Period ended December 31, 2011.
ST. PETER PORT, Guernsey, March 29, 2012 /CNW/ -
PROJECT MILESTONES ACHIEVED
The report below is an update for the work programme on its 80% owned 387.4 km2 Kalana exploitation permit in Mali conducted by IAMGOLD Corporation ("IAMGOLD") as operator of the exploration venture.
PROJECT MILESTONES ACHIEVED
- Over 93,000 metres of diamond and RC drilling has been completed to the end of 2011. The 2011 work program aimed to complete 35,000 metres of diamond and RC drilling with a total budget of $8.0 million. This was exceeded with nearly 58,000 metres drilled and expenditure of $13 million.
|Location/Drill hole type||2010||2011||Project Total to end of 2011|
|Kalana Diamond drilling||Metres||12,361||22,908||35,269|
|Kalana RC drilling||Metres||10,040||23,942||33,982|
|Kalanako Diamond drilling||Metres||0||7,402||7,402|
|Kalanako RC drilling||Metres||12,076||3,474||15,550|
- 46,000 assays have been received from the 58,000 metres drilled in 2011.
- The main objective in 2012 is to complete fences of drill holes on a nominal 50m by 25m across the Kalana 1 North domain, Kalana 1 South domain and Kalana II domain to enable geological cross sections to be generated and a resource study to be completed by IAMGOLD during the third quarter of 2012.
- IAMGOLD has proposed a budget of 60,000 metres at a cost of US$12.5 million for 2012. The majority of the drill metres will be at Kalana, but drilling is also planned at the Djirila discovery that was drilled in 2007/08 by Avnel (see Avnel's press release dated 8/08/2005 and 19/04/2006 reporting excellent drill results, posted on Avnel's website).
Results to December 31, 2011
Avnel issued press releases on its Kalana exploration project on January 31, 2011, February 22, 2011, May 26, 2011 October 11, 2011 and March 12, 2012. Assay results and drill collar co-ordinates are reported in these press releases posted on Avnel's website www.avnelgold.com
The Kalana mine area is geologically defined by three structural domains based on the dip and strike of the quartz veins. These domains are known as Kalana I North, Kalana I South and Kalana II, all located in the immediate vicinity of the current mine operations. Within these domains, the predominant strike and direction of quartz vein packages varies. In Kalana 1 North veins are dipping predominately south. In the Kalana I South domain the predominant dip direction is east and can be projected south east into Kalana II
KALANA I NORTH
Assay results from fifty six diamond drill holes and twenty three RC holes reported show that a mineralised zone, running 400m north of No 2 Shaft and extending over an east west strike of 278 metres, has significant mineralised packages with potential for bulk mining to at least 150 metres below surface.
Kalana 1 North has been drilled systematically over six north-south sections and three east-west sections. Fifty six diamond drill holes have intersected mineralised zones of varying width and grade. Forty seven holes were drilled at a sixty degree angle from south to north at fifty metres between drill hole collars to intersect the predominantly north-south plunging vein structures. Nine diamond drill holes were drilled at sixty degree angle from east to west at approximately 100m between drill hole collars. The surface area covered by the drill sections is 278m (east-west) by 400m (north-south).
A RC drilling campaign commenced in the fourth quarter of 2011 to infill between the diamond drill holes to a programmed hole depth of 150m to 200m. This campaign is expected to be completed in the first half of 2012. This will provide information from drill holes spaced 25 metres apart along the north-south drill lines that are approximately spaced at 50 metres apart.
Thirteen RC drill holes have been drilled at sixty degree angle from south to north to an average depth of 120 metres. Twelve holes were drilled in the fourth quarter of 2012 on three drill lines. In 2010 ten RC drill holes were drilled at sixty degree angle from east to west.
Assay results have been received for all fifty six diamond drill holes and twenty three RC holes. Assay results are available at www.avnelgold.com.
