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Avion Corporate Presentation - May 2009

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  • 1. Company Presentation May 2009 New Gold Producer in West Africa with Exploration Upside
  • 2. Forward-Looking Statement This press release contains forward-looking statements under Canadian securities legislation.  Forward-looking statements include, but are not limited to, statements with respect to the development potential and timetable of the Mali projects; the Company’s ability to raise additional funds as necessary; the future price of gold; the estimation of mineral resources; conclusions of economic evaluation (including scoping studies); the realization of mineral resource estimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capital and operating expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made.  Estimates regarding the anticipated timing, amount and cost of mining at the Mali projects are based on assumptions underlying mineral resource estimates and the realization of such estimates; results of previous mining activities at the projects, and detailed research and analysis completed by independent of the Company; research and estimates regarding the timing of  delivery for long-lead items; knowledge regarding the factors consultants and management involved in building a mine and other factors that will be described in the technical report summarizing the scoping study that will be filed under the profile of the Company on SEDAR.  Capital and operating cost estimates are based on results of previous mining activities, research of the Company and independent consultants, recent estimates of construction and mining costs and other factors that are set out in the scoping study.  Production estimates are based on mine plans and production schedules, which have been developed by the Company’s personnel and independent consultants.  Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to: timing and availability of external financing on acceptable terms;  unexpected events and delays during construction, expansion and start-up; variations in ore grade and recovery rates; receipt and revocation of government approvals; actual results of exploration and mining activities; changes in project parameters as plans continue to be refined; future prices of gold; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements except in accordance with applicable securities laws. Investors are advised that National Instrument NI 43-101 of the Canadian Securities Administrators requires that each category of mineral reserves and mineral resources be reported separately.  Mineral resources that are not mineral reserves do not have demonstrated economic viability.  Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred Resources The information presented uses the terms “measured”, “indicated” and “inferred” mineral resources.  United States investors are advised that while such terms are recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms.  “Inferred mineral resources” have a great amount of uncertainty as to their existence, and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources will ever be converted into mineral reserves. United States investors are also cautioned not to assume that all or any part of an inferred mineral resource exists, or is economically or legally mineable. 2
  • 3. Delivery In less than one year Avion  Acquired a previous producer for a substantial discount  Completed 15,000 metres of drilling  Developed a new mine plan and raised US$ 5 million  Announced an updated resource of 941,000 ounces Au and a merger with Dynamite Resources  Commenced production mid-February, 2009 – 66,000 ounces Au @ US$ 505/oz op cost in 2009  Announced acquisition of resource of 324,000 oz Au  Announces a significant increase in resources  Initiated project expansion studies ~ 200,000 oz Au per year 3
  • 4. Current Segala Main Pit Mining Segala Mine Plan 4
