Avnel Announces closing of Cdn.$16,903,476 equity issue by way of
equitization of debt and private placement

/NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES/

ST. PETER PORT, Guernsey, Aug. 5 /CNW/ - Avnel Gold Mining Ltd. ("Avnel" or the "Company") (TSX: AVK) is pleased to announce today the closing of its previously announced private placement (the "Offering") and debt equitization led by Dundee Securities Corporation, and including Haywood Securities Inc. and PI Financial Corp. (collectively the "Agents"). Under the Offering, Avnel issued 13,025,000 units of the Company (collectively, the "Units") at a price (the "Unit Price") of Cdn$0.20 per Unit, each Unit consisting of one common share of Avnel and one half of one common share purchase warrant (each whole warrant, a "Warrant"), for gross proceeds of Cdn$2,605,000. Pursuant to the debt equitization, Avnel repaid all of its outstanding indebtedness through the issuance of 71,492,382 Units to the debtholders at the Unit Price. Each Warrant issued as part of the Units entitles the holder to purchase one common share of Avnel at a price of Cdn$0.35 per common share at any time up until August 5, 2013.

In connection with the Offering, the Agents were paid a cash commission equal to 7% of the gross proceeds of the Offering and were issued broker warrants equal to 7% of the number of Units sold under the Offering, each such broker warrant entitling the holder thereof to acquire one Unit at the Unit Price up until August 5, 2013. In addition, Dundee, as lead agent, received additional broker warrants equal to 1% of the Units issued under the debt equitization.

About the Company

Avnel is a producing gold mining company operating the Kalana gold mine and is engaged in the exploration of the Kalana Exploitation Permit and Fougadian exploration permit.

Avnel's principal asset is an 80% interest in Société d'Exploitation des Mines d'Or de Kalana ("SOMIKA"). SOMIKA is the holder of a 30-year exploitation permit encompassing 387.4 sq. km. around and to the south of the operating Kalana gold mine in South West Mali. Avnel also holds the Fougadian exploration permit which lies to the South of the main Kalana exploitation permit.

Currently, Avnel and IAMGOLD are working together to explore the large geologically prospective Kalana permit area, focussing initially on the bulk mineable potential of the Kalana gold mine which currently has resources of approximately 1,000,000 ounces. This partnership leverages Avnel's considerable investment in the project and is aimed at fully exploring the upside potential at Kalana with IAMGOLD's West African mining experience.

The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

Forward-Looking Statements

This release includes certain statements that may be deemed "forward-looking statements". All statements in this release, other than statements of historical facts are forward-looking statements. Although Avnel believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in the forward-looking statements. Investors are cautioned that any such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in the forward-looking statements. Avnel does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Avnel Gold Mining Ltd.

For further information: For further information: Howard Miller, Chief Executive Officer, Phone +44 207 589 9082 or 416.726.8194, Email: Howard@hbmiller.co.uk, Website: www.avnelgold.com


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