Period ended September 30, 2012.
ST. PETER PORT, Guernsey, Nov. 12, 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.
- 139,000 metres of diamond and RC drilling has been completed in 2010, 2011 and 2012. During the third quarter 2012 work program, 7,714 metres of RC drilling and 422 metres of diamond drilling were completed.
|Location/Drill hole type||2010||2011||2012||Project Total To Sept 30, 2012|
|Kalana Diamond drilling||Metres||12,361||22,908||10,197||45,466|
|Kalana RC drilling||Metres||10,040||23,942||26,885||60,867|
|Kalanako Diamond drilling||Metres||0||7,402||0||7,402|
|Kalanako RC drilling||Metres||12,076||3,474||4,244||19,794|
|Djirila RC drilling||Metres||0||0||2,535||2,535|
|Kalana/Kalanako auger drilling||Metres||3,945||3,945|
- All drill hole assay results for 2010 and 2011drill campaigns have been received. 95% of assays have been received from the 48,000 metres drilled in the first nine months of 2012.
- 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 fourth quarter of 2012. This drilling should be completed during the fourth quarter to provide data down to at least 200m below surface. During the fourth quarter the planned diamond drilling of 5,000m at Kalana 1 South will be completed to provide additional data down to 400m below surface.
- 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).
- After the military coup d'état in late March, the drilling program was curtailed by IAMGOLD. Drilling re-commenced in late June and through July until the rainy season. Drilling then recommenced in September with one diamond drill and one RC drill rig at Kalana.
Results to September 30, 2012
Avnel issued press releases on its Kalana exploration project on January 31, 2011, February 22, 2011, May 26, 2011 October 11, 2011, March 12, 2012, May 15, 2012 and August 14, 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 five RC holes reported show that a mineralised zone, running 400m north of No 2 Shaft and extending over an east west strike of 230 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 seven diamond drill holes have intersected mineralised zones of varying width and grade. Forty eight 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 March 2012 to infill between the diamond drill holes to a programmed hole depth of 150m to 200m. Due to the suspension of drilling in late March the program was delayed. Drilling of approximately 8,000 metres commenced in late June and is now completed. 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.
Assay results have been received for fifty six diamond drill holes and fifty one RC holes. Assay results are available at www.avnelgold.com.
Geological modeling is in progress and should be complete in the fourth quarter of 2012. Extensive RC drilling in the third quarter of 2012 has provided additional data to a depth of at least 150m. The model will be used for mineral resource estimate in the fourth quarter of 2012.
Underground development and previous drilling have shown that there is potential for long intersections of lower grade mineralisation in the far north of the Kalana 1 North Domain. This zone lies between 300 and 400m north of No 2 shaft. This zone will possibly be part of the northern extremity of an open pit and could provide lower grade ore to the plant as part of the stripping of the pit. The mineralisation is associated with the major quartz veins that plunge from near surface to the south and have been mined underground down to 230m below surface. Between the major veins, vertical veinlets exist that contain gold usually associated with quartz veins. The geological interpretation of the formation of this mineralised zone is being assessed.
The zone lies between drill lines W475 and W310 (165m) and has an average north-south length of 50m. The zone extends down to at least 150m below surface. This interpretation is based on a drill hole density of 50m by 25m.
Long composites on Drill Section W310 West include 52m at 1.23g/t (RC405), 56m at 1.29g/t (RC441), and 36m at 0.8g/t (RC440).
Long composites on Drill Section W360 West include 20m at 0.99g/t and 20m at 0.65 (RC411), 17m at 2.24g/t and 25m at 0.57g/t
Long composites on Drill Section W475 west include 20m at 3.65, 11m at 1.68g/t, 15m at 1.93g/t, and 12m at 2.21g/t (all RC425); 26m at 1.24g/t, 10m at 4.33g/t, 9m at 1.14g/t, 10m at 1.49g/t and 12m at 1.35g/t (all RC251)
In the major mineralised zones, new results confirm the continuity of the mineralised packages identified by previous drilling and underground mining. The main mineralised packages are associated with main veins such as Vein 17, Vein 20, Vein 14, Vein 15, Vein 18 and Vein 18C. The Vein 17 mineralised package is generally the thickest with good grades. Recent results include 14m at 4.05g/t, 17m at 2.4g/t, and 18m at 1.46g/t.
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.
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 varying between 250m to 350m, to a depth of 120m.
The main mineralized zones strike approximately north-south and dip from west to east at approximately twenty five degrees. Some of these zones extend north into the Kalana 1 North domain.