  • 5. The Avion Story The Setting  Gold in a secular bull market – gold shares outperform gold – shares of consolidators perform best The Company  Avion is a well-financed new producer in Mali, West Africa The Opportunity  Current model envisions 100,000 oz gold production by 2012  Increasing resource supports expansion plans - 200,000 ozs Au per year by 2011 possible  Regional consolidation underway 5
  • 6. Agenda The opportunity The company The growth plan The execution 6
  • 7. Gold Bull Market The Comparison is Remarkable 2 Gold Bull Markets – 2001 to present and 1968 to 1980 Relative Performance 2000 1500 1968 to 1980 1000 500 2001 to present 100 0 24 48 72 96 120 144 168 Is history repeating itself? 7
  • 8. Gold Shares Consolidators Perform Best Wheaton River 2001-2005 Relative Performance 1400 1200 1000 Wheaton 800 600 HUI 400 200 0 2001 2002 2003 2004 2005 8
  • 9. Agenda The opportunity The company The growth plan The execution 9
  • 10. The Avion Advantage 1. A new, well funded player Emerging, 2. Good neighbourhood high growth regional consolidator 3. Strong asset base 4. Attractive growth profile 10
  • 11. 1 New Player The New Avion Resources  40% Interest in the Segala Project1  40% Interest in the  80% Interest in the Segala Project Tabakoto Project1  C$11 million in cash  Proven management  Clean balance sheet  Substantial exploration upside N E W  Stronger company  C$13 million in cash and cash equivalents, producing Au  Consolidated interest in the Segala and Tabakoto Projects in Mali1  No debt 1. Government of Mali’s owns 20% 11
  • 12. 1 New Player The New Avion Resources Capital Structure Exchange TSX Venture Ticker AVR Shares Outstanding – basic 198.4 million Fully diluted 341 million* 52-Week High/Low $0.68 - $0.04 Recent Price (May 01 2009) $0.32 Market Capitalization $63.5 million •Warrants and options at $0.08 to $1.00 – would bring in CDN$96 million •82.5 million dynamite warrants @ >$1.07 expire by August 17th , 2009 12
  • 13. 2 In a Good Neighbourhood Mali: Africa’s Third Largest Gold Producer Anglogold Ashanti / IAMGOLD’s Sadiola Mine produces 445,000 oz of gold per year MALI 2.8 M oz. Randgold’s Loulo Mine produces 270,000 oz of gold per year 13
  • 14. 3 Strong Assets Large, Target-Rich Property with Central Milling Complex Approx. 100 km2 Mill Roads Tailings pond Power 3 km Water 14
  • 15. 3 Strong Assets $US100M Assets Acquired for <$0.20 on the Dollar (2008) Camp – Houses 100 staff Milling Facility – 2,100 tpd Power Supply Fuel Supply – Contracted Tabakoto Pit – 400 days water supply 15
  • 16. 3 Strong Assets Large Resource Base – January 2009 Measured and Indicated Resources             Tonnes   Grade (g/t Au) Ounces (Au) Segala (open pit)* 1,523,000 2.65 129,700 Segala (underground)* 2,478,000 4.02 320,500 Tabakoto   337,000   3.58  38,800 Total M&I 4,338,000 3.50 489,000 Inferred Resources                 Tonnes   Grade (g/t Au) Ounces (Au) Segala (open pit)* 3,000 2.91 300 Segala (underground)* 4,069,000   3.46  452,300 Total Inferred 4,072,000 3.46 452,600 Total Resource                 Tonnes   Grade (g/t Au) Ounces (Au) Total MI&Inf   8,410,000   3.48  941,600 Tabakoto geological resource 10,500,000 2.90 ~ 1,000,000** * Segala open pit cut-off 1.4 g/t Au, UG cut-off 2.0 g/t Au ** The potential quantity and grade is conceptual in nature, in that there has been insufficient exploration and/or study to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resource. The geological resource was estimated by modeling Au-mineralized cross structures in the immediate Tabakoto pit area using a 0.5 g/t Au wireframe shell. This estimate is designed to indicate what is possible rather than provide any indication of what may eventually become mineable. 16
