Avion Corporate Presentation 2012-04-23


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Avion Corporate Presentation 2012-04-23

  1. 1. A Growing Gold Producer in West Africa with Exploration UpsideTSX: AVROTCQX: AVGCF April 2012
  2. 2. Forward Looking StatementThis presentation of Avion Gold Corporation (the ”Company”) contains forward-looking statements under Canadian securities legislation. Forward-lookingstatements include, but are not limited to, statements with respect to the development potential and timetable of the projects; the Company’s ability to raiseadditional funds as necessary; the future price of gold; the estimation of mineral resources; conclusions of economic evaluation (including scoping studies); therealization of mineral resource estimates; the timing and amount of estimated future production, development and exploration; costs of future activities; capitaland 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 “doesnot expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of suchwords 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 anticipatedtiming, 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 consultants and management of theCompany; research and estimates regarding the timing of delivery for long-lead items; knowledge regarding the factors involved in building a mine and otherfactors described in the annual information form of the Company. 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 scopingstudy. Production estimates are based on mine plans and production schedules, which have been developed by the Company’s personnel and independentconsultants. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level ofactivity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, includingbut 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 miningactivities; 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 couldcause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be asanticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differmaterially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company doesnot 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 mineralresources be reported separately. Mineral resources that are not mineral reserves do not have demonstrated economic viability.The Company uses the term “cash costs” in this presentation. Cash costs is a non-GAAP figure. Please see the Company’s Management Discussion & Analysisfor an explanation of this figure and the associated uncertainty.Andrew Bradfield, P.Eng., the Chief Operations Officer and Don Dudek, P.Geo., the Senior Vice President, Exploration, of the Company and are “qualifiedpersons” under National Instrument 43-101 and have reviewed and approved the scientific and technical information contained in this news release.Cautionary Note to U.S. Investors Concerning Estimates of Measured, Indicated or Inferred ResourcesThe information presented uses the terms “measured”, “indicated” and “inferred” mineral resources. United States investors are advised that while such termsare recognized and required by Canadian regulations, the United States Securities and Exchange Commission does not recognize these terms. “Inferred mineralresources” 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 ofan inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis offeasibility or other economic studies. United States investors are cautioned not to assume that all or any part of measured or indicated mineral resources willever 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 iseconomically or legally mineable. TSX: AVR 2
  3. 3. Avion Properties –West African Focus Coup Update  Constitutional Law reinstated April 8th  Interim Gov’t appointed with elections in ~40 days  Borders re-opened, fuel and supplies starting to arrive at site  Production continues at Tabakoto  Expect a significant positive valuation change as the perception of country risk reduces after coup TSX: AVR 3
  4. 4. Investment Highlights Profitable Production Tabakoto underground exceeding expectations Mill capacity doubling in progress – more ounces in future New sources of ore for the Tabakoto Mill Hounde PEA in progress with H2 delivery of report expected Continued Exploration success TSX: AVR 4
  5. 5. Valuation Bump-up from a ProductionIncrease to 200,000 oz rate 6,000 5,500Market Capitalization (US$mm) 5,000 4,500 NGD 4,000 3,500 AVERAGE 3,000 ANV 2,500 EGU AUQ AGI 2,000 BTO 1,500 MFL SMF 1,000 KGI Avion Gold 200,000 oz P roduction) ARZ 500 AVM EDV SGR TGZ GSC Avion Gold 0 0 100 200 300 400 500 600 2012 Production (000s oz Au) TSX: AVR 5
  6. 6. Mali: Africa’s Third Largest Gold Producer *See Appendix for details of mineral reserve and resource estimates TSX: AVR 6