Geological modeling is in progress and should be complete in the second quarter of 2012. Extensive RC drilling in the first quarter 2012 will provide additional data to a depth of at least 150m. The model will be used for mineral resource estimate in the second half of 2012.
Results to date indicate that both gold grades and mineralised thicknesses tend to decrease from the main intrusive diorite going north. Mineralisation is generally associated with quartz veins and stockworks.
Recent diamond drilling (DD103 and DD104) and RC drilling (RC240 to RC250) shown in Avnel's press release dated March 12, 2012, has shown that the mineralisation identified by diamond drilling in 2010 does continue west of the main diorite intrusive for approximately 100 metres. Encouraging grades and mineralised widths are reported between the surface and 150 metres. These recent assay results enhance the grade and mineralised widths reported from the 100m spaced diamond drill holes in 2010. This improvement is a function of, inter-alia, closer drill hole spacing.
The mineralised packages continue 180 metres east to a depth of 150 metres below surface (DD084 and DD086). The thicknesses and grade of the north-south dipping mineralisation packages start to decrease going further east (DD088C and DD090) shown in Avnel's press release dated March 12, 2012.
To a depth of 150 metres, drilling has now extended mineralisation 250 metres north of number two shaft (DD089B and DD043). As the mineralisation is associated with veins dipping from north to south, these packages extend up dip to the north towards surface for another 150 metres, 400m north of two shaft (DD036, DD037 and DD038 drilled in 2010) shown in Avnel's press release dated March 12, 2012.
Below 150m from surface, mineralised packages have been identified by the 2010/2011 diamond drill program. One of these packages, Vein 20, is currently being mined with grades in excess of 10g/t over a 1m width. The diamond drill holes continue to intersect a number of veins within the package. This mined area was intersected by DD043, DD057, DD060 and DD044. The grades reported from these holes are significantly lower than those now being mined.
Underground mining and diamond drill holes have exposed a mineralised domain of vertical veins associated with flat vein structures in the northwest area. This domain has potential to be included in a mineral resource but requires more drilling and underground development during 2012.
RC drill holes east of the diorite intrusive have intersected mineralised zones dipping from west to east and are extensions of the veins in Kalana 1 South. These RC holes were drilled from east to west at an inclination of sixty degrees.
During the first half of 2012, forty two RC drill holes are planned to infill the existing drill lines. This will provide intersections at 25 metres between drill collars within the 180m by 250m area discussed above. Holes are planned to be drilled to a minimum of 150 metres and possibly as much as 200 metres. Three RC holes will test the extent of mineralisation to the west of the current boundary drill line.
On the north eastern boundary of Kalana 1 North, the potential for steep, vertical vein packages was tested by two RC drill lines spaced 50m apart. Drill holes were drilled from east to west at sixty degree inclination. Assay results indicate mineralisation that will be further tested by drilling planned in 2012.
KALANA I SOUTH
The diamond drill and RC assay results continue to demonstrate the potential for an open pit in the Kalana 1 South domain, running east-west over 600m and with a north-south strike of 250m to 350m to a depth of 120m.
Kalana 1 South has been drilled systematically over eleven east-west sections and five north-south sections. These drill sections are spaced at 50 metres. Forty seven diamond drill holes have intersected mineralised zones of varying thicknesses and grade. Thirty five holes were drilled at a sixty degree angle from east to west at fifty metres between drill hole collars to intersect the predominantly west-east plunging vein structures. Twelve diamond drill holes were drilled at sixty degree angle from south to north at approximately 100m between drill hole collars. These holes passed through the east-west dipping mineralised zones and continued north into the Kalana 1 North domain.
Assay results have been received for forty seven diamond drill holes. Recent assay results for DD087 and DD088C are shown in Avnel's press release dated March 12, 2012 on www.avnelgold.com.