  • 17. 3 Strong Assets Updated May 2009 Resource Base Updated – Mineral Resources*             Tonnes   Grade (g/t Au) Ounces (Au) Measured & Indicated (1 to 2 g/t Au Cut- 10,820,000 3.48 1,211,300 off) Inferred (1 to 2 g/t Au Cut-off) 9,990,000 3.50 1,139,000 Mineral Resources 0.5 g/t cut-off                Tonnes   Grade (g/t Au) Ounces (Au) Measured & Indicated 18,440,000 2.55 1,510,000 Inferred 17,680,000   2.58  1,467,000 * The resource study was prepared by Milko Rivera, P.Eng., and Farshid Ghazanfari, GIT, with a third party review and initial open pit versus underground mining reviews carried out by Eugene Puritch, P.Eng., of P&E Mining Consultants Inc. Note that open pit mineral resources were calculated at a cut-off of 1.0 g/t Au and underground mineral resources were calculated using a 2.0 g/t cut-off. 17
  • 18. 4 Growth Attractive Growth Profile Timing is ideal – Producing since February 16th , 2009 – On target to produce 66,000 ozs in 2009 @ US$505/oz cash cost  No capital requirements  Five year tax exoneration period  Project debt to be paid to Avion before dividends to Mali Gov.  Significant production growth – with limited capex  Outstanding reserve and resource growth potential – Large land position  West African consolidator – Completed acquisition of Dynamite Resources – Great Quest deal – Acquired 16% of Midlands Minerals 18
  • 19. 4 Growth Production Growth Starts Now! Au Production and Cash Costs Production (000 Au oz) Cash Cost (US$) Cash Costs Au Production Segala (OP) Segala (UG) Tabakoto (OP) Stockpile Mine plan presented in the scoping study prepared by M. Rivera, P. Eng, (independent) with the support of T, Mann, P.Eng. (independent) and Andrew Bradfield, P.Eng. (COO). Resource estimate prepared by Eugene Puritch and Antoine Yassa of P&E Mining Consultants. Using Canaccord Adams Research’s gold price forecast of US$900/oz in 2009, US$850/oz in 2010, US$800/oz in 2011 and US$750/oz in 2012, open pit and underground recoveries of 90% and 85%, respectively, UG equipment will be leased, UG mining by mechanized long hole retreat 19
  • 20. 4 Growth Immediate and Growing Cash Flow Leverage to Gold Price $M of Cash Flow $750/oz $850/oz $950/oz 20
  • 21. Agenda The opportunity The company The growth plan The execution 21
  • 22. Resource Expansion Potential Four Target Concepts 1 Segala at depth – underground potential 2 Tabakoto at depth, and around pit 4 Approx. 100 km2 3 Remainder of property – numerous targets 4 4 New Properties 1 3 2 3 3 km 4 22
  • 23. 1. Segala at Depth/Along Strike NW S Plan View egala S h ear Target Area Segala Ma in Shear Target Area Target Area Section Looking North Target Area Target -400m Area Target Area 23
  • 24. 2. Expansion Potential Around Tabakoto Pit 16.56 g/t Au/24.0 m 4.55 g/t Au/22.0 m 2.18 g/t Au/38.4 m 11.66 g/t Au/13.9 m 28.67 g/t Au/15.9 m  High grade pittable ore already exposed 37.12 g/t Au/7.7 m 22.86 g/t Au/48.0 m 24
  • 25. 2. Tabakoto at Depth/Along Strike Plan View 500 m  Modelled zones at Tabakoto Section View  Open at depth  Potential along strike 25
  • 26. 3. Target-Rich Exploration Property (100 km2) Segala Deposit 8.51 g/t Au/10.5m 2.28 g/t Au/45.0m 1.33 g/t Au/40.0m 3 km 2.72 g/t Au/73.5m 15.27 g/t Au/3.7m 13.56 g/t Au/22.5m Dar Salam 67.08 g/t Au/4.0m 7.41 g/t Au/11.5m 15.56 g/t Au/24.0m 11.6 g/t Au/13.8m Tabakoto Mine Dioulafoundou  75% of drill holes have 10.96 g/t Au/6.0m intersected gold! Fougala Great Quest Property 26
  • 27. 4. Great Quest LOI  Great Quest zones line up with mineralized trends on Tabakoto property  Total Project (Avion + Great Quest) Resource 3.08 M ozs Djambaye 2 Inferred Resource – 2,574,000 tonnes @ 3.92 g/t Au 324,000 oz 27
  • 28. Agenda The opportunity The company The growth plan The execution 28
  • 29. Production to end of March, 2009     Actual Production YTD Feb-Mar Variance   Unit Feb. Mar. Total Budget   Ore Mined tonnes 14,542 22,140 36,682 24,543 12,139 Waste Mined tonnes 1,800 103,742 105,542 692,660 (587,118) Total Mined tonnes 16,342 125,882 142,224 717,203 (574,979) MALI Stockpile Reclaim tonnes 3,953 40,385 44,338 50,000 (5,662)             Mill Feed tonnes 15,400 60,624 76,024 73,200 2,824 Grade g/t Au 2.17 2.88 2.74 2.45 0.29 Recovery % 94.2 92.7 93.0 90.0 3.0 Gold Produced oz 1,010 5,201 6,211 5,198 1,013             Gold Sold oz 720 3,787 4,507 5,198 (691) Gold Price Realized US$/oz 910 930 914 825 89             OPEX per Tonne Milled US$/tonne 37.9 42.5 41.5 73.2 (32) OPEX per Ounce US$/oz 577 495 512 1,031 (519) 29