  7. 7. Strong AssetsGlobal Resource Base Updated – Corporate Mineral Resources* Tonnes Grade Gold Ounces (g/t Au) Proven & Probable (Stock Pile/Open Pit)(1) 243,600 2,611,000 2.90 (1 to 2 g/t Au Cut-off) (167,6002) Proven & Probable(Underground) 669,500 4,630,000 4.50 (2 g/t Au Cut-off) (654,2002) Measured & Indicated 21,238,000 2.21 1,510,000 (0.5 to 2 g/t Au Cut-off) Inferred 30,186,000 2.47 2,411,000 (0.5 to 2 g/t Au Cut-off) (1) Includes stockpile of 1,207,300 tonnes grading 1.53 g/t Au containing 59,600 ozs as of January 1, 2011 • The resource study was prepared by Eugene Puritch, P.Eng. and Antoine Yassa, P. Geo of P&E Mining Consultants Inc. who are qualified persons under NI 43-101. Note that open pit mineral resources were calculated at a cut-off of 0.5 and 1.0 g/t Au and underground mineral resources were calculated using a 2.0 g/t cut-off. • Estimates include 93.75% of Kofi Project resources to reflect ownership • Resource updated to include estimated mining drawdown, Great Quest Acquisition, Kofi Project and Hounde’s Vindaloo zone. (2) Number in brackets indicates estimated reserve drawdown from 2011 production. Tonnes and grade numbers will be adjusted once reserves are updated by the end of Q2. (3) Mineral resources that are not mineral reserves do not have demonstrated economic viability TSX: AVR 7
  8. 8. Project Resource Base Growth3,000,000 Acquistions  87% average total resource growth year Production over year Reserves2,000,000 M&I Inferred1,000,000 - 2008 2009 2010 2011 8 TSX: AVR
  9. 9. 2011 – 91,200 oz. Produced 2012 – 140,000-150,000 oz. (Forecasted pre-coup) Gold Production at Tabakoto30,000 $762/oz est. $900 2012 $80025,000 $70020,000 $600 $50015,000 Oz. Produced $400 Cost/Oz.10,000 $300 $200 5,000 $100 - $- Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 TSX: AVR 9
  10. 10. Avion Production to Date  4,000 tpd run- Growing Production200,000 rate target in 2013150,000  Average mined grade to date of 3.61 g/t Au100,000  Average 50,000 recovery 95.5%  Avion produced 0 256,378 ozs to 2009 2010 2011 2012* date * Estimated 2012 production from 140,000-150,000 ounces TSX: AVR 10
  11. 11. - MaliGold Production Growth - Burkina Faso300,000 *200,000 * Kofi Open PIt Segala UG100,000 Taba UG 0 2011 2012 2013 2014 2015 2016-21 *Does not include Houndé Production Tabakoto and Segala deposit mine schedules from 2011 to 2014 are based on Avion’s NI43-101 technical report on Tabakoto Mining Operations, issued on August 17, 2011, and filed on SEDAR. For subsequent years, and for projections of the Kofi and Houndé deposits, Inferred Mineral Resources have been included, and the plan is based on an in-house study by Avion. Production growth assumes 100% of project, adding incremental feed to the Tabakoto mill and that African Barrick does not exercise their back-in right for the Houndé Project TSX: AVR 11
  12. 12. 4,000 tpd Run-Rate in H2 - 2012 2012Anticipated project milestones Q1 Q2 Q3 Q460,000 metre exploration programTabakoto underground stopingIssue updated resource and reserve reportsStart new open pit mine at Djambaye IISegala underground developmentPlant expansion constructionHot and Cold commissioning of new MillProduction doubling to 4,000 tonnes per dayHoundé resource update & P.E.A. report TSX: AVR 12
  13. 13. Strong Assets Milling Facility – expanding to 4,000 tpd Fuel Supply – Contracted Camp – now houses >350 staff TSX: AVR 13
  14. 14. Recent Tabakoto Underground Development Tabakoto Pit Tabakoto Underground Development Tabakoto Underground TSX: AVR 14
  15. 15. Underground Process Stoping started February 9, 2012 March UG production  Produced 17% more tonnes than planned  42% more ounces than planned  Approximately 1 g/t higher in grade than forecast  Dilution is less than expected and grades slightly higher TSX: AVR 15
  16. 16. Tabakoto & Kofi - Mali Kofi Resource Doubled in 2011 Target-Rich Mining Camp (~600 km2) 2011 discovery cost overall  ~$6.6/oz Inf  ~$23.5/oz Ind Exploration Program of ~$11.4 Million for 2012 (all properties) Total Corp. (Tabakoto + Kofi + Hounde) Resource of:  P&P Res: 0.91 M ozs (Jan.1, 2011)  M&I: 1.5 M ozs*  Inf: 2.4 M ozs** At 0.5 to 2.0 g/t cut-offs TSX: AVR 16
  17. 17. Houndé – Burkina Faso Excellent Resource Expansion Potential <5% of property evaluated Current Resource of:  Ind: 893,000 ozs  Inf: 712,000 ozs Vindaloo resource strike ~2.6 km, mineralized trend ~ 5.7 km open, target 15+ km long Preliminary Economic Assessment initiated for completion Q3/Q4 2012 $8.0 Million Exploration program for 2012 TSX: AVR 17
  18. 18. Opportunity Summary Mali - Short term production doubling supported by two high quality project assets in 20 million ounce plus mining camp Burkina Faso - Expanding 2+ g/t Au open pit resource base with great logistics  3 km from paved highway  1.5 km from high tension power line  Nearby community and work force TSX: AVR 18
  19. 19. Capital Structure Exchange: TSX Ticker: AVR Shares Outstanding – basic: 441.1 million Fully diluted: 466.0 million 52-Week High/Low: $2.57 - $0.78Recent Price (April 23, 2012): $0.82 Market Capitalization: ~$362 million2011 Year End Cash Balance: $20 million TSX: AVR 19