Seventy seven RC drill holes have been drilled over eleven east-west sections and assay results have been received for all these holes. The RC drill holes were oriented at between fifty five and sixty degrees angle from east to west, mainly to a depth of 100m along the drill hole. Some holes were extended to 150m. Drill collars are approximately 50m between holes. Recent assay results are shown in Avnel's press release dated March 12, 2012 for holes drilled in the second half 2011.
The surface area covered by the drill sections is 540m (east-west) by 500m (north-south). During the fourth quarter of 2011 the drill area was extended north where the current mine infrastructure is located. The drill assay results showed the main mineralised vein structures extending 150m north.
Diamond and RC drill hole results from the 2010 and 2011 campaigns have shown a number of mineralised zones associated with major quartz veins (1, 3, 10, 20C and Savane). Between these major mineralised zones the model shows other mineralised zones. The recent RC drill assay results have provided additional data that is being modeled. Assay results include high grades that would be expected as Veins 1 and 3 have been mined underground between 2004 and 2007. The average mined grade of Vein 1 was in excess of 20g/t over 1.8m mining width.
During the first half of 2012, fifty nine RC holes are planned to infill existing lines to a drill spacing of 25m. The drill holes are planned to a minimum depth of 150m but if possible to 200m.
During the first half of 2012, sixteen diamond drill holes are planned to infill existing drill lines targeting Vein 20C and other mineralised packages below 200m depth. These drill holes will provide additional information of the mineralised packages between surface and 200m depth.
The results confirm the existence of an extensive mineralised zone down to 100m below surface over a surface area of 350m by 250m.
Kalana II has been diamond drilled over two east-west sections and two north-south sections. Sixteen diamond drill holes have intersected mineralised zones of varying width and grade. Eight holes were drilled at a sixty degree angle from east to west at 100 metres between drill hole collars to intersect the predominantly west-east plunging vein structures. Eight diamond drill holes were drilled at sixty degree angle from south to north at approximately 100m between drill hole collars.
Assay results have been received for eleven of the sixteen diamond drill holes. Results are shown at www.avnelgold.com.
Forty seven RC drill holes have been drilled over seven east-west sections and assay results have been received for forty seven drill holes. The RC drill holes are drilled at between fifty five and sixty degrees angle from east to west to a depth of 100m to 130m along the drill hole. Drill collars are approximately 100m between holes. Eighty five RC drill holes have been drilled over eight north-south sections and assay results have been received for sixty eight drill holes. The RC drill holes are drilled at between fifty five and sixty degrees angle from south to north to a depth of 100m to 130m along the drill hole. Drill collars are approximately 50m between holes on the thirteen drill lines.
The surface area covered by the drill sections is 350m (east-west) by 400m (north-south).
Geological interpretation and modelling is in progress. Preliminary interpretation indicates the presence of two mineralised packages (named Savana and Superette) dipping from surface to the east. Gold mineralisation exists outside these two packages but has still to be modelled but is located along the boundary of the east -west diorite.
Recent assay results are reported at www.avnelgold.com.
During 2012, five RC drill holes and five diamond drill holes are planned at Kalana II. These holes will assist the geological modeling and resource estimation.
Kalanako is located three kilometres north east of Kalana. Two mineralised trends, with strike lengths of 500m and 250m, have been established from the RC drill assay results. Mineralisation remains open at depth.
During 2010, 138 RC drill holes, totalling 14,460m were completed at Kalanako. Holes were drilled to an average of 105m hole length at an inclination of 55 degrees. Hole collars were spaced 50m apart. Assay results have been received and previously reported for 138 holes. In the fourth quarter of 2011, 3,741 metres of RC drill holes were completed and assay results are pending. Twenty five diamond drill holes were completed at Kalanako. Holes are drilled from east to west at an inclination of sixty degrees. Diamond drill assay results have been received for 14 holes. Results are reported at www.avnelgold.com.
The diamond drill holes will provide geological information to assist the interpretation of the mineralised zones identified by the 2010 RC drill hole program.
