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Avion aims to restart production in Mali

Avion Resources, a Canadian based exploration and development company, has approved a new mining strategy for the Segala and Tabakoto gold projects, located in Mali, West Africa. It will focus on the Segala project during the first phase of this new strategy.

The company plans to commence mining at Segala, which has a 43-101 compliant resource, with two years of open-pit production at a projected low strip ratio, followed by underground mining. It anticipates production to begin at Segala in mid-February 2009. The new strategy is to mine near-surface mineral resources to minimise waste stripping and then proceed to underground mining.

Avion Resources considers the Segala deposit to be less geologically complex, as compared to the Tabakoto deposit, which in turn is expected to reduce mining costs. Initial mining at Segala will focus on the free-digging saprolite; historic metallurgical testwork on the unweathered mineralisation indicates that it is softer than at Tabakoto, which means that higher plant throughput can be achieved when milling Segala mineral resources compared to Tabakoto.

Avion Resources plans to commence a shallow continuation of the existing open-pit at Tabakoto concurrently with the Segala underground mining operation to supplement plant feed. Underground mining at Tabakoto is also being planned and is projected to follow the shallow open-pit operation. By the fourth year of the new production plan, Avion Resources plans to employ only underground operations at both Segala and Tabakoto, which is expected to eliminate high waste stripping costs.

Concurrent with mining and as a follow-up to exploration success in 2008, exploration will continue to be carried out for new open pit and underground resources; this work is expected to be funded from cash flow.

The Tabakoto and Segala projects were previously owned by Nevsun, which commenced mining operations at Tabakoto expecting 3.36 million tonnes of ore (assuming a gold price of $350/oz) would be processed at a rate of 650,000 tonnes a year, with a grade of 5.26 g/t of gold, to a depth of 210 metres at a 2.0 g/t gold cut-off grade. The Segala open-pit was to contribute 3.98 million tonnes grading 2.99 g/t yielding 382,500 ounces of gold to the mill after mining at Tabakoto was completed. According to the plan, the Tabakoto mine was expected to yield approximately 567,500 ounces of gold at an average waste-to-ore ratio of 15.4:1 with ore and waste totalling 52 million tonnes. When these open pit plans were developed none of the technical reports presented options for underground mining.

During production, Nevsun recovered about 100,000 ounces of gold at an average grade of 3.41 g/t, representing an approximate 35% shortfall in expected ore grades at Tabakoto. Costs per ounce were also higher than expected. In September 2007, Nevsun announced that the Tabakoto mine would be placed on care and maintenance. Stockpile ores were processed during the following two months and Nevsun completed the sale process for these Mali projects to Avion in May 2008.

Avion holds 80% of the Tabakoto and Segala gold deposits in Mali, and 100% of an exploration project in Ethiopia that has a total land position of 4,400 km2.