  20. 20. Undervalued Compared to PeersAvion is undervalued relative to producing peer groupbased on a price to earnings and cash flow multiples Source: NBF Estimates, Bloomberg, Thomson (April 9, 2012) TSX: AVR 20
  21. 21. Avion Gold Corporation MAJOR SHAREHOLDERS Sentry Investments ~15% RBC Asset Management ~2% Sprott Asset Management ~13% Management & Directors ~2% Fidelity Asset Management ~12% AGF Asset Management ~1% Maple Leaf Partners ~8% Altamira Asset Management ~1% Van Eck Jr Gold ETF ~5% BlackRock Asset Management ~1% Carmignac Gestion ~3% IA Clarington Investments ~1% Regent Pacific ~3% PI Financial Corp ~1% Craton Capital ~2% TD Asset Management ~1% Oppenheimerfunds ~2% Summary of other positions ~7% at less than 1% TSX: AVR 21
  22. 22. Independent Research and Media CoverageIndependent Research – Full Coverage Firm Analyst BMO Capital Markets Andrew Breichmanas Canaccord Genuity Steven Butler Cormark Securities Mike Kozak Mackie Research Capital Barry Allen NB Financial Tara HassanIndependent Research – Research Notes Firm Analyst Desjardins Securities Brian Christie PI Financial Eric ZaunscherbMedia Coverage Firm Casey Research Gecko Research TSX: AVR 22
  23. 23. Experienced Management Team & BoardMANAGEMENTJohn Begeman, President, Chief Executive Officer and DirectorDon Dudek, Senior Vice President ExplorationAlex Dann, Chief Financial OfficerAndrew Bradfield, Chief Operating OfficerNeil Said, Legal Corporate CounselBOARD OF DIRECTORSJames Coleman–Independent ChairmanJohn BegemanStan BhartiGeorge FaughtBruce HumphreyLewis Mackenzie, Major General (Ret.)Honourable Pierre Pettigrew, P.C. TSX: AVR 23
  24. 24. Avion Gold Corporation Segala Pit Contacts: Address: John Begeman 65 Queen Street West, Suite 800 President & CEO PO Box 67 Tel: (416) 861-5884 Toronto, ON M5H 2M5 jbegeman@aviongoldcorp.com Website: www.aviongoldcorp.com Michael McAllister Manager, Investor Relations Follow us: Tel: (416) 309-2134 info@aviongoldcorp.com TSX: AVR 24
  25. 25. Appendix TSX: AVR 25
  26. 26. Strong Assets Global Resource Base Tabakoto Kofi (93.75% ownership) Houndé Avion Tonnes Grade Oz Au Tonnes Grade Oz Au Tonnes Grade Oz Au Total (Ozs) P&P* 2,611,000 2.90 243,600 243,600 (OP + SP)(1) P&P* 4,630,000 4.50 669,500 669,500 (UG) M&I 1,359,000 3.41 149,100 6,469,125 2.25 468,375 13,410,000 2.07 893,000 1,510,475 Inferred 7,892,500 4.10 1,040,600 11,583,750 1.77 658,125 10,710,000 2.07 715,000 2,413,725(1) Effective reserve date of January 1, 2011. Update planned for mid Q2, 2012(2) Includes stockpile of 1,207,300 tonnes grading 1.53 g/t Au containing 59,600 ozs as of January 1, 2011 • The resource study was prepared by Eugene Puritch, P.Eng. and Antoine Yassa, P. Geo of P&E Mining Consultants Inc. who are qualified persons under NI 43-101. Note that open pit mineral resources were calculated at a cut-off of 0.5 and 1.0 g/t Au and underground mineral resources were calculated using a 2.0 g/t cut-off.(3) Andrew Bradfield, P.Eng. and Don Dudek, P.Geo., Senior Officers of Avion and “qualified persons”, as such term is defined under NI 43-101, are responsible for the Mineral Reserve estimates.(4) The Mineral Reserves were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM), CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council.(3) The Inferred Resources are in addition to the Measured and Indicated Resources.(4) The Mineral Reserves have been classified in accordance with the requirements of National Instrument 43-101 based on a gold price of US$1,183 per ounce and a 94% process plant recovery rate.(5) Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.(6) “UG” stands for underground , “OP” stands for open pit and “SP” stands for stock pile(7) For a full description of the key parameters, assumptions and methods used to estimate the above Mineral Reserves and a discussion of the legal, political and environmental risks that may have an impact on those estimates, refer to the Reserves Report. TSX: AVR 26
  27. 27. Call Options Explanation Avion sold 12 European style call options exercisable over 12 quarters (1st option June 1, 2012 - 12th option March 1, 2015) for $25MM upfront cash for a total of 36,396 ounces ($687/ounce) Each option allows the institution to purchase 3,033 ounces of gold at a set price. The first 4 options are priced at $700, the remaining 8 options are priced at $900 If the call option is exercised on the specific date, Avion will remit to the institution, the difference between the LME gold price and the price of the option Quarterly Option Calculation example: on June 1, 2013, if the gold price is $1,650, Avion will remit $2.27MM to the institution (3,033 ozs * ($1,650 - $900) ) and retain $2.73MM (3,033ozs * $900 ). Total amount to Avion for those 3,033 ounces in the call option would be $1,587 per ounce ($687 upfront + $900 option) For example, at a $1,650 gold price, each ounce sold equates to roughly $1,520 for Avion (undiscounted). TSX: AVR 27