The depth of saprolite and saprock is approximately 150 metres, much deeper than that observed at Kalana. Diamond drilling at Kalanako displays numerous high strain zones (shearing and folding), packets of dense laminated quartz vein with sulfides and locally, highly altered and mineralized dioritic intrusives. Mineralisation is associated with these felsic intrusive rocks that intrude NW-SE striking shear zones. Diamond drill results to date show generally low grades over narrow widths.
The assay turnaround is slower than planned due to work backlog and a sampling protocol that requires a full half core to be sample prepped. Approximately 9,000 samples from the 2011 drill program (58,000 metres) that have been sent to the SGS laboratory in Bamako that were outstanding have now been received.
The planned increase in drill metres and samples during 2012 has been discussed with SGS who are increasing the sample preparation capacity at Kalana and constructing a new fire assay facility at Bamako.
The program to date has made significant progress in constructing a detailed and predictive geological model. The drilling completed in 2011 and the drill program in the first quarter of 2012 is designed to provide information for IAMGOLD to generate a resource estimate planned for the third quarter of 2012.
Historically diamond drilling at the Kalana Mine has underestimated the grades of the mineralised packages actually mined. This under evaluation is common to high grade quartz vein mines where the nugget effect is significant. Recent underground development by Avnel of Vein 20 has again shown that drill hole results underestimate gold grades mined. As part of the resource study it is planned to study the nugget effect at the Kalana Mine using historic data and assess what additional methodology can be applied to the sample and assaying protocols. Approximately 1,000 samples are being prepared to be sent to SGS Laboratory in Ouagadougou, Burkina Faso, for assaying using the Leachwell assay methodology. These one kilogram samples are from mineralised drill hole sample rejects that have been already fire assayed using a 50 gram aliquot sample. Results have been received and are being reviewed.
Metallurgical test work has commenced with 7 samples from two RC holes and underground samples (weighing 50-70kgs per sample) to Lakefield Laboratories in Canada. Results show that gold recovery of 95% plus can be achieved with normal industry cyanide consumption and leach time.
Avnel continues to operate the underground mine exploiting quartz veins by narrow stope mining and gravity gold recovery. This continues to produce data that is helpful to evaluate the nugget effect. In addition Avnel is excavating exploration raises (including twinning diamond drill holes) and drifts (a total of 615 metres completed in 2011) for and at IAMGOLD's expense. Samples from these raises were collected and sent to SGS laboratory for fire assay. Results are now being received and analysed.
Sample protocol entailed the splitting of the core by diamond core saw by IAMGOLD staff at the Kalana mine site. Half of the sample is preserved at the Kalana mine site and the other half separated by the metre and dispatched to the SGS analytical facilities in Bamako, a certified assay lab in West Africa. Each meter sample was dried, crushed, pulverized to 85% passing 75 micron, and then split using a cone splitter. Approximately 200 grams of the pulverised sample was placed in sealed packets and sent to the SGS assay laboratory in Kayes, Mali. Samples were analyzed for gold using a 50g fire assay. Rejects are returned to the Kalana Mine site and stored by IAMGOLD staff.
RC samples are prepared at the Kalana mine site. The cuttings are sampled in one-metre intervals, at a rate of six samples per drill rod. Individual samples are collected at the rig and transported to the mine site for air drying in pans as required (mostly for samples from the lower parts of the RC holes). The samples are weighed at the drill rig.
The dried samples are split in a large riffle to produce a sub-sample of nominal 2.5 kg for subsequent assaying. Chip boards, washed samples for logging, and pan concentrates for the observation of any free gold are also prepared. These activities are carried out by IAMGOLD personnel to industry standards.
