Avnel Gold Mining Limited (AVK: TSX) announces third quarter 2007 results - Period ended September 30, 2007.



    LONDON, United Kingdom, Nov. 14 /CNW Telbec/ - Avnel Gold Mining Limited
(TSX: AVK)

    Avnel records a net loss of $1.3 million in the third quarter of 2007
(net loss of $0.3 million in the year to date) and gold sales for the quarter
of 5,334 ounces

    Results

    Avnel Gold Mining Limited ("Avnel" or the "Company") recorded net loss of
$1.3 million ($0.02 per share) for the three months ended September 30, 2007.
Avnel recorded a net loss of $271,000 ($0.004 per share) for the nine months
ended September 30, 2007 compared to a net loss of $1,232,000 ($0.02 per
share) in the first three quarters of 2006. The improvement compared to last
year is mainly due to the increase in revenue of 39% whilst total expenses
have only increased by 16%. Gold production has increased by 14% for the first
nine months of 2007 compared to the same period in 2006.
    Gold production totalled 5,242 ounces for the quarter, with a head grade
of 20.9g/t compared to production of 6,205 ounces with a head grade of
26.7 g/t in the corresponding period of 2006. Gold sales during the quarter
totalled 5,344 ounces at an average price of $651 per ounce. 900 ounces were
sold into a forward contract at an average price of $447 per ounce.
4,444 ounces were sold at spot with an average price of $692 per ounce. Cash
costs per ounce sold increased from $380 per ounce in the third quarter of
2006 to $480 per ounce in the third quarter of 2007 mainly due to lower gold
production.
    The Company is selling all gold production at spot price from August
2007.
    Gold production decreased in the third quarter compared to the first two
quarters of 2007. This decrease was in line with the mine plan as mining of
lower grade reserve blocks commenced. The mine grade is expected to be in the
range of 14g/t to 15g/t over the next 12 months before rising to over 20g/t.
Development of a new vein, No 18, will commence in the fourth quarter of 2007.
The mine plan shows vein 18 with a grade of 15g/t as the main source of ore
during 2008. During the first half of 2008, mine development will expose other
ore reserve blocks allowing ore production to increase to 5,000 tonnes per
month. The Company anticipates the mine will generate an operating margin to
cover capital expenditures. Funding of exploration programs and corporate
expenses will be required and the Company is evaluating alternatives as part
of a strategic review.

    Operations

    Avnel's principal assets are an 80% interest in Societe des Mines d'Or De
Kalana ("SOMIKA") and a 90% interest in the Fougadian Exploration Permit
through its subsidiary, Avnel Mali SARL. The State of Mali holds the remaining
20% interest in SOMIKA. SOMIKA is the owner and operator of the Kalana Gold
Mine located in the southwest of Mali and is the holder of an exploration
permit in respect of 387.4 kilometres squared in south western Mali. Avnel's
strategic objective, through SOMIKA, is to commercially exploit the reserves
at the Kalana Gold Mine, and enhance the economics of the Kalana Gold Mine
through underground exploration to increase mineral reserves and through
surface exploration.
    The mine was acquired by Avnel in late 2002 following which the existing
plant and infrastructure were upgraded and mining operations were resumed by
SOMIKA in January 2004 with commercial production commencing in March 2004.
During the years 2004, 2005 and 2006 Avnel has been engaged on increasing gold
production from 7,396 ounces in 2004, to 14,823 ounces in 2005 and to
22,638 ounces in 2006. Gold production for the first nine months of 2007
amounted to 20,006 ounces. At the same time, Avnel has invested significantly
in capital expenditures and underground development required to expand
production to a planned annual rate of 60,000 tonnes. The mine development was
behind schedule in 2005 and 2006 and it is now planned that underground
production will increase from 23,000 tonnes in 2006 to 35,000 tonnes in 2007
with the objective of developing the mine to attain its design throughput rate
of 60,000 tonnes per annum on a sustainable basis.
    Gold production decreased in the third quarter compared to the first two
quarters of 2007. This decrease was in line with the mine plan as mining of
lower grade reserve blocks commenced. The mine grade is expected to be in the
range of 14g/t to15g/t over the next 12 months before rising to over 20g/t.
Development of a new vein, No 18, will commence in the fourth quarter of 2007.
The mine plan shows vein 18 with a grade of 15g/t as the main source of ore
during 2008. During the first half of 2008, mine development will expose other
ore reserve blocks allowing ore production to increase to 5,000 tonnes per
month. The company anticipates the mine will generate an operating margin to
cover capital expenditures. Funding of exploration programs and corporate
expenses will be required and the company is evaluating alternatives as part
of a strategic review.