  • 30. Project Timeline 2008 2009 2010 Tabakoto and Segala Gold Projects Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Acquisition Production Start Achieve/Sustain commercial production Technical Reports Historic NI 43 - 101 Technical Report Updated Resource Estimates for Segala and Tabakoto Resource Estimate for Tabakoto Cross Structures Resource Estimate for Dar Salam Resource Estimate for Dioulafoundou Exploration Program Segala / Tabakoto Drilling Regional Exploration Verification of ROM Pad Stockpile and Tailings Grades Ground magnetic surveys Leach Test Work on Segala Production Growth Studies Potential capacity upgrade completed by 2010 year end Merger and Acquisition reviews 30
  • 31. Recent Developments: March 2009 Updated / Optimized Segala Mine Plan Redesigned Segala open pits – reduce waste, increase tonnage  Reduce lower grade stockpile  Lower open pit mining contracted operating costs  Reduce explosive costs  $US1M savings in start-up capital expenditures  First Gold Poured! Segala Mine Plan 31
  • 32. Current Low Valuation Price to Cash Flow Multiples Versus Peers 2009 2010 Note: African Producers/Developers include – Axmin, Banro, Centamin Eqypt, Etruscan, Moto Goldmines, Red Back Mining and Semafo Junior Producers – Eldorado Gold, Gold Wheaton, Golden Star, Northgate, Alamos Gold and Gammon Gold Source: Canaccord Adams Research and public market research (updated May 3) 32
  • 33. Why Invest in Avion Resources? Favourable Consolidators gold dynamics perform best Emerging W. African Consolidator Unknown and New producer Undervalued – into bull market Attractive growth profile 33
  • 34. The Avion Advantage Unknown and undervalued Delivering gold into the heart of the bull market – mill just started! No capital requirements Tax exoneration/project debt re-payment MALI Significant growth potential (with limited capex) Outstanding reserve and resource growth potential West African consolidator We deliver 34
  • 35. Strong Board of Directors Stan Bharti, Chairman Mr. Bharti is a professional engineer and is currently the President of Forbes & Manhattan, Inc., a private merchant bank operating in Canada, the United States and Western Europe. From February 2002 to April 2006, he was Chairman and a director of Desert Sun Mining Corp., a Toronto Stock Exchange-listed mining company which was acquired by Yamana Gold Inc. He has over 25 years of experience in operations, public markets and finance. Mr. Bharti is also a director of several public and private companies. Bruce Humphrey, Director Mr. Humphrey brings a lifetime of mining industry experience, including having served as a former Chief Operating Officer at Goldcorp Inc. and most recently as President and Chief Executive Officer of Desert Sun Mining Corp. prior to its sale to Yamana Gold Inc. John Begeman, President, CEO and Director Mr Begeman is a mining engineer with over 30 years of mining experience. He is currently  the Chief Executive Officer of Valencia Ventures Inc. and was recently the Operating Officer of Zinifex Canada Inc. He has previously served as Vice President, Western Operations of Goldcorp Inc. where Mr. Begeman ran the Wharf Mine open-pit, a consistent low-cost producer Rene Bharti, VP Corporate Development and Director Mr. Bharti has held roles in several public and private companies, including those in the resource, technology, and entertainment sectors. Previously, Mr. Bharti also served as Vice President of Business Development for a publicly listed resource company with gold assets in the former Soviet Union. Mr. Bharti holds a Bachelor of Commerce (Honors) degree from Queen’s University. Don Dudek, Senior VP Exploration and Director Mr. Dudek has held increasingly senior roles with junior to senior exploration and mining companies over the past 25 years. Most recently Mr. Dudek served as Exploration Manager for Aur Resources