The 2.5-kg sub-sample is taken to the SGS preparation laboratory. The sub-sample is weighed by SGS personnel and recorded. The entire sub-sample of nominally 2.5 kg is crushed to 2 mm and pulverized to a nominal 85% passing 75μ. A sub-sample of nominally 200 g is taken from the pulverized material and placed in a Kraft paper bag for transport to the analytical laboratory. Since October 2010 the 200g sub sample has been collected by riffle splitting to avoid possible segregation of heavy gold particles after pulverisation.
As part of the QAQC program, control samples are added. These control samples include standards, blanks and duplicates.
IAMGOLD expects to substantially complete the drill programs at Kalana and Kalanako in the first half of 2012 to generate the data necessary to prepare a NI 43-101compliant Resource Study planned for 2012. The objective is to define a minimum resource of 2 million ounces which would entitle IAMGOLD to obtain 51% of the project if it commits to the carrying out of a feasibility study under an agreed work program.
During 2012 IAMGOLD is also planning to possibly commence testing the gold anomaly targets identified by the termite mound geochemical sampling and ground geophysics program completed in 2011. Targets include Djirila (previously drilled in 2006 see press release dated May 15, 2006, filed on SEDAR or on the Company's website), Tenintoumanina, Sanekourou, Dabaran (previously drilled in 2007), Sananfarani, Solomanina and Tonda.
Technical information regarding the Kalana Gold Mine and the Kalana Permit is provided by Avnel management under the supervision of Roy Meade, a Company director, who is a non-independent "Qualified Person" as such term is defined in National Instrument 43-101.
Fougadian Exploration Permit
On October 17, 2006, Avnel was awarded the Fougadian Exploration Permit which lies south of the Kalana Permit. The Fougadian Exploration Permit covers an area of 150 square kilometres including a portion of the Niessoumala exploration area. The permit was awarded in accordance with the 1999 Mining Code and a foundation agreement (the "Foundation Agreement") was signed between Avnel Mali, a 100% wholly-owned subsidiary of Avnel, and the Government of the Republic of Mali. The Foundation Agreement provides for the exploration and exploitation of Group 2 minerals as defined in the 1999 Mineral Code. Group 2 minerals include gold and silver, and base metals, but exclude precious stones, semi-precious stones and fossils.
Avnel applied for a renewal of the Fougadian Exploration Permit and this was granted in March 2010. Avnel has specified a new area of 75 sq. km as required by the Malian Code. This area lies in the northern half of the original permit and includes the largest anomaly Avnel 1. The renewal is for 3 years and Avnel has committed to expenditures of $1.9 million over this period.
The 2008 drill program was focused on the Avnel-1 gold-in-soil geochemical anomaly that the Company believes is the largest and the most important in terms of gold and arsenic values on the Fougadian Exploration Permit. The anomaly is defined by an area where values generally exceed 32ppb Au and attain a maximum of 1731ppb Au. It extends for almost 4km in an N-S direction and for 1.5km in an E-W direction.
Two diamond drill holes were completed to a depth of 190 metres in order to provide information on the bedrock structure that can be used to optimise the orientation of the RC drilling programme. 48 inclined RC drill holes totalling 5422 metres were completed on a grid pattern during the second quarter, covering only a small portion of the Avnel 1 anomaly. The holes were drilled in a heel-to-toe fashion to ensure complete coverage across the width of the anomaly. As the budget was inadequate to fully test this large anomaly, the holes were drilled along pairs of lines spaced 200m apart, one pair in the north and a second pair 800m further to the south. Because of encouraging geological indications, an additional three holes were drilled to the south of the latter set of lines. In summary, out of the 50 holes drilled 15 (30%) intersected values above 1g/t Au. An airborne geophysics study was completed in the fourth quarter of 2009. The study covered the total Fougadian Exploration Permit. The study generated new information on magnetic, radiometric and topographic data. The Company believes that the study will improve the quality of previous surveys as the line spacing 50m and height flown 25m is superior to previous work.