    Production data for the Kalana Mine for the three and nine month periods
ended September 30, 2007 and 2006 are as follows:

    
                                              Three months       Nine months
                                                     ended             ended
                                              September 30      September 30
                                              2007    2006      2007    2006
                                            ------- --------  ------- -------
    Tonnes milled:
    Underground ore                          8,458   6,594    24,405  18,528
    Coarse sand reclaimed                        -   1,512         -   2,956
    Total                                    8,458   8,106    24,405  21,484
                                          -----------------------------------

    Gold grade - grams per tonne (g/t):
    Underground ore                           20.9    31.5      27.6    32.1
    Coarse sand reclaimed                        -     5.7         -     5.9
    Total                                     20.9    26.7      27.6    28.5
                                          -----------------------------------

    Recovery rate - %                         92.2    89.3      92.4    89.4
    Gold production - ounces                 5,242   6,205    20,006  17,568

    Cost per tonne milled                     $295    $300      $291    $305
    Operating cost per ounce of gold
     sold                                     $480    $380      $360    $371
    Operating cost per ounce of gold
     produced                                 $476    $392      $355    $373
    


    Gold production of 5,242 ounces in the third quarter of 2007 was
marginally ahead of plan and 16% lower than the production in the third
quarter of 2006. The higher gold production than plan was due to higher mill
throughput (11%), lower grade (13%) and higher gold recovery of 92.2% (plan
87.8%).
    Tonnes milled in the third quarter of 2007 were 4% above the production
achieved in the corresponding period of 2006 and 11% above the planned
production for the third quarter. 1,512 tonnes of coarse sand was included in
the mill production in the third quarter of 2006. Underground ore increased
from 6,594 tonnes in the third quarter of 2006 to 8,458 tonnes in the same
period of 2007. Production from stoping on vein 1 was ahead of plan as
productivity improved with up dip mining from the 160 level.
    The gold grade of ore milled in the third quarter of 2007 was 22% lower
than the corresponding period of 2006 and was 13% lower than the plan. Mining
has commenced in lower grade mineral reserve blocks (19g/t) during the quarter
and this has resulted in a decrease in grade to mill. Grades of 11.0g/t from
new reserve block, vein 1 block VC2, were significantly lower than the reserve
grade (19.0g/t) and lower than the higher grades mined in the previous
quarter. The lower grades seem to be associated with a thin diorite intrusion
in contact with the quartz vein. Gold recovery (92.2%) in the plant was higher
than the corresponding period in 2006 (89.3%) and exceeded the plan (87.8%).
Gold recovery decreased from the first quarter of 2007 due to a lower head
grade but is higher than the second quarter despite a reduction in head grade
in the third quarter.
    Development advanced 485 metres in the third quarter of 2007 compared to
the planned 421 metres. Development of the 150 level haulage north to vein 18
advanced 170 metres in the third quarter. Vein 18 was intersected at the end
of the third quarter. During the fourth quarter, two ore raises will be mined
from 150 level to 100 level.

    Exploration

    Avnel completed the first phase of exploration on the Fougadian
Exploration Permit. A total of 8,241 soil samples (including 468 controls)
were collected along E-W oriented lines spaced 200 meters apart (N-S), with a
sample spacing of 50 meters in an E-W direction. All samples were analysed for
gold (fire assay) and for a 35 multi-element suite (ICP-AES) that includes
arsenic, copper and potassium.
    The results of the soil sampling survey have outlined several km-scale,
gold-in-soil anomalies and coincident arsenic anomalies. The numerous
significant gold and arsenic anomalous clusters that have been delineated were
grouped into 14 anomalies (Avnel-1 to Avnel-14). It was observed that these
14 gold anomalies fall along three major mineralised corridors. Two of these
corridors are sub-parallel, strike approximately N-S and can be traced nearly
continuously through the length of the property. The third corridor strikes
NNE-SSW and passes through the south-eastern and north-eastern quadrants of
the licence.
    Avnel has received two reports from The Mineral Corporation which can be
viewed on the company website. The Mineral Corporation conducted a mapping and
regolith study on the Fougadian Permit. The study indicated that a complete
lateritic regolith is preserved in the western part of the permit. The
regolith has been incised and eroded by streams flowing west to east, leaving
some lateritic residuum on the intervening ridges.
    The Mineral Corporation interpreted existing airborne magnetic and
radiometric data generated through the SYSMIN program in 2001. The study
suggested that coincident potassium and magnetic anomalies are potential
targets for further gold exploration. The study identified two north striking
corridors defined by co-incident potassium and magnetic anomalies.
    Using the geophysical interpretation, regolith study and geochemical soil
sampling, the bedrock geology was interpreted, given there is no bedrock
outcrop. Present indications are that the stratigraphy probably strikes in a
north-south direction.
    Avnel is now preparing a phase two exploration program that will include
a RC drill program The timing and funding for the next phase of exploration on
the Fougadian Permit will be announced in due course.
    Avnel continues to review its prospective drill targets on the Kalana
Permit where it has a 30 year permit for exploration.
    Avnel has appointed Dr Andy Killick as Vice President Exploration (see
press release dated October 15, 2007).
    Additional information is available in the MD&A for the quarter ended
June 30, 2007 which is available on the Canadian System for Electronic
Document Analysis and Retrieval (SEDAR) at www.sedar.com and the Company's
website www.avnelgold.com.

    Caution Regarding Forward Looking Statements:

    Statements regarding the corporation's plans with respect to the Kalana
Mine and exploration of the Kalana Permit are forward-looking statements.
There can be no assurance that the planned ongoing development of the Kalana
Gold Mine will be completed as forecast or that the exploration program on the
Kalana Permit will identify minerals resources.

    The TSX has neither approved nor disapproved the form or content of this
    information release.
    %SEDAR: 00021819E




For further information:

For further information: Roy Meade, Chief Executive Officer, +44 207 589
9082, Fax +44 207 589 8507, rmeade@avnelgold.com, www.avnelgold.com; Renmark
Financial Communications Inc.: Barry Mire: bmire@renmarkfinancial.com; Maurice
Dagenais: mdagenais@renmarkfinancial.com, (514) 939-3989, Fax: (514) 939-3717,
www.renmarkfinancial.com


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