Avnel Gold Mining Limited announces first quarter 2012 results

Period ended March 31, 2012

ST. PETER PORT, Guernsey, May 15, 2012 /CNW/ -

Exploration

SOMIKA

PROJECT MILESTONES ACHIEVED

2012 Exploration

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 123,000 metres of diamond and RC drilling has been completed in 2010, 2011 and 2012. During the first quarter 2012 work program,31,000 metres of diamond and RC drilling were completed.

• All drill hole assay results for 2010 drill campaign have been received. 56,000 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 fourth 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 March 30, 2012

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 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 first quarter of 2012 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 provided drilling recommences in May. 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. 42 RC drill holes remain to be drilled to complete this program.

Assay results have been received for fifty six diamond drill holes and twenty three RC holes. Assay results for one diamond drill hole and twenty eight RC drill holes are outstanding. 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 first three quarters of 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

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 diamond drilled systematically over eleven east-west sections and five north-south sections. These drill sections are spaced at 50 metres. Sixty diamond drill holes have intersected mineralised zones of varying thicknesses and grade. Sixteen of these holes were drilled in 2012.  Forty one 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. Nineteen 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. Assay results for DD112 have been received and are shown on the Avnel Gold website www.avanelgold.com.

One hundred and twenty three RC drill holes have been drilled over eleven east-west sections and assay results have been received for ninety seven of 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 25m between holes. Recent assay results are shown in Avnel's press release dated March 12, 2012 and May 15, 2012 for holes drilled in the second half 2011and early 2012.

The surface area covered by the drill sections is 540m (east-west) by 500m (north-south).

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.

KALANA II

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 all of the sixteen diamond drill holes. Recent 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.

KALANAKO

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 reported in the May, 2012 press release. During 2012 thirty seven RC drill holes were completed and assay results are pending. 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 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.

Assaying

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

Resource Study

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 half of 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. 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.

IAMGOLD reported the excellent agreement between the 50 gram Fire Assay and the Leachwell BLEG assay values (tails included). The BLEG Leachwell assaying has clearly shown that the 50 gram Fire Assay is representative for the pulped 2 kg samples that are being analyzed. Almost no gain was observed between 12 hour and 24 hour leach. Fire assay results on the tails detect negligible gold and leach duplicates give identical results. These results validate the approach of pulping the full half core (NQ and HQ) as well as the full split sample from the PQ core or RC and assaying 50 gram after a representative split. This approach does away with the 'in sample' nugget effect but obviously does not do away with the sampling error related to the nugget effect of the sampled object.

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 7 2011 Kalana 50 kg met test samples mostly showed a very 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) 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.

QAQC

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.

Looking Forward

Prior to the cout d'etat in Mali on March 21, 2012, IAMGOLD expected 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. This objective may not be met due to the suspension of drilling at the Kalana Mine at end March 2012 due to a military coup in Mali. At this time the drill contractor has not mobilised its crew to recommence the drill program. IAMGOLD has withdrawn all expatriate staff from Mali and closed its Bamako office. 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. 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. RC drilling commenced at Djirila in mid April.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.

Results of Operations

Metal revenues increased to $5,034,000 in the quarter to March 31, 2012 from $2,498,000 in 2011. This was as a result of an increase in gold ounces sold from 1,806 ounces in the quarter to March 2011 to 2,980 ounces to March 2012 and by the increase in the realised average sales price of gold from $1,380 per ounce in the quarter to March 2011 to $1,684 per ounce to March 2012.

Avnel recorded a net profit from operations of $4,614,000 ($0.029 attributable profit per share) for the quarter ended March 31, 2012 compared to a net loss from operations of $8,417,000 ($0.043 attributable loss per share) in the comparative period in 2011. Included in the quarter to March 2012, is an accounting finance profit on the fair value of derivative financial instruments of $4,597,000 compared to an accounting finance loss of $6,852,000 to March 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 March 31, 2012 increased by $116,000 from $9,371,000 to $9,487,000.

There was a working capital surplus of $12,580,000 as at March 31, 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 increased from $31,726,000 as at December 31, 2011 to $31,979,000 at March 31, 2012.

Total stockholders' equity increased to $30,310,000 at March 31, 2012 from $24,515,000 at December 31, 2011. This was due to the profit in the March 2012 quarter.  The retained deficit also decreased by $5,137,000 as a result of the net profit in the quarter to March 31, 2012.

Mining Operations

The following table shows the production from the Kalana Gold Mine:

Tonnes milled in the quarter to March 2012 increased by 1% compared to first quarter in 2011. Gold production at 2,769 ounces in the first quarter of 2012 was 42% higher the comparative period in 2011 resulting from the marginal higher tonnes milled together with the increased head grade of 8.6g/t in quarter to March 2012 compared to 6.1g/t in the March quarter in 2011.

Gold recovery in the March quarter in 2012 increased to 89.3% from 82.4% in the March quarter 2011 due to higher head grades.

Mine development totalled 332 metres in the first quarter of 2012 compared to 453 metres in the first quarter of 2011 and was 102 metres ahead of the mine plan.  Ore development decreased to 260 metres in the first quarter of 2012 from 295 metres in the first quarter of 2011. Ore development focused on opening Vein 16 above 150m level. Vein 16 was intersected in an exploration raise in 2011 that was following a diamond drill hole. Development has extended the reserve up dip beyond the 2012 planning reserve position and west to the anticipated boundary. To access Vein 20 down to the 230m elevation, a third access winze was mined from 180m level and intersected Vein 20 in April 2012, and will be utilised for mining during 2012/2013.

Exploration development advanced 89 metres in the first 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.

Outlook

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 was anticipated that a new Mineral Resource study would be completed in the fourth quarter of 2012.

Since the Military coup d'etat in Mali on March 21, 2012 exploration activities have been curtailed and drilling suspended.  IAMGOLD's Kalana exploration team continue to work on geological and resource modelling, the taking of bulk samples for shipment to SGS Lakefield Canada 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.  The large backlog of assays is also being caught up.

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 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.

For the remainder of 2012 Avnel is planning gold production of 6,000 ounces from 34,000 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 390 metres during the remainder of 2012.  Development will focus on opening up Vein 17 on 150m level and Vein 20 below 180m level. Exploration development totalling 200 metres is included 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 53,000 tonnes at 6.7g/t containing 11,000 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'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 as normal 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 interruptions to electric power supply to date. Exploration activity has been curtailed due to the withdrawal of expatriates working for IAMGOLD and  the two drilling contractor companies. The SGS assay laboratories within Mali continue to operate although there have been some disruption of power supply in Bamako. This is due to the low water level in the main dam supplying the Mali power grid. 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.

Forward-Looking Information

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.