On December 6, 2010, the Company announced that it had entered into a joint venture arrangements agreement (the "Joint Venture Arrangements Agreement") whereby IAMGOLD has the option to acquire up to an initial 51% interest in Avnel's 90% interest in the Fougadian Exploration Permit. The Fougadian Permit held by Avnel previously comprised 150 sq. km. to the south of and abutting the Kalana Exploitation Permit. Avnel relinquished the southern half of its ground in accordance with the Malian Mining Code and was granted a new exploration licence on the northern half on March 23, 2010. IAMGOLD has applied for an exploration permit in respect of the southern 75 sq. km and this is expected to be granted shortly. The combined permits are referred to as the "Fougadian Exploration Permit".
Under the terms of the Joint Venture Arrangements Agreement, IAMGOLD will fully fund and satisfy the expenditure requirements of the Fougadian Exploration Permit and, upon establishing a qualifying mineral resource of not less than 250,000 oz of gold, may earn a 51% interest (of Avnel's 90% interest) in the permit. Upon delivery of a pre-feasibility study, IAMGOLD will be entitled to increase its interest to 65%. After delivery of a feasibility study, IAMGOLD will undertake to procure or provide project financing to develop a mining operation.
During the first half 2011, approximately 12,300 termite mound samples were collected and submitted for sample preparation at the Kalana SGS sample preparation laboratory. The prepared samples were submitted to SGS fire assay laboratory in Kayes. 13,826 assay results, including 1,388 QAQC samples have been received and validated.
The termite mound sampling has shown there is a strong correlation between gold and arsenic values. These anomalies correlate with the geophysical structures identified by the airborne geophysics study.
The gold values obtained on the "Avnel 1" anomaly, now called the Maramele anomaly, are the highest seen on both Fougadian and SOMIKA permits. The Maramele gold anomaly runs four kilometres north-south and up to two kilometres east-west. Current interpretation is there are a number of mineralised zones running north south within the two kilometre wide anomaly. The 2012 RC drill campaign will test this interpretation as well as other gold anomalies on the Fougadian South Permit.
The establishment of an exploration camp commenced during 2011 and is expected to be operational in 2012. Expenditure totaled $1.05 million during 2011.
Results of Operations
Selected Interim Information
(In thousands of U.S. dollars except per share amounts)
|Net Loss Attributable to parent||(4,705)||(4,429)|
|Loss per share||$(0.025)||$(0.038)|
|Weighted average shares outstanding||185,554,007||116,150,355|
|Working Capital surplus||12,058||3,835|
Results of Operations
Metal revenues increased to $14,654,000 in the year to December 31, 2011 from $13,709,000 in 2010. This was as a result of a decrease in gold ounces sold from 11,227 ounces in the year to December 2010 to 9,283 ounces in 2011 more than offset by the increase in the realised average sales price of gold from $1,218 per ounce in 2010 to $1,573 per ounce in 2011. Other revenues in 2010 included a $1,000,000 by IAMGOLD pursuant to the Option Agreement.
Avnel recorded a net loss of $4,879,000 ($0.025 attributable loss per share) for the year ended December 31, 2011 compared to a net loss of $6,803,000 ($0.038 attributable loss per share) in the comparative period in 2010. Included in 2011, is an accounting finance loss on the fair value of derivative financial instruments of $1,647,000 compared to $3,882,000 in 2010. These fair value accounting losses reported have no cash effect on the Company.
As compared to the balance sheet as at December 31, 2010, Avnel's cash and cash equivalents as at December 31, 2011 increased by $7,265,000 from $2,106,000 to $9,371,000. This increase was due to the 2011 Private Placement, the net proceeds of which $9,749,000, were received in April 2011.
There was a working capital surplus of $12,058,000 as at December 30, 2011 compared to working capital surplus of $3,835,000 as at December 31, 2010. The increase working capital surplus resulted from the 2011 Private Placement. The working capital figures reported exclude the other derivative financial liability reported on the Company's balance sheet which has no cash liability to the Company.