Kalana 1 South has been drilled systematically over eleven east-west sections and six north-south sections. The surface area covered by the drill sections is 540m (east-west) by 390m (north-south).These drill sections are spaced at 50 metres. Sixty three diamond drill holes and one hundred and twenty eight RC drill holes have intersected mineralised zones of varying thicknesses and grade. The drill density is 50m by 25m down to a depth of 100m where most RC drill holes ended. The diamond drill holes continue to a greater depth and provide data at a wider spaced drill hole collar position. Diamond drilling continues in the fourth quarter to increase the density of intersections to allow deeper veins to be modelled.
Assay results have been received for sixty three diamond drill holes and one hundred and twenty eight RC drill holes. Recent assay results are shown on the Avnel Gold website www.avnelgold.com.
Diamond and RC drill hole results from the 2010, 2011 and 2012 drill 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.
Seven diamond drill holes were drilled to test the extension of the Vein 1 mineralised package to surface. The recent assay results confirm the extension of Vein 1 in the saprolite above 80m level to surface. Results include 8m at 5.17g/t (DD132), 10m at 3.95g/t (DD126), 9m at 2.6g/t (DD128), 4m at 31.8g/t (DD134).
The results confirm the existence of an extensive mineralised zone down to 100m below surface over a surface area of 350m by 150m.
Kalana II has been drilled over seven east-west sections and two north-south sections. The surface area covered by the drill sections is 350m (east-west) by 400m (north-south). Sixteen diamond drill holes and forty seven RC drill holes have intersected mineralised zones of varying width and grade.
Assay results have been received for all drill holes. Assay results have been previously reported and are shown on the Avnel Gold website at www.avnelgold.com.
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.
This mineralized zone around the diorite contact covers an area of 150m by 350m.
Both diamond and RC drilling will continue in the fourth quarter at Kalana II.
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. These mineralised zones appear to be steep dipping over a width of less than 10 metres. Closer spaced drill holes will be required to define a mineral resource
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 reported in the May, 2012 press release. During 2012 thirty seven RC drill holes were completed and all assay results received. Twenty six 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 all twenty six holes. Recent results are reported at www.avnelgold.com.
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 felsic 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 at the depth.
The Djirila prospect was discovered by Avnel Gold in 2004 and drilling in 2005/2006 identified high grade mineralisation down to a depth of 150 metres. Djirila is located in the south east portion of the SOMIKA permit (see Avnel Gold Press Release dated April 19, 2006).
A RC drill program commenced on 23 April and was suspended on 30 April 2012. A total of 19 drill holes for 2,535 metres were drilled. Drill samples were transported to the Kalana mine where sample preparation was performed at the SGS sample preparation laboratory. Assay results are still awaited. It is anticipated drilling will recommence in 2013.
A gradient array IP survey has been carried out over several drill targets identified by geochemistry results.
The 2011 IP survey over Ténintoumanina, Djirila and Kalanako grids is being processed and some initial results have been produced.
During 2012 a ground geophysics survey has been completed on several target areas defined by geochemistry. A total of 337.4 line-km has been completed at Kalanako, Kalana, Djirila and Solomanina. The survey was done by Sagax, a specialist company with extensive experience in West Africa. Preliminary results and interpretations have been received. This will be used for the optimum locating of future drill holes.
The backlog of assays has been reduced due to the reduced drilling rate in the second quarter. All 2010 and 2011 results have been received. Approximately 95% of the assays for 2012 have been received.
IAMGOLD and SGS are planning for the construction of a sample preparation and fire assay laboratory at the Kalana Mine site. The laboratory would be operated and managed under contract by SGS. The laboratory capacity will meet the future requirements for ongoing exploration on both the SOMIKA and Fougadian Permits, and any future mining operation. IAMGOLD will also install metallurgical laboratory equipment, including Knelson concentrators, to enable on site testing for ongoing evaluation of nugget effect of the Kalana ore. This decision is based on metallurgical test results on Kalana ore in 2011 and discussions with international expertise in coarse gold deposits. Fire assay laboratory equipment was ordered and deliveries to site started at the end of the third quarter. Orders for laboratory Knelson concentrators have been placed. The laboratory layout is almost complete and orders for the pre-fabricated building should be placed shortly. Construction should commence in the 1st quarter 2013.
The program to date has made significant progress in constructing a detailed and predictive geological model. The drilling completed in 2011 and 2012 is designed to provide information for IAMGOLD to generate a resource estimate which is planned for the fourth quarter of 2012. See the Outlook section below.
