Avion Gold Corp AVGCF

14 May update

[jmlguy]

Here is another update from Can-o-C    The one narcisist on the board who thinks they are meaningless isn't permitted to read it.  Eu-niece et al. can continue to blather from his ivory tower. For the rest, injest.              Flying under the radar. Shares of Avion Gold soared in mid-April on strong drill results but hit turbulence after missing

production estimates for Q1/10 and reducing 2010 production guidance. Shares have since resumed their upward climb, a trend

Canaccord Genuity Senior Mining Analyst Eric Zaunscherb believes will only continue. He considers the Q1/10 production

glitches incidental and the new 2010 production guidance in line with our own forecast of 74,000 ounces. He has also updated

his Avion model to take into account very positive exploration results, recent land acquisitions, a C$28.8-million bought-deal

and adjustments to reflect the quality of management guidance. Avion’s successful exploration program at Ségala and Tabakoto

to date is leading to increased confidence that the project’s compliant resources will be lifted from the current 11.4 million

tonnes measured and indicated at 3.90 g/t Au (1.4 million ounces) plus 9.9 million tonnes inferred grading 3.78 g/t Au (1.2

million ounces). Given the high-grade intersections in drilling to date, Zaunscherb expects that the resource-grade will see a

significant life as well. Consequently, he boosted his target price as successful exploration and prospective land expansion are

– Canadian and U.S. Comments for Friday May 14, 2010 4

.

driving increased mine life in his model, which at the peak gold price of US$1,300/oz used in his valuation results in a

significant increase in corporate NAVPS. Zaunscherb also notes that although Q1/10 production was negatively impacted,

Q1/10 financial results should benefit from sales carried over from Q4/09 (Q4/09 sales amounted to 13,376 ounces as compared

to production of 21,307 ounces). Q1/10 financial results are expected to be released May 20. Avion Gold is among

Zaunscherb’s top picks as it remains one of the least expensive gold producers under Canaccord Genuity coverage, trading at

4.4x 2011 P/E, 4.1x 2011 P/CF and 0.36x P/NAV (5%, spot) versus peer metrics of 24.6x, 13.9x and 1.15x, respectively.