Total assets increased from $25,593,000 as at December 31, 2010 to $31,726,000 at December 31, 2011 due mainly to the 2011 Private Placement.
Total stockholders' equity also increased to $24,515,000 as at December 31, 2011 from $21,677,000 at December 31, 2010. This was due to the 2011 Private Placement. The retained deficit increased by $4,325,000 as a result of the net loss made in the year to December 31, 2011.
The following table shows the production from the Kalana Gold Mine:
|Gold grade - grams per tonne (g/t):|
|Recovery rate - %||84.6||86.1|
|Gold production - ounces||9,550||10,727|
|Cost per tonne milled - $ per tonne||261||235|
|Operating cost per ounce of gold sold - $ per ounce||1,280||1,073|
|Operating cost per ounce of gold produced - $ per ounce||1,297||1,103|
Tonnes milled in 2011 were 5% lower than achieved in 2010. Gold production at 9,550 ounces in 2011 was 11% lower than 2010 resulting from the lower tonnes milled together with the reduced head grade of 7.2g/t in 2011 compared to 7.7g/t in 2010. Both tonnes milled and ounces produced exceeded the 2011 plan due to increased ore availability and higher gold price allowing lower grade stopes to be mined.
Gold recovery in 2011 decreased slightly to 84.6% from 86.1% in 2010 due to lower head grades.
Mine development totalled 1,658 metres in 2011 compared to 1,216 metres in 2010 and was 554 metres ahead of the mine plan. Ore development increased to 817 metres in 2011 from 696 metres in 2010. Ore development focused on exposing Vein 20 mining area with positive results. The vein was exposed west of a fault where no vein was expected. To access Vein 20 down to the 210m elevation, an ore winze was advanced and a second access winze developed from 180m level. This second access winze intersected Vein 20 in the fourth quarter of 2011, and will be utilised for mining during 2012.
Exploration development advanced 615 metres in 2011, as raises were mined to expose the mineralised package adjacent to Vein 17, Vein 18 and Vein 18C. The raises are adjacent to diamond drill holes recently completed by IAMGOLD.
Through the joint venture with IAMGOLD, Avnel is implementing an aggressive exploration program at the Kalana Mine to follow up the drilling program in 2010 and 2011, reported above. IAMGOLD expects to incur expenditure in excess of $12 million during 2012 (with a total expense since the commencement of the joint venture of $31 million). The majority of the expenditure will be on diamond and RC drilling at the Kalana Mine. It is anticipated that a new Mineral Resource study will be completed in the third quarter of 2012. Underground exploration development is planned to be to 298 metres as part of the resource study.
In addition RC drilling will continue at the Kalanako Prospect close to Kalana to follow up the initial drill program in 2010 and 2011.
During 2012 IAMGOLD is also planning to commence drill testing the gold anomaly targets identified by the termite samples and ground geophysics program completed in 2011. Targets include Djirila (previously drilled in 2006/07), Tenintoumanina, Sanekourou, Dabaran (previously drilled in 2007), Sananfarani, Solomanina and Tonda.
In 2011 IAMGOLD, the joint venture partner with Avnel commenced exploration on the Fougadian Permit, which lies south and abuts the Kalana Permit. A termite mound sampling program was completed during the first half of 2011 and construction of an exploration camp is expected to be completed in 2012. During 2012, IAMGOLD has proposed a $6.5 million budget to follow up the exploration results achieved in 2010/2011. The work program will include RC drilling at the Avnel 1 gold anomaly (now called Maramale) to follow up the targets identified by geochemical sampling of termite mounds and geophysical structures identified by airborne geophysics.