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.
Metallurgical test work has commenced with 7 samples from two RC holes and underground samples (weighing 50-70kgs per sample) sent to Lakefield Laboratories in Canada. Results show that gold recovery of 95% plus can be achieved with normal industry cyanide consumption and leach time. IAMGOLD have reported that the seven 2011 Kalana 50 kg met test samples mostly showed a significantly higher grade than the 50 gram fire assay.
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 and 269 metres in 2012) 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 substantially completed the drill programs at Kalana and Kalanako by the end of the third quarter to generate the data necessary to prepare a NI 43-101 compliant 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. Avnel and IAMGOLD have agreed to extend the exploration phase of its joint venture arrangements from August 9, 2012 to December 31, 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 and 2012. Targets include Djirila (previously drilled in 2006 see press release dated May 15, 2006, filed on SEDAR or on the Company's website), Ténintoumanina, Sanekourou, Dabaran (previously drilled in 2007), Sananfarani, Solomanina and Tonda. RC drilling commenced at Djirila in mid April.
Selected Interim Information
(In thousands of U.S. dollars except per share amounts)
|Three months ended Sept 30||Nine months ended Sept 30|
|Net (loss)/profit attributable to parent||(83)||4,601||7,618||(3,257)|
|(Loss)/profit per share||($0.000)||$0.024||$0.040||($0.019)|
|Weighted average shares outstanding||191,743,724||191,739,477||191,743,724||175,039,799|
|Balance Sheet||Sept 30, 2012||Sept 30, 2011||Dec 31, 2011|
|Working capital surplus||12,235||12,722||12,058|
Results of Operations
Revenues decreased by 29% in the third quarter to $3,427,000 arising from a 29% decrease in the number of ounces of gold sold. Gold production reduced by 9% in the third quarter resulting from reduced head grades. Cost of Operations increased by 15% in the third quarter due mainly to the movement in finished goods stock.
The net loss of $1,280,000 in the quarter to 30 September 2012 compares to a net profit of $5,168,000 in the comparable period in 2011. The net loss in the September quarter 2012 included a loss of $711,000 on financial derivatives compared to a profit of $5,488,000 on financial derivatives in the September quarter in 2011.
Cash reduced by $697,000 in the September quarter from $9,324,000 to $8,627,000 mainly due to reduced ounces sold and capital expenditures of $276,000.
Metal revenues increased to $12,854,000 in the nine months to September 30, 2012 from $11,271,000 in 2011. This was as a result of an increase in gold ounces sold from 7,258 ounces in the period to September 30, 2011 to 7,742 ounces to September 2012 and by the increase in the realised average sales price of gold from $1,548 per ounce in the period to September 30, 2011 to $1,655 per ounce to September 30, 2012.
Avnel recorded a net profit from operations of $5,591,000 ($0.040 attributable profit per share) for the period ended September 30, 2012 compared to a net loss from operations of $3,988,000 ($0.019 attributable loss per share) in the comparative period in 2011. Included in the period to September 2012, is an accounting profit on the fair value of derivative financial instruments of $6,733,000 compared to an accounting loss of $1,870,000 to September 2011. These fair value accounting movements reported have no cash effect on the Company.
As compared to the balance sheet as at December 31, 2011, Avnel's cash and cash equivalents as at September 30, 2012 reduced by $744,000 from $9,371,000 to $8,627,000. This reduction was after $735,000 of capital expenditure in the period.
There was a working capital surplus of $12,235,000 as at September 30, 2012 compared to working capital surplus of $12,058,000 as at December 31, 2011. 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 reduced from $31,726,000 as at December 31, 2011 to $31,196,000 at September 30, 2012.
Total stockholders' equity increased to $32,612,000 at September 30, 2012 from $24,515,000 at December 31, 2011. This was due to the net profit in the period to September 30, 2012.
The following table shows the production from the Kalana Gold Mine:
|Three months ended Sept 30||Nine months ended Sept 30|
|Gold grade - grams per tonne (g/t):|
|Recovery rate - %||86.4||84.6||87.3||84.6|
|Gold production - ounces||2,309||2,549||7,643||7,462|
|Cost per tonne milled||$253||$268||$262||$261|
|Operating cost per ounce of gold sold||$1,441||$1,217||$1,267||$1,239|
|Operating cost per ounce of gold produced||$1,392||$1,242||$1,257||$1,254|
Tonnes milled in the quarter to September 2012 increased by 8% compared to third quarter in 2011. Gold production at 2,309 ounces in the third quarter of 2012 was 9% lower than the comparative period in 2011 resulting from reduced head grade of 6.53g/t in quarter to September 2012 compared to 7.60g/t in the September quarter in 2011. Gold production was below plan by 9% due to lower grades.
