altered mafic intrusion and similarly altered, intensely sheared and altered intermediate to mafic volcanoclastics.

The mineralization is often quartz stockwork-style, intrusion-hosted and weakly to moderately pyritic.

The entire mineralized package strikes north-northeast and dips steeply to the west. Higher gold grade zones have been intersected where the intrusion narrows.

Additional drilling of four to six holes to test for strike extensions of the Vindaloo zone is planned for the fourth quarter.

The mineral resource is constrained by two zones varying in true width from roughly 3.5 to 40 metres. Grade capping of gold assays was at 10 to 35 grams gold, depending on whether it was in a fresh or saprolite mineralized lens.

According to Avion, Burkina Faso’s mining industry is growing rapidly “due to a combination of a stable elected democratic government, excellent geology and a competitive fiscal regime.”

Avion predicts that by 2011 Burkina Faso will become the fourth-largest gold producing country in Africa. The company’s management also points to the country’s low taxes (income tax rate is 20% and so too is the corporate tax rate for mining companies).

The country’s government has also apparently mandated a three-year tax holiday during the construction phase of mining projects that offers relief from VAT as well as custom duties. During mining operations customs duties are 7.5%. The government receives a 10% free-carried interest and a 3% royalty on gold production.

Apart from Hounde, Avion holds an 80% interest in the Tabakoto (past-producing) and Segala gold projects in Mali, about 200 km south of the city of Kayes. Production at both projects began in 2009 and churned out 51,000 ounces of gold.

This year Avion expects production of 75,000 to 80,000 oz. gold. The company is also evaluating the possibility of an underground mine plan for the Segala and Tabakoto deposits.

Avion acquired Tabakoto and Segala in May 2008 from Nevsun Africa, a subsidiary of Nevsun Resources (NSU-T, NSU-X). The Government of Mali owns the remaining 20% interest.

In Toronto at midday, Avion shares were trading at 87¢ apiece, up 5¢ on the day, or 6.1%.

Over the last 52 weeks the junior has traded in a range of 27¢-84¢ per share.