Inc. which provided him the opportunity to evaluate 100’s of grass roots to advanced projects in Latin America and Africa. During his career Mr. Dudek was part of the team that discovered 7 new base and precious metal deposits in Canada, one of which has been mined. He also supervised work at Teck Cominco’s high profile La Verde Cu-porphyry deposit in Mexico. Mr. Dudek holds a B.Sc. Geology (honors) from the University of Saskatchewan. Honorable Pierre Pettigrew, Director The Honorable Pierre S. Pettigrew has had a most distinguished career as a Canadian federal cabinet minister, serving as Minister of Foreign Affairs and Minister for International Trade in his last positions in public office. Mr. Pierre Pettigrew also served as Minister of Health, Minister of Intergovernmental Affairs, Minister of Human Resources Development and Minister of International Cooperation. As a cabinet minister, he chaired numerous working groups on difficult international trade issues and lead trade missions to China, India, Russia, Germany, Algeria, Morocco, South Africa, Nigeria, Mexico, and other countries. From 1985 to 1995, he was an International Business Consultant with Deloitte. 35
  • 36. Experienced Management Team John Begeman, President, CEO and Director (see “Board of Directors”) Rene Bharti, VP Corporate Development and Director (see “Board of Directors”) Don Dudek, Senior VP Exploration and Director (see “Board of Directors”) Greg Duras, CFO Mr. Duras joined Avion Resources Corp. in May 2008, bringing with him more than a decade of corporate and project finance experience in the resource sector. Prior to assuming this role, he held the position of Vice President of Finance and Administration at S.C. Rosia Montana Gold Corporation S.A. (RMGC), a mineral exploration and mining development company based in Romania with responsibility for financial reporting, project financing, taxation, auditing and budgeting activities. Prior to RMGC, Mr. Duras held a number of senior finance roles, including Controller of TSX-listed Gabriel Resources Ltd. and High River Gold Mines Ltd. Mr. Duras is a Certified General Accountant and a Certified Professional Accountant, and holds a Bachelor of Administration from Lakehead University. Andrew Bradfield, Chief Operating Officer Andrew Bradfield has over 26 years of operations, technical, and management experience in the mineral resource industry. He has held positions at mines in Australia, Canada, China, Ethiopia, the Philippines, South Africa and Sweden. His experience includes start-up, development, operations, as well as technical and financial evaluations. Mr. Bradfield was most recently VP, Operations for TVI Pacific. Prior to joining TVI, he was the Chief Operating Officer for a mining and exploration company, which operates a diamond mine, and explores for diamonds and gold in China. He holds a Bachelor of Science (B.Sc. with honours) in Mining Engineering from Queen’s University, Canada. Chris Bradbrook, M.Sc. VP Strategic Development 30 years experience in Mining and Financial Industries.  Demonstrated skills in development, management and growth of junior mining companies through application of strong financing, strategic and marketing skills.  Founder of New Gold Inc., for which he raised $500 million.  Former Vice President, Corporate Development for Goldcorp Inc. during company's most explosive growth phase. 36
  • 37. Contact: Rene Bharti VP Corporate Development Tel: (416) 861-5876 rene@avionresources.com Don Dudek, P.Geo, the Senior Vice President, Exploration of the Company and qualified person under National Instrument 43-101, has reviewed the scientific and technical information in this presentation 37
  • 38. Gold Bull Market How High Could Gold Go? DJIA/Gold Price Since 1896 45 Jul ’99 = 44X 40 35 30 Jan ’66 = 28X 25 20 Aug ’29 = 18X 15 Mar 05 10 Jan ’32 Apr ’80 = 7X = 2X = 1X 5 = 2X DJIA/Gold 0  Gold = A 1896 1906 1916 1926 1936 1946 1956 1966 1976 1986 1996 2006 BIG NUMBER! 38

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