In 2012, Avnel is planning gold production of 8,000 ounces from 46,000 tonnes milled, at an average grade of 6.5g/t. This plan is very sensitive to grade, gold price and costs. The plan assumes development of a third winze from 180m level will enable mining of Vein 20 to continue in the second half of 2012 and 2013 at an assumed grade of 7.5g/t. Lower grade ore is planned to be mined from Veins 17 and 16 based on the gold price of $1,700 per ounce. The company intends to sustain the operation as long as feasible whilst the exploration program progresses. This is important to reduce the social impact on the community and to cover the costs of underground pumping. Once underground mining operations are temporarily stopped, the mine will be placed on care and maintenance. The underground water pumping system will remain in operation to prevent flooding of the mine and allow access for future exploration activity.
The mine plans to advance development 718 metres during 2012. Development will focus on opening up Vein 17 on 150m level and Vein 20 below 180m level. Dependent on results, development will continue. Exploration development totalling 298 metres to provide information to support the exploration drilling program is planned on 150m and 180m levels.
It is forecast that the mineable reserves available from the current mine infrastructure are approximately 66,000 tonnes at 6.8g/t containing 12,000 ounces. This assumes that ongoing development of Vein 20 below 180m level will be successful as this represents 50% of ore to be mined.
There remains approximately 1,740,000 tonnes containing over 600,000 ounces in underground mineral resources (measured and indicated). In addition the open pit mineral resources (measured, indicated and inferred) contain approximately 400,000 ounces in 3 million tonnes. Underground mining and underground diamond drilling have exposed additional mineralised zones that may contain gold to extract by open pit mining or underground bulk mining. Avnel believes the optimum method to exploit these mineral resources will require the development of an open pit with a new gold plant. The development of the underground mine between 180m and 300m level will be postponed until this study is completed. Avnel has revised the mineral reserves of the Kalana Gold Mine in line with the strategic decision to proceed with the Kalana Main Project Study and the IAMGOLD Joint Venture which is more fully explained on pages 2 to 3 above.
Current Events in Mali
Following the military coup d'etat on March 21, 2012 developments in Mali are being closely monitored by Avnel. Mr. Roy Meade, Executive Director of Operations based at Kalana reports that mining and exploration activities at the mine site are continuing as normal and conditions in the surrounding communities are completely calm. The road between the Kalana Mine Site and the capital, Bamako, remains open. Communications remain open as normal and arrangements are being investigated to ensure continuity of supply of locally procured consumables such as diesel (mainly for exploration). The mine, which is operating normally, operates on grid power and there have been no interruptions to electric power supply to date. We are optimistic that the issues giving rise to, and arising from the coup d'etat will be resolved by peaceful dialogue.
ABOUT THE COMPANY
Avnel is a producing gold mining company operating the Kalana Mine in south-west Mali and is engaged in the exploration of the 30-year Kalana Exploitation Permit encompassing 387.4 sq km around and to the south of the Kalana Mine.
Avnel's principal asset is an 80% interest in Société d'Exploitation des Mines d'Or de Kalana ("SOMIKA") which is the holder of the Kalana Exploitation Permit. The Kalana Project is situate in south west Mali. The 387.4 sq km exploitation permit has a NI-43-101 compliant resource of 1,020,000 oz (at an average grade of 10.4 g/t) in the measured and indicated category, and 249,000 oz (at an average grade of 3.4 g/t) in the inferred category. Avnel also holds the Fougadian Exploration Permit covering an area of 75 sq. km. to the south of the main Kalana Exploitation Permit area and abutting it.
Technical Information and Qualified Person/Quality Control Notes
Information in this release arising subsequent to the date of the 2005 Snowden Technical Report regarding the Kalana Gold Mine and exploration activity is provided by Avnel management under the supervision of Roy Meade (a director of the Company) who is a non-independent "Qualified Person" as such term is defined in National Instrument 43-101. Portions of the information are based on assumptions, qualifications and procedures which are not fully described herein.
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. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, continued availability of capital and financing and general economic, market or business conditions. 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.
For further information:
Public Relations Consultant:
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E-Mail [email protected]