Gold recovery in the September quarter in 2012 increased to 86.4% from 84.6% in the comparative quarter in 2011.
Mine development totalled 224 metres in the third quarter of 2012 compared to 224 metres in the third quarter of 2011 and was 174 metres ahead of the mine plan. Ore development increased to 224 metres in the third quarter of 2012 from 170 metres in the third quarter of 2011. Ore development focused on opening Vein 20 at 210m elevation. Access development to Vein 18 west of the existing mining area advanced 37m during the quarter. Based on recent diamond drill results, a new planning reserve was calculated for Vein 18. The vein lies 50m west of existing mining and is being developed by winzing down from 180m level and flat development from the Vein 18 stoping area above 180m level. This new Vein 18 is forecast to provide 20,000 tonnes of ore to be mined in 2013.
Exploration development advanced 88 metres in the third quarter 2012, as raises were mined to expose the mineralised package adjacent to Vein 17, Vein 18, Vein 18C and Vein 20. 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 $9 million during 2012 (with a total expense since the commencement of the joint venture of $29 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 would be completed by IAMGOLD in the fourth quarter of 2012.
After the Military coup d'etat in Mali on March 21, 2012, exploration activities were curtailed but drilling re-commenced in June and July. After the rains, drilling recommenced in September at Kalana. IAMGOLD's Kalana exploration team continue to work on geological and resource modelling, the taking of bulk samples for shipment to SGS South Africa for test work and ongoing analysis of the very large database that IAMGOLD have developed since the commencement of exploration in the fourth quarter of 2009.
Taking into account political developments in Mali and the onset of the rainy season in June, the exploration phase of the IAMGOLD/Avnel JV arrangements has been extended to December 31, 2012 in respect of the Kalana Permit. It is likely that a similar extension will be agreed in respect of the Fougadian Exploration Permit.
IAMGOLD commenced drill testing the gold anomaly targets identified by the termite samples and ground geophysics program completed in 2011. Drilling was carried out at Djirila in April and results are being received. Additional targets include, Ténintoumanina, 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 proposed a $6.5 million budget to follow up the exploration results achieved in 2010/2011. This work program was curtailed by the Military coup d'état but it is expected that in 2013 RC drilling at the Avnel 1 gold anomaly (now called Maramale) will commence to follow up the targets identified by geochemical sampling of termite mounds and geophysical structures identified by airborne geophysics. Avnel has applied for an extension of the Fougadian exploration permit that expires in December 2012. This will allow the planned drill program to be completed and results analysed prior to any decision to apply for 50% of the Permit on renewal as per Mali regulations. A positive response to extend the permit to end 2013 is anticipated in the 4th quarter.
For the remainder of 2012, Avnel is planning gold production of 2,000 ounces from 11,000 tonnes milled, at an average grade of 6.5g/t. This plan is very sensitive to grade, gold price and costs. The Company intends to sustain the current mining 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 250 metres during the remainder of 2012. Development will focus on opening up Vein 18 180m level west of the existing mined area as a potential mining reserve for 2013. Exploration development totalling 50 metres is included to provide information to support the exploration drilling program 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 6.3g/t containing 13,000 ounces. This assumes that ongoing development of Vein 20 below 180m level and Vein 18 west of existing mining areas will be successful as this represents 66% 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 IAMGOLD/Avnel bulk mineable 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'état 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 activities at the mine site are continuing as normal and conditions in the surrounding communities are completely calm. Communications remain open and the supply of locally procured consumables such as diesel continues. Importation of equipment and spares has continued as normal. The mine, which is operating normally, operates on grid power and there have been no abnormal interruptions to electric power supply to date. Exploration drilling activity has recommenced. The SGS assay laboratories within Mali continue to operate. Gold dore exports have continued as normal.
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. Avnel and IAMGOLD Corporation have entered into a joint venture arrangements agreement whereby IAMGOLD has the option to acquire up to an initial 51% interest in Avnel's interest in the Fougadian Exploration Permit and in an additional 75 sq. kms to the south of Avnel's Fougadian Exploration Permit area for which IAMGOLD has applied for an exploration permit.
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.
SOURCE: AVNEL GOLD MINING LTD.
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