Avion Gold Corp AVGCF

#33 Hearts AVR!

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AVR : TSX-V : C$1.23 | C$453.7M | Speculative Buy , Target C$2.10 ?

•Avion flying; raising target to C$2.10 from C$1.60 and maintaining

SPECULATIVE BUY rating

A Q3/10 earnings beat and our recent site visit give us an impetus to raise our price

target

We are recommending Avion Gold as a SPECULATIVE BUY to risk-tolerant

investors seeking a 71% projected return to our new C$2.10 price target,

increased from C$1.60.

Despite 193% appreciation since the end of July, reasons remain to accumulate

including:

• Continued improvement in operational and financial performance give

confidence in the growth profile, taking production from 51,000 oz in 2009 to

approaching 200,000 oz/a in 2012.

• Superb exploration capabilities in target-rich environments of Mali and

Burkina Faso feeding pipeline growth.

• One of the most attractive valuations in Canaccord Genuity’s gold producer

coverage.

71% projected return continues to justify a SPECULATIVE BUY rating

We apply a 5% discount rate to the cash flows generated by Tabakoto and Segala,

a rate reduced from 7.5% previously. Under peak gold pricing at US$1,500/oz we

generate a corporate NAV (5%, peak) estimate of C$2.31 per adjusted fully share,

up from C$1.53 previously. Applying a conservative 0.9x P/NAV multiple

generates a C$2.10 price target, increased from C$1.60.